Coeur Mining(US:CDE)2021-07-29 21:10Financial Data and Key Metrics Changes - The company reported a 6% increase in quarterly revenue, generating $58 million of operating cash flow during the quarter [30] - Last Twelve Months (LTM) EBITDA approached $300 million, reflecting a 41% year-over-year increase despite a non-cash inventory charge at Rochester [31] - The company ended the quarter with nearly $390 million of liquidity and a net leverage ratio of one times, positioning it well for funding its 2021 CapEx and exploration programs [32] Business Line Data and Key Metrics Changes - Gold production at Wharf increased by 27% quarter-over-quarter, while silver production at Rochester rose by 15% [6][28] - Kensington's gold production was slightly down due to timing, but it generated approximately $24 million of free cash flow, nearly seven times higher than the prior period [22][27] - Palmarejo's higher mill throughput and better metallurgical recoveries offset lower grades, leading to solid results despite geotechnical challenges [21] Market Data and Key Metrics Changes - The average realized silver price increased, contributing to improved topline performance [5] - The company highlighted a strategic investment in Victoria Gold, acquiring an 18% block from Orion Mine Finance, which aligns with its strategy to bolster its portfolio in high-quality jurisdictions [17] Company Strategy and Development Direction - The company is advancing its largest exploration campaign in history, planning to invest approximately $75 million in exploration in 2021, nearly 50% higher than the previous year [11] - Major development priorities include the ongoing expansion at Rochester and the potential restart at Silvertip, with significant progress reported on both projects [12][14] - The company aims to maintain a balanced portfolio of North American precious metals assets, focusing on organic growth [36] Management's Comments on Operating Environment and Future Outlook - Management reiterated production guidance and expressed confidence in a strong second half of the year across all operating locations [7] - The company acknowledged inflationary pressures affecting operating costs, particularly in contractor labor and materials [13][47] - Management emphasized the importance of maintaining a robust safety culture and operational performance, reporting the lowest lost-time injury rate in company history [20] Other Important Information - The company has secured a capital lease package of nearly $60 million to fund equipment purchases for the Rochester expansion [33] - The company opportunistically added to its hedge position, securing 132,000 ounces of gold hedge for the next year with an average floor of $1,630 per ounce [34] Q&A Session Summary Question: Expectations for pre-production expenditures for the Rochester expansion - Management anticipates an even split of around $200 million in pre-production expenditures between 2021 and 2022, with potential adjustments due to inflation [37][40] Question: Details on the $20 million additional investment in Rochester - The additional funding aims to improve safety, availability, and operability of the infrastructure, including upgrades to geotechnical design and control systems [44][45] Question: Long-term prospects for Palmarejo amid challenges in Mexico - Management remains committed to Palmarejo, highlighting exploration potential and ongoing efforts to extend mine life despite challenges in the jurisdiction [51][52] Question: Timing and funding for the Silvertip project - Management envisions a potential restart and expansion of Silvertip, with funding expected to come from off-take financing and operational cash flow [60][66] Question: Confidence in executing multiple projects amid inflationary pressures - Management expressed confidence in executing on priorities, supported by a strong balance sheet, cash flow from operations, and various funding sources [99][110]