Coeur Mining(US:CDE)2024-11-06 21:34Part I. Financial Information Financial Statements This section presents Coeur Mining, Inc.'s unaudited condensed consolidated financial statements, highlighting increased revenue and a return to net income Condensed Consolidated Balance Sheets The balance sheet reflects an increase in total assets, liabilities, and stockholders' equity as of September 30, 2024 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $345,972 | $267,255 | | Total Assets | $2,227,800 | $2,080,848 | | Total Current Liabilities | $318,084 | $289,613 | | Total Liabilities | $1,144,650 | $1,056,945 | | Total Stockholders' Equity | $1,083,150 | $1,023,903 | Condensed Consolidated Statements of Comprehensive Income (Loss) The company reported a significant financial turnaround with net income for Q3 and the nine months ended September 30, 2024, driven by substantial revenue growth Income Statement Summary (in thousands, except per share data) | Metric | Q3 2024 | Q3 2023 | 9 Months 2024 | 9 Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $313,476 | $194,583 | $748,562 | $559,116 | | Income (Loss) Before Taxes | $74,556 | $(15,012) | $70,078 | $(51,436) | | Net Income (Loss) | $48,739 | $(21,109) | $21,048 | $(78,107) | | Diluted EPS | $0.12 | $(0.06) | $0.05 | $(0.24) | Condensed Consolidated Statements of Cash Flows Cash provided by operating activities significantly improved for the nine months ended September 30, 2024, while investing and financing activities saw reduced cash usage Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Operating Activities | $110,441 | $2,011 | | Investing Activities | $(145,728) | $(217,135) | | Financing Activities | $51,177 | $206,527 | | Increase (Decrease) in Cash | $15,306 | $(8,223) | Notes to Condensed Consolidated Financial Statements These notes provide detailed explanations of accounting policies, segment performance, a major acquisition agreement, debt structure modifications, and ongoing commitments - The company's operating segments include Palmarejo, Rochester, Kensington, and Wharf mines, and the Silvertip exploration project, with Palmarejo and Wharf being the largest net income contributors in Q3 20242728 - On October 3, 2024, Coeur entered into a definitive agreement to acquire SilverCrest Metals Inc. for an implied total equity value of approximately $1.7 billion, with the transaction expected to close in late Q1 202540 - The company completed commissioning of Rochester's new crushing circuit on March 7, 2024, placing $528 million of construction in process into service during the first quarter41 - In February 2024, the company extended its Revolving Credit Facility (RCF) to February 2027 and increased its capacity from $390 million to $400 million47 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's strong financial performance, driven by increased production and higher metal prices, and reaffirms full-year 2024 guidance - Q3 2024 was a strong quarter with revenue of $313.5 million, operating cash flow of $111.1 million, and GAAP net income of $48.7 million ($0.12 per share)102 - Key operational achievements in Q3 include a 21% increase in gold production and a 15% increase in silver production, with costs per ounce declining 12% from the prior quarter103 - The company announced an agreement to acquire SilverCrest Metals Inc. in an all-stock transaction valued at approximately $1.7 billion, which is expected to enhance cash flow and accelerate deleveraging103 - During Q3, the company reduced its outstanding revolving credit facility (RCF) balance by $50 million to $225 million, bringing its net debt to EBITDA ratio below 2.0x103 Consolidated Financial Results Consolidated revenue and net income significantly increased in Q3 and the first nine months of 2024, driven by higher sales volumes and metal prices Consolidated Metal Sales (in thousands) | Period | Gold Sales | Silver Sales | Total Metal Sales | | :--- | :--- | :--- | :--- | | Q3 2024 | $223,772 | $89,704 | $313,476 | | Q2 2024 | $154,085 | $67,941 | $222,026 | | 9M 2024 | $529,626 | $218,936 | $748,562 | | 9M 2023 | $387,959 | $171,157 | $559,116 | 2024 Guidance The company reaffirmed its full-year 2024 guidance for production, costs, and capital expenditures, reflecting strong year-to-date performance 2024 Production Guidance | Metal | Ounces | | :--- | :--- | | Gold | 310,000 - 355,000 oz | | Silver | 10,700 - 13,300 K oz | 2024 Capital & Exploration Guidance ($M) | Category | Amount ($M) | | :--- | :--- | | Capital Expenditures, Sustaining | $124 - $158 | | Capital Expenditures, Development | $36 - $42 | | Exploration, Expensed | $40 - $50 | Results of Operations Operational performance improved across all sites in Q3 2024, with increased production and efficiency gains at key mines - Palmarejo: Q3 gold and silver production increased 8% and 14% QoQ, respectively, due to higher grades and recoveries, with costs applicable to sales (CAS) per ounce decreasing significantly134 - Rochester: Q3 gold and silver production rose 21% and 19% QoQ, respectively, driven by the successful ramp-up of the new three-stage crusher137 - Kensington: Q3 gold production increased 4% QoQ due to higher grades, and CAS per gold ounce decreased 11%140 - Wharf: Q3 gold production surged 53% QoQ, driven by higher tons placed, grade, and timing of recoveries144 Liquidity and Capital Resources The company maintains strong liquidity with sufficient cash and available credit, and aims for a long-term target of 0.0x Net Debt to Adjusted EBITDA - At quarter-end, the company had $78.7 million of cash, cash equivalents, and restricted cash, with $145.4 million available under its RCF147 - Net cash from operating activities was $111.1 million in Q3 2024 and $110.4 million for the first nine months of 2024154 - Capital expenditures for the first nine months of 2024 were $135.5 million, a decrease from $271.9 million in the prior-year period, mainly due to reduced spending on the Rochester expansion project158 Non-GAAP Financial Performance Measures The company utilizes non-GAAP measures like Adjusted EBITDA and Free Cash Flow to provide additional insight into its operating performance, showing significant improvements Adjusted EBITDA Reconciliation (in thousands) | Metric | Q3 2024 | Q2 2024 | 9 Months 2024 | 9 Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $48,739 | $1,426 | $21,048 | $(78,107) | | EBITDA | $121,052 | $49,705 | $197,908 | $35,454 | | Adjusted EBITDA | $126,041 | $52,407 | $222,785 | $78,012 | Free Cash Flow (in thousands) | Metric | Q3 2024 | Q2 2024 | | :--- | :--- | :--- | | Cash flow from operations | $111,063 | $15,249 | | Capital expenditures | $(41,980) | $(51,405) | | Free cash flow | $69,083 | $(36,156) | Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks primarily from fluctuations in gold and silver prices, foreign currency exchange rates, and interest rate changes - The company's profitability is highly sensitive to gold and silver price fluctuations, where a 10% change in realized gold prices on outstanding provisionally priced sales would cause revenue to vary by $3.1 million201206 - The company's gold and silver forward contracts, used to protect cash flow during the Rochester expansion, all settled by June 2024, with no outstanding hedging contracts at the end of Q3 2024205 - Operations in Canada and Mexico expose the company to foreign currency exchange rate risks, which can impact profitability and cash flow207 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2024, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective in providing reasonable assurance that required information is recorded, processed, and reported in a timely manner212 - No material changes were made to the company's internal control over financial reporting during the third quarter of 2024213 Part II. Other Information Legal Proceedings This section refers to Note 16 of the financial statements for information on ongoing litigation matters concerning VAT refunds and water rights in Mexico - For details on legal proceedings, the report refers to Note 16 – Commitments and Contingencies215 Risk Factors This section updates the company's risk factors, focusing extensively on new risks associated with the proposed acquisition of SilverCrest Metals Inc - The acquisition of SilverCrest is subject to numerous conditions, including shareholder and regulatory approvals, which may delay or prevent its completion, and failure to close could require Coeur to pay a $100 million termination fee218219221 - The combined company may be unable to successfully integrate SilverCrest's business or realize the anticipated benefits, due to complexities in strategy, staffing, and systems230231 - The issuance of a significant number of Coeur shares as consideration could create a "market overhang" and adversely affect the stock price, as former SilverCrest shareholders may sell their new Coeur shares, depressing the market price226238 - SilverCrest's financial statements are prepared under IFRS and its mineral estimates under NI 43-101, which differ from Coeur's U.S. GAAP and SEC S-K 1300 standards, posing risks during the conforming and integration process232 Mine Safety Disclosures Information regarding mine safety matters as required by the Dodd-Frank Act is provided in Exhibit 95.1, which is attached to this Form 10-Q - Mine safety disclosures are provided in Exhibit 95.1 of this report242 Other Information The company reports no director or Section 16 officer adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q3 2024 - No directors or Section 16 officers adopted, modified, or terminated any Rule 10b5-1 trading plans during the quarter ended September 30, 2024243 Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications, Mine Safety Disclosures, and financial data in XBRL format - The report includes standard exhibits such as CEO/CFO certifications, mine safety disclosures, and XBRL interactive data files245246