Coeur Reports Second Quarter 2016 Results

Coeur Reports Second Quarter 2016 Results

Coeur Mining, Inc. (the “Company” or “Coeur”) (NYSE: CDE) reported second quarter 2016 revenue of $182.0 million, net income of $14.5 million, or $0.09 per share, and adjusted net income¹ of $17.3 million, or $0.11 per share.

Continued cost reductions resulted in a 16% decline in costs applicable to sales ("CAS") per silver equivalent ounce¹ ("AgEqOz"), a 21% decrease in CAS per gold equivalent ounce¹ ("AuEqOz"), and an 11% reduction in all-in sustaining costs ("AISC") per AgEqOz¹, all compared to the same quarter last year.

Cash flow from operating activities was $45.9 million, almost a $40 million increase quarter-over-quarter. Free cash flow¹ totaled $12.2 million in the second quarter, approximately $37 million higher than the first quarter.

Highlights

• Silver production was 4.0 million ounces and gold production was 92,727 ounces, or 9.6 million silver equivalent ounces¹, representing a 19% increase over the first quarter
• Silver and gold sales were 4.0 million ounces and 88,543 ounces, respectively, or 9.3 million silver equivalent ounces¹, representing a 12% increase over the first quarter
• CAS and adjusted CAS were $10.15 and $10.05 per realized AgEqOz¹, representing decreases of 11% and 9%, respectively, compared to the first quarter. Using a 60:1 equivalence ratio, CAS and adjusted CAS were $10.82 and $10.71 per AgEqOz¹, representing quarter-over-quarter decreases of 12% and 11%, respectively
• CAS and adjusted CAS per AuEqOz¹ were $649 and $644, each representing a decrease of 11% compared to the first quarter
• AISC and adjusted AISC were $13.36 and $13.27 per realized AgEqOz¹, representing quarter-over-quarter decreases of 4% and 3%, respectively. Using a 60:1 equivalence ratio, AISC and adjusted AISC were $14.92 and $14.82 per AgEqOz¹, each representing a quarter-over-quarter decrease of 8%
• Net income and adjusted net income¹ were $14.5 million and $17.3 million, or $0.09 and $0.11 per share, respectively
• EBITDA¹ and adjusted EBITDA¹ were $62.1 million and $72.4 million, respectively, with EBITDA increasing almost threefold and adjusted EBITDA nearly doubling compared to the first quarter
• Capital expenditures totaled $23.3 million, driven by underground development of Guadalupe and Independencia at Palmarejo and the Jualin deposit at Kensington
• Cash and equivalents were $257.6 million at June 30, 2016, which includes proceeds from a $75.0 million "at-the-market" stock offering completed during the quarter
• Completed sales of non-core assets for total consideration of $12.9 million during the second quarter and $23.8 million year-to-date, including the sale of a 2.5% net smelter returns royalty on the Correnso mine in New Zealand on July 25, 2016
• Received regulatory approval for the construction of an additional 120 million tons of leach pad capacity at Rochester; preliminary construction activities have now begun
• Subsequent to quarter-end, satisfied the minimum ounce obligation on the Franco-Nevada royalty, triggering a shift to improved terms which are expected to result in a significant increase in free cash flow¹ at Palmarejo (previously announced June 23, 2014)
• On July 15, 2016, repaid $99 million remaining principal on term loan plus a $4.4 million prepayment premium, for a total of $103.4 million, reducing total debt by nearly 20% and eliminating approximately $9 million of annual interest expense

"In addition to strong production increases, we again delivered industry-leading cost reductions during the second quarter. Combined with higher realized silver and gold prices, our quarterly adjusted EBITDA nearly doubled to $72.4 million, and we generated positive free cash flow of $12.2 million during the quarter," said Mitchell J. Krebs, Coeur's President and Chief Executive Officer.

"Along with our strong operating and financial performance, we achieved two significant milestones subsequent to quarter-end: the satisfaction of the minimum ounce obligation on Palmarejo's Franco-Nevada royalty and the repayment of the $100 million term loan. The transition to the improved Franco-Nevada terms represents a watershed event, positioning Palmarejo to be a significant contributor to free cash flow going forward. Combined with the debt repayment and the commensurate reduction to interest expense, our operations are poised to generate significant free cash flow in the second half of 2016.

"During the second half of the year, we plan to increase our exploration budget by approximately $8 million, primarily to upgrade resources to reserves at Palmarejo, Kensington, and Rochester. Nearly half of the $8 million increase will go toward expensed exploration activities and results in an increase to our full-year expensed exploration guidance range to $14 - $16 million. The other half of the $8 million increase will go toward capitalized exploration, resulting in an increase to our full-year guidance range to $16 - $18 million. In addition to this high-return incremental investment in exploration activities, we anticipate increasing our capital expenditure budget by an additional $10 million during the second half, bringing the total increase to $15 million for full-year guidance of $105 - $115 million. These additional funds will support additional underground development at Guadalupe and Jualin and will allow us to accelerate the construction of incremental leach pad capacity at Rochester now that all permits have been received.” (see "Non-U.S. GAAP Measures")

Financial Results

Second quarter revenue increased 23% quarter-over-quarter and 9% year-over-year to $182.0 million based on average realized silver and gold prices of $17.38 and $1,255, respectively. Silver contributed 38% of metal sales and gold contributed 62% during the second quarter. Costs applicable to sales declined 1% quarter-over-quarter and 16% year-over-year to $100.5 million during the second quarter.

Net income was $14.5 million, or $0.09 per share, in the second quarter, compared to net losses of $20.4 million, or $0.14 per share, in the first quarter, and $16.7 million, or $0.12, in the second quarter 2015. Adjusted net income¹ was $17.3 million, or $0.11 per share, compared to adjusted net losses¹ of $11.0 million, or $0.07 per share, in the first quarter and $18.1 million, or $0.13 per share, in the second quarter 2015. Adjusted net income for the second quarter primarily excludes foreign exchange losses, fair value adjustments to royalty obligations, and gains on sales of non-core assets. Second quarter cash flow from operating activities was $45.9 million, nearly $40 million higher than the prior quarter, despite a $1.6 million increase in working capital, resulting from higher production and average realized metal prices as well as lower costs applicable to sales on a per ounce basis.

Second quarter adjusted EBITDA¹ was $72.4 million, nearly doubling both quarter-over-quarter and year-over-year. At June 30, 2016, LTM adjusted EBITDA¹ totaled $170.9 million, a 26% increase over the first quarter and 81% higher than the same period last year.

Second quarter general and administrative expenses were $7.4 million, decreasing 11% quarter-over-quarter and 12% year-over-year. Second quarter capital expenditures of $23.3 million were 5% higher compared to the first quarter, driven by development of the Guadalupe and Independencia deposits at Palmarejo and the Jualin deposit at Kensington, and 2% lower compared to the same period last year. For the first six months of 2016, general and administrative expenses were $15.7 million and capital expenditures totaled $45.5 million.

Operations

Highlights of second quarter 2016 results for each of the Company's operating segments are provided below.

• Silver equivalent¹ production increased 34% compared to the first quarter as a result of higher grades and a 32% increase in tons mined from underground operations
• Metal sales of $48.3 million increased 62% quarter-over-quarter and 24% year-over-year
• Second quarter adjusted CAS per realized AgEqOz¹ were $8.24 and adjusted CAS per AgEqOz¹ (60:1 equivalence) were $9.02, representing declines of 19% and 22%, respectively, compared to the first quarter
• Transition to lower-tonnage, higher-grade, higher-margin underground operations at Guadalupe and Independencia remains on track
• Open pit mining operations were completed in mid-April while limited mining of the legacy underground area has extended into the third quarter
• Development and mining activities at Independencia continue on schedule; mining rate of 1,000 tons per day expected to be reached by year-end
• Subsequent to quarter-end, the minimum royalty ounce obligation was met, resulting in the new, more favorable Franco-Nevada stream agreement becoming effective, which is expected to significantly improve Palmarejo's cash flows going forward
• Maintaining full-year 2016 guidance of 3.9 - 4.4 million ounces of silver and 67,000 - 72,000 ounces of gold at CAS per AgEqOz¹ of $12.50 - $13.50

• Silver equivalent production¹ increased 31% in the second quarter due mostly to a 46% increase in tons placed quarter-over-quarter. The relatively higher portion of tons placed from run-of-mine led to a temporary decrease in grades for the quarter
• Elevated crushing rates and tons placed in the second quarter are expected to drive further production increases in the second half of the year
• Metal sales of $35.8 million increased 19% quarter-over-quarter and declined 2% year-over-year
• Second quarter adjusted CAS per realized AgEqOz¹ were $10.43 and adjusted CAS per AgEqOz¹ (60:1 equivalence) were $11.30, representing declines of 8% and 10%, respectively, compared to the prior quarter
• The Record of Decision was received from the Bureau of Land Management on June 30, allowing for the construction of an additional 120 million tons of leach pad capacity to begin in the second half of 2016
• Maintaining full-year 2016 guidance of 4.8 - 5.3 million ounces of silver and 48,000 - 55,000 ounces of gold at CAS per AgEqOz¹ of $11.25 - $12.25

• Consistent production and costs achieved in the second quarter with 32,210 gold ounces produced at an historical low adjusted CAS per AuOz¹ of $740
• Metal sales of $36.5 million increased 2% quarter-over-quarter and declined 14% year-over-year due to fewer ounces sold
• Development of the high-grade Jualin deposit is now 50% complete with an initial reserve estimate expected at year-end
• Maintaining full-year 2016 production guidance of 115,000 - 125,000 ounces of gold at CAS per AuOz¹ of $825 - $875

• Gold equivalent production¹ increased 34% compared to the prior quarter due to higher grades and timing of recoveries, driving a 20% decrease quarter-over-quarter in adjusted CAS per AuEqOz¹ to $534
• Metal sales of $34.0 million increased 22% quarter-over-quarter and 67% year-over-year
• Higher production levels expected in the second half of 2016 as a result of seasonal mining in the higher-grade Golden Reward pit
• Recovery rates, which were lower in the second quarter as a result of plant maintenance, are expected to return to the high-90% level in the third quarter
• Maintaining full-year 2016 guidance of 90,000 - 95,000 ounces of gold at CAS per AuEqOz¹ of $650 - $750

• Adjusted CAS per AgOz¹ were $12.97, 3% higher quarter-over-quarter but down 2% year-over-year
• Metal sales of $25.2 million increased 18% quarter-over-quarter and 8% year-over-year
• Purchases of high grade ore continue to contribute approximately one-third of production, supplementing cash flow generated from mined ore
• Maintaining full-year 2016 guidance of 5.8 - 6.1 million ounces of silver at CAS per AgOz¹ of $13.50 - $14.25

• Completed the sale of a number of Coeur Capital's assets in the second quarter for total consideration of approximately $9.9 million
• Completed the sale of a 2.5% net smelter returns royalty on the Correnso mine in New Zealand in July 2016 bringing total consideration for non-core asset sales to $23.8 million year-to-date
• Coeur Capital's primary remaining asset is a silver stream on the Endeavor mine in New South Wales, Australia
• Silver production received from the stream on the Endeavor mine continued to decline in the second quarter following a curtailment of production by the operator due to lower lead and zinc prices
• Coeur is maintaining its revised 2016 production guidance for Endeavor of 175,000 - 200,000 silver ounces

Exploration

Costs associated with exploration in the second quarter totaled $6.1 million, including $2.2 million (expensed) for discovery of new silver and gold mineralization and $3.9 million (capitalized) for definition and expansion of mineralized material. Coeur's exploration program ramped up to 11 active drill rigs late in the second quarter: six at Palmarejo, two at Kensington, two at Rochester, and one at Wharf. A total of 139,501 feet (42,520 meters) of combined core and reverse circulation drilling was completed during the quarter.

Coeur's 2016 exploration program gained significant momentum in the second quarter with a continued focus on brownfield exploration as well as a ramp up of greenfield exploration programs. Second quarter priorities included:

• Expanding the Guadalupe-Independencia corridor, including deeper areas of the Guadalupe and Independencia deposits and the Los Bancos and Nación veins
• Underground infill and expansion drilling of the high-grade Jualin deposit at Kensington, as well as four zones within the Kensington Main deposit and the Raven vein
• Infill and expansion drilling of the higher-grade East Rochester deposit, which is expected to be the focus of a revised economic analysis in 2016
• Ramp up of early-stage exploration projects in the U.S. and in north-central Mexico; drilling will commence on two projects in the second half of 2016

In-line with Coeur's success-based exploration strategy, the exploration guidance has been revised higher for 2016 to $14 - 16 million in 2016 (from $11 - $13 million), with an additional $16 - $18 million of capital allocated to resource conversion (from $11 - $13 million).

Full-Year 2016 Outlook

Full-year 2016 production and cost guidance remain unchanged. In light of positive exploration results in the first half of the year as well as an improved metal price environment, Coeur's exploration budget has increased by $8 million, nearly half of which has been added to exploration expense guidance and the balance of which has been earmarked for capitalized exploration and added to capital expenditures guidance. The $15 million increase to capital expenditures guidance also includes additional funds being allotted for development at Guadalupe and Jualin and to accelerate construction of incremental leach pad capacity at Rochester.

Conference Call Information

Coeur will report its full operational and financial results for second quarter 2016 on July 27, 2016 after the New York Stock Exchange closes for trading. There will be a conference call on July 28, 2016 at 11:00 a.m. Eastern time.

About Coeur

Coeur Mining is a well-diversified, growing precious metals producer with five precious metals mines in the Americas employing approximately 2,000 people. Coeur produces from its wholly owned operations: the Palmarejo silver-gold complex in Mexico, the Rochester silver-gold mine in Nevada, the Kensington gold mine in Alaska, the Wharf gold mine in South Dakota, and the San Bartolomé silver mine in Bolivia. The Company also has a non-operating interest in the Endeavor mine in Australia as well as royalty interests in Ecuador and New Zealand. In addition, the Company has two silver-gold exploration stage projects - the La Preciosa project in Mexico and the Joaquin project in Argentina. Coeur conducts ongoing exploration activities in Alaska, Nevada, Mexico, Bolivia and Argentina.

Cautionary Statement

This news release contains forward-looking statements within the meaning of securities legislation in the United States and Canada, including statements regarding anticipated cash flow, production, costs, capital expenditures, expenses, mining rates, recovery rates, operations at Palmarejo, development activity at Palmarejo and Kensington, expansion projects at Rochester, ore purchases at San Bartolomé, and exploration efforts. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause Coeur's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, the risk that anticipated production, cost and expense levels are not attained, 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), changes in the market prices of gold and silver and a sustained lower price environment, the uncertainties inherent in Coeur's production, exploratory and developmental activities, including risks relating to permitting and regulatory delays, ground conditions, grade variability, any future labor disputes or work stoppages (including those involving third parties), the uncertainties inherent in the estimation of gold and silver reserves and resources, changes that could result from Coeur's future acquisition of new mining properties or businesses, the absence of control over and reliance on third parties to operate mining operations in which Coeur or its subsidiaries hold royalty or streaming interests and risks related to these mining operations including results of mining and exploration activities, environmental, economic and political risks of the jurisdiction in which the mining operations are located, the loss of access to any third-party smelter to which Coeur markets silver and gold, the effects of environmental and other governmental regulations, the risks inherent in the ownership or operation of or investment in mining properties or businesses in foreign countries, Coeur's ability to raise additional financing necessary to conduct its business, make payments or refinance its debt, as well as other uncertainties and risk factors set out in filings made from time to time with the United States Securities and Exchange Commission, and the Canadian securities regulators, including, without limitation, Coeur's most recent reports on Forms 10-K and 10-Q. Actual results, developments and timetables could vary significantly from the estimates presented. Readers are cautioned not to put undue reliance on forward-looking statements. Coeur disclaims any intent or obligation to update publicly such forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, Coeur undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of Coeur, its financial or operating results or its securities.

Dana Willis, Coeur's Director, Resource Geology and a qualified person under Canadian National Instrument 43-101, supervised the preparation of the scientific and technical information concerning Coeur's mineral projects in this news release. For a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources, as well as data verification procedures and a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant factors, Canadian investors should refer to the Technical Reports for each of Coeur's properties as filed on SEDAR at www.sedar.com.

Non-U.S. GAAP Measures

We supplement the reporting of our financial information determined under United States generally accepted accounting principles (U.S. GAAP) with certain non-U.S. GAAP financial measures, including EBITDA, adjusted EBITDA, adjusted net income (loss), costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce), adjusted costs applicable to sales per silver equivalent ounce, all-in sustaining costs, and adjusted all-in sustaining costs. We believe that these adjusted measures provide meaningful information to assist management, investors and analysts in understanding our financial results and assessing our prospects for future performance. We believe these adjusted financial measures are important indicators of our recurring operations because they exclude items that may not be indicative of, or are unrelated to our core operating results, and provide a better baseline for analyzing trends in our underlying businesses. We believe EBITDA, adjusted EBITDA, adjusted net income (loss), costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce), adjusted costs applicable to sales per silver equivalent ounce, all-in sustaining costs, and adjusted all-in sustaining costs are important measures in assessing the Company's overall financial performance.

Notes

1. EBITDA, adjusted EBITDA, adjusted net income (loss), all-in sustaining costs, adjusted all-in sustaining costs, costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce), and adjusted costs applicable to sales per silver equivalent ounce are non-GAAP measures. Please see tables in the Appendix for the reconciliation to U.S. GAAP. For purposes of silver and gold equivalence, a 60:1 silver to gold ratio is assumed except where noted as average realized prices. Free cash flow is defined as cash flow from operating activities less capital expenditures and gold production royalty payments. Please see table in Appendix for the calculation of consolidated free cash flow.

2. Includes capital leases. Net of debt issuance costs and premium received.