Coeur Mining(US:CDE)2023-08-10 18:10Financial Data and Key Metrics Changes - Quarterly revenue totaled $177 million, with production of approximately 68,000 ounces of gold and 2.4 million ounces of silver, underpinned by strong performances at Rochester and Wharf operations, offset by a weaker than planned quarter at Kensington [20][21] - Adjusted EBITDA was impacted by challenges at Kensington, but a strong second half is anticipated across all sites, including Kensington, leading to significantly higher EBITDA levels [15][30] - Operating cash flow swung to a positive $39 million compared to a negative $35 million during Q1, driven by solid operating performance at Palmarejo, Rochester, and Wharf, as well as favorable changes in working capital [32] Business Line Data and Key Metrics Changes - At Rochester, production decreased as expected compared to the first quarter, with better than anticipated production driven by positive residual ounce production from legacy leach pads [8][20] - Kensington faced challenges due to higher than expected water flows, impacting planned production, leading to a revised full year guidance of between 84,000 and 95,000 ounces of gold [30] - Wharf's results were slightly ahead of plan, benefiting from high-grade material and tons placed earlier in the year, with a new permit allowing for mining of the Boston expansion [13][20] Market Data and Key Metrics Changes - The strengthening peso created pressure on costs, resulting in approximately $5 million of additional costs at Palmarejo, while lower diesel costs decreased by 26% versus Q2 2022 [25][33] - The company has hedged almost 70% of its non-Franco-Nevada related second half gold production at $1,977 per ounce and approximately 50% of its second half silver production at $25.41 per ounce [53] Company Strategy and Development Direction - The company is focused on the safe and efficient commissioning and ramp-up of the expansion project at Rochester, while also aiming to deliver stronger performance at Kensington and generate results from the development and drilling program [36] - Significant multiyear investments in expansions and exploration at North American assets are expected to yield benefits for stockholders, including higher production, lower costs, and free cash flow [24][55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a strong second half of the year, particularly at Rochester and Kensington, with expectations for improved performance and production levels [15][30] - The company is well-positioned to begin delivering the benefits of multiyear investments, with a constructive macro backdrop for both gold and silver [55] Other Important Information - The total project capital for Rochester is expected to come in between $710 million to $730 million, about 6% to 9% above the previously estimated $607 million [12] - The company completed an innovative financing of Canadian flow-through shares during the second quarter, raising just under $30 million at a 21% premium to the market price [53] Q&A Session Summary Question: Kensington's performance and future expectations - Management indicated that the challenges at Kensington were primarily due to inflow of water, not loss of grade, and similar grades are expected through the end of the year, with a majority of deferred ounces planned for 2024 [57] Question: Labor and productivity concerns for Rochester expansion - Management confirmed that they have the right number of people to start up the process plant and do not foresee productivity impacts due to access to labor [42][43] Question: Kensington's productivity in July and August - July showed significant improvement from June, with expectations for August to be better than July as water inflow issues were addressed [61] Question: Balance sheet and liquidity management - Management expressed confidence in managing liquidity levels through various levers, including the new ATM program and existing credit facilities, to support operations through the capital-intensive period [66][69]