Coeur Mining, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis (“MD&A”) provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of Coeur Mining, Inc. and its subsidiaries (collectively the “Company”, “our”, or “we”). We use certain non-GAAP financial performance measures in our MD&A. For a detailed description of these measures, please see “Non-GAAP Financial Performance Measures” at the end of this Item. We provide Costs applicable to sales (“CAS”) allocation, referred to as the co-product method, based on revenue contribution for Palmarejo and Rochester and based on the primary metal, referred to as the by-product method, for Wharf. Revenue from secondary metal, such as silver at Wharf, is treated as a cost credit. Overview We are primarily a gold and silver producer with operating assets located in the United States and Mexico and an exploration project in Canada. Third Quarter Highlights For the quarter, Coeur reported revenue of $194.6 million and cash used in operating activities of $2.4 million. We reported GAAP net loss of $21.1 million, or $0.06 per diluted share. On a non-GAAP adjusted basis 1 , the Company reported EBITDA of $30.6 million and net loss of $18.6 million or $0.05 per diluted share. For the nine months ended September 30, 2023, Coeur reported revenue of $559.1 million and cash provided by operating activities of $2.0 million. We reported GAAP net loss of $78.1 million, or $0.24 per diluted share. On a non-GAAP adjusted basis 1 , the Company reported EBITDA of $78.0 million and net loss of $71.8 million or $0.22 per diluted share. • Increased revenue and adjusted EBITDA driven by stronger gold production and lower costs – Revenue increased 10% and adjusted EBITDA increased 38% quarter-over-quarter, due to a 15% quarter-over-quarter increase in gold production and a 13% quarter-over-quarter decline in adjusted costs applicable to sales per gold ounce • Rochester expansion project now complete – First production from the new leach pad and process plant was achieved in mid-September. The legacy crushing circuit is now being decommissioned in preparation of mining expected to begin in that location in 2024 • Material step-up in Rochester production now occurring – During the month of October, Rochester recovered 537,000 ounces of silver and 8,050 ounces of gold, which is more than double the year-to-date monthly average silver production and more than triple the year-to-date monthly average gold production • Gold production and cost guidance updated; silver guidance remains unchanged – A stronger anticipated fourth quarter at Wharf is expected to offset adjusted gold production guidance at Kensington. The low end of total 2024 production guidance remains unchanged and the overall range has narrowed to 304,000 - 342,500 ounces. Additionally, Kensington cost guidance has been revised to reflect the impact of revised production expectations. Silver full-year production guidance of 10 - 12 million ounces remains unchanged • Balance sheet and hedging initiatives supporting remaining capital requirements – With elevated capital investment levels related to the recently completed Rochester expansion expected through year-end, Coeur ended the quarter with total liquidity of approximately $280 million. Realized and unrealized gains from the Company’s 2023 gold and silver hedges total nearly $20 million at quarter-end, providing meaningful downside protection through this period of capital intensity 25 Selected Financial and Operating Results Three Months Ended Nine Months Ended September 30, 2023 June 30, 2023 September 30, 2023 September 30, 2022 Financial Results: (in thousands, except per share amounts) Gold sales $ 139,503 $ 121,355 $ 387,959 $ 415,257 Silver sales $ 55,080 $ 55,880 $ 171,157 $ 160,263 Consolidated Revenue $ 194,583 $ 177,235 $ 559,116 $ 575,520 Net income (loss) $ (21,109) $ (32,412) $ (78,107) $ (127,196) Net income (loss) per share, diluted $ (0.06) $ (0.10) $ (0.24) $ (0.47) Adjusted net income (loss) (1) $ (18,619) $ (20,153) $ (71,829) $ (71,607) Adjusted net income (loss) per share, diluted (1) $ (0.05) $ (0.06) $ (0.22) $ (0.26) EBITDA (1) $ 15,274 $ 3,961 $ 35,454 $ (12,898) Adjusted EBITDA (1) $ 30,648 $ 22,235 $ 78,012 $ 103,154 Total debt (2) $ 512,241 $ 469,386 $ 512,241 $ 635,679 Operating Results: Gold ounces produced 78,617 68,406 216,062 242,619 Silver ounces produced 2,277,386 2,388,141 7,200,410 7,345,171 Gold ounces sold 78,015 67,090 215,971 241,779 Silver ounces sold 2,213,735 2,337,413 7,140,067 7,289,084 Average realized price per gold ounce $ 1,788 $ 1,809 $ 1,796 $ 1,718 Average realized price per silver ounce $ 24.88 $ 23.91 $ 23.97 $ 21.99 (1) See “Non-GAAP Financial Performance Measures.” (2) Includes finance leases. Net of debt issuance costs and premium received. Consolidated Financial Results Three Months Ended September 30, 2023 compared to Three Months Ended June 30, 2023 Revenue We sold 78,015 gold ounces and 2.2 million silver ounces, compared to 67,090 gold ounces and 2.3 million silver ounces. Revenue increased by $17.3 million, or 10%, as a result of a 16% increase gold ounces sold and a 4% increase in average realized silver prices, partially offset by a 5% decrease in silver ounces sold and a 1% decrease in average realized gold prices. The increase in gold ounces sold was primarily due to higher mill throughput at Palmarejo and Kensington, higher grades at Kensington, partially offset by the timing of production from Rochester’s new leach pad related to startup of the new process plant and timing of recoveries at Wharf. The decrease in silver ounces sold was primarily due to lower silver grades at Palmarejo and the timing of production on the new leach pad related to startup of the new process plant. Gold and silver represented 72% and 28% of third quarter 2023 sales revenue, respectively, compared to 68% and 32% of second quarter 2023 sales revenue, respectively. The following table summarizes consolidated metal sales: Three Months Ended Increase (Decrease) Percentage Change In thousands September 30, 2023 June 30, 2023 Gold sales $ 139,503 $ 121,355 $ 18,148 15 % Silver sales 55,080 55,880 (800) (1) % Metal sales $ 194,583 $ 177,235 $ 17,348 10 % 26 Costs Applicable to Sales Costs applicable to sales increased $8.3 million, or 6%, primarily due to higher gold ounces sold and a higher net realizable value (“LCM”) adjustments at Rochester. For a complete discussion of costs applicable to sales, see Results of Operations below. Amortization Amortization increased $3.3 million, or 17% primarily due to an increase in gold ounces sold and the commencement of production of the new leach pad in mid-September 2023 at Rochester. Expenses General and administrative expenses decreased $0.3 million, or 3%, primarily due to lower employee incentive related costs. Exploration expense increased $9.5 million, or 326%, driven by accelerated drilling activity at Palmarejo, Kensington and Silvertip. Pre-development, reclamation, and other expenses decreased $1.4 million, or 14%, stemming from lower ongoing carrying costs at Silvertip. The following table summarizes pre-development, reclamation, and other expenses: Three Months Ended Increase (Decrease) Percentage Change In thousands September 30, 2023 June 30, 2023 COVID-19 $ 14 $ 21 $ (7) (33) % Silvertip ongoing carrying costs 2,780 4,609 (1,829) (40) % Asset retirement accretion 4,153 4,073 80 2 % Other 1,733 1,345 388 29 % Pre-development, reclamation and other expense $ 8,680 $ 10,048 $ (1,368) (14) % Other Income and Expenses During the third quarter of 2023, the Company incurred a $0.8 million gain in connection with the exchange of $19.3 million in aggregate principal amount plus accrued interest of 2029 Senior Notes for 7.6 million shares of common stock. During the second quarter of 2023, the Company incurred a $3.0 million gain in connection with the exchange of $48.5 million in aggregate principal amount plus accrued interest of 2029 Senior Notes for 13.9 million shares of common stock. Fair value adjustments, net, decreased to a loss of $2.0 million compared to $3.9 million as a result of an increase in value of the Company’s equity investments. For additional details on the Company’s equity investments see Note 6 -- Investments. Interest expense (net of capitalized interest of $4.1 million) increased to $7.4 million from $6.9 million due to higher interest paid under the RCF as a result of increasing interest rates, partially offset by higher capitalized interest, and lower interest payable following the extinguishment of $67.8 million in 2029 Senior Notes. Other, net decreased to a gain of $0.5 million compared to a loss of $9.9 million as a result of the $12.3 million loss recognized from the sale of La Preciosa Deferred Consideration in the second quarter of 2023. Income and Mining Taxes Income and mining tax expense of approximately $6.1 million resulted in an effective tax rate of (40.6)% for the three months ended September 30, 2023. This compares to income tax expense of $9.9 million for an effective tax rate of (43.8)% for the three months ended June 30, 2023. The comparability of the Company’s income and mining tax (expense) benefit and effective tax rate for the reported periods was impacted by multiple factors, primarily: (i) variations in our income before income taxes; (ii) geographic distribution of that income; (iii) mining taxes; (iv) foreign exchange rate; (v) the sale of non-core assets; (vi) percentage depletion; and (vii) the impact of uncertain tax positions. Therefore, the effective tax rate will fluctuate, sometimes significantly, period to period. 27 The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit: Three Months Ended September 30, Three Months Ended June 30, 2023 2023 In thousands Income (loss) before tax Tax (expense) benefit Income (loss) before tax Tax (expense) benefit United States $ (22,674) $ (1,565) $ (35,540) $ (2,264) Canada (9,345) — (4,410) — Mexico 17,111 (4,532) 17,534 (7,602) Other jurisdictions (104) — (130) — $ (15,012) $ (6,097) $ (22,546) $ (9,866) 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 will ultimately 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 “Item 1A - Risk Factors”. Net Loss Net loss was $21.1 million, or $0.06 per diluted share, compared to $32.4 million, or $0.10 per diluted share. The decrease in net loss was driven by a 16% increase gold ounces sold, a 4% increase in average realized silver prices, favorable changes in the fair value of the Company’s equity investments, and a $12.3 million loss on the sale of the La Preciosa Deferred Consideration recognized in the second quarter of 2023. This was partially offset by a 5% decrease in silver ounces sold, a 1% decrease in average realized gold prices, a higher LCM adjustment at Rochester, and higher exploration costs. Adjusted net loss was $18.6 million, or $0.05 per diluted share, compared to $20.2 million, or $0.06 per diluted share (see “Non-GAAP Financial Performance Measures”). Nine Months Ended September 30, 2023 compared to Nine Months Ended September 30, 2022 Revenue We sold 215,971 gold ounces and 7.1 million silver ounces, compared to 241,779 gold ounces and 7.3 million silver ounces. Revenue decreased by $16.4 million, or 3%, as a result of a 11% and 2% decrease in gold and silver ounces sold, respectively, partially offset by a 5% and 9% increase in average realized gold and silver prices, respectively. The decrease in gold ounces sold was primarily due to lower mill throughput at Palmarejo and Kensington, lower grades and recoveries at Kensington, and the timing of production from Rochester’s new leach pad related to startup of the new process plant, partially offset by higher grades at Wharf. The decrease in silver ounces sold was primarily due to lower mill throughput at Palmarejo, partially offset by the timing of recoveries and higher grades at Rochester. Gold and silver represented 69% and 31% of 2023 sales revenue, respectively, compared to gold and silver representing 72% and 28% of 2022 sales revenue, respectively. The following table summarizes consolidated metal sales: Nine Months Ended Increase (Decrease) Percentage Change In thousands September 30, 2023 September 30, 2022 Gold sales $ 387,959 $ 415,257 $ (27,298) (7) % Silver sales 171,157 160,263 10,894 7 % Metal sales $ 559,116 $ 575,520 $ (16,404) (3) % Costs Applicable to Sales Costs applicable to sales decreased $6.5 million, or 1%, primarily due to lower gold and silver ounces sold and lower LCM adjustments at Rochester. For a complete discussion of costs applicable to sales, see Results of Operations below. 28 Amortization Amortization decreased $18.4 million primarily due to lower gold and silver ounces sold and longer assumed mine lives at Palmarejo, Rochester, Kensington and Wharf driven by prior year’s successful investments in exploration. Expenses General and administrative expenses increased $2.1 million, or 7%, primarily due to higher employee incentive related costs and corporate administrative costs. Exploration expense increased $0.9 million, or 5%, driven by accelerated drilling activity at Palmarejo, Kensington and Silvertip, partially offset by the Canadian mining exploration tax credits associated with expenditures at the Silvertip exploration project recognized in the second quarter of 2023. Pre-development, reclamation, and other expenses decreased $0.2 million, or 1%, stemming from lower ongoing carrying costs at Silvertip and lower costs incurred in connection with the Company’s COVID-19 health and safety protocols, partially offset by higher asset retirement accretion. The following table summarizes pre-development, reclamation, and other expenses: Nine Months Ended September 30, Increase (Decrease) Percentage Change In thousands 2023 2022 COVID-19 $ 92 $ 1,585 $ (1,493) (94) % Silvertip ongoing carrying costs 13,569 15,542 (1,973) (13) % Asset retirement accretion 12,219 10,588 1,631 15 % Other 3,738 2,124 1,614 76 % Pre-development, reclamation and other expense $ 29,618 $ 29,839 $ (221) (1) % Other Income and Expenses During the first nine months of 2023, the Company incurred a $3.7 million gain in connection with the exchange of $67.8 million in aggregate principal amount plus accrued interest of 2029 Senior Notes for 21.6 million shares of common stock. Fair value adjustments, net, increased to a gain of $4.6 million compared to a loss $65.3 million loss as a result of an increase in value of the Company’s equity investments. For additional details on the Company’s equity investments see Note 6 -- Investments. Interest expense (net of capitalized interest of $9.4 million) increased to $21.7 million from $15.7 million due to higher interest paid under the RCF attributable to higher average debt levels and interest rates, partially offset by lower interest payable following the extinguishment of $67.8 million in 2029 Senior Notes. Other, net decreased to a loss of $10.4 million compared to a gain of $2.2 million, as a result of the $12.3 million loss recognized from the sale of the La Preciosa Deferred Consideration. Income and Mining Taxes During the nine months of 2023, income and mining tax expense of approximately $26.7 million resulted in an effective tax rate of (51.9)% for 2023. This compares to income tax expense of $15.1 million for an effective tax rate of (13.4)% for 2022. The comparability of the Company’s income and mining tax (expense) benefit and effective tax rate for the reported periods was impacted by multiple factors, primarily: (i) variations in our income before income taxes; (ii) geographic distribution of that income; (iii) the sale of non-core assets; (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. 29 The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit: Nine Months Ended September 30, 2023 2022 In thousands Income (loss) before tax Tax (expense) benefit Income (loss) before tax Tax (expense) benefit United States $ (83,994) $ (4,847) $ (154,263) $ (2,270) Canada (23,049) — (22,859) (21) Mexico 56,045 (21,824) 64,847 (12,788) Other jurisdictions (438) — 158 — $ (51,436) $ (26,671) $ (112,117) $ (15,079) 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 will ultimately 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 “Item 1A - Risk Factors”. Net Loss Net loss was $78.1 million, or $0.24 per diluted share, compared to $127.2 million, or $0.47 per diluted share. The decrease in net loss was driven by a 5% and 9% increase in average realized gold and silver prices, respectively, decreased LCM adjustments at Rochester, favorable changes in the fair value of the Company’s equity investments, and a $3.7 million gain in connection with the exchange of 2029 Senior Notes. This was partially offset by a 11% and 2% decrease in gold and silver ounces sold, respectively, higher losses on the sale of assets, interest expense and income and mining taxes. Adjusted net loss was $71.8 million, or $0.22 per diluted share, compared to $71.6 million, or $0.26 per diluted share (see “Non-GAAP Financial Performance Measures”). 2023 Guidance The Company has made the following changes to its 2023 gold production and cost guidance: (i) the low end of Wharf’s gold production guidance has been revised upward; and (ii) Kensington’s 2023 gold production and cost guidance have been refined to reflect the cumulative impact of paste backfill challenges at Kensington earlier in the year. 2023 Production Guidance Previous Updated Gold Silver Gold Silver (oz) (K oz) (oz) (K oz) Palmarejo 100,000 - 112,500 6,500 - 7,500 100,000 - 112,500 6,500 - 7,500 Rochester 35,000 - 50,000 3,500 - 4,500 35,000 - 50,000 3,500 - 4,500 Kensington 84,000 - 95,000 — 81,000 - 85,000 — Wharf 85,000 - 95,000 — 88,000 - 95,000 — Total 304,000 - 352,500 10,000 - 12,000 304,000 - 342,500 10,000 - 12,000 2023 Costs Applicable to Sales Guidance Previous Updated Gold Silver Gold Silver ($/oz) ($/oz) ($/oz) ($/oz) Palmarejo (co-product) $900 - $1,050 $14.25 - $15.25 $900 - $1,050 $14.25 - $15.25 Rochester (co-product) — — — — Kensington $1,650 - $1,750 — $1,850 - $1,950 — Wharf (by-product) $1,200 - $1,350 — $1,200 - $1,350 — 30 The Company expects second half 2023 CAS at Rochester to be similar to actual first half 2023 CAS as Coeur completes and ramps up the expansion project. 2023 Capital, Exploration and G&A Guidance ($M) Capital Expenditures, Sustaining $148 - $168 Capital Expenditures, Development $230 - $264 Exploration, Expensed $30 - $35 Exploration, Capitalized $10 - $15 General & Administrative Expenses $36 - $40 Note: The Company’s previous guidance figures assume estimated prices of $1,800/oz gold and $23.00/oz silver as well as CAD of 1.25 and MXN of 20.00. The Company’s updated guidance figures assume estimated prices of $1,900/oz gold and $23.00/oz silver as well as CAD of 1.25 and MXN of 20.00. Guidance figures exclude the impact of any metal sales or foreign exchange hedges. 31 Results of Operations Palmarejo Three Months Ended Nine Months Ended September 30, 2023 June 30, 2023 September 30, 2023 September 30, 2022 Tons milled 501,722 472,622 1,507,950 1,643,561 Average gold grade (oz/t) 0.055 0.056 0.054 0.053 Average silver grade (oz/t) 3.67 4.10 3.93 3.78 Average recovery rate – Au 97.6 % 87.4 % 91.7 % 92.0 % Average recovery rate – Ag 86.9 % 83.5 % 83.9 % 84.0 % Gold ounces produced 26,870 23,216 75,204 80,847 Silver ounces produced 1,600,927 1,616,986 4,970,343 5,219,628 Gold ounces sold 26,018 22,207 74,195 81,905 Silver ounces sold 1,533,975 1,560,743 4,889,877 5,205,011 CAS per gold ounce (1) $ 924 $ 1,028 $ 950 $ 844 CAS per silver ounce (1) $ 15.67 $ 15.22 $ 15.01 $ 12.76 (1) See Non-GAAP Financial Performance Measures. Three Months Ended September 30, 2023 compared to Three Months Ended June 30, 2023 Gold and silver production increased 16% and decreased 1%, respectively, as a result of 6% increase mill throughput, higher gold and silver recoveries, and 2% and 10% lower gold and silver grades, respectively. Metal sales were $77.3 million, or 40% of Coeur’s metal sales, compared with $72.7 million, or 41% of Coeur’s metal sales. Revenue increased by $4.6 million or 6%, of which $5.0 million was due to a higher gold production, partially offset by a decrease of $0.4 million due to lower gold prices. Costs applicable to sales per gold ounce decreased 10% and per silver ounce increased 3%, due to the mix of gold and silver sales and a strengthening Mexican Peso. Amortization of $9.0 million was in-line with prior quarter. Capital expenditures decreased to $10.8 million from $11.9 million due to lower expenditures related to the open pit backfill project and underground development. Nine Months Ended September 30, 2023 compared to Nine Months Ended September 30, 2022 Gold and silver production decreased 7% and 5%, respectively as a result of 8% lower mill throughput, partially offset by 2% and 4% higher gold and silver grades, respectively. Metal sales were $232.3 million, or 42% of Coeur’s metal sales, compared with $233.9 million, or 41% of Coeur’s metal sales. Revenue decreased by $1.6 million or 1%, of which $19.5 million was due to a lower volume of gold and silver production, partially offset by an increase of $17.9 million due to higher average realized gold and silver prices. Costs applicable to sales per gold and silver ounce increased 13% and 18%, respectively, due to the mix of gold and silver sales, lower production, higher employee-related and consumable costs primarily due to continued inflationary pressures and a strengthening Mexican Peso. Amortization decreased to $25.8 million due to a decrease in gold and silver ounces sold and longer assumed mine life. Capital expenditures decreased to $32.8 million from $34.5 million due to lower infill drilling activities. 32 Rochester Three Months Ended Nine Months Ended September 30, 2023 June 30, 2023 September 30, 2023 September 30, 2022 Tons placed (1) 3,487,173 2,690,840 8,634,599 12,165,685 Average gold grade (oz/t) 0.003 0.003 0.003 0.003 Average silver grade (oz/t) 0.50 0.42 0.46 0.35 Gold ounces produced 4,459 6,314 18,928 23,146 Silver ounces produced 607,735 682,656 2,051,737 2,089,225 Gold ounces sold 4,432 6,493 19,274 22,724 Silver ounces sold 606,083 694,657 2,070,544 2,054,176 CAS per gold ounce (2) $ 2,549 $ 1,726 $ 2,219 $ 2,609 CAS per silver ounce (2) $ 31.74 $ 21.39 $ 27.38 $ 30.04 (1) During the three months ended September 30, 2023, 743,551 and 2,743,622 tons were placed on legacy and new leach pads, respectively. During the nine months ended September 30, 2023, 2,407,785 and 6,226,814 tons were placed on legacy and new leach pads, respectively. During the nine months ended September 30, 2022, 11,889,398 and 276,287 tons were placed on legacy and new leach pads, respectively. (2) See Non-GAAP Financial Performance Measures. Three Months Ended September 30, 2023 compared to Three Months Ended June 30, 2023 Gold and silver production decreased 29% and 11%, respectively, as a result of the timing of recoveries primarily due to Rochester preparing to transition from the legacy leach pad to the new leach pad associated with the Rochester expansion. Approximately 80% of the tons placed in the third quarter of 2023 were placed onto the new leach pad, which commenced production in mid-September 2023. Metal sales were $23.6 million, or 12% of Coeur’s metal sales, compared with $29.1 million, or 16% of Coeur’s metal sales. Revenue decreased by $5.5 million, or 19%, of which $6.2 million was due to a lower volume of gold and silver production, partially offset by an increase of $0.7 million due to higher average realized gold prices. Costs applicable to sales per gold and silver ounce increased 48% due to a higher LCM adjustment of $7.7 million compared to $1.6 million in the prior period. Amortization increased to $4.2 million due to commencement of production of the new leach pad in mid-September 2023. Capital expenditures increased to $84.4 million from $61.5 million due to timing of payments related to the Rochester expansion project. Nine Months Ended September 30, 2023 compared to Nine Months Ended September 30, 2022 Gold and silver production decreased 18% and 2%, respectively, primarily due to the timing of recoveries. Metal sales were $86.6 million, or 15% of Coeur’s metal sales, compared with $87.0 million, or 15% of Coeur’s metal sales. Revenue decreased by $0.4 million, or 0%, of which $6.3 million was due to a lower volume of silver production, partially offset by an increase of $5.9 million due to higher average realized gold and silver prices. Costs applicable to sales per gold and silver ounce decreased 15% and 9%, respectively, due to the mix of gold and silver sales, lower LCM adjustments of $22.4 million compared to $38.0 million in the prior period, lower diesel costs, partially offset by higher employee-related, and maintenance costs. Amortization decreased to $13.0 million due to longer assumed mine life. Capital expenditures increased to $197.8 million from $154.0 million due to timing of payments related to the Rochester expansion project. Construction of the new three-stage crushing circuit is now complete and first production from the new leach pad and process plant began in mid-September. Commissioning of the process plant is complete and commissioning of the new crusher corridor is underway, with ramp-up expected throughout the remainder of 2023 and into the first half of 2024. Once operating at full capacity, throughput levels are expected to average 32 million tons per year, which is approximately 2.5 times higher than historical levels, making Rochester one of the largest open pit heap leach operations in the world. The total estimated capital for the project remains at $710 - $730 million. 33 Kensington Three Months Ended Nine Months Ended September 30, 2023 June 30, 2023 September 30, 2023 September 30, 2022 Tons milled 167,950 152,907 474,194 516,936 Average gold grade (oz/t) 0.16 0.09 0.13 0.16 Average recovery rate 92.6 % 90.9 % 91.7 % 92.5 % Gold ounces produced 24,614 13,193 58,103 78,726 Gold ounces sold 24,516 13,273 58,691 78,109 CAS per gold ounce (1) $ 1,559 $ 2,945 $ 1,953 $ 1,484 (1) See Non-GAAP Financial Performance Measures. Three Months Ended September 30, 2023 compared to Three Months Ended June 30, 2023 Gold production increased 87% as a result of 78% higher grades and 10% higher milled throughput. Metal sales were $46.5 million, or 24% of Coeur’s metal sales, compared to $24.6 million, or 14% of Coeur’s metal sales. Revenue increased by $21.9 million, or 89%, of which $21.4 million resulted from a higher volume of gold production, and $0.5 million due to higher average realized gold prices. Costs applicable to sales per gold ounce decreased 47% due to higher production. Amortization increased to $6.9 million primarily due to an increase in gold ounces sold. Capital expenditures increased to $15.8 million from $11.7 million due to higher underground development. Nine Months Ended September 30, 2023 compared to Nine Months Ended September 30, 2022 Gold production decreased 26% as a result of 8% lower throughput primarily due to challenges with mine sequencing and stope extraction as well as lower grades and recoveries. Metal sales were $111.3 million, or 20% of Coeur’s metal sales, compared to $143.7 million, or 25% of Coeur’s metal sales. Revenue decreased by $32.3 million, or 23%, of which $36.6 million resulted from a lower volume of gold production, partially offset by an increase of $4.2 million due to higher average realized gold prices. Costs applicable to sales per gold ounce increased 32% due to lower production partially offset by lower diesel and employee-related costs. Amortization decreased to $17.5 million primarily due to a decrease in gold ounces sold and longer assumed mine life. Capital expenditures increased to $38.2 million from $23.8 million due to higher infill drilling and underground development. Wharf Three Months Ended Nine Months Ended September 30, 2023 June 30, 2023 September 30, 2023 September 30, 2022 Tons placed 1,254,267 1,041,846 3,452,907 3,530,855 Average gold grade (oz/t) 0.023 0.022 0.026 0.020 Gold ounces produced 22,674 25,683 63,827 59,900 Silver ounces produced 68,724 88,499 178,330 36,318 Gold ounces sold 23,049 25,117 63,811 59,041 Silver ounces sold 73,677 82,013 179,646 29,897 CAS per gold ounce (1) $ 1,268 $ 1,031 $ 1,224 $ 1,244 (1) See Non-GAAP Financial Performance Measures. Three Months Ended September 30, 2023 compared to Three Months Ended June 30, 2023 Gold production decreased 12% driven by timing of recoveries. Metal sales were $47.1 million, or 24% of Coeur’s metal sales, compared to $50.8 million, or 29% of Coeur’s metal sales. Revenue decreased by $3.7 million, or 7%, of which $4.3 million was due to a lower gold production, partially offset by an increase of $0.6 million due to higher average realized gold prices. Costs applicable to sales per gold ounce increased 23% due to lower production and higher operating costs. Amortization decreased to $1.6 million due to a decrease in gold ounces sold. Capital expenditures were $0.7 million. Nine Months Ended September 30, 2023 compared to Nine Months Ended September 30, 2022 Gold production increased 7% driven by higher grades. Metal sales were $128.8 million, or 23% of Coeur’s metal sales, compared to $110.9 million, or 19% of Coeur’s metal sales. Revenue increased by $17.9 million, or 16%, of which $12.9 34 million was due to a higher volume of gold production, and $5.0 million due to higher average realized gold prices. Costs applicable to sales per gold ounce decreased 2% due to lower operating costs driven by lower diesel and other consumable costs. Amortization decreased to $4.8 million due to longer assumed mine life. Capital expenditures were $1.0 million. Silvertip Nine Months Ended September 30, 2023 Ongoing carrying costs at Silvertip totaled $13.6 million in the nine months ended September 30, 2023 and $15.5 million in 2022. Capital expenditures in 2023 totaled $1.4 million compared to $21.4 million in the prior year due to planned reduction in capital development expenditures. Since acquisition, exploration at Silvertip has been consistently successful, with demonstrated resource growth. Multiple new zones have been discovered, resulting in significant increases in resources. In addition, the full geochemical and metal zonation of the deposit is being studied including the critical minerals indium, germanium and gallium that are present in the ore body. The Company anticipates a slower overall timeline to advance the Silvertip project, with the primary focus on growth and achieving a better understanding of the overall deposit. Consistent with Silvertip’s status as a long-term exploration project, the Company reclassified its mineral reserves to measured and indicated resources as of year-end 2022. Coeur focused on compiling, analyzing and interpreting historical data during the first nine months of the year to increase the understanding of the geological context and mineralization system. Significant work on logging, data collection, analysis and interpretation is ongoing as part of this effort. A new detailed geological model will be compiled to support year-end resource calculations at the end of 2023. Liquidity and Capital Resources At September 30, 2023, the Company had $54.9 million of cash, cash equivalents and restricted cash and $220.4 million available under the RCF. Future borrowing under the RCF may be subject to certain financial covenants. Cash and cash equivalents decreased $8.2 million in the nine months ended September 30, 2023, due to 11% and 2% decrease in gold and silver ounces sold, respectively, $271.9 million of capital expenditures primarily related to the Rochester expansion project and higher costs at our operations due to continued inflationary pressures, partially offset by aggregate net proceeds of $147.7 million from the sale of 54.6 million shares of its common stock in the March 2023 Equity Offering and September 2023 Equity Offering, $39.8 million received from the sale of 6.0 million shares of common stock of Victoria Gold (“Victoria Gold Common Shares”), and net proceeds of $28.7 million from the sale of 8.3 million shares of its common stock in the Private Placement Offering (as defined below). Additionally, the Company received net proceeds of $7.0 million from the sale of the La Preciosa Deferred Consideration, $5.0 million received from the Avino note receivable, net proceeds of $1.8 million from the sale of common stock of Integra Resources Corporation, and a 5% and 9% increase in average realized gold and silver prices, respectively. At September 30, 2023, the Company had $140.0 million drawn, $29.6 million in outstanding letters of credit and $220.4 million available under the RCF. On August 9, 2023, the Company entered into an amendment (the “August Amendment”) to the RCF. The August Amendment, among other things, (1) modifies the financial covenants to provide greater flexibility during the final stages of the Rochester expansion under (a) the consolidated net leverage and consolidated senior secured leverage ratios at September 30, 2023 through the March 31, 2024, with the ratios returning to the previous levels at June 30, 2024 and (b) the consolidated interest coverage ratio at June 30 through September 30, 2023, with the ratio returning to the previous level at December 31, 2023, (2) allows up to $50 million, through June 30, 2024, stepping down to $40 million in September 31, 2024, $30 million in December 31, 2024 and $15 million thereafter, for integration costs or costs associated with establishing new facilities and certain costs associated with LCM adjustments at Rochester to be excluded from the calculation of Consolidated EBITDA for purposes of the RCF, (3) increases the interest rate on certain borrowings through June 30, 2024, and (4) restricts certain acquisitions through March 31, 2024. In January 2023, the Company completed the sale of 6.0 million Victoria Gold Common Shares at a price of $6.70 per Victoria Gold Common Share, for net proceeds of $39.8 million. At September 30, 2023, the Company held $7.2 million of equity securities. In May 2023, the Company sold 3.7 million shares of common stock of Integra Resources Corporation (“Integra Common Shares”) at a price of $0.48 per share, for net proceeds of $1.8 million. 35 In March 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 Company sold a total of 32,861,580 shares of 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. In June 2023, the Company sold a total of 5,276,154 shares of its common stock (“Private Placement Offering”) issued as “flow-through shares” as defined in subsection 66(15) of the Income Tax Act (Canada) (the “FT Shares”), raising net proceeds of $18.2 million, of which $5.1 million represents net proceeds received in excess of the Company’s average price (“FT Premium Liability”). The proceeds of the issuance of FT Shares will be used by the Company for certain qualifying “Canadian Exploration Expenditures” (as such term is defined in the Income Tax Act (Canada)). The Company granted an over-allotment option of up to 3,000,000 additional flow-through shares, which was exercised in full and closed on July 20, 2023. The over-allotment option raised net proceeds of $10.5 million, including an additional $2.7 million of FT Premium Liability. In September 2023, the Company completed a $50.0 million “at the market” offering of its common stock, par value $0.01 per share (the “September 2023 Equity Offering”). The Company sold a total of 21,699,856 shares of its common stock in the September 2023 Equity Offering at an average price of $2.30 per share, raising net proceeds (after sales commissions) of $49.3 million. The Company had outstanding forward contracts on 55,749 ounces of gold and 1.2 million ounces of silver at September 30, 2023 that settle monthly through December 2023. The Company is targeting to hedge up to 70% of expected gold production and 50% of expected silver production for 2023 in order to protect cash flow during a period of elevated capital expenditures and may in the future layer on additional hedges as circumstances warrant. The weighted average fixed price on the forward contracts is $1,977 per ounce of gold and $25.47 per ounce of silver. In the first nine months of 2023, the Company exchanged $67.8 million in aggregate principal amount plus accrued interest of 2029 Senior Notes for 21.6 million shares of common stock. We currently believe we have sufficient sources of funding to meet our business requirements for the next twelve months and longer-term. We expect to use a combination of cash provided by operating activities under-pinned by our gold and silver hedging programs, additional equity financing, and borrowings under our RCF depending on future commodity prices to fund near term capital requirements, including those described in this report for the Rochester expansion project and in our 2023 capital expenditure guidance. Our longer-term plans contemplate the expansion and restart of Silvertip, as well as the continued exploration to extend mine lives at all of our operating sites. We also have additional obligations as part of our ordinary course of business, beyond those committed for capital expenditures and other purchase obligations and commitments for purchases of goods and services. If and to the extent liquidity resources are insufficient to support short- and long-term expenditures, we may need to incur additional indebtedness or issue additional equity securities, among other financing options, which may not be available on acceptable terms or at all. This could have a material adverse impact on the Company, as discussed in more detail under Item 1A – Risk Factors in the 2022 10-K and Part II, Item 1A of this Report. Cash Provided by (Used in) Operating Activities Net cash used in operating activities for the three months ended September 30, 2023 was $2.4 million, compared to net cash provided by operating activities of $39.4 million for the three months ended June 30, 2023. Net cash provided by operating activities for the nine months ended September 30, 2023 was $2.0 million, compared to net cash used in operating activities of $2.9 million for the nine months ended September 30, 2022. Adjusted EBITDA for the three months ended September 30, 2023 was $30.6 million, compared to $22.2 million for the three months ended June 30, 2023. Adjusted EBITDA for the nine months ended September 30, 2023 was $78.0 million, compared to $103.2 million for the nine months ended September 30, 2022 (see “Non-GAAP Financial Performance Measures”). Net cash provided by operating activities was impacted by the following key factors for the applicable periods: 36 Three Months Ended Nine Months Ended In thousands September 30, 2023 June 30, 2023 September 30, 2023 September 30, 2022 Cash flow before changes in operating assets and liabilities $ 14,187 $ (6,920) $ 13,490 $ 52,224 Changes in operating assets and liabilities: Receivables (478) (913) 1,659 4,099 Prepaid expenses and other (3,000) 4,260 764 939 Inventories (18,620) (18,738) (54,993) (42,650) Accounts payable and accrued liabilities 5,528 61,708 41,091 (17,512) Cash provided by (used in) operating activities $ (2,383) $ 39,397 $ 2,011 $ (2,900) Net cash provided operating activities decreased $41.8 million for the three months ended September 30, 2023 compared to the three months ended June 30, 2023, primarily as a result of a 5% decrease in silver ounces sold, a 1% decrease in average realized gold prices, higher exploration costs of $9.5 million, lower metal sales prepayments of $15.0 million received in the third quarter of 2023, and the timing of interest payments, partially offset by a 16% increase gold ounces sold and a 4% increase in average realized silver prices. Revenue for the three months ended September 30, 2023 compared to the three months ended June 30, 2023 increased by $17.3 million, of which $16.5 million was due to the higher volume of gold sales, and $0.9 million as the result of higher average realized silver prices. Net cash provided by operating activities increased $4.9 million for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily due to a 5% and 9% increase in average realized gold and silver prices, respectively, the receipt of $30.0 million of prepayments in the third quarter of 2023, and the receipt of $7.8 million FT Premium Liability, partially offset by a 11% and 2% decrease in gold and silver ounces sold, respectively, higher operating and costs, and timing of VAT collections at Palmarejo. Revenue for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 decreased by $16.4 million, of which $49.9 million was due to a lower volume of gold and silver sales, partially offset by $33.5 million as the result of higher average realized gold and silver prices. Cash Provided by Investing Activities Net cash used in investing activities in the three months ended September 30, 2023 was $112.2 million compared to $75.6 million in the three months ended June 30, 2023. Cash used in investing activities increased primarily due to higher capital expenditures and net proceeds of $7.0 million received from the sale of the La Preciosa Deferred Consideration, and net proceeds of $1.8 million from the sale of common stock of Integra Resources Corporation in the second quarter of 2023. The Company incurred capital expenditures of $112.3 million in the three months ended September 30, 2023 compared with $85.6 million in the three months ended June 30, 2023 primarily related to POA 11 construction activities at Rochester and underground development at Palmarejo and Kensington in both periods. Net cash used in investing activities in the nine months ended September 30, 2023 was $217.1 million compared to $182.9 million in the nine months ended September 30, 2022. Cash used in investing activities increased due to higher capital expenditures and the receipt of net proceeds of $15.3 million from the sale of the La Preciosa project in 2022, partially offset by net proceeds of $7.0 million received from the sale of the La Preciosa Deferred Consideration, $5.0 million received from the collection of amounts due under the promissory note issued in connection with the sale of the La Preciosa project, and net proceeds of $1.8 million from the sale of common stock of Integra Resources Corporation. The Company incurred capital expenditures of $271.9 million in the nine months ended September 30, 2023 compared with $239.3 million in the nine months ended September 30, 2022 primarily related to POA 11 construction activities at Rochester and underground development at Palmarejo and Kensington in both periods. Cash Provided by Financing Activities Net cash provided by financing activities in the three months ended September 30, 2023 was $111.2 million compared to $25.9 million in the three months ended June 30, 2023. During the three months ended September 30, 2023, the Company drew $60.0 million, net, under the RCF, received net proceeds of $49.3 million from the sale of 21.7 million shares of its common stock in the September 2023 Equity Offering, and received net proceeds of $7.8 million from the sale of 3.0 million shares of its common stock issued as the FT Shares. During the three months ended June 30, 2023, the Company drew $20.0 million, net, under the RCF, and received net proceeds of $13.1 million from the sale of 5.3 million shares of its common stock issued as the FT Shares. 37 Net cash provided by financing activities in the nine months ended September 30, 2023 was $206.5 million compared to $204.3 million in the nine months ended September 30, 2022. During the nine months ended September 30, 2023, the Company drew $60.0 million, net, under the RCF, received aggregate net proceeds of $147.7 million from the sale of 54.6 million shares of its common stock in the March 2023 Equity Offering and September 2023 Equity Offering, and received net proceeds of $20.9 million from the sale of 8.3 million shares of its common stock in the Private Placement Offering. During the nine months ended September 30, 2022, the Company drew $135.0 million, net, from the RCF, and received net proceeds of $98.3 million from the sale of 22.1 million shares of its common stock in the March 2022 Equity Offering. Critical Accounting Policies and Accounting Developments See Note 2 - Summary of Significant Accounting Policies contained in the 2022 10-K and Note 2 - Summary of Significant Accounting Policies contained in this Report for the Company’s critical accounting policies and estimates. Other Liquidity Matters We believe that our liquidity and capital resources in the U.S. are adequate to fund our U.S. operations and corporate activities. The Company has asserted indefinite reinvestment of earnings from its Mexican operations as determined by management’s judgment about and intentions concerning the future operations of the Company. The Company does not believe that the amounts reinvested will have a material impact on liquidity. In order to reduce indebtedness, fund future cash interest payments and/or amounts due at maturity or upon redemption and for general working capital purposes, from time-to-time we may (1) issue equity securities for cash in public or private offerings or (2) repurchase certain of our debt securities for cash or in exchange for other securities, which may include secured or unsecured notes or equity, in each case in open market or privately negotiated transactions. We evaluate any such transactions in light of prevailing market conditions, liquidity requirements, contractual restrictions, and other factors. The amounts involved may be significant and any debt repurchase transactions may occur at a substantial discount to the debt securities’ face amount. Non-GAAP Financial Performance Measures Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by generally accepted accounting principles (“GAAP”). Unless otherwise noted, we present the Non-GAAP financial measures in the tables below. These measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP. Adjusted Net Income (Loss) Management uses Adjusted net income (loss) to evaluate the Company’s operating performance, and to plan and forecast its operations. The Company believes the use of Adjusted net income (loss) reflects the underlying operating performance of our core mining business and allows investors and analysts to compare results of the Company to similar results of other mining companies. Management’s determination of the components of Adjusted net income (loss ) are evaluated periodically and is based, in part, on a review of non-GAAP financial measures used by mining industry analysts. The tax effect of adjustments are based on statutory tax rates and the Company’s tax attributes, including the impact through the Company’s valuation allowance. The combined effective rate of tax adjustments may not be consistent with the statutory tax rates or the Company’s effective tax rate due to jurisdictional tax attributes and related valuation allowance impacts which may minimize the tax effect of certain adjustments and may not apply to gains and losses equally. Adjusted net income (loss) is reconciled to Net income (loss) in the following table: 38 Three Months Ended Nine Months Ended In thousands except per share amounts September 30, 2023 June 30, 2023 September 30, 2023 September 30, 2022 Net income (loss) $ (21,109) $ (32,412) $ (78,107) $ (127,196) Fair value adjustments, net 2,010 3,922 (4,629) 65,272 Foreign exchange loss (gain) 5 154 2,149 1,190 (Gain) loss on sale of assets and securities 19 12,622 12,650 (2,365) RMC bankruptcy distribution — (1,516) (1,516) — Gain on debt extinguishment (774) (2,961) (3,735) — COVID-19 costs 14 21 92 1,585 Other adjustments 1,439 1,137 2,647 (360) Tax effect of adjustments (1) (223) (1,120) (1,380) (9,733) Adjusted net income (loss) $ (18,619) $ (20,153) $ (71,829) $ (71,607) Adjusted net income (loss) per share, Basic $ (0.05) $ (0.06) $ (0.22) $ (0.26) Adjusted net income (loss) per share, Diluted $ (0.05) $ (0.06) $ (0.22) $ (0.26) (1) For the three months ended September 30, 2023, tax effect of adjustments of $0.2 million (-8%) is primarily related to fair value adjustments on the Company’s equity investments, and LCM adjustment recorded at Rochester. For the three months ended June 30, 2023, tax effect of adjustments of $1.1 million (-9%) is primarily related to fair value adjustments on the Company’s equity investments, loss on the sale of the La Preciosa Deferred Consideration and LCM adjustment recorded at Rochester. For the nine months ended September 30, 2023, tax effect of adjustments of $1.4 million (-25%) is primarily related to the fair value adjustments on the Company’s equity investments, loss on the sale of the La Preciosa Deferred Consideration and LCM adjustment recorded at Rochester. For the nine months ended September 30, 2022, tax effect of adjustments of $9.7 million (-15%) is primarily related to the to the fair value adjustments on the Company’s equity investments and the derecognition of deferred tax liabilities related to the sale of La Preciosa. EBITDA and Adjusted EBITDA Management uses EBITDA to evaluate the Company’s operating performance, to plan and forecast its operations, and assess leverage levels and liquidity measures. The Company believes the use of EBITDA reflects the underlying operating performance of our core mining business and allows investors and analysts to compare results of the Company to similar results of other mining companies. Adjusted EBITDA is a measure used in the indenture governing the 2029 Senior Notes and the RCF to determine our ability to make certain payments and incur additional indebtedness. EBITDA and Adjusted EBITDA do not represent, and should not be considered an alternative to, Net income (Loss) or Cash Flow from Operations as determined under GAAP. Other companies may calculate Adjusted EBITDA differently and those calculations may not be comparable to our presentation. Adjusted EBITDA is reconciled to Net income (loss) in the following table: 39 Three Months Ended Nine Months Ended In thousands except per share amounts September 30, 2023 June 30, 2023 September 30, 2023 September 30, 2022 Net income (loss) $ (21,109) $ (32,412) $ (78,107) $ (127,196) Interest expense, net of capitalized interest 7,402 6,912 21,703 15,670 Income tax provision (benefit) 6,097 9,866 26,671 15,079 Amortization 22,884 19,595 65,187 83,549 EBITDA 15,274 3,961 35,454 (12,898) Fair value adjustments, net 2,010 3,922 (4,629) 65,272 Foreign exchange (gain) loss (421) (627) 107 972 Asset retirement obligation accretion 4,153 4,073 12,219 10,588 Inventory adjustments and write-downs 8,934 1,603 24,723 40,360 (Gain) loss on sale of assets and securities 19 12,622 12,650 (2,365) RMC bankruptcy distribution — (1,516) (1,516) — Gain on debt extinguishment (774) (2,961) (3,735) — COVID-19 costs 14 21 92 1,585 Other adjustments 1,439 1,137 2,647 (360) Adjusted EBITDA $ 30,648 $ 22,235 $ 78,012 $ 103,154 Free Cash Flow Management uses Free Cash Flow as a non-GAAP measure to analyze cash flows generated from operations. Free Cash Flow is Cash Provided By (used in) Operating Activities less Capital expenditures as presented on the Condensed Consolidated Statements of Cash Flows. The Company believes Free Cash Flow is also useful as one of the bases for comparing the Company’s performance with its competitors. Although Free Cash Flow and similar measures are frequently used as measures of cash flows generated from operations by other companies, the Company’s calculation of Free Cash Flow is not necessarily comparable to such other similarly titled captions of other companies. The following table sets forth a reconciliation of Free Cash Flow, a non-GAAP financial measure, to Cash Provided By (used in) Operating Activities , which the Company believes to be the GAAP financial measure most directly comparable to Free Cash Flow. Three Months Ended Nine Months Ended (Dollars in thousands) September 30, 2023 June 30, 2023 September 30, 2023 September 30, 2022 Cash flow from operations $ (2,383) $ 39,397 $ 2,011 $ (2,900) Capital expenditures 112,273 85,581 271,902 239,260 Free cash flow $ (114,656) $ (46,184) $ (269,891) $ (242,160) Operating Cash Flow Before Changes in Working Capital Management uses Operating Cash Flow Before Changes in Working Capital as a non-GAAP measure to analyze cash flows generated from operations. Operating Cash Flow Before Changes in Working Capital is Cash Provided By (used in) Operating Activities excluding the change in Receivables , Prepaid expenses and other , Inventories and Accounts payable and accrued liabilities as presented on the Consolidated Statements of Cash Flows. The Company believes Operating Cash Flow Before Changes in Working Capital is also useful as one of the bases for comparing the Company’s performance with its competitors. Although Operating Cash Flow Before Changes in Working Capital and similar measures are frequently used as measures of cash flows generated from operations by other companies, the Company’s calculation of Operating Cash Flow Before Changes in Working Capital is not necessarily comparable to such other similarly titled captions of other companies. The following table sets forth a reconciliation of Operating Cash Flow Before Changes in Working Capital, a non-GAAP financial measure, to Cash Provided By (used in) Operating Activities , which the Company believes to be the GAAP financial measure most directly comparable to Operating Cash Flow Before Changes in Working Capital. 40 Three Months Ended Nine Months Ended (Dollars in thousands) September 30, 2023 June 30, 2023 September 30, 2023 September 30, 2022 Cash provided by (used in) operating activities $ (2,383) $ 39,397 $ 2,011 $ (2,900) Changes in operating assets and liabilities: Receivables 478 913 (1,659) (4,099) Prepaid expenses and other 3,000 (4,260) (764) (939) Inventories 18,620 18,738 54,993 42,650 Accounts payable and accrued liabilities (5,528) (61,708) (41,091) 17,512 Operating cash flow before changes in working capital $ 14,187 $ (6,920) $ 13,490 $ 52,224 Costs Applicable to Sales Management uses CAS to evaluate the Company’s current operating performance and life of mine performance from discovery through reclamation. We believe these measures assist analysts, investors and other stakeholders in understanding the costs associated with producing gold and silver, assessing our operating performance and ability to generate free cash flow from operations and sustaining production. These measures may not be indicative of operating profit or cash flow from operations as determined under GAAP. Management believes that allocating CAS to gold and silver based on gold and silver metal sales relative to total metal sales best allows management, analysts, investors and other stakeholders to evaluate the operating performance of the Company. Other companies may calculate CAS differently as a result of reflecting the benefit from selling non-silver metals as a by-product credit, converting to silver equivalent ounces, and differences in underlying accounting principles and accounting frameworks such as in International Financial Reporting Standards. Three Months Ended September 30, 2023 In thousands (except metal sales, per ounce or per pound amounts) Palmarejo Rochester Kensington Wharf Silvertip Total Costs applicable to sales, including amortization (U.S. GAAP) $ 57,083 $ 34,708 $ 45,180 $ 32,614 $ 919 $ 170,504 Amortization (9,024) (4,176) (6,894) (1,588) (919) (22,601) Costs applicable to sales $ 48,059 $ 30,532 $ 38,286 $ 31,026 $ — $ 147,903 Metal Sales Gold ounces 26,018 4,432 24,516 23,049 — 78,015 Silver ounces 1,533,975 606,083 — 73,677 — 2,213,735 Costs applicable to sales Gold ($/oz) $ 924 $ 2,549 $ 1,559 $ 1,268 Silver ($/oz) $ 15.67 $ 31.74 $ — Three Months Ended June 30, 2023 In thousands (except metal sales, per ounce or per pound amounts) Palmarejo Rochester Kensington Wharf Silvertip Total Costs applicable to sales, including amortization (U.S. GAAP) $ 54,608 $ 29,717 $ 43,950 $ 29,634 $ 1,021 $ 158,930 Amortization (8,017) (3,649) (4,801) (1,805) (1,021) (19,293) Costs applicable to sales $ 46,591 $ 26,068 $ 39,149 $ 27,829 $ — $ 139,637 Metal Sales Gold ounces 22,207 6,493 13,273 25,117 — 67,090 Silver ounces 1,560,743 694,657 — 82,013 — 2,337,413 Costs applicable to sales Gold ($/oz) $ 1,028 $ 1,726 $ 2,945 $ 1,031 Silver ($/oz) $ 15.22 $ 21.39 $ — 41 Nine Months Ended September 30, 2023 In thousands (except metal sales, per ounce and per pound amounts) Palmarejo Rochester Kensington Wharf Silvertip Total Costs applicable to sales, including amortization (U.S. GAAP) $ 169,675 $ 112,508 $ 132,356 $ 87,201 $ 3,161 $ 504,901 Amortization (25,760) (13,043) (17,539) (4,802) (3,161) (64,305) Costs applicable to sales $ 143,915 $ 99,465 $ 114,817 $ 82,399 $ — $ 440,596 Metal Sales Gold ounces 74,195 19,274 58,691 63,811 215,971 Silver ounces 4,889,877 2,070,544 — 179,646 — 7,140,067 Costs applicable to sales Gold ($/oz) $ 950 $ 2,219 $ 1,953 $ 1,224 Silver ($/oz) $ 15.01 $ 27.38 $ — Nine Months Ended September 30, 2022 In thousands (except metal sales, per ounce and per pound amounts) Palmarejo Rochester Kensington Wharf Silvertip Total Costs applicable to sales, including amortization (U.S. GAAP) $ 162,682 $ 137,580 $ 144,870 $ 80,596 $ 3,778 $ 529,506 Amortization (27,150) (16,592) (28,360) (6,500) (3,778) (82,380) Costs applicable to sales $ 135,532 $ 120,988 $ 116,510 $ 74,096 $ — $ 447,126 Metal Sales Gold ounces 81,905 22,724 78,109 59,041 241,779 Silver ounces 5,205,011 2,054,176 — 29,897 — 7,289,084 Costs applicable to sales Gold ($/oz) $ 844 $ 2,609 $ 1,484 $ 1,244 Silver ($/oz) $ 12.76 $ 30.04 $ — Reconciliation of Costs Applicable to Sales for Updated 2023 Guidance In thousands (except metal sales, per ounce or per pound amounts) Palmarejo Kensington Wharf Costs applicable to sales, including amortization (U.S. GAAP) $ 232,269 $ 181,642 $ 114,698 Amortization (36,538) (26,295) (6,330) Costs applicable to sales $ 195,731 $ 155,347 $ 108,368 By-product credit — (193) (5,288) Adjusted costs applicable to sales $ 195,731 $ 155,154 $ 103,080 Metal Sales Gold ounces 99,719 83,310 89,109 Silver ounces 6,558,482 221,306 Revenue Split Gold 49% 100% 100% Silver 51% Adjusted costs applicable to sales Gold ($/oz) $900 - $1,050 $1,850 - $1,950 $1,200 - $1,350 Silver ($/oz) $14.25 - $15.25 42 Cautionary Statement Concerning Forward-Looking Statements This Report contains numerous forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) relating to the Company’s gold and silver mining business, including statements regarding operations and activities at the Company’s properties, exploration and development efforts, mine lives, strategies, expectations regarding the Rochester expansion project (including future LCM adjustments), the tax treatment of the FT Shares and the risk that related exploration efforts at Silvertip will not occur on a timely basis or at all, inflation, hedging strategies, realization of deferred tax assets, expectations about the recovery of unduly paid VAT in Mexico, timing of completion of obligations under prepayment agreements, liquidity management, financing plans, risk management strategies, capital allocation and anticipated production, costs, expenses, and cash flow. Such forward-looking statements are identified by the use of words such as “believes,” “intends,” “expects,” “hopes,” “may,” “should,” “plan,” “projected,” “contemplates,” “anticipates” or similar words. Actual results could differ materially from those projected in the forward-looking statements. The factors that could cause actual results to differ materially from those projected in the forward-looking statements include (i) the risk factors set forth in Part II, Item 1A of this Report and in the Q1 2023 10-Q, the Q2 2023 10-Q and in “Risk Factors” section of the 2022 10-K, and the risks set forth in this MD&A and Item 3 of this Report, (ii) the risks and hazards inherent in the mining business (including risks inherent in developing large-scale mining projects, environmental hazards, industrial accidents, weather or geologically related conditions), (iii) changes in the market prices of gold and silver and a sustained lower price or higher treatment and refining charge environment, (iv) the uncertainties inherent in the Company’s production, exploratory and developmental activities, including risks relating to permitting and regulatory delays (including the impact of government shutdowns), mining law changes, ground conditions and grade and recovery variability, (v) any future labor disputes or work stoppages (involving the Company and its subsidiaries or third parties), (vi) the uncertainties inherent in the estimation of mineral reserves and resources, (vii) changes that could result from the Company’s future acquisition of new mining properties or businesses, (viii) the loss of access to any third-party smelter or refiner to whom the Company markets its production, (ix) the potential effects of the COVID-19 pandemic, equipment and materials availability, and inflationary pressures, (x) the effects of environmental and other governmental regulations, (xi) the risks inherent in the ownership or operation of or investment in mining properties or businesses in foreign countries, (xii) breaches or lapses in the security of technology systems on which the Company relies, which could compromise the data stored within them, as well as failure to comply with ever-evolving global privacy and security regulatory obligations, and (xiii) the Company’s ability to raise additional financing necessary to conduct its business, make payments or refinance its debt. Readers are cautioned not to put undue reliance on forward-looking statements. The Company disclaims any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.