Coeur Reports Fourth Quarter and Full-Year 2016 Results

Coeur Reports Fourth Quarter and Full-Year 2016 Results

Coeur Mining, Inc. (the “Company” or “Coeur”) (NYSE:CDE) today reported 2016 financial results, posting net income of $55.4 million, or $0.34 per share, and cash flow from operating activities of $125.8 million, an increase of $12.3 million, or 11%, over 2015. Adjusted EBITDA¹ for the year was $215.2 million, increasing nearly $90 million, or 68%, year-over-year. Over the course of 2016, the Company also meaningfully strengthened its balance sheet, ending the year with total outstanding debt of $210.9 million, a 57% reduction compared to a year ago, net debt¹ of $48.7 million, and a year-end cash balance of $162.2 million.

In the fourth quarter, the Company generated a net loss of $8.3 million, or $0.03 per share, due mostly to lower metal prices and a one-time loss of $11.3 million related to the redemption of $190 million in principal of the Company's 7.875% Senior Notes due 2021. Quarterly cash flow from operating activities was $25.5 million and adjusted EBITDA¹ was $44.0 million.

Highlights

• As announced on January 5, 2017, Coeur achieved record production of 3.9 million ounces of silver and 102,500 ounces of gold, or 10.0 million silver equivalent ounces (AgEqOz)¹, for the fourth quarter and 14.8 million ounces of silver and 358,170 ounces of gold, or 36.3 million AgEqOz¹ for the full year
• For Coeur's primary silver operations, CAS and adjusted CAS per average spot AgEqOz¹ were $11.42 and $11.34, respectively, for the fourth quarter and $11.12 and $10.99 for the full year. The full-year figures represented 10% and 7% year-over-year declines, respectively
• For Coeur's primary gold operations, fourth quarter CAS and adjusted CAS per gold equivalent ounce (AuEqOz)¹ were $675 and $676, respectively. Relative to 2015, full-year CAS and adjusted CAS per AuEqOz¹ declined 8% and 10%, respectively, to $705 and $688
• Companywide AISC and adjusted AISC per average spot AgEqOz¹ were $14.56 and $14.52, respectively, for the quarter and $14.27 and $14.09 for the full year. Full-year figures both represent year-over-year decreases of 2%. On a 60:1 equivalence basis, companywide AISC and adjusted AISC per AgEqOz¹ were $16.08 and $15.88, respectively, both within the Company guidance range of $15.75 - $16.25
• General and administrative expenses were $29.4 million, within Company guidance and representing a year-over-year decrease of 10%
• Capital expenditures for the quarter were $29.9 million, driven by the ramp-up of Palmarejo underground operations at Guadalupe and Independencia, construction of the Stage IV leach pad expansion at Rochester, and continued development of the Jualin decline at Kensington. Full-year capital expenditures were $101.0 million, below Company guidance of $105 - $115 million
• Total debt decreased $279.5 million, or 57%, year-over-year. Together with rising adjusted EBITDA¹, the Company's total debt to last twelve month (LTM) adjusted EBITDA¹ declined to 1.0x, down from 3.8x a year ago and 5.5x fifteen months ago
• In 2016, Coeur monetized several non-core assets for a total consideration of $23.8 million, consistent with its strategy of redeploying capital to higher-return opportunities. This focus has continued into the new year, with the pending Joaquin Project sale announced in January 2017 for total consideration of $25 million plus a 2% NSR

"2016 marked a key inflection point for Coeur. Our silver equivalent production set a new Company record, operating and non-operating costs continued to decline, adjusted EBITDA increased materially, and we achieved strong earnings for the year. In addition, we delivered on our commitment to strengthen our balance sheet by reducing total debt by $280 million,” said Mitchell J. Krebs, Coeur's President and Chief Executive Officer.

“Coeur has entered 2017 well-positioned to continue delivering high-quality growth through ongoing initiatives at our Palmarejo, Kensington, and Rochester operations. In addition, our exploration programs targeting near-mine additions to reserves and resources have been accelerated and are expected to further enhance and extend the economics of our existing operations. Our team has done a terrific job executing our strategic plan and striving to establish a higher standard in all areas of the business.”

Financial Results

During the quarter, the Company realized average silver and gold prices of $16.64 and $1,170 per ounce, representing quarter-over-quarter decreases of 15% and 11%, respectively. Importantly, the average realized gold price in the fourth quarter reflected the impact of the new gold stream agreement with Franco-Nevada, which provides for a payment of $800 per ounce delivered. For the full year, average realized silver and gold prices were $17.18 and $1,230, 11% and 8% higher, respectively, year-over-year.

Fourth quarter revenue was $159.2 million, a decrease of 10% quarter-over-quarter, driven by lower metal prices. Silver metal sales contributed 33% and gold 67%. For the full year, revenue increased 3% to $665.8 million, with silver metal sales contributing 37% and gold 63%.

Costs applicable to sales were $102.0 million for the fourth quarter. Full-year costs applicable to sales were $409.5 million, representing a year-over-year decrease of 15%, primarily driven by lower unit costs. Other contributing factors include increased operating efficiencies, lower input costs, and more favorable currency exchange rates.

Free cash flow¹ for the quarter was negatively impacted by an increase in inventory at Palmarejo as well as the acceleration of cash interest paid in connection with the redemption of $190 million in principal of the Company's 7.875% Senior Notes due 2021. The increase in inventory at Palmarejo resulted from the timing of a quarter-end shipment and gold retained for purchase by Franco-Nevada in January 2017.

Fourth quarter expensed exploration was $5.3 million, bringing full-year expensed exploration to $12.9 million, representing a year-over-year increase of 11% due to expanded exploration drilling activities at Palmarejo, Kensington, and Rochester.

Net income in 2016 was $55.4 million, or $0.34 per share. This compares to a net loss of $367.2 million, or $2.83 per share in 2015, which included after-tax, non-cash impairment charges of $313.3 million. Adjusted net income¹ in 2016 was $47.8 million, or $0.29 per share, a significant improvement over the adjusted net loss¹ in 2015 of $103.6 million, or $0.80 per share.

Operations

Highlights of fourth quarter and full-year 2016 results for each of the Company's operating segments are provided below.

• In 2016, legacy open pit and underground operations at Palmarejo were completed while underground operations at Guadalupe and Independencia steadily accelerated, reaching a mining rate of approximately 2,400 and 1,000 tons per day, respectively, as of year-end. The Company is targeting a combined mining rate of 4,500 tons per day by year-end 2017
• Silver equivalent¹ production increased 40% quarter-over-quarter to 2.7 million ounces as a result of higher mining rates and improved recovery rates. As expected, full-year silver equivalent¹ production declined 6% to 8.9 million as the mine transitioned from legacy Palmarejo operations to higher-grade underground operations at Guadalupe and Independencia
• Fourth quarter adjusted CAS per average spot AgEqOz¹ was $10.11 while full-year adjusted CAS per average spot AgEqOz¹ was $9.57, representing a year-over-year decrease of 19% as a result of higher grade production, lower input costs, and a more favorable exchange rate
• Exploration expense increased in the second half of the year as drilling efforts to extend mine life accelerated
• In July 2016, the 400,000 ounce minimum royalty obligation with Franco-Nevada under the original agreement was satisfied and the new, more favorable gold stream agreement became effective. The first sale under the new stream agreement occurred in the fourth quarter at a gold price of $800 per ounce
• In 2017, Palmarejo is expected to produce 6.5 - 7.0 million ounces of silver and 110,000 - 120,000 ounces of gold, or 13.1 - 14.2 million silver equivalent¹ ounces at CAS per AgEqOz¹ of $10.00 - $10.50. Using a 69:1 spot silver to gold ratio, Palmarejo's 2017 CAS per spot AgEqOz¹ is expected to be $9.25 - $9.75
• Capital expenditures are expected to increase to $40 - $45 million in 2017 as a result of the ongoing transition to underground mining operations at Guadalupe and Independencia

• Fourth quarter silver equivalent¹ production increased 13% quarter-over-quarter to 2.1 million ounces due to improved Stage III leach pad performance resulting from strong ore placement rates throughout 2016. Full-year silver equivalent¹ production was 7.6 million ounces
• Tons placed of 19.6 million in 2016 was approximately 19% higher year-over-year and the highest since Rochester first began operating in 1986
• Adjusted CAS per average spot AgEqOz¹ increased slightly to $11.16 in the fourth quarter and decreased 3% to $10.93 for the full year
• Full-year free cash flow¹ was $12.0 million, representing an increase of $5.2 million, or 76%, over 2015. This was primarily driven by increased production, lower unit costs, and lower capital expenditures
• Construction of the Stage IV leach pad expansion remains on-schedule and on-budget, with commissioning expected in the third quarter of 2017
• Full-year 2017 production expected to be 4.2 - 4.7 million ounces of silver and 47,000 - 52,000 ounces of gold, or 7.0 - 7.8 million silver equivalent¹ ounces at CAS per AgEqOz¹ of $11.50 - $12.00. Using a 69:1 spot silver to gold ratio, Rochester's 2017 CAS per spot AgEqOz¹ is expected to be $10.75 - $11.25
• Capital expenditures are expected to increase to $30 - $35 million in 2017 due to continued construction of the Stage IV leach pad expansion

• Fourth quarter gold production was the highest of the year, increasing 27% quarter-over-quarter to 33,688 ounces due to higher tons milled and higher grades. Full-year production was near the high end of the Company's guidance range at 124,331 ounces of gold
• Fourth quarter adjusted CAS per gold ounce (AuOz)¹ decreased 7% quarter-over-quarter to $801 due to higher grades. Full-year adjusted CAS per AuOz¹ was within guidance at $790 and represented a 1% decrease year-over-year
• Despite a year-over-year $13.0 million increase in capital expenditures, free cash flow¹ remained flat in 2016 at $14.0 million
• 2017 production is expected to be 120,000 - 125,000 ounces of gold at CAS per AuOz¹ of $800 - $850
• Capital expenditures are expected to increase to over $40 million in 2017 primarily as a result of ongoing development of the Jualin deposit, where production is expected to begin late in the year

• Gold production in the fourth quarter was 30,675 ounces, the strongest quarter of 2016. The concurrent decline in average gold grade for the period was anticipated due to seasonal mine sequencing
• Full-year production of 109,175 ounces of gold exceeded the high-end of Company guidance by over 9,000 ounces and represented an increase of 40% compared to 2015. This was largely the result of two additional months of production, as well as improved grades and plant recovery rates
• Fourth quarter adjusted CAS per AuEqOz¹ was relatively flat quarter-over-quarter at $556, while full-year adjusted CAS per AuEqOz¹ beat guidance, decreasing 19% to $575, primarily due to lower mining and leaching costs
• Full-year free cash flow¹ of $57.6 million brings total free cash flow to $86.4 million since the acquisition of Wharf in February 2015 for $99 million
• Production in 2017 is expected to be 85,000 - 90,000 ounces of gold at CAS per AuEqOz¹ of $775 - $825, both of which reflect the anticipated completion of the higher-grade Golden Reward deposit by mid-year

• Fourth quarter silver production decreased 8% quarter-over-quarter to 1.3 million ounces due to an ongoing water shortage in Bolivia resulting from nationwide drought conditions
• Full-year silver production was relatively constant at 5.5 million ounces
• Fourth quarter and full-year adjusted CAS per silver ounce (AgOz)¹ decreased 3% quarter-over-quarter and 1% year-over-year, respectively, to $13.97 and $13.46. Fourth quarter CAS per AgOz¹ benefited from higher grade ore while the decrease in full-year CAS per AgOz¹ was driven by lower consumables costs
• Cash flow from operating activities and free cash flow¹ for the full year were $29.4 million and $22.8 million, respectively, representing year-over-year increases of 13% and 15%
• The Company's 2017 production guidance is 5.4 - 5.9 million silver ounces at CAS per AgOz¹ of $14.00 - $14.50

• Fourth quarter and full-year silver production from the Company's silver stream on the Endeavor mine in Australia decreased 21% quarter-over-quarter and 61% year-over-year, respectively, to 43,901 and 247,998 ounces, due to the operator's decision to reduce mining rates in response to lower lead and zinc prices
• 2017 production is expected to be 300,000 - 400,000 ounces of silver due to an anticipated increase in production following recent improvements in zinc and lead prices
• Royalty revenue decreased compared to 2015 primarily due to non-core asset sales during the year that totaled $23.8 million

Exploration

Fourth quarter expensed exploration was $5.3 million, bringing full-year expensed exploration to $12.9 million, an 11% year-over-year increase, due to expanded exploration drilling activities. Fourth quarter and full-year capitalized drilling were $2.5 million and $12.9 million, respectively. As of year-end, the Company had 17 drill rigs active across Palmarejo, Kensington, Rochester, La Preciosa, and two early-stage exploration properties and had completed over 400,896 feet (122,195 meters) of combined core and reverse circulation drilling throughout the year.

Highlights from Coeur’s expanded exploration program in 2016 include:

• Increased both surface and underground drilling at Palmarejo, and specifically at the Guadalupe and Independencia mines and the Los Bancos and Nación-Dana deposits, with eight drill rigs active at year-end
• Accelerated surface and underground exploration at Kensington with a focus on growth at Kensington Main as well as at Jualin, Raven, and several new veins discovered through surface sampling programs
• Continued extension and infill of the East Rochester discovery as well as resource conversion drilling within the western portions of the main pit
• Development of a new geologic model for Wharf, which is expected to set the stage for continued resource growth

In 2017, the expensed exploration budget has been nearly doubled to $23 - $25 million with a continued focus on resource growth. Another $11 - $13 million of capital is expected to be allocated to resource conversion. Priorities for 2017 include:

• Increased step-out drilling at all of our mine sites, with the largest budget allocation to Palmarejo
• Continued definition drilling at La Preciosa
• Early-stage exploration in Mexico, USA, and Canada focused on developing a long-term pipeline of high-quality projects

Full-Year 2017 Outlook

Full-year 2017 guidance highlights are provided below. Production guidance remains unchanged from the guidance published January 5, 2017.

• Expected silver equivalent¹ production increase driven by ongoing acceleration of Palmarejo underground operations offset by lower expected production at Wharf
• Higher expected CAS per AuEqOz¹ at Wharf due to anticipated completion of mining of the higher-grade Golden Reward deposit, higher tons mined compared to 2016, and one-time plant maintenance expenses
• Anticipated increase in capital expenditures driven by carryover from 2016, the Stage IV leach pad expansion at Rochester, and higher underground development levels at Kensington and Palmarejo
• Higher exploration expense primarily due to step-out drilling at Palmarejo, definition drilling at La Preciosa, and early-stage exploration

Conference Call Information

Coeur will report its full operational and financial results for fourth quarter and full-year 2016 on February 8, 2017 after the New York Stock Exchange closes for trading. There will be a conference call on February 9, 2017 at 11:00 a.m. Eastern time.

The conference call and presentation will also be webcast on the Company’s website www.coeur.com. Hosting the call will be Mitchell J. Krebs, President and Chief Executive Officer of Coeur, who will be joined by Peter C. Mitchell, Senior Vice President and Chief Financial Officer, Frank L. Hanagarne, Jr., Senior Vice President and Chief Operating Officer, Hans Rasmussen, Senior Vice President of Exploration, and other members of management. A replay of the call will be available through February 23, 2017.

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. In addition, the Company owns the La Preciosa project in Mexico, a silver-gold exploration stage project. Coeur conducts ongoing exploration activities in Alaska, Nevada, South Dakota, and Mexico.

Cautionary Statement

This news release contains forward-looking statements within the meaning of securities legislation in the United States and Canada, including statements regarding interest expense, production, costs, capital expenditures, expenses, mining rates, development activity at Palmarejo and Kensington, expansion at Rochester, transitioning to a lower-cost, high-quality profitable precious metals producer, cash flow, mine lives, growth, operations at Kensington and Wharf, drilling, resource growth and conversion, development of a pipeline of future projects, 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 whom 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, the political risks and uncertainties associated with recent developments in Bolivia, 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 report on Form 10-K. 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.

Christopher Pascoe, Coeur's Director, Technical Services and a qualified person under Canadian National Instrument 43-101, approved 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, net debt, total debt to LTM adjusted EBITDA, adjusted net income (loss), costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce or per average spot silver equivalent ounce), adjusted costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce or per average spot 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, net debt, total debt to LTM adjusted EBITDA, adjusted net income (loss), costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce or per average spot silver equivalent ounce), adjusted costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce or per average spot silver equivalent ounce), all-in sustaining costs, and adjusted all-in sustaining costs are important measures in assessing the Company's overall financial performance. For additional explanation regarding our use of non-U.S. GAAP financial measures, please refer to our Form 10-K for the year ended December 31, 2016.

Notes

1. EBITDA, adjusted EBITDA, net debt, total debt to LTM adjusted EBITDA, adjusted net income (loss), costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce or per average spot silver equivalent ounce), adjusted costs applicable to sales per silver equivalent ounce (or per gold equivalent ounce or per average spot silver equivalent ounce), all-in sustaining costs, and adjusted all-in sustaining costs 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 spot prices. Please see table below for average silver and gold spot prices during the period and the silver to gold ratio. 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.
3. 2016 results reflect adjusted CAS and AISC. Please see reconciliation tables in the Appendix for additional information.