Coeur Reports Fourth Quarter and Full-Year 2022 Results
ca.finance.yahoo.com
Wed, February 22, 2023 at 1:30 p.m. PST·17 min read
Provides Full-Year 2023 Guidance
CHICAGO, February 22, 2023--( BUSINESS WIRE)--Coeur Mining, Inc. ("Coeur" or the "Company") (NYSE: CDE) today reported fourth quarter 2022 financial results, including revenue of $210 million and cash flow from operating activities of $29 million. The Company reported GAAP net income from continuing operations of $49 million, or $0.17 per share, driven by a $62 million gain on sale of the Crown and Sterling ("Crown Sterling") holdings. On an adjusted basis1, Coeur reported EBITDA of $36 million, cash flow from operating activities before changes in working capital of $20 million and net loss from continuing operations of $18 million, or $0.06 per share.
For the full year, Coeur reported revenue of $786 million, cash flow from operating activities of $26 million and GAAP net loss from continuing operations of $78 million, or $0.28 per share. On an adjusted basis1, the Company reported EBITDA of $139 million, cash flow from operating activities prior to changes in working capital of $72 million and net loss from continuing operations of $89 million, or $0.32 per share.
___________________________________________________________________________________________________________________________________
Key Highlights
Solid fourth quarter production growth led to full-year production within guidance ranges – Gold and silver production increased 5% and 4% quarter-over-quarter, respectively, to 87,727 ounces and 2.5 million ounces. Full-year gold and silver production totaled 330,346 ounces and 9.8 million ounces, respectively, within the Company’s consolidated production guidance ranges
Rochester delivered strong quarterly performance – Fourth quarter production at Rochester totaled 973,000 ounces and 11,589 ounces of silver and gold, respectively, representing quarter-over-quarter increases of 31% and 32%. Costs applicable to sales2 decreased 5% for silver and 12% for gold quarter-over-quarter
POA 11 expansion nearing scheduled mid-year construction completion and remains on-track – Construction at Rochester is scheduled to be completed mid-year 2023. At the end of 2022, the project was 74% complete. The new Stage VI leach pad is now operational, with first ore placed on February 1, 2023. As of December 31, 2022, approximately $605 million of the estimated capital had been committed, of which $494 million of the estimated capital cost had been incurred. Total expected project capital remains unchanged at $650 - $670 million
Exploration investment drives approximately 12% and 3% year-over-year increases in gold and silver reserves, respectively – Gold reserves at Kensington grew roughly 56% year-over-year, adding approximately a year and a half to its mine life. Successful exploration at Silvertip contributed to year-over-year increases in measured and indicated resources of 73%, 69% and 81% in silver, zinc and lead, respectively, excluding reclassified ounces. Over the last five years, the Company has invested approximately $245 million in exploration, leading to increases of approximately 21% and 49% in Company-wide gold and silver reserves, respectively over the five-year period
Liquidity further bolstered to support remaining elevated levels of growth investments – The sale of the Crown Sterling holdings was completed on November 4, 2022 for upfront cash consideration of $150 million. On January 17, 2023, Coeur announced the sale of its remaining shares of Victoria Gold Corporation ("Victoria Gold") for net cash proceeds of approximately $40 million. Coeur ended the quarter with total liquidity of approximately $342 million, including $62 million of cash and $280 million of available capacity under its $390 million revolving credit facility ("RCF")3 and is further supported by robust hedges covering approximately 52% and 29% of 2023 estimated gold and silver production, respectively. As adjusted to reflect the receipt of proceeds from Victoria Gold, Coeur’s total liquidity stood at $382 million at December 31, 2022
2023 guidance ranges consistent with 2022 investor day outlook – The Company expects 2023 gold and silver production of 320,000 - 370,000 ounces and 10.0 - 12.0 million ounces, respectively, driven by strong expected second half silver and gold production increases consistent with the planned ramp-up at Rochester following completion of the POA 11 expansion project and by higher expected gold production from the Wharf gold operation
"A stronger fourth quarter capped off an important year for Coeur in 2022 as we positioned the Company to deliver on a pivotal 2023 composed of several important catalysts, including the mid-year construction completion of the POA 11 expansion project at Rochester," said Mitchell J. Krebs, President and Chief Executive Officer.
"2022 represented a year of unprecedented global volatility and intensive capital investment by the Company. Decades high inflation, strength in the U.S. dollar and supply chain disruptions made it a challenging year to deliver on many of Coeur’s key priorities. Despite the unique challenges, I am proud that our team achieved our full-year production guidance for the third consecutive year, delivered full-year capital expenditures in-line with our guidance and came in below our full-year G&A guidance range. Even with strong fourth quarter production increases, our costs applicable to sales declined, which is a testament to our team’s ongoing aggressive cost management efforts and effective business improvement initiatives. In addition, I am particularly proud of our team’s safety performance last year, which resulted in all-time Company low incident rates and among the lowest in the industry.
"The POA 11 expansion project made tremendous progress during the fourth quarter, while the Rochester operation ended 2022 with one of its strongest quarters in recent years. Rochester’s fourth quarter reflected higher grades placed in the prior quarter as well as the application of many of the important lessons we have generated over the past two years in preparation for the transition to the newly expanded infrastructure later this year.
"2022 also marked another successful year for reserve replacement, which reflects our ongoing commitment to investing in near-mine exploration. Over the past five years, the Company has invested nearly $245 million in exploration to increase our gold and silver reserves by 21% and 49%, respectively, while boosting measured and indicated resources by 77% for gold and 53% for silver. In particular, early success from Kensington’s multi-year development and drilling program led to a 56% increase in reserves and the addition of one and a half years of mine life. At Silvertip, silver, zinc and lead measured and indicated resources materially increased year-over-year by approximately 73%, 69% and 81%, respectively, excluding reclassified ounces. We expect Silvertip’s resource to continue to expand and support a future potential source of meaningful growth for the Company."
Financial and Operating Highlights (Unaudited)
(Amounts in millions, except per share amounts, gold ounces produced & sold, and per-ounce metrics)
|
| 2022
|
| 4Q 2022
| 3Q 2022
| 2Q 2022
| 1Q 2022
|
| 2021
|
| 4Q 2021
| Gold Sales
| $
| 572.9
|
| $
| 157.6
|
| $
| 139.2
|
| $
| 146.6
|
| $
| 129.5
|
| $
| 578.9
|
| $
| 146.7
|
| Silver Sales
| $
| 212.8
|
| $
| 52.5
|
| $
| 43.8
|
| $
| 57.5
|
| $
| 59.0
|
| $
| 253.9
|
| $
| 61.2
|
| Consolidated Revenue
| $
| 785.6
|
| $
| 210.1
|
| $
| 183.0
|
| $
| 204.1
|
| $
| 188.4
|
| $
| 832.8
|
| $
| 207.8
|
| Costs Applicable to Sales2
| $
| 606.5
|
| $
| 159.3
|
| $
| 163.2
|
| $
| 150.7
|
| $
| 133.3
|
| $
| 511.5
|
| $
| 136.5
|
| General and Administrative Expenses
| $
| 39.5
|
| $
| 10.2
|
| $
| 9.7
|
| $
| 9.3
|
| $
| 10.3
|
| $
| 40.4
|
| $
| 9.6
|
| Net Income (Loss)
| $
| (78.1
| )
| $
| 49.0
|
| $
| (57.4
| )
| $
| (77.4
| )
| $
| 7.7
|
| $
| (31.3
| )
| $
| (10.7
| )
| Net Income (Loss) Per Share
| $
| (0.28
| )
| $
| 0.17
|
| $
| (0.21
| )
| $
| (0.28
| )
| $
| 0.03
|
| $
| (0.13
| )
| $
| (0.04
| )
| Adjusted Net Income (Loss)1
| $
| (89.1
| )
| $
| (17.5
| )
| $
| (44.7
| )
| $
| (13.1
| )
| $
| (13.8
| )
| $
| (1.4
| )
| $
| (11.6
| )
| Adjusted Net Income (Loss)1 Per Share
| $
| (0.32
| )
| $
| (0.06
| )
| $
| (0.16
| )
| $
| (0.05
| )
| $
| (0.05
| )
| $
| (0.01
| )
| $
| (0.05
| )
| Weighted Average Shares Outstanding
|
| 275.2
|
|
| 284.5
|
|
| 278.1
|
|
| 278.0
|
|
| 263.6
|
|
| 250.0
|
|
| 254.8
|
| EBITDA1
| $
| 72.0
|
| $
| 84.9
|
| $
| (20.5
| )
| $
| (32.8
| )
| $
| 40.4
|
| $
| 148.4
|
| $
| 28.3
|
| Adjusted EBITDA1
| $
| 139.0
|
| $
| 35.9
|
| $
| 18.3
|
| $
| 43.3
|
| $
| 41.5
|
| $
| 216.1
|
| $
| 48.7
|
| Cash Flow from Operating Activities
| $
| 25.6
|
| $
| 28.5
|
| $
| (19.1
| )
| $
| 22.6
|
| $
| (6.4
| )
| $
| 110.5
|
| $
| 35.0
|
| Capital Expenditures
| $
| 352.4
|
| $
| 113.1
|
| $
| 96.6
|
| $
| 73.2
|
| $
| 69.5
|
| $
| 309.8
|
| $
| 100.9
|
| Free Cash Flow1
| $
| (326.7
| )
| $
| (84.5
| )
| $
| (115.7
| )
| $
| (50.6
| )
| $
| (75.9
| )
| $
| (199.3
| )
| $
| (65.9
| )
| Cash, Equivalents & Short-Term Investments
| $
| 61.5
|
| $
| 61.5
|
| $
| 75.4
|
| $
| 74.2
|
| $
| 73.3
|
| $
| 56.7
|
| $
| 56.7
|
| Total Debt4
| $
| 515.9
|
| $
| 515.9
|
| $
| 635.7
|
| $
| 547.5
|
| $
| 485.5
|
| $
| 487.5
|
| $
| 487.5
|
| Average Realized Price Per Ounce – Gold
| $
| 1,736
|
| $
| 1,787
|
| $
| 1,702
|
| $
| 1,729
|
| $
| 1,721
|
| $
| 1,652
|
| $
| 1,652
|
| Average Realized Price Per Ounce – Silver
| $
| 21.77
|
| $
| 21.14
|
| $
| 19.09
|
| $
| 22.61
|
| $
| 24.06
|
| $
| 25.06
|
| $
| 23.17
|
| Gold Ounces Produced
|
| 330,346
|
|
| 87,727
|
|
| 83,438
|
|
| 83,772
|
|
| 75,409
|
|
| 348,529
|
|
| 88,946
|
| Silver Ounces Produced
|
| 9.8
|
|
| 2.4
|
|
| 2.4
|
|
| 2.5
|
|
| 2.5
|
|
| 10.1
|
|
| 2.6
|
| Gold Ounces Sold
|
| 329,968
|
|
| 88,189
|
|
| 81,782
|
|
| 84,786
|
|
| 75,211
|
|
| 350,347
|
|
| 88,930
|
| Silver Ounces Sold
|
| 9.8
|
|
| 2.5
|
|
| 2.3
|
|
| 2.5
|
|
| 2.5
|
|
| 10.1
|
|
| 2.6
|
| Adjusted CAS per AuOz1
| $
| 1,300
|
| $
| 1,270
|
| $
| 1,318
|
| $
| 1,207
|
| $
| 1,169
|
| $
| 977
|
| $
| 1,016
|
| Adjusted CAS per AgOz1
| $
| 17.00
|
| $
| 15.57
|
| $
| 14.52
|
| $
| 15.09
|
| $
| 14.95
|
| $
| 15.70
|
| $
| 14.47
|
|
Financial Results
Fourth quarter 2022 revenue totaled $210 million compared to $183 million in the prior period and $208 million in the fourth quarter of 2021. The Company produced 87,727 and 2.5 million ounces of gold and silver, respectively, during the quarter. Metal sales for the quarter totaled 88,189 ounces of gold and 2.5 million ounces of silver. Average realized gold and silver prices for the quarter were $1,787 and $21.14 per ounce, respectively, compared to $1,702 and $19.09 per ounce in the prior period, a respective 5% and 11% increase quarter-over-quarter, and $1,652 and $23.17 per ounce in the fourth quarter of 2021, respectively, an 8% increase in gold and 9% decrease in silver.
Coeur generated $786 million in revenue during 2022, compared to $833 million in 2021. Full-year gold and silver production totaled 330,346 and 9.8 million ounces, respectively, compared to 348,529 ounces of gold and 10.1 million ounces of silver in 2021. Metal sales in 2022 included 329,968 and 9.8 million ounces of gold and silver, respectively. Average realized gold and silver prices for the year were $1,736 and $21.77 per ounce, respectively, compared to $1,652 and $25.06 per ounce in 2021.
Gold and silver sales represented 75% and 25% of quarterly revenue, respectively. For the full year, gold and silver sales accounted for 73% and 27% of revenue. The Company’s U.S. operations accounted for approximately 67% and 61% of fourth quarter and full-year revenue, respectively.
Costs applicable to sales2 decreased 2% quarter-over-quarter to $159 million while increasing 19% year-over-year to $607 million. Higher costs during the year were due primarily to increased consumable costs driven by inflation. General and administrative expenses remained consistent quarter-over-quarter at $10 million.
Coeur invested approximately $9 million ($8 million expensed and $2 million capitalized) in exploration during the quarter, compared to roughly $12 million ($8 million expensed and $4 million capitalized) in the prior period. For the full year, the Company invested approximately $48 million ($27 million expensed and $22 million capitalized), compared to roughly $71 million ($51 million expensed and $20 million capitalized), reflecting lower planned investment across the portfolio following the Company’s highest-ever exploration investment in 2021. See the "Operations" and "Exploration" sections for additional detail on the Company’s exploration activities.
The Company recorded income tax benefit of approximately $0.4 million and expense of approximately $15 million during the fourth quarter and for the full year, respectively. Cash income and mining taxes paid during the period totaled approximately $9 million, bringing the full-year total to $42 million. Cash taxes paid in 2022 primarily reflect income and mining tax payments in Mexico. Additionally, Coeur expects to pay approximately $14 - $18 million in cash taxes during the first quarter of 2023 primarily as a result of its annual tax filings in Mexico.
Quarterly operating cash flow totaled $29 million compared to $(19) million in the prior period, mainly driven by higher metal sales and favorable changes in working capital. Changes in working capital during the quarter were $9 million, compared to $(18) million in the prior period, reflecting the timing of semi-annual interest payments on the Company’s 2029 5.125% Senior Notes. For the full year, operating cash flow decreased 77% to $26 million driven by lower profitability at each site.
Capital expenditures increased 17% quarter-over-quarter to $113 million, bringing the full-year total to $352 million and within Coeur’s 2022 guidance range of $330 - $395 million. Expenditures related to the expansion project at Rochester totaled $89 million and $229 million during the fourth quarter and full-year, respectively, compared to $68 million in the third quarter and $148 million in 2021. Sustaining and development capital expenditures accounted for approximately 18% and 82%, respectively, of Coeur’s total capital investment during the quarter.
Capital Project Update
Rochester Expansion
As of December 31, 2022, the Company had committed approximately $605 million of capital since inception of the project and approximately $494 million of the estimated project cost had been incurred. Total estimated project capital remains between $650 - $670 million. At the end of 2022, the project was 74% complete.
Coeur achieved several key milestones at the Rochester expansion during the quarter.
Notably, the Company (i) completed concrete foundations for the pre-screen structure, while advancing the concrete work in the primary crusher area, (ii) continued structural, mechanical, piping, electrical and instrumentation construction work throughout the project, and (iii) achieved mechanical completion of the Merrill-Crowe electrical substation construction.
Progress on the Merrill-Crowe plant remained on schedule during the quarter, including (i) completion of mechanical equipment setting, (ii) completion of process plant building cladding, (iii) commencement of electrical cable installation and continuation of piping installation, and (iv) successful completion of control systems programming and factory testing.
Further work on the crusher corridor also advanced, including (i) completion of the first lift of the primary crusher vertical concrete, (ii) continuation of steel erection and equipment installation above the secondary cone crushers in the secondary crusher area, (iii) continuation of steel erection and equipment installation above the tertiary HPGR crushers in the tertiary crusher area, and (iv) commencement of control systems programming.
During the quarter, Coeur made solid progress on the final major high-voltage electrical distribution and substation construction, while also advancing pre-commissioning planning and system development. Mechanical completion remains on target for mid-2023 with ramp-up and commissioning expected to take place during the second half of the year. Key elements of the project timeline in 2023 are highlighted below:
|
| Target Completion Date
| Placing Ore on Stage VI Leach Pad
|
| 1Q ?
| Merrill-Crowe Mechanical Completion
|
| 2Q
| Crushing Circuit Inauguration
|
| 3Q
| Commission and Ramp-Up Completion
|
| Year-End
|
Balance Sheet and Liquidity Update
Coeur ended the quarter with total liquidity of approximately $342 million, including $62 million of cash and $280 million of available capacity under its $390 million RCF3 subject to certain financial covenants. Additionally, the Company had $44 million of marketable securities at the end of the fourth quarter.
On January 17, 2023, Coeur announced the sale of the remaining 6 million shares of its Victoria Gold investment for net proceeds of approximately $40 million, which is not included as part of the Company’s fourth quarter results. As adjusted to reflect the receipt of proceeds from this transaction, Coeur’s total liquidity stood at $382 million at December 31, 2022.
Hedging Update
During the fourth quarter, the Company added to its hedge position by executing additional hedges on 18,000 ounces of its expected 2023 gold production. Additionally, early in the first quarter, Coeur executed additional hedges on 30,000 ounces of its expected 2023 gold production. The Company continues to have meaningful gold price protection in place for 2023. In 2022, Coeur realized a net hedge gain of roughly $24 million.
Coeur established a new silver hedge position through the execution of hedges on 3.2 million ounces of its expected 2023 silver production early in the first quarter of 2023. The Company’s hedging strategy continues to focus on mitigating risk during this time of capital intensity. An overview of the hedges in place is outlined below.
| 1Q 2023
| 2Q 2023
| 3Q 2023
| 4Q 2023
| Gold Ounces Hedged
| 40,500
| 40,500
| 49,749
| 49,749
| Avg. Forward Price ($/oz)
| $1,944
| $1,944
| $1,975
| $1,975
| Silver Ounces Hedged
| 800,000
| 1,200,000
| 600,000
| 600,000
| Avg. Forward Price ($/oz)
| $24.29
| $24.29
| $25.00
| $25.00
|
Mark-to-Market Adjustments
The Company values its strategic investments in equity securities at the end of each reporting period. The estimated fair values of Coeur’s equity investments in Victoria Gold, Avino Silver & Gold Mines Ltd. and Integra Resources Corp. totaled $44 million at December 31, 2022, consisting of $32 million, $10 million and $2 million, respectively (and does not reflect the sale of Victoria Gold stock that occurred after quarter-end), compared to $45 million at September 30, 2022, consisting of $36 million, $7 million and $2 million, respectively.
Rochester LCM Adjustment
Coeur reports the carrying value of metal and leach pad inventory at the lower of cost or net realizable value, with cost being determined using a weighted average cost method. Decreases in the market price of gold and silver can affect the value of metal inventory, stockpiles and leach pads, and it may be necessary to record a write-down to the net realizable value, as well as impact carrying value of long-lived assets. At the end of the fourth quarter, the cost of ore on leach pads at Rochester exceeded its net realizable value which resulted in a lower of cost or market ("LCM") adjustment of $9 million (approximately $8 million in costs applicable to sales2 and $1 million of amortization).
Operations
Fourth quarter and full-year 2022 highlights for each of the Company’s operations are provided below.
Palmarejo, Mexico
(Dollars in millions, except per ounce amounts)
|
| 2022
|
|
| 4Q 2022
|
|
| 3Q 2022
|
|
| 2Q 2022
|
|
| 1Q 2022
|
|
| 2021
|
|
| 4Q 2021
|
| Tons milled
|
| 2,197,808
|
|
| 554,247
|
|
| 538,750
|
|
| 539,600
|
|
| 565,211
|
|
| 2,106,741
|
|
| 587,615
|
| Average gold grade (oz/t)
|
| 0.053
|
|
| 0.051
|
|
| 0.049
|
|
| 0.054
|
|
| 0.056
|
|
| 0.056
|
|
| 0.055
|
| Average silver grade (oz/t)
|
| 3.63
|
|
| 3.16
|
|
| 3.53
|
|
| 3.95
|
|
| 3.87
|
|
| 3.93
|
|
| 3.86
|
| Average recovery rate – Au
|
| 92.1
| %
|
| 92.4
| %
|
| 93.3
| %
|
| 92.4
| %
|
| 90.6
| %
|
| 92.8
| %
|
| 89.7
| %
| Average recovery rate – Ag
|
| 84.2
| %
|
| 85.0
| %
|
| 84.9
| %
|
| 84.2
| %
|
| 83.0
| %
|
| 82.4
| %
|
| 81.3
| %
| Gold ounces produced
|
| 106,782
|
|
| 25,935
|
|
| 24,807
|
|
| 27,109
|
|
| 28,931
|
|
| 109,202
|
|
| 28,748
|
| Silver ounces produced (000’s)
|
| 6,709
|
|
| 1,489
|
|
| 1,612
|
|
| 1,795
|
|
| 1,813
|
|
| 6,821
|
|
| 1,843
|
| Gold ounces sold
|
| 107,157
|
|
| 25,252
|
|
| 24,378
|
|
| 29,285
|
|
| 28,242
|
|
| 108,806
|
|
| 27,706
|
| Silver ounces sold (000’s)
|
| 6,695
|
|
| 1,490
|
|
| 1,554
|
|
| 1,855
|
|
| 1,796
|
|
| 6,806
|
|
| 1,813
|
| Average realized price per gold ounce
| $
| 1,471
|
| $
| 1,509
|
| $
| 1,447
|
| $
| 1,507
|
| $
| 1,419
|
| $
| 1,380
|
| $
| 1,374
|
| Average realized price per silver ounce
| $
| 21.78
|
| $
| 21.10
|
| $
| 19.01
|
| $
| 22.56
|
| $
| 23.94
|
| $
| 25.00
|
| $
| 23.26
|
| Metal sales
| $
| 303.4
|
| $
| 69.5
|
| $
| 64.8
|
| $
| 86.0
|
| $
| 83.1
|
| $
| 320.3
|
| $
| 80.4
|
| Costs applicable to sales2
| $
| 182.6
|
| $
| 47.1
|
| $
| 43.2
|
| $
| 49.1
|
| $
| 43.2
|
| $
| 153.7
|
| $
| 38.8
|
| Adjusted CAS per AuOz1
| $
|
|
