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. Second Quarter Highlights For the quarter, Coeur reported revenue of $222.0 million and cash provided by operating activities of $15.2 million. We reported GAAP net income of $1.4 million, or $0.00 per diluted share. On a non-GAAP adjusted basis 1 , the Company reported EBITDA of $52.4 million and net loss of $3.4 million, or $0.01 per diluted share. For the six months ended June 30, 2024, Coeur reported revenue of $435.1 million and cash used in operating activities of $0.6 million. We reported GAAP net loss of $27.7 million, or $0.07 per diluted share. On a non-GAAP adjusted basis 1 , the Company reported EBITDA of $96.7 million and net loss of $22.4 million or $0.06 per diluted share. • Recently expanded Rochester achieves mid-year target run rates – Rochester successfully completed ramp-up activities by achieving throughput rates of over 88,000 tons per day. Annual throughput levels are expected to be approximately 2.5 times higher than historical levels, or roughly 32 million tons per year, leading to expected strong increases in production and free cash flow and substantially lower unit costs. Rochester’s second quarter silver and gold production both increased 39% compared to the first quarter • Higher prices drove strong revenue and adjusted EBITDA 1 increases – The Company’s average realized gold and silver prices increased by approximately 11% and 10% year-over-year, respectively. Together with a 76% year-over-year increase in gold production at Kensington, second quarter revenue increased 25% and adjusted EBITDA 1 jumped 136% year-over-year. • Continued positive results from Kensington’s multi-year exploration program – The Company’s June 27, 2024 update highlighted Kensington’s successful multi-year development and exploration program, which is expected to be completed in the first half of 2025 and is targeting a year-end reserves-based mine life of over five years at year-end 2024 and a return to positive free cash flow during the second half of next year • Closed the acquisition of key concessions near Palmarejo – On July 8, 2024, the purchase of two strategic blocks of mining concessions adjacent to the Palmarejo gold-silver complex was completed. The purchase from a subsidiary of Fresnillo plc (“Fresnillo”) unlocks significant near-term and longer-term potential to extend Palmarejo’s mine life to the east of the existing operation • Hedging program concluded - The Company’s gold and silver hedging program that was utilized during the construction and ramp-up of Rochester was completed during the second quarter; Coeur is fully exposed to commodity prices going forward • Silvertip summer exploration program now underway - The robust 2024 program includes large step-out drilling on known structures, significant mapping and sampling, and geophysics to rapidly explore a wider portion of the permitted ground. The program aims to grow near-mine resources through underground drilling, take large step-outs on known structures to assist with rapid resource growth, identify the outer edges of the system, and identify additional, nearby structures with potential to host mineralization similar to Silvertip • 2024 production guidance ranges maintained; cost guidance adjusted - The Company is maintaining its full-year production guidance ranges of 310,000 - 355,000 gold ounces and 10.7 - 13.3 million silver ounces. Full-year CAS 1 guidance at Palmarejo and Wharf have been reduced to reflect strong cost management efforts, while Rochester’s second half CAS 1 guidance ranges have been increased to reflect timing of ounces placed under leach. Additionally, the Company is increasing its full-year exploration guidance to reflect additional investment at Wharf and Kensington based on recent results, while capital expenditure guidance is being increased to reflect the accelerated timing of certain equipment purchases and final payments related to the Rochester expansion 25 Selected Financial and Operating Results Three Months Ended Six Months Ended June 30, 2024 March 31, 2024 June 30, 2024 June 30, 2023 Financial Results: (in thousands, except per share amounts) Gold sales $ 154,085 $ 151,769 $ 305,854 $ 248,456 Silver sales $ 67,941 $ 61,291 $ 129,232 $ 116,077 Consolidated Revenue $ 222,026 $ 213,060 $ 435,086 $ 364,533 Net income (loss) $ 1,426 $ (29,117) $ (27,691) $ (56,998) Net income (loss) per share, diluted $ 0.00 $ (0.08) $ (0.07) $ (0.18) Adjusted net income (loss) (1) $ (3,405) $ (19,021) $ (22,426) $ (53,211) Adjusted net income (loss) per share, diluted (1) $ (0.01) $ (0.05) $ (0.06) $ (0.17) EBITDA (1) $ 49,705 $ 27,151 $ 76,856 $ 20,180 Adjusted EBITDA (1) $ 52,407 $ 44,339 $ 96,746 $ 47,362 Total debt (2) $ 629,327 $ 585,552 $ 629,327 $ 469,386 Operating Results: Gold ounces produced 78,696 80,744 159,440 137,445 Silver ounces produced 2,637,950 2,584,760 5,222,710 4,923,024 Gold ounces sold 76,932 81,416 158,348 137,956 Silver ounces sold 2,592,727 2,600,435 5,193,162 4,926,332 Average realized price per gold ounce $ 2,003 $ 1,864 $ 1,932 $ 1,801 Average realized price per silver ounce $ 26.20 $ 23.57 $ 24.89 $ 23.56 (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 June 30, 2024 compared to Three Months March 31, 2024 Revenue We sold 76,932 gold ounces and 2.6 million silver ounces, compared to 81,416 gold ounces and 2.6 million silver ounces. Revenue increased by $9.0 million, or 4%, as a result of a 7% and 11% increase in average realized gold and silver prices, respectively, partially offset by a 6% decrease in gold ounces sold, while silver ounces sold remained comparable. The Company benefited from the higher gold and silver spot prices that were partially offset by higher realized losses from gold and silver hedges in the second quarter of 2024. The Company’s hedge program was concluded as of June 30, 2024. The higher grade and the ramp-up of the new three-stage crusher at Rochester, and higher mill throughput and grade at Kensington increased gold ounces sold but that was more than offset by lower mill throughput and grade at Palmarejo. Silver ounces sold remained comparable with Palmarejo’s lower mill throughput being offset by the successful ramp-up at Rochester. Gold and silver represented 69% and 31% of second quarter 2024 sales revenue, respectively, compared to 71% and 29% of first quarter 2024 sales revenue, respectively. The following table summarizes consolidated metal sales: Three Months Ended Increase (Decrease) Percentage Change In thousands June 30, 2024 March 31, 2024 Gold sales $ 154,085 $ 151,769 $ 2,316 2 % Silver sales 67,941 61,291 6,650 11 % Metal sales $ 222,026 $ 213,060 $ 8,966 4 % 26 Costs Applicable to Sales Costs applicable to sales decreased $1.3 million, or 1%, primarily due to lower gold ounces sold, favorable foreign exchange rates at Palmarejo, and a lower of cost or net realizable value (“LCM”) adjustment at Rochester in the first quarter of 2024. For a complete discussion of costs applicable to sales, see Results of Operations below. Amortization Amortization increased $0.6 million, or 2%, primarily due to higher gold and silver ounces sold at Rochester and higher gold ounces sold at Kensington, partially offset by lower gold and silver ounces sold at Palmarejo and a lower LCM adjustment at Rochester in the first quarter of 2024. Expenses General and administrative expenses decreased $3.2 million, or 22%, primarily due to lower employee incentive and stock-based compensation costs. Exploration expense increased $2.4 million, or 23%, driven by the commencement of surface drilling at Silvertip and higher resource expansion drilling activity at Wharf. Pre-development, reclamation, and other expenses decreased $9.6 million, or 53%, stemming from completion of the dismantling and disposal of the legacy crusher at Rochester and the Kensington royalty settlement of $6.8 million in the first quarter of 2024. The following table summarizes pre-development, reclamation, and other expenses: Three Months Ended Increase (Decrease) Percentage Change In thousands June 30, 2024 March 31, 2024 Silvertip ongoing carrying costs 2,055 2,362 (307) (13) % (Gain) loss on sale of assets 640 3,536 (2,896) (82) % Asset retirement accretion 4,154 4,076 78 2 % Kensington royalty settlement — 6,750 (6,750) (100) % Other 1,741 1,504 237 16 % Pre-development, reclamation and other expense $ 8,590 $ 18,228 $ (9,638) (53) % Other Income and Expenses During the first quarter of 2024, the Company incurred a $0.4 million gain in connection with the exchange of $5.9 million in aggregate principal amount plus accrued interest of 2029 Senior Notes for 1.8 million shares of common stock. Interest expense (net of capitalized interest of $0.4 million) increased to $13.2 million from $12.9 million due to higher interest paid under the RCF and finance lease obligations. Other, net increased to a gain of $5.1 million compared to $2.8 million as a result of foreign exchange gains primarily in Mexico and the receipt of the $1.2 million distribution from the Republic Metal Corporation bankruptcy proceedings (the “RMC Bankruptcy Distribution”). Income and Mining Taxes Income and mining tax expense of approximately $7.2 million resulted in an effective tax rate of 83.4% for three months ended June 30, 2024. This compares to income tax expense of $16.0 million for an effective tax rate of (122.4)% for three months ended March 31, 2024. 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) percentage depletion; (v) foreign exchange rates; and (vi) 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 June 30, Three Months Ended March 31, 2024 2024 In thousands Income (loss) before tax Tax (expense) benefit Income (loss) before tax Tax (expense) benefit United States $ (4,660) $ 1,677 $ (30,553) $ (3,819) Canada (9,628) (258) (7,584) (114) Mexico 22,948 (8,608) 25,204 (12,091) Other jurisdictions (45) — (160) — $ 8,615 $ (7,189) $ (13,093) $ (16,024) 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 Income (Loss) Net income was $1.4 million, or $0.00 per diluted share, compared to a net loss of $29.1 million, or $0.08 per diluted share. The decrease in net loss was driven by a 7% and 11% increase in average realized gold and silver prices, respectively, lower employee incentive and stock-based compensation costs, lower income and mining taxes, a lower LCM adjustment at Rochester and the Kensington royalty settlement of $6.8 million in the first quarter of 2024. This was partially offset by a 6% decrease in gold ounces sold and higher interest and exploration expense. Adjusted net loss was $3.4 million, or $0.01 per diluted share, compared to $19.0 million, or $0.05 per diluted share (see “Non-GAAP Financial Performance Measures”). Six Months Ended June 30, 2024 compared to Six Months Ended June 30, 2023 Revenue We sold 158,348 gold ounces and 5.2 million silver ounces, compared to 137,956 gold ounces and 4.9 million silver ounces. Revenue increased by $70.6 million, or 19%, as a result of a 15% and 5% increase in gold and silver ounces sold, respectively, and a 7% and 6% increase in average realized gold and silver prices, respectively. The Company benefited from the higher gold and silver spot prices that were partially offset by realized losses from gold and silver hedges in the second quarter of 2024 compared to realized gains in the prior year. The Company’s hedge program was concluded as of June 30, 2024. The increase in gold and silver ounces sold was primarily due to higher gold and silver grades and higher recoveries at Palmarejo, higher mill throughput and grades at Kensington and higher tons placed and timing of recoveries at Wharf. Additionally, Rochester produced higher silver ounces while gold production remained comparable following the successful commissioning and ramp-up of the new three stage crusher at Rochester in 2024. Gold and silver represented 70% and 30% of 2024 sales revenue, respectively, compared to 68% and 32% of 2023 sales revenue, respectively. The following table summarizes consolidated metal sales: Six Months Ended Increase (Decrease) Percentage Change In thousands June 30, 2024 June 30, 2023 Gold sales $ 305,854 $ 248,456 $ 57,398 23 % Silver sales 129,232 116,077 13,155 11 % Metal sales $ 435,086 $ 364,533 $ 70,553 19 % Costs Applicable to Sales Costs applicable to sales decreased $2.0 million, or 1%, primarily due to the favorable impact of the estimated recoverable ounces on the legacy leach pad and lower LCM adjustments at Rochester, partially offset by higher gold and silver ounces sold. For a complete discussion of costs applicable to sales, see Results of Operations below. 28 Amortization Amortization increased $12.9 million, or 31%, primarily due to higher gold and silver ounces sold and the commencement of production of the new leach pad in mid-September 2023 at Rochester, partially offset by lower LCM adjustments at Rochester. Expenses General and administrative expenses increased $3.8 million, or 17%, primarily due to higher employee incentive and stock-based compensation costs, and higher outside service and legal costs. Exploration expense increased $15.8 million, or 209%, as a result of planned drilling activity at Palmarejo, Kensington, Wharf and Silvertip. Pre-development, reclamation, and other expenses increased $5.6 million, or 26%, stemming from the Kensington royalty settlement of $6.8 million and higher losses on the sale of assets, partially offset by lower ongoing carrying costs at Silvertip. The following table summarizes pre-development, reclamation, and other expenses: Six Months Ended June 30, Increase (Decrease) Percentage Change In thousands 2024 2023 Silvertip ongoing carrying costs 4,416 10,789 (6,373) (59) % (Gain) loss on sale of assets 4,176 312 3,864 1,238 % Asset retirement accretion 8,230 8,066 164 2 % Kensington royalty settlement 6,750 — 6,750 100 % Other 3,246 2,083 1,163 56 % Pre-development, reclamation and other expense $ 26,818 $ 21,250 $ 5,568 26 % Other Income and Expenses During the six months ended June 30, 2024, the Company incurred a $0.4 million gain in connection with the exchange of $5.9 million in aggregate principal amount plus accrued interest of 2029 Senior Notes for 1.8 million shares of common stock compared to $3.0 million incurred during the six months ended June 30, 2023. The Company did not have fair value adjustments, net, in the first six months of 2024 following the sale of the Company’s equity investments in 2023. Interest expense (net of capitalized interest of $0.4 million) increased to $26.1 million from $14.3 million due to higher interest paid under the RCF attributable to higher average debt levels, and lower capitalized interest, partially offset by lower interest paid under the 2029 Senior Notes. Other, net increased to a gain of $7.9 million compared to a loss of $10.6 million as a result of the recognition of the FT Premium Liability income of $3.9 million following the renouncement of Silvertip exploration expenditures and the $12.3 million loss recognized from the sale of the La Preciosa Deferred Consideration in 2023. Income and Mining Taxes During the first half of 2024, income and mining tax expense of approximately $23.2 million resulted in an effective tax rate of (518.4)% for 2024. This compares to income tax expense of $20.6 million for an effective tax rate of (56.5)% for 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) foreign exchange rates; (iv) mining taxes; (v) the prior year 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. 29 The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit: Six Months Ended June 30, 2024 2023 In thousands Income (loss) before tax Tax (expense) benefit Income (loss) before tax Tax (expense) benefit United States $ (33,890) $ (2,142) $ (61,320) $ (3,282) Canada (18,535) (372) (13,704) — Mexico 48,152 (20,699) 38,933 (17,292) Other jurisdictions (205) — (333) — $ (4,478) $ (23,213) $ (36,424) $ (20,574) 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 $27.7 million, or $0.07 per diluted share, compared to $57.0 million, or $0.18 per diluted share. The decrease in net loss was driven by a 15% and 5% increase in gold and silver ounces sold, respectively, a 7% and 6% increase in average realized gold and silver prices, respectively, lower ongoing costs at Silvertip, the recognition of the FT Premium Liability income of $3.9 million, lower LCM adjustments at Rochester, and the $12.3 million loss recognized from the sale of the La Preciosa Deferred Consideration in 2023. This was partially offset by the Kensington royalty settlement of $6.8 million, higher exploration, general and administrative and interest expense, and favorable changes in the fair value of the Company’s equity investments in the first six months of 2023. Adjusted net loss was $22.4 million, or $0.06 per diluted share, compared to $53.2 million, or $0.17 per diluted share (see “Non-GAAP Financial Performance Measures”). 2024 Guidance The Company has reaffirmed its 2024 production guidance. Due to strong operational performance and cost control measures, Coeur has lowered cost guidance at Palmarejo and Wharf. With the ramp-up of the new Merrill-Crowe facility and three-stage crusher corridor at Rochester completed, the Company has provided updated cost guidance for Rochester for the second half of 2024, which is reflected below. In addition, Coeur was able to conclude final negotiations with the key construction contractor during the second quarter, leading to an increase in expected 2024 development capital expenditures as certain costs that were originally planned for 2025 were paid during the second quarter. The Company has now paid $725 million of the total $730 million capital cost of the expansion. Coeur has increased its planned exploration program at Wharf as the Company has identified opportunities to extend mine life at the Juno and North Foley deposits as well as at Kensington. The below exploration expense guidance excludes $15 - $20 million of underground mine development and support costs associated with Silvertip. 2024 Production Guidance Gold Silver (oz) (K oz) Palmarejo 95,000 - 103,000 5,900 - 6,700 Rochester 37,000 - 50,000 4,800 - 6,600 Kensington 92,000 - 106,000 — Wharf 86,000 - 96,000 — Total 310,000 - 355,000 10,700 - 13,300 30 2024 Costs Applicable to Sales Guidance Previous Updated Gold Silver Gold Silver ($/oz) ($/oz) ($/oz) ($/oz) Palmarejo (co-product) $1,075 - $1,275 $16.50 - $17.50 $950 - $1,150 $15.50 - $16.50 Second Half 2024 Rochester (co-product) $1,200 - $1,400 $14.00 - $16.00 $1,500 - $1,700 $18.00 - $20.00 Kensington $1,525 - $1,725 — $1,525 - $1,725 — Wharf (by-product) $1,100 - $1,200 — $950 - $1,050 — 2024 Capital, Exploration and G&A Guidance Previous Updated ($M) ($M) Capital Expenditures, Sustaining $116 - $158 $124 - $158 Capital Expenditures, Development $19 - $26 $36 - $42 Exploration, Expensed $40 - $50 $40 - $50 Exploration, Capitalized $7 - $13 $15 - $20 General & Administrative Expenses $36 - $40 $36 - $40 Note: The Company’s previous guidance figures assume estimated prices of $2,000/oz gold and $23.75/oz silver as well as CAD of 1.25 and MXN of 17.00. Guidance figures exclude the impact of any metal sales or foreign exchange hedges. The Company’s updated guidance figures assume estimated prices of $2,300/oz gold and $27.00/oz silver as well as CAD of 1.25 and MXN of 17.00. Guidance figures exclude the impact of any metal sales or foreign exchange hedges. 31 Results of Operations Palmarejo Three Months Ended Six Months Ended June 30, 2024 March 31, 2024 June 30, 2024 June 30, 2023 Tons milled 429,561 500,747 930,308 1,006,228 Average gold grade (oz/t) 0.066 0.070 0.068 0.054 Average silver grade (oz/t) 4.49 4.34 4.41 4.06 Average recovery rate – Au 89.9 % 95.2 % 92.8 % 88.8 % Average recovery rate – Ag 82.8 % 83.7 % 83.3 % 82.5 % Gold ounces produced 25,467 33,160 58,627 48,334 Silver ounces produced 1,596,138 1,818,297 3,414,435 3,369,416 Gold ounces sold 24,313 33,462 57,775 48,177 Silver ounces sold 1,542,395 1,796,468 3,338,863 3,355,902 CAS per gold ounce (1) $ 1,012 $ 909 $ 958 $ 975 CAS per silver ounce (1) $ 15.32 $ 13.30 $ 14.12 $ 14.57 (1) See Non-GAAP Financial Performance Measures. Three Months Ended June 30, 2024 compared to Three Months Ended March 31, 2024 Gold and silver production decreased 23% and 12%, respectively, as a result of 14% decrease in mill throughput due to mine sequencing, lower recovery rates and a 6% decrease in gold grade, partially offset by a 3% increase in silver grade. Metal sales were $83.2 million, or 37% of Coeur’s metal sales, compared with $96.4 million, or 45% of Coeur’s metal sales. Revenue decreased by $13.1 million, or 14%, of which $22.7 million was due to lower volume of gold and silver production, partially offset by an increase of $9.6 million due to higher gold and silver prices. Costs applicable to sales per gold and silver ounce increased 11% and 15%, respectively, due to lower production, partially offset by lower operating costs, favorable foreign exchange rates and the mix of gold and silver sales which impacted co-product cost allocation. Amortization decreased by $1.7 million to $10.8 million due to lower gold and silver ounces sold. Capital expenditures decreased to $5.9 million from $6.8 million due to lower equipment expenditures. Six Months Ended June 30, 2024 compared to Six Months Ended June 30, 2023 Gold and silver production increased 21% and 1%, respectively, as a result of a 26% and 9% increase in gold and silver grades, respectively, and higher gold recoveries, partially offset by 8% decrease in mill throughput. Metal sales were $179.6 million, or 41% of Coeur’s metal sales, compared with $155.0 million, or also 43% of Coeur’s metal sales. Revenue increased by $24.6 million, or 16%, of which $15.6 million was due to a higher volume of gold production and $9.0 million was due to higher gold and silver prices. Costs applicable to sales per gold and silver ounce decreased 2% and 3%, respectively, due to higher production and the mix of gold and silver sales which impacted co-product cost allocation, partially offset by higher operating costs. Amortization increased by $6.7 million to $23.4 million due to a 20% increase in gold ounces sold. Capital expenditures decreased to $12.6 million from $22.1 million due to lower open pit backfill project and equipment expenditures. 32 Rochester Three Months Ended Six Months Ended June 30, 2024 March 31, 2024 June 30, 2024 June 30, 2023 Tons placed (1) 5,102,800 3,135,571 8,238,371 5,147,426 Average gold grade (oz/t) 0.002 0.002 0.002 0.003 Average silver grade (oz/t) 0.59 0.52 0.56 0.43 Gold ounces produced 8,006 5,755 13,761 14,469 Silver ounces produced 973,057 699,190 1,672,247 1,444,002 Gold ounces sold 8,150 6,185 14,335 14,842 Silver ounces sold 985,269 735,254 1,720,523 1,464,461 CAS per gold ounce (2) $ 1,844 $ 1,877 $ 1,821 $ 2,136 CAS per silver ounce (2) $ 21.95 $ 20.93 $ 21.83 $ 25.42 (1) During the three months ended June 30, 2024, 4.3 million and 0.8 million tons of crushed ore were placed on the new leach pad and legacy leach pad, respectively. During the three months ended March 31, 2024, 1.9 million and 1.2 million tons of crushed ore were placed on the new leach pad and legacy leach pad, respectively. During the six months ended June 30, 2024, 6.2 million and 2.0 million tons of crushed ore were placed on the new leach pad and legacy leach pad, respectively. During the six months ended June 30, 2023, 3.5 million and 1.6 million tons of crushed ore were placed on the new leach pad and legacy leach pad, respectively. (2) See Non-GAAP Financial Performance Measures. Three Months Ended June 30, 2024 compared to Three Months Ended March 31, 2024 Gold and silver production increased 39% primarily driven by the commissioning and ramp-up of the new three-stage crusher. Metal sales were $42.8 million, or 19% of Coeur’s metal sales, compared with $29.8 million, or 14% of Coeur’s metal sales. Revenue increased by $12.9 million, or 43%, of which $10.6 million was due to a higher volume of gold and silver production, and $2.3 million was due to higher average realized gold and silver prices. Costs applicable to sales per gold and silver ounce decreased 2% and increased 5%, respectively, due to the mix of gold and silver sales which impacted co-product cost allocation and higher consumable and outside service costs. Amortization increased by $2.0 million to $8.6 million due to higher gold and silver ounces sold. Capital expenditures increased to $27.5 million from $21.2 million due to ramp up activities and timing of payments related to the Rochester expansion project. Commissioning of Rochester’s new three-stage crushing circuit and truck load-out facility was completed on March 7, 2024 leading to declaration of commercial production and $528 million of construction in process placed into service in the first quarter of 2024. The Company successfully completed the ramp-up of all three stages of the crushing circuit by the end the second quarter by achieving throughput rates of over 88,000 tons per day. Ore tons placed increased 63% quarter-over-quarter to 5.1 million tons, including approximately 4.3 million tons through the new crushing circuit and placed on the stage 6 leach pad and roughly 0.8 million tons of run-of-mine material placed on the legacy stage 4 leach pad. Crushing and placement rates were lighter than initially planned for the full quarter primarily driven by down days to address ramp up related adjustments that were identified while mining rates exceeded plan. Six Months Ended June 30, 2024 compared to Six Months Ended June 30, 2023 Gold and silver production decreased 5% and increased 16%, respectively, as a result of the fewer ounces produced from the legacy leach pads in the first quarter of 2024 as Rochester transitioned to the new leach pad in 2023. Metal sales were $72.6 million, or 17% of Coeur’s metal sales, compared with $63.0 million, or 17% of Coeur’s metal sales. Revenue increased by $9.6 million, or 15%, of which $5.3 million was due to a higher volume of silver production, and $4.3 million resulting from higher average realized gold and silver prices. Costs applicable to sales per gold and silver ounce decreased 15% and 14%, respectively, due to the favorable impact of an increase in estimated recoverable ounces on the legacy leach pad in the first quarter of 2024, an increase in tons placed and a LCM adjustments of $3.1 million compared to $14.7 million in the prior year, which benefited from higher gold and silver prices, and the increase in recoverable ounces on the legacy leach pads. Amortization increased by $6.3 million to $15.2 million due to higher silver ounces sold and the commencement of production from the new leach pad in mid-September 2023 and the three-stage crushing circuit in March 2024, partially offset by lower gold ounces sold. Capital expenditures decreased to $48.8 million from $113.4 million due to reduced spending related to the Rochester expansion project. 33 Kensington Three Months Ended Six Months Ended June 30, 2024 March 31, 2024 June 30, 2024 June 30, 2023 Tons milled 182,043 167,439 349,482 306,244 Average gold grade (oz/t) 0.14 0.14 0.14 0.12 Average recovery rate 92.3 % 90.8 % 91.6 % 91.1 % Gold ounces produced 23,202 21,434 44,636 33,489 Gold ounces sold 23,539 21,183 44,722 34,175 CAS per gold ounce (1) $ 1,732 $ 1,853 $ 1,789 $ 2,235 (1) See Non-GAAP Financial Performance Measures. Three Months Ended June 30, 2024 compared to Three Months Ended March 31, 2024 Gold production increased 8% as a result of 9% increase in mill throughput and higher recovery rates. Metal sales were $51.1 million, or 23% of Coeur’s metal sales, compared to $43.5 million, or 20% of Coeur’s metal sales. Revenue increased by $7.5 million, or 17%, of which $5.1 million resulting from a higher volume of gold production, and $2.4 million due to higher average realized gold prices. Costs applicable to sales per gold ounce decreased 7% due to higher production. Amortization increased by $0.8 million to $6.4 million primarily due to the increase in gold ounces sold. Capital expenditures increased to $16.5 million from $13.3 million reflecting continued investment associated with the multi-year underground development and exploration program designed to extend and enhance the mine life, which began in 2022 and is expected to be completed in 2025 and tailings dam expansion expenditures. Six Months Ended June 30, 2024 compared to Six Months Ended June 30, 2023 Gold production increased 33% as a result of 17% higher grade and 14% higher mill throughput. Metal sales were $94.6 million, or 22% of Coeur’s metal sales, compared to $64.8 million, or 18% of Coeur’s metal sales. Revenue increased by $29.8 million, or 46%, of which $22.3 million resulting from a higher volume of gold production, and $7.5 million due to higher average realized gold prices. Costs applicable to sales per gold ounce decreased 20% due to higher production. Amortization increased by $1.4 million to $12.0 million primarily due to the increase in gold ounces sold, partially offset the favorable impact of a longer assumed mine life. Capital expenditures increased to $29.7 million from $22.4 million reflecting continued investment associated with the multi-year underground development and exploration program designed to extend and enhance the mine life, which began in 2022 and is expected to be completed in 2025. Wharf Three Months Ended Six Months Ended June 30, 2024 March 31, 2024 June 30, 2024 June 30, 2023 Tons placed 1,162,437 1,251,955 2,414,392 2,198,640 Average gold grade (oz/t) 0.032 0.021 0.026 0.027 Gold ounces produced 22,021 20,395 42,416 41,153 Silver ounces produced 68,755 67,273 136,028 109,606 Gold ounces sold 20,930 20,586 41,516 40,762 Silver ounces sold 65,063 68,713 133,776 105,969 CAS per gold ounce (1) $ 829 $ 1,155 $ 991 $ 1,199 (1) See Non-GAAP Financial Performance Measures. Three Months Ended June 30, 2024 compared to Three Months Ended March 31, 2024 Gold production increased 8% driven by higher grade and timing of recoveries. Metal sales were $45.0 million, or 20% of Coeur’s metal sales, compared to $43.3 million, or 20% of Coeur’s metal sales. Revenue increased by $1.6 million, or 4%, of which $0.6 million was due to a higher gold production, and $1.0 million due to higher average realized gold prices. Costs applicable to sales per gold ounce decreased 28% due to higher grade and lower operating costs. Amortization decreased to $1.1 million due to favorable impact of higher grade. Capital expenditures were $1.2 million. 34 Six Months Ended June 30, 2024 compared to Six Months Ended June 30, 2023 Gold production increased 3% driven by higher tons placed and timing of recoveries, partially offset by lower grade. Metal sales were $88.3 million, or 20% of Coeur’s metal sales, compared to $81.7 million, or 22% of Coeur’s metal sales. Revenue increased by $6.6 million, or 8%, of which $2.2 million was due to a higher gold production, and $4.4 million was due to higher average realized gold prices. Costs applicable to sales per gold ounce decreased 17% due to higher tons placed. Amortization decreased to $2.5 million due to higher tons placed and the favorable impact of a longer assumed mine life. Capital expenditures were $1.5 million. Silvertip Six Months Ended June 30, 2024 compared to Six Months Ended June 30, 2023 Exploration expense totaled $11.7 million in the first half of 2024 as the Company continues to focus on increasing the mineral resources at Silvertip, which were supported by 271 meters of underground mine development. Ongoing carrying costs at Silvertip totaled $4.4 million in the first half of 2024 and $10.8 million in 2023. Capital expenditures in the first half of 2024 totaled $0.9 million. Liquidity and Capital Resources At June 30, 2024, the Company had $75.9 million of cash, cash equivalents and restricted cash and $95.5 million available under the RCF. Future borrowing under the RCF may be subject to certain financial covenants. Cash and cash equivalents increased $12.5 million in the six months ended June 30, 2024 due to a 15% and 5% increase in gold and silver ounces sold, respectively, a 7% and 6% increase in average realized gold and silver prices, respectively, the net proceeds of $23.7 million from the sale of 7.7 million shares of common stock in the Private Placement Offering (as defined below), and net draws of $100.0 million under the RCF. This was partially offset by $93.5 million of capital expenditures primarily related to the completion of the Rochester expansion project. On February 21, 2024, the Company entered into an agreement to extend and enhance its RCF (the “February 2024 Amendment”). The February 2024 Amendment, among other things, (1) extends the term of the RCF by approximately two years so that it now matures in February 2027, (2) increases the RCF by $10 million from $390 million to $400 million, (3) adds Fédération Des Caisses Desjardins Du Québec and National Bank of Canada as lenders on the RCF, (4) permits the Company to obtain one or more increases of the RCF in an aggregate amount of up to $100 million in incremental loans and commitments, subject to certain conditions, including obtaining commitments from relevant lenders to provide such increase, (5) allows for unencumbered domestic cash to be included in the calculation of the consolidated net leverage ratio, and (6) allows up to $15 million of non-capitalized underground mine development costs related to Silvertip to be excluded from the calculation of Consolidated EBITDA for purposes of the RCF. In March 2024, the Company completed the sale of 7,704,725 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 approximately $23.7 million, of which $0.9 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)), in conducting an exploration and mineral resource evaluation program on the Silvertip property in British Columbia and Yukon to determine the existence, location, extent, and quality of the silver, lead, and zinc on the Silvertip property. The Company had no outstanding forward contracts at June 30, 2024 following the final settlement in June 2024. The Company has no current plans to implement new hedges but may in the future add new hedges as circumstances warrant. During the six months ended June 30, 2024, the Company exchanged $5.9 million in aggregate principal amount of 2029 Senior Notes plus accrued interest for 1.8 million shares of its common stock. We currently believe we have sufficient sources of funding to meet our business requirements for the next 12 months and longer-term. We expect to use a combination of cash provided by operating activities 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 2024 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 35 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”. Cash Provided by (Used in) Operating Activities Net cash provided by operating activities for the three months ended June 30, 2024 was $15.2 million, compared to net cash used in operating activities of $15.9 million for the three months ended March 31, 2024. Net cash used in operating activities for the six months ended June 30, 2024 was $0.6 million, compared to net cash provided by operating activities of $4.4 million for six months ended June 30, 2023. Adjusted EBITDA for the three months ended June 30, 2024 was $52.4 million, compared to $44.3 million for three months ended March 31, 2024. Adjusted EBITDA for the six months ended June 30, 2024 was $96.7 million, compared to $47.4 million for the six months ended June 30, 2023 (see “Non-GAAP Financial Performance Measures”). Net cash provided by (used in) operating activities was impacted by the following key factors for the applicable periods: Three Months Ended Six Months Ended In thousands June 30, 2024 March 31, 2024 June 30, 2024 June 30, 2023 Cash flow before changes in operating assets and liabilities $ 27,482 $ (30,607) $ (3,125) $ (697) Changes in operating assets and liabilities: Receivables 3,180 (5,316) (2,136) 2,137 Prepaid expenses and other 4,176 (639) 3,537 3,764 Inventories (19,774) (19,694) (39,468) (36,373) Accounts payable and accrued liabilities 185 40,385 40,570 35,563 Cash provided by (used in) operating activities $ 15,249 $ (15,871) $ (622) $ 4,394 Net cash provided by operating activities increased $31.1 million for the three months ended June 30, 2024 compared to the three months ended March 31, 2024, primarily due to a 7% and 11% increase in average realized gold and silver prices, respectively, timing of VAT collections in Mexico, lower prepaid insurance, and timing of interest and income and mining tax payments. Revenue for the three months ended June 30, 2024 compared to the three months ended March 31, 2024 increased by $9.0 million, of which $18.1 million was due to higher average realized gold and silver prices, partially offset by $9.2 million resulting from lower volume of gold and silver sales. Net cash used in operating activities increased $5.0 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to the timing of VAT collections in Mexico, higher exploration, general and administrative, and interest expense, partially offset by a 15% and 5% increase in gold and silver ounces sold, respectively, and a 7% and 6% increase in average realized gold and silver prices, respectively. Revenue for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 increased by $70.6 million, of which $46.0 million was due to higher volume of gold sales, and $24.5 million as the result of higher average gold and silver prices. Cash Used in Investing Activities Net cash used in investing activities in the three months ended June 30, 2024 was $51.6 million compared to $42.1 million in the three months ended March 31, 2024. Cash used in investing activities increased due to the timing of payments related to the Rochester expansion project. The Company incurred capital expenditures of $51.4 million in the three months ended June 30, 2024 compared with $42.1 million in the three months ended March 31, 2024 primarily related to ramp-up activities and timing of payments related to the Rochester expansion project at Rochester and underground development at Palmarejo and Kensington in both periods. Net cash used in investing activities in the six months ended June 30, 2024 was $93.7 million compared to $105.0 million in the six months ended June 30, 2023. Cash used in investing activities decreased due to net proceeds of $39.8 million received from the sale of its remaining Victoria Gold Common Shares, net proceeds of $7.0 million received from the sale of the La Preciosa Deferred Consideration, and $5.0 million received from the sale of the La Preciosa project in 2023, partially offset by a decrease in capital expenditures at Rochester. The Company incurred capital expenditures of $93.5 million in the six months ended June 30, 2024 compared with $159.6 million in the six months ended June 30, 2023 primarily related to expansion construction and ramp-up activities at Rochester and underground development and exploration at Palmarejo and Kensington in both periods. Cash Provided by Financing Activities 36 Net cash provided by financing activities in the three months ended June 30, 2024 was $43.3 million compared to $63.8 million in the three months ended March 31, 2024. During the three months ended June 30, 2024, the Company drew $50.0 million, net, from the RCF. During the three months ended March 31, 2024, the Company received net proceeds of $23.7 million from the sale of 7.7 million shares of its common stock in the Private Placement Offering, and drew $50.0 million, net, from the RCF. Net cash provided by financing activities in the six months ended June 30, 2024 was $107.1 million compared to $95.3 million in the six months ended June 30, 2023. During the six months ended June 30, 2024, the Company received net proceeds of $23.7 million from the sale of 7.7 million shares of its common stock in the Private Placement Offering, and drew $100.0 million, net, from the RCF. During the six months ended June 30, 2023, the Company received net proceeds of $98.4 million from the sale of 32.9 million shares of its common stock in the March 2023 Equity Offering, 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. Critical Accounting Policies and Accounting Developments See Note 2 -- Summary of Significant Accounting Policies contained in the 2023 10-K and Note 2 -- Summary of Significant Accounting Policies contained in this Report for the Company’s critical accounting policies and estimates. Ore on Leach Pads The heap leach process extracts silver and gold by placing ore on an impermeable pad and applying a diluted cyanide solution that dissolves a portion of the contained silver and gold, which are then recovered in metallurgical processes. The Company uses several integrated steps to scientifically measure the metal content of ore placed on the leach pads. As the ore body is drilled in preparation for the blasting process, samples are taken of the drill residue which are assayed to determine estimated quantities of contained metal. The Company then processes the ore through crushing facilities where the output is again weighed and sampled for assaying. A metallurgical reconciliation with the data collected from the mining operation is completed with appropriate adjustments made to previous estimates. The crushed ore is then transported to the leach pad for application of the leaching solution. As the leach solution is collected from the leach pads, it is continuously sampled for assaying. The quantity of leach solution is measured by flow meters throughout the leaching and precipitation process. After precipitation, the product is converted to doré at the Rochester mine and a form of gold electrolytic cathodic sludge at the Wharf mine, representing the final product produced by each mine. The inventory is stated at lower of cost or net realizable value, with cost being determined using a weighted average cost method. The historical cost of metal expected to be extracted within 12 months is classified as current and the historical cost of metals contained within the broken ore expected to be extracted beyond 12 months is classified as non-current. Ore on leach pads is valued based on actual production costs incurred to produce and place ore on the leach pad, less costs allocated to minerals recovered through the leach process. The estimate of both the ultimate recovery expected over time and the quantity of metal that may be extracted relative to the time the leach process occurs requires the use of estimates, which are inherently inaccurate due to the nature of the leaching process. The quantities of metal contained in the ore are based upon actual weights and assay analysis. The rate at which the leach process extracts gold and silver from the crushed ore is based upon laboratory testing and actual experience of more than 20 years of leach pad operations at the Rochester mine and 30 years of leach pad operations at the Wharf mine. The assumptions used by the Company to measure metal content during each stage of the inventory conversion process includes estimated recovery rates based on laboratory testing and assaying. The Company periodically reviews its estimates compared to actual experience and revises its estimates when appropriate. The ultimate recovery will not be known until leaching operations cease. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted for on a prospective basis. In the first quarter of 2024, the Company completed a review of the estimated recoverable ounces of gold and silver on its leach pads and determined that as a result of longer expected leach time and favorable recoveries relative to previous estimates that the estimated recoverable gold and silver on the Rochester legacy (Stages 2, 3 and 4) leach pads supported an upward revision. An additional 6,000 ounces of gold and 900,000 ounces of silver were added to the legacy leach pads in the first quarter of 2024. There are five reusable heap leach pads (load/offload) used at Wharf. Each pad goes through an approximate 24-month process of loading of ore, leaching and offloading which includes a neutralization and denitrification process. During the leaching cycle of each pad, revised estimated recoverable ounces for each of the pads may result in an upward or downward revision from time to time, which have not historically been significant. The updated recoverable ounce estimate is considered a change in estimate and was accounted for prospectively. As of June 30, 2024, the Company’s estimated recoverable ounces of gold and silver on the leach pads were 38,092 and 5.6 million, respectively. 37 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 a partial 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: Three Months Ended Six Months Ended In thousands except per share amounts June 30, 2024 March 31, 2024 June 30, 2024 June 30, 2023 Net income (loss) $ 1,426 $ (29,117) $ (27,691) $ (56,998) Fair value adjustments, net — — — (6,639) Foreign exchange loss (gain) (2,950) 484 (2,466) 2,145 (Gain) loss on sale of assets and securities 640 3,536 4,176 12,631 RMC bankruptcy distribution (1,199) — (1,199) (1,516) (Gain) loss on debt extinguishment 21 (438) (417) (2,961) Other adjustments 104 5,461 5,565 1,284 Tax effect of adjustments (1) (1,447) 1,053 (394) (1,157) Adjusted net income (loss) $ (3,405) $ (19,021) $ (22,426) $ (53,211) Adjusted net income (loss) per share, Basic $ (0.01) $ (0.05) $ (0.06) $ (0.17) Adjusted net income (loss) per share, Diluted $ (0.01) $ (0.05) $ (0.06) $ (0.17) 38 (1) For the three months ended June 30, 2024, tax effect of adjustments of $1.4 million 333% is primarily related to the RMC Bankruptcy Distribution. For the three months ended March 31, 2024, tax effect of adjustments of $1.1 million (12.3%) is primarily related to the Kensington royalty settlement and LCM adjustment recorded at Rochester. For the six months ended June 30, 2024, tax effect of adjustments of $0.4 million (-5%) is primarily related to the RMC Bankruptcy Distribution, Kensington royalty settlement and LCM adjustment recorded at Rochester. For the six months ended June 30, 2023, tax effect of adjustments of $1.2 million (-41%) 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. 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: Three Months Ended Six Months Ended In thousands except per share amounts June 30, 2024 March 31, 2024 June 30, 2024 June 30, 2023 Net income (loss) $ 1,426 $ (29,117) $ (27,691) $ (56,998) Interest expense, net of capitalized interest 13,162 12,947 26,109 14,301 Income tax provision (benefit) 7,189 16,024 23,213 20,574 Amortization 27,928 27,297 55,225 42,303 EBITDA 49,705 27,151 76,856 20,180 Fair value adjustments, net — — — (6,639) Foreign exchange (gain) loss (2,089) 365 (1,724) 527 Asset retirement obligation accretion 4,154 4,076 8,230 8,066 Inventory adjustments and write-downs 1,071 4,188 5,259 15,790 (Gain) loss on sale of assets and securities 640 3,536 4,176 12,631 RMC bankruptcy distribution (1,199) — (1,199) (1,516) (Gain) loss on debt extinguishment 21 (438) (417) (2,961) Other adjustments 104 5,461 5,565 1,284 Adjusted EBITDA $ 52,407 $ 44,339 $ 96,746 $ 47,362 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. Consolidated Three Months Ended Six Months Ended (Dollars in thousands) June 30, 2024 March 31, 2024 June 30, 2024 June 30, 2023 Cash flow from operations $ 15,249 $ (15,871) $ (622) $ 4,394 Capital expenditures 51,405 42,083 93,488 159,629 Free cash flow $ (36,156) $ (57,954) $ (94,110) $ (155,235) 39 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 Condensed 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. Three Months Ended Six Months Ended (Dollars in thousands) June 30, 2024 March 31, 2024 June 30, 2024 June 30, 2023 Cash provided by (used in) operating activities $ 15,249 $ (15,871) $ (622) $ 4,394 Changes in operating assets and liabilities: Receivables (3,180) 5,316 2,136 (2,137) Prepaid expenses and other (4,176) 639 (3,537) (3,764) Inventories 19,774 19,694 39,468 36,373 Accounts payable and accrued liabilities (185) (40,385) (40,570) (35,563) Operating cash flow before changes in working capital $ 27,482 $ (30,607) $ (3,125) $ (697) 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 IFRS Accounting Standards. Three Months Ended June 30, 2024 In thousands (except metal sales and per ounce amounts) Palmarejo Rochester Kensington Wharf Silvertip Total Costs applicable to sales, including amortization (U.S. GAAP) $ 59,070 $ 45,225 $ 47,166 $ 20,181 $ 790 $ 172,432 Amortization (10,843) (8,570) (6,445) (1,067) (790) (27,715) Costs applicable to sales $ 48,227 $ 36,655 $ 40,721 $ 19,114 $ — $ 144,717 Metal Sales Gold ounces 24,313 8,150 23,539 20,930 — 76,932 Silver ounces 1,542,395 985,269 — 65,063 — 2,592,727 Costs applicable to sales Gold ($/oz) $ 1,012 $ 1,844 $ 1,732 $ 829 Silver ($/oz) $ 15.32 $ 21.95 $ — 40 Three Months Ended March 31, 2024 In thousands (except metal sales and per ounce amounts) Palmarejo Rochester Kensington Wharf Silvertip Total Costs applicable to sales, including amortization (U.S. GAAP) $ 66,896 $ 33,632 $ 44,885 $ 26,808 $ 852 $ 173,073 Amortization (12,602) (6,633) (5,596) (1,393) (852) (27,076) Costs applicable to sales $ 54,294 $ 26,999 $ 39,289 $ 25,415 $ — $ 145,997 Metal Sales Gold ounces 33,462 6,185 21,183 20,586 — 81,416 Silver ounces 1,796,468 735,254 — 68,713 — 2,600,435 Costs applicable to sales Gold ($/oz) $ 909 $ 1,877 $ 1,853 $ 1,155 Silver ($/oz) $ 13.30 $ 20.93 $ — Six Months Ended June 30, 2024 In thousands (except metal sales and per ounce amounts) Palmarejo Rochester Kensington Wharf Silvertip Total Costs applicable to sales, including amortization (U.S. GAAP) $ 125,966 $ 78,857 $ 92,051 $ 46,989 $ 1,642 $ 345,505 Amortization (23,445) (15,203) (12,041) (2,460) (1,642) (54,791) Costs applicable to sales $ 102,521 $ 63,654 $ 80,010 $ 44,529 $ — $ 290,714 Metal Sales Gold ounces 57,775 14,335 44,722 41,516 — 158,348 Silver ounces 3,338,863 1,720,523 — 133,776 — 5,193,162 Costs applicable to sales Gold ($/oz) $ 958 $ 1,821 $ 1,789 $ 991 Silver ($/oz) $ 14.12 $ 21.83 $ — 41 Six Months Ended June 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) $ 112,592 $ 77,800 $ 87,176 $ 54,587 $ 2,242 $ 334,397 Amortization (16,736) (8,867) (10,645) (3,214) (2,242) (41,704) Costs applicable to sales $ 95,856 $ 68,933 $ 76,531 $ 51,373 $ — $ 292,693 Metal Sales Gold ounces 48,177 14,842 34,175 40,762 137,956 Silver ounces 3,355,902 1,464,461 — 105,969 — 4,926,332 Costs applicable to sales Gold ($/oz) $ 975 $ 2,136 $ 2,235 $ 1,199 Silver ($/oz) $ 14.57 $ 25.42 $ — Reconciliation of Costs Applicable to Sales for Updated 2024 Guidance In thousands (except metal sales and per ounce amounts) Palmarejo Rochester (1) Kensington Wharf Costs applicable to sales, including amortization (U.S. GAAP) $ 261,913 $ 147,456 $ 195,337 $ 102,091 Amortization (46,953) (42,237) (28,757) (5,694) Costs applicable to sales $ 214,960 $ 105,219 $ 166,580 $ 96,397 By-product credit — — 16 (5,328) Adjusted costs applicable to sales $ 214,960 $ 105,219 $ 166,596 $ 91,069 Metal Sales Gold ounces 104,260 28,170 100,500 91,040 Silver ounces 6,652,590 3,197,910 205,600 Revenue Split Gold 51% 43% 100% 100% Silver 49% 57% Adjusted costs applicable to sales Gold ($/oz) $950 - $1,150 $1,500 - $1,700 $1,525 - $1,725 $950 - $1,050 Silver ($/oz) $15.50 - $16.50 $18.00 - $20.00 (1) Cost guidance for Rochester reflects the second half of 2024. Reconciliation of Costs Applicable to Sales for Previous 2024 Guidance In thousands (except metal sales and per ounce amounts) Palmarejo Rochester (1) Kensington Wharf Costs applicable to sales, including amortization (U.S. GAAP) $ 258,870 $ 129,322 $ 199,980 $ 108,330 Amortization (37,130) (36,990) (33,530) (6,330) Costs applicable to sales $ 221,740 $ 92,332 $ 166,450 $ 102,000 By-product credit — — — (2,550) Adjusted costs applicable to sales $ 221,740 $ 92,332 $ 166,450 $ 99,450 Metal Sales Gold ounces 100,350 28,130 103,790 90,000 Silver ounces 6,516,830 3,927,890 105,920 Revenue Split Gold 51% 38% 100% 100% Silver 49% 62% Adjusted costs applicable to sales Gold ($/oz) $1,075 - $1,275 $1,200 - $1,400 $1,525 - $1,725 $1,100 - $1,200 Silver ($/oz) $16.50 - $17.50 $14.00 - $16.00 (1) Cost guidance for Rochester reflects the second half of 2024. 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 “Risk Factors” section of the 2023 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 a future 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.