Coeur Mining (CDE) 29 Oct 202020 Q3 Earnings call transcript

Good day and welcome to the Coeur Mining Third Quarter 2020 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Paul DePartout, Director of Investor Relations. Please go ahead.

morning. good and you Thank Welcome to conference quarter Mining's third earnings call. Coeur

our described market were and a on slides, like and released press results our that close remind slides I everyone to after statements XX-Qs from well press available some our release XXXX release Our release, press presentation as comments statements results differ. in which today yesterday's include XXXX and our would Please included may the the copy are in risk XX-K. factors as actual and forward-looking of review our website. the of cautionary and

turn I'll over Now, to it Mitch.

good and Paul morning Thanks everyone.

quarter Joining me nearly higher driven slides on along by headlines I'd to management Starting Mick point the team. gold out presentation over along Tom. three here and the turning We Palmarejo strong had prices. performances a with and decade few at quarterly materials, with and and in in today's Routledge to several Mick our Wharf like other results before off of a and Tom the are call members best silver Whelan financial four from

cash just nearly to almost than at quarterly generating ounces record. the back big free of of the gold first Wharf to XX,XXX is cash is over of two the free emphasize of just the did quarter a million the how government-mandated producing in of record-breaking $XX double third bounce levels to which higher flows quarter want their The which Palmarejo one also the previous free nearly is had suspension team job a I $XX million of basically great how times quarter team highest ever. in production second generate flow from and and cash flow

POA will to this December. $XXX flow when year the Rochester. its important expansion fundamentally in technical a We year updated company. We $X you XX also completed less issued is step to expected in help sharing from million kicked a with to of construction Once over details report cash change look forward Rochester's at than on off successfully million the reposition the

Another ratcheted company-wide now year. up exploration invest we pace are over in this and on fact million to headline is our $XX the that momentum

doing an We study view strengthen major operation ounces. potential balance are optimize resource pre-feasibility decision was capital with taking to lot mine allocation is continue Rochester place to briefly recovery and generate while of Silvertip. great this lead to aspects it $XX at in Stage as the finally, circuit ongoing has further the Two and million several on and lives. to fine-tuning blasting to excellent a we're silver debt, be the reserves and advance gold new and the repaying work team of our tremendous internal I increase the the wrapping up HPGR the able of outstanding larger that quarter-over-quarter. want Starting priorities Rochester, the great discoveries, cash by base, and near-mine of And crusher grow of at our having the POA XX to to to nearly leach to sheet pad from the IV balance still mine touch unit longer and

on in and of accelerating is that stacking HPGR the that inter-lift quarters liners will levels you consistent use plan to quarter. but remain details, will helping early based our revised dramatically the in is best All of post-expansion provide how mine that we Rochester of coming Mick this with confident operate production predictable work to more results. some the recoveries and and silver implemented accelerate achieve enhance understanding third derisk to we

ensuring efficient a Regarding from initial the been on and performance work a technical reliable focused potential results the the and that's on with assuming pleased Silvertip PFS, mill we're restart. very expansion

drill of quarter increasing further later there. and from there. high-grade our the in confidence best the We'll getting deposit back the and quality results determine forward size Silvertip encouraging are Additionally, the this with path extremely been assess have we're where we

for do achieving we remain to and let decisions make cannot We this, allocation our and Rochester. near-term us Silvertip As capital it's to important priorities distract at afford we're critical results disciplined investment us objective to positive the at framework. according from seeing our

XX highlights through a The key greenhouse Before XXXX and and reduction to wind been our its source to reaching Wharf proactively our our ultimate shifting quickly from measuring over as turn the more power electricity to of wind generated online. attention our with are ahead Mick. XX go power slide next bring than that headline I operations, want of year comes Mick With of is capacity gas plans it Slide more that, carbon few goal initiatives. from XX% usage emissions the now I'll goes to XXX% We've your to focus managing since examples energy and which footprint.

Thanks Mitch.

and safety Before highlights entire to the work and hard challenging and our their I'd all office times. and workforce miners covering for our operational the for employees relentless from suppliers these contractors our to commitment thank to like our dedication health during and

every Let's continue standard for pursue excellence a and to strive and higher day. each

in cost mill day. $XX of the quarter. X,XXX over after bounced the flow generate accomplish which starting any during COVID-XX case continuity cash Much second the gold cash Along over of back efficiencies free doubling of just into to on million the We our to We for XX per Palmarejo, to and than with production up off days production XX% generator with free being with the this to flow was quarter. down in able were impact. the ensure was in digging quarter. results in these results us through and averaged levels which solid with roughly more -- higher increase helped silver production strong throughput, and in staffing business over controls, Now, this higher mine top X tons due slide together

the changes what from on restrictions periodic executing While government workforce our there focused are plans. can we may operating we and consistently control be to

higher in second the cash the reasons. placement anticipated quarter Rochester, That to XX year. led quarter, of the with million forward, XX% did gold and tons the which Looking considerably the full to third Switching for we for couple less to were the than days production for an XX% expect slightly production costs team during we crushing excellent of stacking offset than and lost the lower job X.X higher XXXX. increases and higher period quarter than of a key prior the said,

fine Stage areas with of ounces. And some of the and quarter. particles stacked predictability there we to secondly, still challenges from leach inter-lift are in were Merrill-Crowe the coming impact from earlier the of an ore lowering the breakthrough IV solution pregnant the liners pad, limiting recovery seeing the the new increase dilution of plant we the slowing in of First, commissioning due year production this on end the towards those

However, of we are placement addressing of improvements expect continued higher rates these see production items strategy. execution the and head results to our and in as liner on inter-lift

Turning to the next slide.

to with to additional recover plan that performance our level placing installing operational we of revised have higher a stacking by will You will the ounces scope faster drive by plastic help better predictability. closer liners more expanded inter-lift of they so see

ore. stacked We to separately which of have placement rates crushed supplement maximize also with HPGR the continued to run-of-mine is benefits material,

can production importantly heap the the XX and quarters that lessons apply learned to confidence of are give POA so the All increase over on pad. coming we we optimize leach new to us performance knowledge more able the

causing Kensington, a as looking production testing month we mine and Turning Kensington underground and at the minor to we cases to positive us had bounced expect and on the high tracing several Despite for was contact during strong previous of has back August, note. slide the COVID-XX couple this conducted back the finish to suspend as extensive we year setback, a weeks site. activities across briefly lower of the

and similar generate $XX couple discipline. flow. grades helping certainly finish XXXX at $XXX while not record million at of higher ounce free the Lastly per levels cost quarters. of we by around of over year, our ounces the half past XX,XXX average team the better to produced generate production of to an maintain cost To we to Wharf. strong anticipate The nearly results cash We first were able rates least gold placement and over driven

XX handing slide With our the overall higher attention which Before over pass underscores guidance closing call I'll to that, Tom. reflects that fourth your and to quarter. Tom, to highlight want our in to a it out I lower strong and bring costs, XXXX with over confidence updated production

Starting Mick. on off slide Thanks, X.

excellent adjusted a and reflect and financials at higher to $XX at quarter nearly as results prices of led third realized well XX% margin. as Wharf EBITDA Palmarejo XX% growth revenue which million Our

has and EBITDA million, ago. almost LTM cash $XXX just year compared and Operating $XXX to continue As to $XX increase significant profitability we to million totaled flow by XX% free million quarter-over-quarter. $XX improvements grown one respectively million

Turning to slide over XX.

latest balance by flow of repay the cash plan debt $XX Our investor revolver any nearly over the that and like generated call. as also the shape position in million we quarter including liquidity. maturities the did million million execute $XX mention cash near-term remains with on the during with We balance our into I'd to not ended of not the end $XXX remain sheet revolver hedges year. million the used and quarter to no We since end year expect repay remaining head borrowings. to much excellent of of if strong our additional $XX to sooner we of

our quarter, further backstop. the sheet trend debt-to-EBITDA bolster untouched now time remains to see third By XXXX. liquidity for continue last for late the since our ATM resort At the place in significantly. the the and ratios to leverage financial our as commitment net and under balance of time was generating first end downward better Additionally, X we results a

years. strengthen We at has very heading and Mitch. we over the two call of sheet are into the construction pass the major are that progress well-positioned back made balance to I'll proud Rochester now to next been believe the

on priorities the shows even strong, the virtual a published results We'll with we form we XX can as the we December the progress returning Rochester XX we its the forward and And walk was end on program third dialed in update Day stronger highlight strong of report, know our while Silvertip. off approach achieve first as also to August. Rochester to well can. to year. build getting Slide technical as near-term way provide the status our back mid-year hosting Kensington looking a updated performance Tom. quarter in half of very we Investor Thanks, to exploration We're several results through

our investment. amount of results operating expanded in level our higher we go With keep based higher opportunities future near advancing of a the with near-term all executing on Our delivering of and our our of the from about We'll of our delivering North team operational questions. is results from in our exploration let's pipeline balanced believe the goal kind portfolio open financial the growth pursuing and for business strengthening possible excited performance, longer-term standard extremely consistent, value developing of every projects creating up precious organic that we're is American-based and it metals assets. ahead of facet and

the session now will come Reichman will today begin Capital we Noble And question from Instructions] [Operator Please with first question-and-answer go Mark ahead. Markets. And our

a morning. XXXX in expected exploration With much program for and more Good active XXXX. probably

on if to that kind et other XXX-acre because the at program? to you permits And execute Crown wondering that that to recently need disturbance permits there's you key permit Block. get just environment wanted got was for of get exploration cetera, kind take know of any your I Just the

Yes.

Okay. Hans ask it's to Hans? that. I'll Hi, Mitch. Mark, cover

at on XXX-acre working We're for yes, the as got Well, discovery, Crown. pads just acres far where as specifically got Mark. this disturbance XXX of X-acre six permit on new permitted Seahorse through the also notice. Hey, permitting, we we've

I to see at rig is problems rigs with labs of a more at Coeur of the now the the think rig we've three about of headwind turnaround we'll two we're Crown in switched we're sure Crown two-week headwinds will issues three in turnaround companies other drill seeing end drill RC the one two some grabbing So lot far to as no a is earlier and real month assay year. Where the I'm and turnaround down end couple and issue rigs so a to there. year. from availability course you're and And industry as by with the up

no real moving those drill can have Independence Hill, there. forward pretty interim than The got process permits acres Other we for easily. In are that were Mexico Hill drilling Lincoln in to we're other we where in a notice D.C., permit slowdowns the QX permit are though, so that on we expect by the next from we programs X-acre assets year of with at that, Alio, out disturbance. XXX or

even helpful. net earnings very I just That's carryforwards thinking could improved with was And operating making much Tom. for I in effect. loss the which employ in advantage income, is the shielding position the be Could follow-up of an the to it? what my maybe mechanics address you And the expansion guess terms about once just the the plans of U.S. or in acquisitions kind is and and Rochester is NOL

Sure. million which allow for pay are in thanks the United of we've to for going Yes, foreseeable Great got question, us tax States $XXX noticing future. to that. losses, net federal operating the not over income

taxes federal expansion major still. quite coming at And – with time Rochester, up income should paying so we're again some again we not be for the

fits our into that and right – that's capital framework. allocation So

about or we hands down this tax U.S. thinking want of we when Mexico funds U.S. to wins advantage that So we're allocate The because where the have.

very Thank you much.

Mark. Thanks,

from question with Instructions] Our [Operator next will Capital Please Reagor go Roth Partners. Joseph come ahead.

Joe. Hi,

guys. on Hey, first Well, great cash a flow. and great quarter congrats

Thanks, Joe.

first guys that? give of sustaining possibilities the pretty been have I this to for year. any color what driving guess particularly you recoveries? for high thing gold the compared us at recovery last on Can are levels So those rates, year what's And like Palmarejo,

Yes question. that? you cover good do want to Mick,

Yes, for sure.

we've far. yeah great So, some results, so seen

to those expect We generally results continue.

and of some driven really down great Of process ongoing, plant the improvements. course mineralogy, performance somewhat the but have program team it's got delivering the sustainable a the optimizing there BI by

And care capital related maintenance, or to is the better has it at plant, just been there expense improvements machinery? any better those of

far. Certainly small very a amount so

optimization. little We have that continue projects, a bit ongoing with to

Okay.

top? think bit, good. still So reaching running guys a would obviously kind you Switching Rochester thing this hoped your like you'll When you is? lagging is that do be. you what get that conviction point And would a sounds it behind, of of say gears level where

you I'll once. putting you Merrill-Crowe say a won't between a which a we there. the there that leave solution at we're a Rochester Well, very moving I There's start very with thrown HPGR. then of We've lot high with of leach Joe off. configuration, where level of off. there, Mick lot pickup, question that me from in all Stage I'll start can crusher lot Obviously, And hear conviction. at last have surprise IV. out right, the with dealing a introducing We're a mature out parts, into to pad plant

of lot have be at And in, fine-tuning can dialing about so we things, going in those before -- a we And through think here is then and painful and of little time reason, late invest times. go it. optimizing units, with very -- as in a this it's right, which all But HPGR back right, it at XXXX run worthwhile, a about of year precisely two to HPGR when of or expansion. think end you and this is we the And put two unit, year, one have for capital. last

kind of half it, comfortable as the gold now. from kind of update. we half half first a that, or then But through the the versus them. an And I understand Investor be of in XX% XX% And should half. have can year that, the we'll should we think right we're production through versus if second the leach as process So continue plan, things there, out first with over up nice everybody first we it, that's second half. Silver see get double, mine it's year And pad. be provide this the systematically can of We with December. Day, that working

is inter-lift only liner we've that strategy doing happening. commissioning and typical three two we're things These it's for now been as I think with well. debugged but that or months, getting -- the So those

left Mick cover. anything So you But ... I've I don't if know, to for

and short the of You lot allows we time. view I the apply covered we heat in very the now in Mitch. because the visibility mean, liners, short end-to-end period of high can these there, have milling, a a an interval But control mine, This Merrill-Crowe. sort leach that inter-lift us right,

optimize course HPGRs fraction, control. and opportunity So blasting, for we powder can optimized through for getting heat mine the leach and that rates. floor short sizing factors, bench at the of that And then and heights the and interval

leach delay, to a this long the It's having depth performing. typical heap the commissioning to understand new not, we normal. are we're earlier and So wait it high Merrill-Crowe now in with about plant, how very periods call things I of then, the mean, pad. And talked

learned, managing pad. and bit And clarification plant You see results. robust program even new at half see Great when XX. more we're we in years. to, little seeing said learnings Merrill-Crowe a the couple POA project of earlier. A project that better second getting project, then, better now startup And stronger us and for you through, powerful, really and a issues and that are We're some the the the apply have we as next supporting lessons to start-up help XX POA the derisk leach a upcoming are to of them. the fines to those through heap the extra That's going in come fantastic. expect

with that on and gold Thanks kind of to just, silver any price Is is final are just that enough? what intention add, One have color for that Okay. or stuff, more you for guys. we color done now? any thing,

of source XX time. out to perpetual this for is, Rochester. the doing there covers a year. the which floor underneath, of hedger. next think, of with funding period We're don't guess, important a pretty an comfortable then, XXXX, Yeah. become to we're limited $X,XXX of answer bulk chunk that intend I short a spend I And Joe good having the, chunk smaller over protect We of this at POA

that today, we Obviously, sort add? as comfortable with evolves thinking we're of have. Tom, what And anything to evolve, but the markets so

do, And to get we we to look, through the what Joe to you make know, -- do need to sure need as we expansion. Rochester

few sheet this And if we we to it's maintain for 'XX. right ounces in where so we of And But We we pause so. balance kind to to in a do and cushion out. up. improving have felt, this saw took that like do We saw modeling think a flexibility taken had thing running as And add we're that flexibility at time. have still prices point we'll a the now. we more pause, performance sufficient

over. guys. turn I Good to hear. Thanks will it

question RBC. next from ahead. our Mark And come will go Mihaljevic with Please

Thanks and good morning guys.

Mark. Hi

off guess feels great it It kick gets guys. never I to not actually Wharf. like attention about cash you generator it why despite being ask the for a

of elevated levels sense for more keep contract just money something So run done your into from to capture and is you crushing especially the going to a well. obviously guys production kind as try cycle part this you've to the rather kind stacking some that than make that in historical rates put higher of wondering that Like at the of to benefited of you had higher you've prices little rate? back

It thanks out. giving deserves a that. one. Wharf Yes. for definitely Well Mick shout I'll let cover

As loading first sequencing fourth easier that there's and a you than that quarters. question. summer the that of unloading and there offloading factors Obviously months quarters are into out know pads and lot

we then But with these probably is you factor want is also quarter that. I after future drilling ask to snow run has us like to can Hans that more to it and you And comment. things are the And cover optimism that be as gives the Mick. out So Go years. know for potential been Mark's that Mick never talk already extending. around of there do been assets question? briefly activity of opportunities dealing But here might Hans they to in that play going one about ahead out Mick. keep some maybe Wharf as a cautious and about like fourth seems XX-plus there's

as QX performance and that's a reconciliation. We Wharf against QX mine planned. the and expected we restacking that's past. and but bit plan pulling forward Mitch those and lower, briefly And fully positive to see solid the ounces for unload just in some -- And because then mean continue some in we go-forward Hans? ounces start great good pad in the in mentioned is deliver year. we'll this and finish now for have a QX I as QX plan a Yes. seeing as and expect after the performance to QX then why just have year-on-year numbers done little solidly

Mark. Hey

of to potentially a drilling minimal know life We're Wharf you that into Barrick Richmond looking new some boundary. the if pretty year we've permit for exploration. the done requirements north mine at mine end Lac asset have an As we the purchase expansion of footprint Wharf, is But lot ounces option because that work this a asset which now expansion doing of near haven't Wharf, that done we just the the old and Hill are on. of ever would of the The at flow some happens. there just

assays so should asset all like back our evaluate and to lab that what drilling And still means We the should future by stage, done the for that geochemistry geochemistry. what QX surface have both geology, that all look the there. looks we're that and -- have at from QX evaluation in we

going start it innovative do terms we'll they're layback if south in life bit we're a another more mine stepping next to start to sense. the and and getting dependent drilling bit that the makes permits of where For looks highwall little a year like expand to on

Wharf the to be next from news as XXXX budget more far come and year we'll of double XXXX. bit drilling in a So as more drilling almost

We remember million. Just one you -- for Wharf. there last Mark as for probably that shameless we bought $XX.X plug

really hopefully a more in X-year bought we come. it life, plus has think I kind overall years contributor. for as highlights has and an and acquisition how mine quarter that throw as $XX years five And just later XXXX So it to for of us it been to great X-year had million it mine nearly thing seven life, off when just this an maybe

by a for team. And been out real one the is work So that quarter third us. there to the it's credit just terrific hard a

So thanks the for question.

And between for you to seem And rates. throughputs Thanks Kensington that you concern you managed to I color obviously heading have mining the the and were challenges pretty with might some Palmarejo around have at there that. some around well. into through pretty maintaining COVID guess had Kensington good get then quarter able been cases underground actually

So do with just see think some do rates kind in these you of, than protocols you you can or run now are this? running that even all even the capacity higher sustainable these levels, maintain place at opportunities to push

you Yes. in. dealt I'll team were I stockpile we I of start while which and of can to then COVID Mick mining Kensington there, we the the At to issues able we there. run with Palmarejo, the think is material expect to off think great those plan processing ahead tons can see. there fill there But X,XXX and rates definitely continue. were day, continue a in -- with underground kind

rate surprise a to run X,XXX tons is get of on probably keep the targeting more to you quarter, about basis which a and management. we were think But want might or where Mick And or moving they tons parts of that? there's have still of as day But any it go to overall around you relates is do day, just us. COVID right. lot think I workforce is when a there X,XXX color, a lot fourth other so going at to to add things down a and where

a One a this a and production for lifted. limit Certainly of had per day Kensington while X,XXX couple limit year, we things. that Yes. on has been tons of

and And opportunity that to but that's Palmarejo, going so with us now, we're supporting the in forward, do forward well, into really At with opportunities we program asset. to optimize at BI results can presenting September process Kensington the and business great process is them that that see debottlenecking to plant a earlier future. looking how really sustain plant with we going mentioned that we improvement saw what the

at future So that a potential. team job great confidence there's are a there the that doing supporting good

built got -- we've to some and Hans. in life that generate not that's reason, get it capital is the the is the if on to that it mine Palmarejo high support virtually opportunities internal cash put or of that excess we're it, can still get at terms up. And flow mill the spending on where with mine can there we back no incremental capacity list. But no to inventory incremental and more And to right

And still so, time over building that we're obviously. some toward

just is all Merrill-Crowe. on sense. seeing just that been here, you to some to see you're pad disrupting the a points HPGR a say of of is answer couple new kind have see are the with makes kind first stages days early expecting, guess kind a of issues surprising really obviously, follow-ups to No, I Yes. mentioned early of not come that fines really -- you whether And starting that fines off, overly through? this wondering I that as mentioned, not or it pad. it to but any is, And that Rochester belabor of earlier But the creating more the new that than you were you it's of

Go Mick? ahead

that. address can I Certainly, Yes.

is plant we that fraction distribution. course. see fines then the better those us We very when next seeing bit operating when nature in months. that the We seeing of certainly the We additional the But through. rate say performance commissioning so leach saw And flexibility, put a is fraction that we're the now optimizing HPGR for overliner at XX in front as end operation we liners the just that forward heap that. and as more run the we and early. new to that the clarifier that put And use of that high. improve fines fine So over capacity from to we're little pad then just operation plant. material on we into some we're leach give of heap deal can spec. with a a that inter-lift pad go new the It's we're optimized new But Merrill-Crowe implemented a normally

kind of here. Perfect. Okay. the And second follow-up

how down the higher or you of -- is placing the kind on what inter-lift fresh it material some or the of new liner? the of that long Just percolation versus of get kind onto some takes for you're that stacked to that molecules pad higher that

pad So pad plastic. that a long on we're we see the ore the question part of part of of It It's profile track old in was how close period. certainly, to placing already the a breakthrough. very XXX-foot the to over liner we now

extending one wider strategy. then starting So inter-lift liner we inter-lift X we're weeks Phase so now Within to Phase short new breakthrough We the interval construction one area area breakthrough liner liner stage started and seeing work quickly. a for that off seeing that we're or the implement now two on with within our and why a areas. implement can that's we're control. very we're X the And

Thanks. Perfect. Okay.

I flow think I again, And see to quarter. cash free had. covers what the nice that this

Hey, thanks, Mark. Appreciate it.

Yes.

Brian will with ahead. from James. Please go question next come Raymond MacArthur Our

Hi, Brian.

Brian. Hello, muted. Maybe you

you Can me? hear

Yeah.

Got you. Here you are. Yeah.

don't Sorry, know. I

Sorry, but I apologize that.

to some we're kind continue mean you you're Just and restart and that against focus, doing But and extent philosophically hedging as Rochester Would with silver. the some at capital philosophically ahead but hedging if the to think Rochester extent if sense Silvertip go of you and trade-off you Silvertip. hedge expenditures, go to gold I well? at consider the is to you gold I which I realize moment. to prudent the makes develop capping if first ahead between

go how on think Silvertip you that. ahead of trying you through you all or figure actually mean I'm I hedge? with it? So and to just philosophically would ahead Would go just out kind

No. question. Good

I last too think philosophy. asked quarter a question you're Brian you philosophical into

I maybe should strategy all It's that. say

General like to makes to that a a certainty metals some nobody third for think I third that zinc, of derisk exposure of bring That one university you hand. is here life the have Counsel if think best raising think from of over for Yes, pie that's it's and to about good our roughly. higher a Silvertip third philosophy who's buys the majors think project. and are you I and can his silver, Look our really them means level I zinc in lead two-thirds revenues I chart candidates And that a potentially lead. stock think

which that a anymore provide. of really we I our investors is think upside silver of most though do to even having still prefer which huge percentage our not business we silver

inclined other at Silvertip, but have silver We revenue out do think game. any are coming two less to that would all metals fair no I we be something on with those silver of and hedging

Great. very Very much. Thank clear. you

Yeah.

Good. Brian. Okay. Thanks,

concludes our closing remarks. And any turn this the back like question-and-answer to Mitchell over session. for I'd to Krebs conference

now Okay. hey, December hopefully Day this at speaking Day, to Investor everybody stay Well, forward meantime between and safe. again our XX. Investor in then Great. look And I with and our you on everybody's appreciate healthy will morning. Virtual we the time

have a So Thanks. day. good

now has presentation. concluded. conference you Thank The for today's attending

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