Coeur Mining, Inc. 10-Q

Item 1. Financial Statements and Supplementary Data COEUR MINING, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) March 31, 2023 December 31, 2022 ASSETS Notes In thousands, except share data CURRENT ASSETS Cash and cash equivalents $ 66,977 $ 61,464 Receivables 4 35,621 36,333 Inventory 5 62,054 61,831 Ore on leach pads 5 93,355 82,958 Equity securities 6 14,938 32,032 Prepaid expenses and other 15,199 25,814 288,144 300,432 NON-CURRENT ASSETS Property, plant and equipment, net 416,077 392,320 Mining properties, net 1,050,505 997,435 Ore on leach pads 5 42,092 51,268 Restricted assets 8,979 9,028 Equity securities 6 — 12,120 Receivables 4, 11 22,098 22,023 Other 61,510 61,517 TOTAL ASSETS $ 1,889,405 $ 1,846,143 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 119,094 $ 96,123 Accrued liabilities and other 17 69,222 92,863 Debt 7 32,039 24,578 Reclamation 8 5,796 5,796 226,151 219,360 NON-CURRENT LIABILITIES Debt 7 462,047 491,355 Reclamation 8 199,584 196,635 Deferred tax liabilities 20,909 14,459 Other long-term liabilities 34,178 35,318 716,718 737,767 COMMITMENTS AND CONTINGENCIES 16 STOCKHOLDERS’ EQUITY Common stock, par value $ 0.01 per share; authorized 600,000,000 shares, 331,042,396 issued and outstanding at March 31, 2023 and 295,697,624 at December 31, 2022 3,310 2,957 Additional paid-in capital 3,990,080 3,891,265 Accumulated other comprehensive income (loss) ( 4,719 ) 12,343 Accumulated deficit ( 3,042,135 ) ( 3,017,549 ) 946,536 889,016 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,889,405 $ 1,846,143 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 4 COEUR MINING, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) Three Months Ended March 31, 2023 2022 Notes In thousands, except share data Revenue 3 $ 187,298 $ 188,404 COSTS AND EXPENSES Costs applicable to sales (1) 3 153,056 133,267 Amortization 22,708 26,433 General and administrative 12,083 10,272 Exploration 4,650 5,418 Pre-development, reclamation, and other 13 10,890 11,412 Total costs and expenses 203,387 186,802 OTHER INCOME (EXPENSE), NET Fair value adjustments, net 11 10,561 10,605 Interest expense, net of capitalized interest 7 ( 7,389 ) ( 4,568 ) Other, net 13 ( 961 ) 1,737 Total other income (expense), net 2,211 7,774 Income (loss) before income and mining taxes ( 13,878 ) 9,376 Income and mining tax (expense) benefit 9 ( 10,708 ) ( 1,694 ) NET INCOME (LOSS) $ ( 24,586 ) $ 7,682 OTHER COMPREHENSIVE INCOME (LOSS): Change in fair value of derivative contracts designated as cash flow hedges ( 12,928 ) ( 5,218 ) Reclassification adjustments for realized (gain) loss on cash flow hedges ( 4,134 ) 460 Other comprehensive income (loss) ( 17,062 ) ( 4,758 ) COMPREHENSIVE INCOME (LOSS) $ ( 41,648 ) $ 2,924 NET INCOME (LOSS) PER SHARE 14 Basic income (loss) per share: Basic $ ( 0.08 ) $ 0.03 Diluted $ ( 0.08 ) $ 0.03 (1) Excludes amortization. The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 5 COEUR MINING, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31, 2023 2022 Notes In thousands CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ ( 24,586 ) $ 7,682 Adjustments: Amortization 22,708 26,433 Accretion 3,993 3,463 Deferred taxes 6,451 ( 8,262 ) Fair value adjustments, net 11 ( 10,561 ) ( 13,744 ) Stock-based compensation 10 3,151 2,267 Write-downs 5 13,113 7,595 Deferred revenue recognition 16 ( 10,115 ) ( 315 ) Other 2,069 ( 1,340 ) Changes in operating assets and liabilities: Receivables 3,050 9,100 Prepaid expenses and other current assets ( 496 ) ( 509 ) Inventory and ore on leach pads ( 17,635 ) ( 17,672 ) Accounts payable and accrued liabilities ( 26,145 ) ( 21,125 ) CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ( 35,003 ) ( 6,427 ) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 74,048 ) ( 69,502 ) Proceeds from the sale of assets — 15,371 Sale of investments 6 39,775 — Proceeds from notes receivable 4 5,000 — Other ( 44 ) ( 11 ) CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES ( 29,317 ) ( 54,142 ) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock 14 98,429 98,397 Issuance of notes and bank borrowings, net of issuance costs 7 75,000 85,000 Payments on debt, finance leases, and associated costs 7 ( 101,897 ) ( 103,267 ) Other ( 2,097 ) ( 3,403 ) CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 69,435 76,727 Effect of exchange rate changes on cash and cash equivalents 399 272 INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 5,514 16,430 Cash, cash equivalents and restricted cash at beginning of period 63,169 58,289 Cash, cash equivalents and restricted cash at end of period $ 68,683 $ 74,719 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 6 COEUR MINING, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED) In thousands Common Stock Shares Common Stock Par Value Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Balances at December 31, 2022 295,698 $ 2,957 $ 3,891,265 $ ( 3,017,549 ) $ 12,343 $ 889,016 Net income (loss) — — — ( 24,586 ) — ( 24,586 ) Other comprehensive income (loss) — — — — ( 17,062 ) (17,062) Common stock issued under "at the market" stock offering 32,862 329 98,100 — — 98,429 Common stock issued/canceled under long-term incentive plans, annual incentive plans, director fees and options, net 2,482 24 715 — — 739 Balances at March 31, 2023 331,042 $ 3,310 $ 3,990,080 $ ( 3,042,135 ) $ ( 4,719 ) $ 946,536 In thousands Common Stock Shares Common Stock Par Value Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Balances at December 31, 2021 256,919 $ 2,569 $ 3,738,347 $ ( 2,939,442 ) $ ( 1,212 ) $ 800,262 Net income (loss) — — — 7,682 — 7,682 Other comprehensive income (loss) — — — — ( 4,758 ) (4,758) Common stock issued under "at the market" stock offering 22,053 220 98,279 — — 98,499 Common stock issued/canceled under long-term incentive plans and director fees and options, net 1,862 19 ( 1,730 ) — — ( 1,711 ) Balances at March 31, 2022 280,834 $ 2,808 $ 3,834,896 $ ( 2,931,760 ) $ ( 5,970 ) $ 899,974 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 7 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements NOTE 1 - BASIS OF PRESENTATION The interim condensed consolidated financial statements of Coeur Mining, Inc. and its subsidiaries (collectively, “Coeur” or the “Company”) are unaudited. In the opinion of management, all adjustments and disclosures necessary for the fair presentation of these interim statements have been included. The results reported in these interim statements may not be indicative of the results which will be reported for the year ending December 31, 2023. The condensed consolidated December 31, 2022 balance sheet data was derived from audited consolidated financial statements. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 10-K”). NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Significant Accounting Policies Please see Note 2 — Summary of Significant Accounting Policies contained in the 2022 10-K. Use of Estimates The Company's Condensed Consolidated Financial Statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of the Company's Condensed Consolidated Financial Statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and reported amounts of revenues and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions relate to metal prices and mineral reserves that are the basis for future cash flow estimates utilized in impairment calculations and units-of production amortization calculations, environmental, reclamation and closure obligations, estimates of recoverable silver and gold in leach pad inventories, estimates of fair value for certain reporting units and asset impairments, valuation allowances for deferred tax assets, and the fair value and accounting treatment of financial instruments, equity securities, asset acquisitions, the allocation of fair value to assets and liabilities assumed in connection with business combinations, and derivative instruments. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results will differ from the amounts estimated in these financial statements. Revenue Recognition The Company’s gold stream agreement with a subsidiary of Franco-Nevada Corporation (“Franco-Nevada”) provided for a $22.0 million deposit from Franco-Nevada for the right and obligation, commencing in 2016, to purchase 50% of Palmarejo’s gold production (excluding production from certain properties acquired in 2015) at the lesser of $800 or market price per ounce. Because there is no minimum obligation associated with the deposit, it is not considered financing, and each shipment is considered to be a separate performance obligation. The streaming agreement represents a contract liability under ASC 606, which requires the Company to ratably recognize a portion of the deposit as revenue for each gold ounce delivered to Franco-Nevada. The remaining unamortized balance is included in Accrued liabilities and other and Other long-term liabilities on the Condensed Consolidated Balance Sheet. See Note 16 -- Commitments and Contingencies for additional detail. The following table presents a roll forward of the Franco-Nevada contract liability balance: Three Months Ended March 31, In thousands 2023 2022 Opening Balance $ 7,411 $ 8,150 Revenue Recognized ( 115 ) ( 315 ) Closing Balance $ 7,296 $ 7,835 In December 2022, the Company received a $25.0 million prepayment (the “December 2022 Prepayment”) under the Amended Sales Contract (as defined below). The December 2022 Prepayment represents a contract liability under ASC 606, which requires the Company to recognize ratably a portion of the deposit as revenue for each gold ounce delivered to the customer. The remaining contract liability is included in Accrued liabilities and other on the Condensed Consolidated Balance Sheet. See Note 2 -- Summary of Significant Accounting Policies contained in the 2022 10-K and Note 16 -- Commitments and Contingencies in this Report for additional detail. 8 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements The following table presents a roll forward of the Amended Sales Contract liability balance: Three Months Ended March 31, In thousands 2023 2022 Opening Balance $ 25,016 $ 15,016 Additions 111 10,139 Revenue Recognized ( 10,000 ) — Closing Balance $ 15,127 $ 25,155 Recently Issued Accounting Standards In March 2022, the FASB issued ASU 2022-01, “ Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method ” which is intended to make amendments to the fair value hedge accounting previously issued in ASU 2017-12 “ Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ”. The new standard is effective for reporting periods beginning after December 15, 2022. The standard introduced the portfolio layer method allowing multiple hedged layers of a single closed portfolio when applying fair value hedge accounting. The Company adopted the new derivatives and hedging standards effective January 1, 2023, which did not have a material effect on our financial position, results of operations or cash flows. NOTE 3 – SEGMENT REPORTING The Company’s operating segments include the Palmarejo, Rochester, Kensington and Wharf mines and Silvertip exploration project. Except for the Silvertip exploration project, all operating segments are engaged in the discovery, mining, and production of gold and/or silver. The Silvertip exploration project, which suspended active mining and processing activities in February 2020, is engaged in the discovery of silver, zinc and lead. Other includes certain mineral interests, strategic equity investments, corporate office, elimination of intersegment transactions, and other items necessary to reconcile to consolidated amounts. Financial information relating to the Company’s segments is as follows (in thousands): Three Months Ended March 31, 2023 Palmarejo Rochester Kensington Wharf Silvertip Other Total Revenue Gold sales $ 40,607 $ 16,047 $ 40,124 $ 30,323 $ — $ — $ 127,101 Silver sales 41,700 17,853 74 570 — — 60,197 Metal sales 82,307 33,900 40,198 30,893 — — 187,298 Costs and Expenses Costs applicable to sales (1) 49,265 42,865 37,382 23,544 — — 153,056 Amortization 8,719 5,218 5,844 1,409 1,221 297 22,708 Exploration 1,313 383 996 — 1,497 461 4,650 Other operating expenses 1,526 2,025 984 1,014 6,546 10,878 22,973 Other income (expense) Fair value adjustments, net — — — — — 10,561 10,561 Interest expense, net 122 ( 175 ) ( 530 ) ( 14 ) ( 22 ) ( 6,770 ) ( 7,389 ) Other, net (3) ( 138 ) ( 93 ) ( 71 ) ( 476 ) ( 9 ) ( 174 ) ( 961 ) Income and mining tax (expense) benefit ( 9,702 ) 239 — ( 419 ) — ( 826 ) ( 10,708 ) Net Income (loss) $ 11,766 $ ( 16,620 ) $ ( 5,609 ) $ 4,017 $ ( 9,295 ) $ ( 8,845 ) $ ( 24,586 ) Segment assets (2) $ 306,852 $ 877,844 $ 152,946 $ 107,417 $ 242,886 $ 49,056 $ 1,737,001 Capital expenditures $ 10,150 $ 51,962 $ 10,702 $ 121 $ 669 $ 444 $ 74,048 (1) Excludes amortization (2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests (3) See Note 13 -- Additional Comprehensive Income (Loss) Detail for additional detail 9 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements Three Months Ended March 31, 2022 Palmarejo Rochester Kensington Wharf Silvertip Other (4) Total Revenue Gold sales $ 40,074 $ 11,052 $ 44,059 $ 34,266 $ — $ — $ 129,451 Silver sales 42,999 15,317 245 392 — — 58,953 Metal sales 83,073 26,369 44,304 34,658 — — 188,404 Costs and Expenses Costs applicable to sales (1) 43,225 32,275 36,910 20,857 — — 133,267 Amortization 9,386 4,710 8,622 2,061 1,259 395 26,433 Exploration 1,610 1,942 402 — — 1,464 5,418 Other operating expenses 921 1,831 615 512 6,494 11,311 21,684 Other income (expense) Fair value adjustments, net — — — — — 10,605 10,605 Interest expense, net ( 115 ) ( 178 ) ( 248 ) ( 13 ) ( 68 ) ( 3,946 ) ( 4,568 ) Other, net (3) ( 339 ) ( 48 ) 106 39 ( 5 ) 1,984 1,737 Income and mining tax (expense) benefit ( 12,075 ) ( 35 ) — ( 993 ) — 11,409 ( 1,694 ) Net Income (loss) $ 15,402 $ ( 14,650 ) $ ( 2,387 ) $ 10,261 $ ( 7,826 ) $ 6,882 $ 7,682 Segment assets (2) $ 288,081 $ 618,481 $ 149,840 $ 91,527 $ 234,693 $ 127,015 $ 1,509,637 Capital expenditures $ 13,611 $ 33,050 $ 7,924 $ 1,361 $ 11,859 $ 1,697 $ 69,502 (1) Excludes amortization (2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests (3) See Note 13 -- Additional Comprehensive Income (Loss) Detail for additional detail (4) Includes Sterling/Crown exploration properties and La Preciosa project that were disposed of in 2022, see Note 21 -- Dispositions contained in the 2022 10-K for additional information. Assets March 31, 2023 December 31, 2022 Total assets for reportable segments $ 1,737,001 $ 1,669,982 Cash and cash equivalents 66,977 61,464 Other assets 85,427 114,697 Total consolidated assets $ 1,889,405 $ 1,846,143 Geographic Information Long-Lived Assets March 31, 2023 December 31, 2022 United States $ 974,500 $ 899,960 Mexico 255,008 251,950 Canada 236,952 237,723 Other 122 122 Total $ 1,466,582 $ 1,389,755 Revenue Three months ended March 31, 2023 2022 United States $ 104,991 $ 105,331 Mexico 82,307 83,073 Total $ 187,298 $ 188,404 10 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements NOTE 4 – RECEIVABLES Receivables consist of the following: In thousands March 31, 2023 December 31, 2022 Current receivables: Trade receivables $ 5,489 $ 6,302 VAT receivable 12,349 10,741 Income tax receivable 15,776 9,719 Avino note receivable (1) — 4,926 Gold and silver forwards realized gains (2) 1,376 4,059 Other 631 586 $ 35,621 $ 36,333 Non-current receivables: Deferred cash consideration (1) $ 7,753 $ 7,677 Contingent consideration (1) 14,345 14,346 $ 22,098 $ 22,023 Total receivables $ 57,719 $ 58,356 (1) See Note 11 -- Fair Value Measurements for additional details on the Avino note receivable, deferred cash consideration and contingent consideration. In March 2023, the Company received payment of $5.0 million related to the Avino note receivable. (2) Represents realized gains on gold and silver forward hedges from March 2023 that contractually settle in subsequent months. See Note 12 -- Derivative Financial Instruments & Hedging for additional details on the gold and silver forward hedges. NOTE 5 – INVENTORY AND ORE ON LEACH PADS Inventory consists of the following: In thousands March 31, 2023 December 31, 2022 Inventory: Concentrate $ 1,793 $ 2,869 Precious metals 10,518 12,636 Supplies 49,743 46,326 $ 62,054 $ 61,831 Ore on Leach Pads: Current $ 93,355 $ 82,958 Non-current 42,092 51,268 $ 135,447 $ 134,226 Long-term Stockpile (included in Other ) $ 32,070 $ 28,840 Total Inventory and Ore on Leach Pads $ 229,571 $ 224,897 Coeur reports the carrying value of metal and leach pad inventory at the lower of cost or net realizable value, with cost being determined using a weighted average cost method. In the three months ended March 31, 2023, the cost of stockpile, leach pad and metal inventory at Rochester exceeded its net realizable value, which resulted in non-cash write downs of $ 14.3 million ($ 13.1 million was recognized in Costs applicable to sales and $ 1.2 million in Amortization ). 11 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements NOTE 6 – INVESTMENTS Equity Securities The Company makes strategic investments in equity securities of silver and gold exploration, development and royalty and streaming companies. At March 31, 2023 In thousands Cost Gross Unrealized Losses Gross Unrealized Gains Estimated Fair Value Equity Securities Integra Resources Corp. $ 9,455 $ ( 7,472 ) $ — $ 1,983 Avino Silver & Gold Mines Ltd 13,720 ( 1,260 ) — 12,460 Other 2,233 ( 1,738 ) — 495 Equity securities $ 25,408 $ ( 10,470 ) $ — $ 14,938 At December 31, 2022 In thousands Cost Gross Unrealized Losses Gross Unrealized Gains Estimated Fair Value Equity Securities Victoria Gold Corp. $ 70,560 $ ( 38,528 ) $ — $ 32,032 Integra Resources Corp. 9,455 ( 7,115 ) — 2,340 Avino Silver & Gold Mines Ltd 13,720 ( 4,199 ) — 9,521 Other 2,233 ( 1,974 ) — 259 Equity securities $ 95,968 $ ( 51,816 ) $ — $ 44,152 Changes in the fair value of the Company’s investment in equity securities are recognized each period in the Condensed Consolidated Statement of Comprehensive Income (Loss) in Fair value adjustments, net . See Note 11 -- Fair Value Measurements for additional details. In January 2023, the Company sold its remaining 6.0 million shares of common stock of Victoria Gold (“Victoria Gold Common Shares”) at a price of $ 6.70 per share, for net proceeds of $ 39.8 million. NOTE 7 – DEBT March 31, 2023 December 31, 2022 In thousands Current Non-Current Current Non-Current 2029 Senior Notes, net (1) $ 9,405 $ 360,041 $ — $ 369,212 Revolving Credit Facility (2) — 60,000 — 80,000 Finance lease obligations 22,634 42,006 24,578 42,143 $ 32,039 $ 462,047 $ 24,578 $ 491,355 (1) Net of unamortized debt issuance costs of $ 5.6 million and $ 5.8 million at March 31, 2023 and December 31, 2022, respectively. (2) Unamortized debt issuance costs of $ 3.2 million and $ 3.6 million at March 31, 2023 and December 31, 2022, respectively, included in Other Non-Current Assets . 2029 Senior Notes In March 2021, the Company completed an offering of $ 375.0 million in aggregate principal amount of 5.125% senior notes due 2029 in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, for net proceeds of approximately $ 367.5 million (the “2029 Senior Notes”). For more details, please see Note 10 -- Debt contained in the 2022 10-K. In April 2023, the Company exchanged $ 9.5 million in aggregate principal amount plus accrued interest of 2029 Senior Notes for 2,155,141 shares of common stock. Revolving Credit Facility At March 31, 2023, the Company had $ 60.0 million drawn at an interest rate of 8.3 %, $ 29.5 million in outstanding letters of credit and $ 300.5 million available under its $ 390 million revolving credit facility (the “RCF”). Future borrowing may be subject to certain financial covenants. For more details, please see Note 10 -- Debt contained in the 2022 10-K. 12 Coeur Mining, Inc. and Subsidiaries Notes to Consolidated Financial Statements Finance Lease Obligations From time to time, the Company acquires mining equipment and facilities under finance lease agreements. In the three months ended March 31, 2023, the Company entered into a new lease financing arrangement for mining equipment at Rochester. Additionally, Coeur secured a finance lease package for nearly $ 60.0 million in 2021, of which $ 57.4 million has been funded as of March 31, 2023. This package is earmarked for planned equipment purchases for the Rochester expansion project in 2021, 2022 and 2023 and has an interest rate of 5.2 %. All finance lease obligations are recorded, upon lease inception, at the present value of future minimum lease payments. For more details, please see Note 9 -- Leases contained in the 2022 10-K. Interest Expense Three Months Ended March 31, In thousands 2023 2022 2029 Senior Notes $ 4,805 $ 4,805 Revolving Credit Facility 2,746 1,187 Finance lease obligations 1,280 1,221 Amortization of debt issuance costs 640 417 Other debt obligations 27 127 Capitalized interest ( 2,109 ) ( 3,189 ) Total interest expense, net of capitalized interest $ 7,389 $ 4,568 NOTE 8 – RECLAMATION Reclamation and mine closure costs are based principally on legal and regulatory requirements. Management estimates costs associated with reclamation of mining properties. On an ongoing basis, management evaluates its estimates and assumptions, and future expenditures could differ from current estimates. Changes to the Company’s asset retirement obligations for its operating sites are as follows: Three Months Ended March 31, In thousands 2023 2022 Asset retirement obligation - Beginning $ 202,431 $ 180,156 Accretion 3,993 3,463 Settlements ( 1,044 ) ( 1,056 ) Asset retirement obligation - Ending $ 205,380 $ 182,563 NOTE 9 - INCOME AND MINING TAXES The following table summarizes the components of Income and mining tax (expense) benefit for the three months ended March 31, 2023 and 2022 by significant jurisdiction: Three months ended March 31, 2023 2022 In thousands Income (loss) before tax Tax (expense) benefit Income (loss) before tax Tax (expense) benefit United States $ ( 25,780 ) $ ( 1,018 ) $ ( 10,130 ) $ ( 1,199 ) Canada ( 9,294 ) — ( 7,525 ) — Mexico 21,399 ( 9,690 ) 27,033 ( 495 ) Other jurisdictions ( 203 ) — ( 2 ) — $ ( 13,878 ) $ ( 10,708 ) $ 9,376 $ ( 1,694 ) During the first quarter of 2023, the Company reported estimated income and mining tax expense of approximately $ 10.7 million, resulting in an effective tax rate of ( 77.2 )%. This compares to income tax expense of $ 1.7 million for an effective tax rate of 18.1 % during the first quarter of 2022. The comparability of the Company’s income and mining tax (expense) 13 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements benefit and effective tax rate for the reported periods was impacted by multiple factors, primarily: (i) the sale of non-core assets; (ii) variations in our income before income taxes; (iii) geographic distribution of that income; (iv) mining taxes; (v) foreign exchange rates; (vi) the impact of uncertain tax positions; (vii) percentage depletion; and (viii) the non-recognition of tax assets. Therefore, the effective tax rate will fluctuate, sometimes significantly, period to period. A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related tax benefits will not be realized. The Company analyzes its deferred tax assets and, if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance. Conversely, if it is determined that the Company ultimately will be more likely than not able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of factors that impact the Company’s ability to realize its deferred tax assets. For additional information, please see the section titled “Risk Factors” in the 2022 10-K. The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The statute of limitations remains open from 2019 forward for the U.S. federal jurisdiction and from 2015 forward for certain other foreign jurisdictions. As a result of statutes of limitation that will begin to expire within the next twelve months in various jurisdictions and possible settlements of audit-related issues with taxing authorities in various jurisdictions with respect to which none of the issues are individually significant, the Company believes that it is reasonably possible that the total amount of its net unrecognized income tax benefits will decrease by less than $ 0.1 million in the next twelve months. At March 31, 2023 and December 31, 2022, the Company had $ 0.0 million of unrecognized tax benefits. The Company’s continuing practice is to recognize potential interest and/or penalties related to unrecognized tax benefits as part of its income tax expense. At March 31, 2023 and December 31, 2022, the Company had $ 0.0 million of accrued income-tax-related interest and penalties. NOTE 10 – STOCK-BASED COMPENSATION The Company has stock incentive plans for executives, directors and eligible employees. Stock awards include performance shares, restricted stock and stock options. Stock-based compensation expense in the three months ended March 31, 2023 was $ 3.2 million, compared to $ 2.3 million in the three months ended March 31, 2022. At March 31, 2023, there was $ 14.1 million of unrecognized stock-based compensation cost which is expected to be recognized over a weighted-average remaining vesting period of 1.9 years. The following table summarizes the grants awarded during the three months ended March 31, 2023: Grant date Restricted stock Grant date fair value of restricted stock Performance shares Grant date fair value of performance shares February 27, 2023 2,596,856 $ 3.00 1,738,581 $ 3.14 NOTE 11 – FAIR VALUE MEASUREMENTS Three Months Ended March 31, In thousands 2023 2022 Change in the value of equity securities (1) $ 10,561 $ 13,744 Termination of gold zero cost collars — ( 3,139 ) Fair value adjustments, net $ 10,561 $ 10,605 (1) Includes unrealized gains on held equity securities of $ 2.8 million, and $ 13.7 million for the three months ended March 31, 2023, and 2022, respectively. Accounting standards establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1), secondary priority to quoted prices in inactive markets or observable inputs (Level 2), and the lowest priority to unobservable inputs (Level 3). 14 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement: Fair Value at March 31, 2023 In thousands Total Level 1 Level 2 Level 3 Assets: Equity securities including warrants $ 14,938 $ 14,443 $ 495 $ — Provisional metal sales contracts 224 — 224 — Silver forwards 555 — 555 — $ 15,717 $ 14,443 $ 1,274 $ — Liabilities: Gold forwards $ 5,274 $ — $ 5,274 $ — Provisional metal sales contracts 184 — 184 — $ 5,458 $ — $ 5,458 $ — Fair Value at December 31, 2022 In thousands Total Level 1 Level 2 Level 3 Assets: Equity securities $ 44,152 $ 43,893 $ 259 $ — Provisional metal sales contracts 299 — 299 — Gold forwards 12,343 — 12,343 — $ 56,794 $ 43,893 $ 12,901 $ — Liabilities: Provisional metal sales contracts $ 10 $ — $ 10 $ — The Company’s investments in equity securities are recorded at fair market value in the financial statements based primarily on quoted market prices. Such instruments are classified within Level 1 of the fair value hierarchy. The common share purchase warrants the Company received as consideration in the La Preciosa project sale are valued using a pricing model with inputs derived from observable market data, including quoted market prices and quoted interest curve rates. The model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy. The Company’s provisional metal sales contracts include concentrate and certain doré sales contracts that are valued using pricing models with inputs derived from observable market data, including forward market prices. The Company’s gold and silver forward contracts are valued using pricing models with inputs derived from observable market data, including forward market prices, yield curves, credit spreads. No assets or liabilities were transferred between fair value levels in the three months ended March 31, 2023. The fair value of financial assets and liabilities carried at book value in the financial statements at March 31, 2023 and December 31, 2022 is presented in the following table: March 31, 2023 In thousands Book Value Fair Value Level 1 Level 2 Level 3 Assets: Deferred cash consideration $ 7,753 $ 7,338 $ — $ 7,338 $ — Liabilities: 2029 Senior Notes (1) $ 369,446 $ 312,240 $ — $ 312,240 $ — Revolving Credit Facility (2) $ 60,000 $ 60,000 $ — $ 60,000 $ — (1) Net of unamortized debt issuance costs of $ 5.6 million (2) Unamortized debt issuance costs of $ 3.2 million included in Other Non-Current Assets . 15 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements December 31, 2022 In thousands Book Value Fair Value Level 1 Level 2 Level 3 Assets: Promissory note $ 4,926 $ 4,579 $ — $ 4,579 $ — Deferred cash consideration $ 7,677 $ 7,317 $ — $ 7,317 $ — Liabilities: 2029 Senior Notes (1) $ 369,212 $ 291,924 $ — $ 291,924 $ — Revolving Credit Facility (2) $ 80,000 $ 80,000 $ — $ 80,000 $ — (1) Net of unamortized debt issuance costs of $ 5.8 million. (2) Unamortized debt issuance costs of $ 3.6 million included in Other Non-Current Assets . The fair value of the 2029 Senior Notes was estimated using quoted market prices. The fair value of the RCF approximates book value as the liability is secured, has a variable interest rate, and lacks significant credit concerns. The consideration for the sale of La Preciosa project included a promissory note payable to the Company that matured in March 2023 and was paid in full, and deferred cash consideration payable on the first anniversary of initial production from any portion of the La Preciosa project. These assets were valued using the pricing model with inputs derived from observable market data, including synthetic credit rating and quoted discount rate. The model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy. In addition, the Company has assets initially measured at fair value at inception and remeasured at fair value on a nonrecurring basis such as the royalties and contingent consideration received in connection with dispositions. The consideration for the sale of La Preciosa project also included two royalties: a 1.25 % net smelter returns royalty on properties covering the Gloria and Abundancia areas of the La Preciosa project and a 2.00 % gross value royalty on all areas of the La Preciosa project other than the Gloria and Abundancia areas, and contingent consideration of $ 0.25 per silver equivalent ounce (adjusted for inflation) on any new mineral reserves discovered and declared outside of the current resources area at the La Preciosa project, up to a maximum payment of $ 50.0 million. The fair value of the royalties and the contingent consideration assets were $ 11.2 million and $ 1.2 million, respectively, valued as of the date of closing of the transaction and are measured at fair value on a non-recurring basis. The fair value of the royalties and the contingent consideration were valued using Monte Carlo simulation models. The model inputs include significant unobservable inputs and involve significant management judgment. The significant unobservable inputs included assumptions related to metal prices which assumed silver prices ranging from $ 22 to $ 25 per ounce and gold prices ranging from $ 1,700 to $ 1,930 per ounce as well as volatility assumptions for silver and gold prices ( 33.5 % and 19.0 %, respectively), and an assumed weighted average cost of capital of 15.5 %. Such instruments are classified as Level 3 of the fair value hierarchy. The consideration for the sale of Sterling/Crown exploration properties included the right to an additional payment of $ 50.0 million should the Buyer, its affiliates or its successors, report gold resources in the Sterling/Crown exploration properties (including any in-situ ounces mined after the closing of the Transaction) equal to or greater than 3,500,000 gold ounces, subject to certain additional terms and conditions detailed in the stock purchase agreement. The fair value of the contingent consideration asset of $ 13.0 million valued as of the date of closing of the transaction was valued using a discounted cash flow model and is measured at fair value on a non-recurring basis. The model inputs include significant unobservable inputs, involve significant management judgment and is classified as Level 3 of the fair value hierarchy. The significant unobservable inputs included managements assumption related to the probability (75%) and timing (ranging from 5 years to 30 years) of achieving reported gold resources equal to or greater than 3,500,000 gold ounces and a discount rate of 8.1 %. NOTE 12 – DERIVATIVE FINANCIAL INSTRUMENTS & HEDGING ACTIVITIES The Company is exposed to various market risks, including the effect of changes in metal prices, foreign currency exchange rates and interest rates, and uses derivatives to manage financial exposures that occur in the normal course of business. Derivative gains and losses are included in operating cash flows in the period in which they contractually settle. The Company does not hold or issue derivatives for trading or speculative purposes. The Company may elect to designate certain derivatives as hedging instruments under U.S. GAAP. The Company formally documents all relationships between designated hedging instruments and hedged items as well as its risk management objectives and strategies for undertaking hedge transactions. This process includes linking all derivatives designated as hedges to either recognized assets or liabilities or forecasted transactions and assessing, both at inception and on an ongoing basis, the effectiveness of the hedging relationships. 16 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements Derivatives Designated as Cash Flow Hedging Strategies To protect the Company’s exposure to fluctuations in metal prices, particularly during times of elevated capital expenditures, the Company enters into forward contracts. The contracts are net settled monthly and if the actual price of gold or silver at the time of expiration is lower than the fixed price or higher than the fixed prices, it would result in a realized gain or loss, respectively. The Company has elected to designate these instruments as cash flow hedges of forecasted transactions at their inception. At March 31, 2023, the Company had the following derivative cash flow hedge instruments that settle as follows: In thousands except average prices and notional ounces 2023 2024 and Thereafter Gold forwards Average gold fixed price per ounce $ 1,968 $ — Notional ounces 157,998 — Silver forwards Average silver fixed price per ounce $ 24.64 — Notional ounces 2,400,000 — The effective portions of cash flow hedges are recorded in Accumulated other comprehensive income (loss) (“AOCI”) until the hedged item is recognized in earnings. Deferred gains and losses associated with cash flow hedges of metal sales revenue are recognized as a component of Revenue in the same period as the related sale is recognized. At inception, the Company performed an assessment of the forecasted transactions and the hedging instruments and determined that the hedging relationships are considered perfectly effective. Future assessments are performed to verify that critical terms of the hedging instruments and the forecasted transactions continue to match, and the forecasted transactions remain probable, as well as an assessment of any adverse developments regarding the risk of the counterparties defaulting on their commitments. There have been no such changes in critical terms or adverse developments. As of March 31, 2023, the Company had $ 4.7 million of net after-tax loss in AOCI related to losses from cash flow hedge transactions, of which $ 4.7 million of net after-tax losses is expected to be recognized in its Condensed Consolidated Statement of Comprehensive Income (Loss) during the next 12 months. Actual amounts ultimately reclassified to net income are dependent on the price of gold and silver for metal contracts. The following summarizes the classification of the fair value of the derivative instruments designated as cash flow hedges: March 31, 2023 In thousands Prepaid expenses and other Other assets Accrued liabilities and other Gold forwards $ — $ — $ 5,274 Silver forwards 555 — — December 31, 2022 In thousands Prepaid expenses and other Other assets Accrued liabilities and other Gold forwards $ 12,343 $ — $ — The following table sets forth the after-tax gains (losses) on derivatives designated as cash flow hedges that have been included in AOCI and the Condensed Consolidated Statement of Comprehensive Income (Loss) for the three months ended March 31, 2023 and 2022, respectively (in thousands). 17 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements Three Months Ended March 31, 2023 2022 Amount of Gain (Loss) Recognized in AOCI Gold forwards $ ( 13,984 ) $ ( 1,832 ) Silver forwards 1,056 — Gold zero cost collars — ( 3,386 ) $ ( 12,928 ) $ ( 5,218 ) Amount of (Gain) Loss Reclassified from AOCI to Earnings Gold forwards $ ( 2,261 ) $ — Silver forwards ( 1,873 ) — Gold zero cost collars — 460 $ ( 4,134 ) $ 460 Derivatives Not Designated as Hedging Instruments Provisional Metal Sales The Company enters into sales contracts with third-party smelters, refiners and off-take customers which, in some cases, provide for a provisional payment based upon preliminary assays and quoted metal prices. The provisionally priced sales contracts contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable recorded at the forward price at the time of sale. The embedded derivatives do not qualify for hedge accounting and are marked to market through earnings each period until final settlement. Zero Cost Collars To protect the Company’s exposure to fluctuations in metal prices the Company entered into Asian (or average value) put and call option contracts in net-zero-cost collar arrangements. The contracts were net cash settled monthly and, if the price of gold at the time of expiration is between the put and call prices, would expire at no cost to the Company. If the price of gold at the time of expiration was lower than the put prices or higher than the call prices, it would result in a realized gain or loss, respectively. The Company elected to designate these instruments as cash flow hedges of forecasted transactions at their inception. In the first quarter of 2022, the Company voluntarily de-designated hedge accounting for the zero cost collars and subsequently terminated the arrangements. The cost to terminate the zero cost collars was $ 7.7 million, of which $ 3.1 million was recognized in earnings and the remaining $ 4.6 million, which represents the fair value of the zero cost collars on the date of de-designation, was retained in AOCI and was recognized in earnings in 2022 as the forecasted transactions occurred. At March 31, 2023, the Company had the following derivative instruments that settle as follows: In thousands except average prices and notional ounces 2023 2024 and Thereafter Provisional gold sales contracts $ 15,047 $ — Average gold price per ounce $ 1,923 $ — Notional ounces 7,825 — The following summarizes the classification of the fair value of the derivative instruments: March 31, 2023 In thousands Prepaid expenses and other Accrued liabilities and other Provisional metal sales contracts $ 224 $ 184 December 31, 2022 In thousands Prepaid expenses and other Accrued liabilities and other Provisional metal sales contracts $ 299 $ 10 The following represent mark-to-market gains (losses) on derivative instruments in the three ended March 31, 2023, and 2022, respectively (in thousands): 18 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements Three Months Ended March 31, Financial statement line Derivative 2023 2022 Revenue Provisional metal sales contracts $ ( 249 ) $ 492 Fair value adjustments, net Terminated zero cost collars — ( 3,139 ) $ ( 249 ) $ ( 2,647 ) Credit Risk The credit risk exposure related to any derivative instrument is limited to the unrealized gains, if any, on outstanding contracts based on current market prices. To reduce counter-party credit exposure, the Company enters into contracts with institutions management deems credit-worthy and limits credit exposure to each institution. The Company does not anticipate non-performance by any of its counterparties. NOTE 13 – ADDITIONAL COMPREHENSIVE INCOME (LOSS) DETAIL Pre-development, reclamation, and other consists of the following: Three Months Ended March 31, In thousands 2023 2022 COVID-19 $ 56 $ 972 Silvertip ongoing carrying costs 6,180 6,159 Asset retirement accretion 3,993 3,463 Other 661 818 Pre-development, reclamation and other $ 10,890 $ 11,412 Other, net consists of the following: Three Months Ended March 31, In thousands 2023 2022 Foreign exchange gain (loss) $ ( 1,154 ) $ ( 559 ) Gain (loss) on sale of assets ( 9 ) 1,831 Other 202 465 Other, net $ ( 961 ) $ 1,737 NOTE 14 – NET INCOME (LOSS) PER SHARE Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of the Company’s common stock outstanding during the period. Diluted net income (loss) per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the three months ended March 31, 2023 and 2022, there were 366,946 and 1,151,073 common stock equivalents, respectively, related to equity-based awards that were not included in the diluted earnings per share calculation as the shares would be antidilutive. 19 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements Three months ended March 31, In thousands except per share amounts 2023 2022 Net income (loss) available to common stockholders $ ( 24,586 ) $ 7,682 Weighted average shares: Basic 300,950 261,458 Effect of stock-based compensation plans — 2,105 Diluted 300,950 263,563 Income (loss) per share: Basic $ ( 0.08 ) $ 0.03 Diluted $ ( 0.08 ) $ 0.03 On March 17, 2023, the Company completed a $ 100.0 million “at the market” offering of its common stock, par value $ 0.01 per share (the “March 2023 Equity Offering”). The March 2023 Equity Offering was conducted pursuant to an ATM Equity Offering Sales Agreement, entered into on February 23, 2023 between the Company and BMO Capital Markets Corp. and RBC Capital Markets, LLC as sales agents. The Company sold a total of 32,861,580 shares of its common stock in the March 2023 Equity Offering at an average price of $ 3.04 per share, raising net proceeds (after sales commissions) of $ 98.4 million. Proceeds from the March 2023 Equity Offering were used to reduce outstanding amounts under the RCF and for general corporate purposes. On December 11, 2022, the Company completed a $ 50.0 million “at the market” offering of its common stock, par value $ 0.01 per share (the “December 2022 Equity Offering”). The December 2022 Equity Offering was conducted pursuant to an ATM Equity Offering Sales Agreement, entered into on November 9, 2022 between the Company and BMO Capital Markets Corp. and RBC Capital Markets, LLC as sales agents. The Company sold a total of 14,766,835 shares of its common stock in the December 2022 Equity Offering at an average price of $ 3.39 per share, raising net proceeds (after sales commissions) of $ 49.2 million. Proceeds from the December 2022 Equity Offering were used to repay outstanding amounts under the RCF. On March 18, 2022, the Company completed a $ 100.0 million “at the market” offering of its common stock, par value $ 0.01 per share (the “March 2022 Equity Offering”). The March 2022 Equity Offering was conducted pursuant to an ATM Equity Offering Sales Agreement, entered into on April 23, 2020 between the Company and BofA Securities, Inc. and RBC Capital Markets, LLC as sales agents. The Company sold a total of 22,053,275 shares of its common stock in the March 2022 Equity Offering at an average price of $ 4.53 per share, raising net proceeds (after sales commissions) of $ 98.0 million. Proceeds from the March 2022 Equity Offering were used to repay outstanding amounts under the RCF. NOTE 15 - SUPPLEMENTAL GUARANTOR INFORMATION The following summarized financial information is presented to satisfy disclosure requirements of Rule 13-01 of Regulation S-X resulting from the guarantees by Coeur Alaska, Inc., Coeur Explorations, Inc., Coeur Rochester, Inc., Coeur South America Corp., Wharf Resources (U.S.A.), Inc. and its subsidiaries, Coeur Capital, Inc., Sterling Intermediate Holdco, Inc., and Coeur Sterling Holdings LLC (collectively, the “Subsidiary Guarantors”) of the 2029 Senior Notes. The following schedules present summarized financial information of (a) Coeur, the parent company and (b) the Subsidiary Guarantors (collectively the “Obligor Group”). The summarized financial information of the Obligor Group is presented on a combined basis with intercompany balances and transactions between entities in the Obligor Group eliminated. The Obligor Group’s amounts due from, amounts due to and transactions with certain wholly-owned domestic and foreign subsidiaries of the Company have been presented in separate line items, if they are material. Each of the Subsidiary Guarantors is 100% owned by Coeur and the guarantees are full and unconditional and joint and several obligations. There are no restrictions on the ability of Coeur to obtain funds from the Subsidiary Guarantors by dividend or loan. 20 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements SUMMARIZED BALANCE SHEET Coeur Mining, Inc. Guarantor Subsidiaries In thousands March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022 Current assets $ 31,103 $ 73,692 $ 162,845 $ 137,432 Non-current assets (1) $ 415,039 $ 445,778 $ 1,057,010 $ 991,213 Non-guarantor intercompany assets $ 1,096 $ 4,391 $ — $ — Current liabilities $ 25,534 $ 19,842 $ 146,050 $ 136,788 Non-current liabilities $ 429,460 $ 457,195 $ 192,514 $ 193,024 Non-guarantor intercompany liabilities $ 58,914 $ 58,257 $ 1,594 $ 1,594 (1) Coeur Mining, Inc.’s non-current assets includes its investment in Guarantor Subsidiaries. SUMMARIZED STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31, 2023 In thousands Coeur Mining, Inc. Guarantor Subsidiaries Revenue $ — $ 104,991 Gross profit (loss) $ ( 297 ) $ ( 11,270 ) Net income (loss) $ ( 24,585 ) $ ( 18,231 ) NOTE 16 – COMMITMENTS AND CONTINGENCIES Mexico Litigation Matters As of March 31, 2023, $ 29.1 million in principal is due from the Mexican government associated with VAT that was paid under Coeur Mexicana, S.A. de C.V.’s (“Coeur Mexicana’s”) prior royalty agreement with a subsidiary of Franco-Nevada Corporation, which was terminated in 2016. Coeur Mexicana applied for and initially received VAT refunds associated with the royalty payments in the normal course; however, in 2011 the Mexican tax authorities began denying Coeur Mexicana’s VAT refunds based on the argument that VAT was not legally due on the royalty payments. Accordingly, Coeur Mexicana began to request refunds of the VAT as undue payments, which the Mexican tax authorities also denied. The Company has since been engaged in ongoing efforts to recover the VAT from the Mexican government (including through litigation and potential arbitration as well as refiling VAT refund requests). Despite a favorable ruling from Mexican tax courts in this matter in 2018, litigation of the matter continued at the Mexican administrative, appeals court and supreme court levels for several years, most of which was determined unfavorably to Coeur based on interpretations of applicable law and prior court decisions which the Company and its counsel believe are contrary to legal precedent, conflicting and erroneous. While the Company believes that it remains legally entitled to be refunded the full amount of the VAT receivable and intends to rigorously continue its VAT recovery efforts, based on the continued failure to recover the VAT receivable and unfavorable Mexican court decisions, the Company determined to write down the carrying value of the VAT receivable at September 30, 2021. Coeur has elected to initiate an arbitration proceeding under Chapter 11 of the North American Free Trade Agreement, or NAFTA, to resolve the matter. Outcomes in NAFTA arbitration and the process for recovering funds even if there is a successful outcome in NAFTA arbitration can be lengthy and unpredictable. In addition, ongoing litigation with the Mexican government associated with enforcement of water rights in Mexico, if unsuccessful, may impact Coeur Mexicana’s ability to access new sources of water to provide sufficient supply for its operations at Palmarejo and, if material, may have a material adverse impact on the Company’s operations and financial results. Palmarejo Gold Stream Coeur Mexicana sells 50 % of Palmarejo gold production (excluding production from certain properties acquired in 2015) to a subsidiary of Franco-Nevada Corporation (“Franco-Nevada”) under a gold stream agreement for the lesser of $ 800 or spot price per ounce. In 2016, Coeur Mexicana received a $ 22.0 million deposit toward future deliveries under the gold stream agreement. In accordance with generally accepted accounting principles, although Coeur Mexicana has satisfied its 21 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements contractual obligation to repay the deposit to Franco-Nevada, the deposit is accounted for as deferred revenue and is recognized as revenue on a units-of-production basis as ounces are sold to Franco-Nevada. At March 31, 2023, the remaining unamortized balance was $ 7.3 million, which is included in Accrued liabilities and other and Other long-term liabilities on the Condensed Consolidated Balance Sheet. Kensington Prepayment In June 2019, Coeur amended its existing sales and purchase contract with a metal sales counterparty for gold concentrate from its Kensington mine (the “Amended Sales Contract”). From time to time thereafter, the Amended Sales Contract has been further amended to allow for additional prepayments. In December 2022, the Company received a $25.0 million prepayment, of which $10.0 million was recognized as revenue in the first quarter of 2023. The remaining deliveries of the December 2022 Prepayment are recognized as a deferred revenue liability and are presented in Accrued liabilities and other on the Condensed Consolidated Balance Sheet. Under the relevant terms of the Amended Sales Contract, Coeur maintains its exposure to the price of gold and expects to recognize the remaining value of the accrued liability by June 2023. Rochester Expansion Project Update As of March 31, 2023, the Company had committed approximately $ 634 million of capital since inception of the Rochester expansion project, approximately $ 560 million of the estimated project cost had been incurred and the project was 82% complete. The Company estimates the total capital cost for the project will likely be around the high end of the $650 - $670 million guidance range, which primarily reflects the impact of extreme winter weather on construction productivity during the first quarter. Mechanical completion remains on target for mid-2023 with ramp-up and commissioning expected to take place during the second half of the year. The Company expects capital expenditures related to the Rochester expansion to be approximately $197 - $207 million during 2023, with roughly 70% incurred during the first half of the year. Coeur achieved several key milestones at the Rochester expansion project during the quarter. Notably, the Company began placing ore on the new Stage VI leach pad on February 1 and achieved mechanical completion of the Merrill-Crowe process plant on March 31, ahead of its second quarter target completion date. Coeur also energized the 63-kilovolt power system and achieved mechanical completion of the crusher corridor electrical substation. In addition to achieving mechanical completion ahead of schedule, progress on the Merrill-Crowe plant included (i) completion of the leach recirculation system which will deliver solution to the Stage VI leach pad, (ii) advancement of pre-commissioning of power and process systems, and (iii) completion of control systems programming and acceptance testing. Coeur also continued to make solid progress on the crusher corridor with the start of steel erection and equipment setting for the pre-screen and further advancement of concrete work in the primary crusher area. Other work on the crusher corridor included (i) stacker steel and conveyor erection at the primary, secondary and tertiary stockpiles, (ii) topping out of the steel erection at both the secondary and tertiary crushers, (iii) continuation of piping and electrical installation across the crusher corridor, and (iv) completion of control systems programming with acceptance testing now well advanced. Other Commitments and Contingencies As part of its ongoing business and operations, the Company and its affiliates are required to provide surety bonds, bank letters of credit, bank guarantees and, in some cases, cash as financial support for various purposes, including environmental remediation, reclamation, collateral for gold and silver hedges and other general corporate purposes. As of March 31, 2023 and December 31, 2022, the Company had surety bonds totaling $ 319.1 million and $ 326.8 million, respectively, in place as financial support for future reclamation and closure costs. The obligations associated with these instruments are generally related to performance requirements that the Company addresses through its ongoing operations and from time-to-time, the Company may be required to post collateral, including cash or letters of credit which reduce availability under its revolving credit facility, to support these instruments. As the specific requirements are met, the beneficiary of the associated instrument cancels and/or returns the instrument to the issuing entity. Certain of these instruments are associated with operating sites with long-lived assets and will remain outstanding until closure. The Company believes it is in compliance with all applicable bonding obligations and will be able to satisfy future bonding requirements through existing or alternative means, as they arise. NOTE 17 – ADDITIONAL BALANCE SHEET DETAIL AND SUPPLEMENTAL CASH FLOW INFORMATION Accrued liabilities and other consist of the following: 22 Coeur Mining, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements In thousands March 31, 2023 December 31, 2022 Accrued salaries and wages $ 20,960 $ 29,868 Deferred revenue (1) 15,852 25,736 Income and mining taxes 1,714 7,874 Accrued operating costs 8,327 6,241 Unrealized losses on derivatives 5,458 10 Taxes other than income and mining 1,866 3,318 Accrued interest payable 3,481 8,256 Operating lease liabilities 11,564 11,560 Accrued liabilities and other $ 69,222 $ 92,863 (1) See Note 16 -- Commitments and Contingencies for additional details on deferred revenue liabilities The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets that total the same such amounts shown in the Condensed Consolidated Statements of Cash Flows in the three months ended March 31, 2023 and 2022: In thousands March 31, 2023 March 31, 2022 Cash and cash equivalents $ 66,977 $ 73,330 Restricted cash equivalents 1,706 1,389 Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows $ 68,683 $ 74,719 23