Coeur Reports Fourth Quarter and Full-Year 2018 Production and Sales Results

Business Wire 14-Jan-2019 4:30 PM

Coeur Mining, Inc. (the "Company" or "Coeur") (NYSE:CDE) today announced fourth quarter 2018 production of 3.5 million ounces of silver, 99,460 ounces of gold, 3.1 million pounds of zinc and 1.7 million pounds of lead, or 9.8 million silver equivalent1 ounces (12.2 million ounces based on average spot prices during the fourth quarter).2 Silver and gold production during the fourth quarter increased 19% and 12%, respectively, compared to the prior quarter. Strong results were driven by increased production from Palmarejo and Rochester as well as significantly higher production from Kensington.

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Quarterly Production Results (Graphic: Business Wire)

Quarterly Production Results (Graphic: Business Wire)

Full-year 2018 production included 12.9 million ounces of silver, 367,728 ounces of gold, 6.8 million pounds of zinc and 3.9 million pounds of lead, or 35.6 million silver equivalent1 ounces (43.4 million ounces based on average spot prices for the year).2 Silver production increased 8% during 2018 driven by strong performance at Palmarejo and Rochester. Gold production decreased 4% over the same period as positive results from Palmarejo and Rochester were outweighed by lower production at Wharf.

Metal sales for the fourth quarter totaled 3.1 million ounces of silver, 87,514 ounces of gold, 2.6 million pounds of zinc and 1.4 million pounds of lead, or 8.5 million silver equivalent1 ounces (10.7 million ounces based on average spot prices during the quarter).2 Full-year 2018 metal sales totaled 12.4 million ounces of silver, 358,731 ounces of gold, 4.8 million pounds of zinc and 3.1 million pounds of lead, or 34.3 million silver equivalent1 ounces (41.9 million ounces based on average spot prices for the year).2 Metal sales reflect the impact of the bankruptcy filing of Republic Metals Corp. ("RMC"), a U.S.-based precious metals refiner, that occurred in early November. Approximately 0.4 million ounces and 6,500 ounces of the Company's silver and gold, respectively, were affected by RMC's Chapter 11 filing.

The Company expects to issue full-year 2019 production and cost guidance in conjunction with the release of its fourth quarter and full-year 2018 financial results on February 20, 2019.

Quarterly Production Results

Note: On February 28, 2018, Coeur divested the San Bartolomé mine through the sale of its 100%-owned Bolivian subsidiary. As a result, San Bartolomé is excluded from consolidating operating statistics for all periods presented unless otherwise noted.

Operations

Fourth quarter and full-year 2018 production and sales highlights for each of Coeur's operations are provided below.

Palmarejo, Mexico

               
    2018   4Q 2018   3Q 2018   2Q 2018   1Q 2018   2017   4Q 2017
Tons milled 1,382,471 378,389 300,116 344,073 359,893 1,498,421 389,524
Average silver grade (oz/t) 6.49 5.96 6.26 6.86 6.88 5.62 6.92
Average gold grade (oz/t) 0.10 0.08 0.10 0.11 0.10 0.09 0.10
Average recovery rate – Ag 83.8% 84.0% 82.2% 87.5% 81.4% 86.0% 87.0%
Average recovery rate – Au 88.9% 97.6% 88.8% 89.9% 80.4% 90.0% 92.0%
Ounces Produced
Silver (000's) 7,516 1,893 1,544 2,066 2,013 7,242 2,346
Gold 122,722 31,239 27,885 33,702 29,896 121,569 37,537
Silver equivalent1 (000's) 14,880 3,768 3,217 4,088 3,807 14,536 4,600
Silver equivalent1 (average spot) (000's) 17,429 4,528 3,796 4,728 4,382 16,207 5,209
Ounces Sold
Silver (000's) 7,229 1,534 1,572 2,092 2,031 7,586 2,343
Gold 115,592 23,667 29,830 31,207 30,888 131,743 38,953
Silver equivalent1 (000's) 14,165 2,955 3,362 3,964 3,884 15,491 4,681
Silver equivalent1 (average spot) (000's) 16,566 3,530 3,981 4,557 4,479 17,301 5,313
Average realized price per silver ounce $15.77 $14.57 $14.75 $16.49 $16.73 $16.96 $16.57
Average realized price per gold ounce $1,140 $1,148 $1,082 $1,162 $1,168 $1,110 $1,139
 
  • Fourth quarter gold and silver production increased 12% and 23%, respectively, to 31,239 and 1.9 million ounces compared to the prior quarter. Silver equivalent1 production was 3.8 million ounces (4.5 million ounces based on average spot prices during the fourth quarter), 17% higher compared to the third quarter. Year-over-year, gold and silver production increased 1% and 4%, respectively
  • Higher production during the quarter was driven largely by increased throughput as the Company processed ore that was initially scheduled to be processed in the third quarter. This contributed to a one-time increase in reported recoveries due to a reduction of in-circuit inventory; metallurgical recoveries were relatively flat during the quarter
  • Underground development at the La Nación deposit, located between the Independencia and Guadalupe underground mines, remains on-schedule. Production is expected to commence in the second half of 2019, providing anticipated additional mill feed to supplement existing ore sources
  • Approximately 23% of gold sales in the fourth quarter, or 5,458 ounces, were sold under Palmarejo's gold stream agreement at a price of $800 per ounce. For the full year, a total of 35,807 ounces of gold (31% of Palmarejo's gold sales), were sold under this agreement

Rochester, Nevada

               
    2018   4Q 2018   3Q 2018   2Q 2018   1Q 2018   2017   4Q 2017
Tons placed 16,169,807 3,674,566 4,061,082 4,083,028 4,351,131 16,440,270 4,171,451
Average silver grade (oz/t) 0.52 0.46 0.52 0.53 0.54 0.53 0.50
Average gold grade (oz/t) 0.004 0.004 0.004 0.004 0.003 0.003 0.003
Ounces Produced
Silver (000's) 5,038 1,466 1,290 1,125 1,157 4,714 1,361
Gold 54,388 15,926 14,702 12,273 11,487 51,051 18,995
Silver equivalent1 (000's) 8,301 2,422 2,172 1,861 1,846 7,777 2,500
Silver equivalent1 (average spot) (000's) 9,431 2,809 2,477 2,095 2,067 8,478 2,808
Ounces Sold
Silver (000's) 4,855 1,391 1,248 1,097 1,119 4,931 1,457
Gold 52,789 15,339 14,257 12,030 11,163 54,642 20,002
Silver equivalent1 (000's) 8,022 2,310 2,104 1,819 1,789 8,210 2,658
Silver equivalent1 (average spot) (000's) 9,118 2,683 2,400 2,048 2,004 8,961 2,983
Average realized price per silver ounce $15.50 $14.53 $14.70 $16.47 $16.66 $16.98 $16.58
Average realized price per gold ounce $1,261 $1,234 $1,204 $1,297 $1,331 $1,262 $1,279
 
  • Silver and gold production during the fourth quarter increased 14% and 8%, respectively, to 1.5 million and 15,926 ounces compared to the prior quarter. Silver equivalent1 production during the period was 12% higher quarter-over-quarter at 2.4 million ounces (2.8 million ounces based on average spot prices during quarter)
  • For the full year, silver production was 5.0 million ounces while gold production was 54,388 ounces, both 7% higher than 2017, with silver equivalent1 production totaling 8.3 million ounces (9.4 million ounces based on average spot prices)
  • Production was positively impacted by the continued strong performance of both the Stage IV and Stage III leach pads. These positive results outweighed the impact of lower crushing rates during the fourth quarter, which were anticipated following the decommissioning of the 15,000 ton per day ("tpd") in-pit crusher
  • Installation of an initial high-pressure grinding roll ("HPGR") unit remains on schedule and budget. The concrete foundation for the HPGR is complete and structural erection is scheduled for the end of January. Ore production utilizing the HPGR unit is anticipated to commence in the second quarter, with silver recoveries expected to increase beginning mid-year
  • Installation of the HPGR unit and a new secondary crusher is expected to result in higher production during the second half of the year compared to the first half

Wharf, South Dakota

               
    2018   4Q 2018   3Q 2018   2Q 2018   1Q 2018   2017   4Q 2017
Tons placed 4,923,774 1,644,168 1,127,391 1,075,820 1,076,395 4,560,441 1,124,785
Average gold grade (oz/t) 0.022 0.020 0.023 0.023 0.022 0.027 0.029
Ounces produced
Gold 76,840 16,960 19,437 22,507 17,936 95,372 27,292
Silver (000's) 51 13 13 13 12 64 16
Gold equivalent1 77,683 17,175 19,646 22,729 18,133 96,431 27,560
Ounces sold
Gold 75,572 15,306 19,874 23,053 17,339 98,237 28,975
Silver (000's) 48 11 12 14 11 74 16
Gold equivalent1 76,373 15,488 20,081 23,282 17,522 99,472 29,256
Average realized price per gold ounce $1,267 $1,247 $1,198 $1,285 $1,341 $1,269 $1,278
 
  • Gold production declined 13% quarter-over-quarter to 16,960 ounces in the fourth quarter. This was primarily due to the placement of lower grade ore during the quarter as well as temporary percolation issues resulting in slower-than-anticipated recoveries
  • For the full year, gold production decreased 19% to 76,840 ounces as a result of unplanned weather-related downtime in the third quarter and timing of leach pad recoveries
  • Tons placed for the full year reached 4.9 million tons, up from 4.6 million in 2017 and 4.3 million in 2016
  • Production in 2019 is expected to return to levels comparable to prior quarters

Kensington, Alaska

               
    2018   4Q 2018   3Q 2018   2Q 2018   1Q 2018   2017   4Q 2017
Tons milled 661,731 166,310 167,964 168,751 158,706 668,727 167,631
Average gold grade (oz/t) 0.19 0.23 0.17 0.16 0.17 0.18 0.22
Average recovery rate 93.0% 93.0% 91.8% 92.6% 94.0% 93.5% 92.8%
Gold ounces produced 113,778 35,335 26,809 25,570 26,064 115,094 34,932
Gold ounces sold 114,778 33,202 25,648 28,165 27,763 125,982 35,634
Average realized price per gold ounce $1,247 $1,246 $1,161 $1,269 $1,307 $1,226 $1,244
 
  • Commercial production at Jualin was declared on December 1, 2018. The figures shown in the table above include pre-commercial production
  • Fourth quarter gold production of 35,335 ounces represented a 32% increase quarter-over-quarter and was slightly higher compared to the same period the prior year, largely driven by additional production from Jualin
  • Approximately 23,000 tons of development ore and 3,000 tons of stope ore were mined from Jualin during the fourth quarter, yielding production (inclusive of pre-commercial) of nearly 10,500 ounces of gold at a grade of 0.40 ounces per ton, demonstrating the impact that high-grade mill feed can have on the overall production profile of Kensington
  • Full-year gold production of 113,778 ounces was relatively flat compared to 2017

Silvertip, British Columbia

               
    2018   4Q 2018   3Q 2018   2Q 2018   1Q 2018   2017   4Q 2017
Tons milled 86,127 38,802 28,080 14,450 4,795
Average silver grade (oz/t) 8.04 6.06 7.29 14.15 10.05
Average zinc grade (%) 6.9% 5.8% 8.0% 8.2% 6.60
Average lead grade (%) 5.0% 3.9% 4.6% 8.1% 7.3% —% —%
Average recovery rate – Ag 49.1% 60.5% 47.0% 42.3% 30.9% —% —%
Average recovery rate – Zn 56.7% 69.1% 49.1% 57.9% 18.7% —% —%
Average recovery rate – Pb 45.1% 54.7% 44.4% 40.5% 21.1% —% —%
Produced
Silver (000's ounces) 340 142 96 87 15
Zinc (000's lbs) 6,781 3,083 2,207 1,372 119
Lead (000's lbs) 3,913 1,658 1,159 949 147
Silver equivalent1 (000's) 943 411 286 217 29
Silver equivalent1 (average spot) (000's) 1,117 488 342 277 36
Sold
Silver (000's ounces) 268 127 131 10
Zinc (000's lbs) 4,793 2,552 1,772 469
Lead (000's lbs) 3,089 1,444 1,645
Silver equivalent1 (000's) 710 352 320 38
Silver equivalent1 (average spot) (000's) 837 418 371 52
Average realized price per silver ounce $14.03 $13.79 $14.95 $13.01
Average realized price per zinc pound $0.83 $0.75 $0.93 $1.08
Average realized price per lead pound $0.81 $0.83 $0.99 $—
 
  • Silvertip achieved commercial production on September 1, 2018. The figures shown in the above table include pre-commercial production
  • On December 27, 2018, the Company announced an initial reserve, which was used to support a reserve-based mine plan and economic analysis, as well as an updated resource. The Company will file a technical report in accordance with National Instrument 43-101 by February 10, 2019
  • Production of silver, zinc and lead during the fourth quarter increased 48%, 41% and 42%, respectively, compared to the prior quarter. The increases were primarily driven by comparatively higher mill throughput rates compared to previous quarters
  • Although throughput has been lower than originally anticipated, the Company continues progressing towards its target of 1,100 tpd (1,000 metric tonnes per day ("mtpd")) by the end of the first quarter. Month-to-date in January, throughput rates have averaged 695 tpd (631 mtpd)
  • Recovery rates continued to improve throughout the fourth quarter, albeit remaining at lower than targeted levels. Recovery rates are expected to trend higher as mill consistency improves and the flotation circuit is optimized. Average metal grade is also expected to improve as depleted ore from historic stockpiles is now being replaced with newly-mined underground material
  • As operations continue to ramp up, the Company remains focused on improvements in four key areas: (i) mill projects targeting higher availability, (ii) maintenance procedures and systems, (iii) supply chain and procurement, and (iv) employee training and development
  • Construction on the 220-person camp facility was substantially completed by the end of the fourth quarter, with personnel expected to begin moving in during the first quarter of 2019
  • The Company remains on track to receive approval for the permit amendment application that will allow for a sustained mining and milling rate of 1,100 tpd (1,000 mtpd) on a year-round basis in early 2019

2018 Production Results

Coeur's 2018 production results, along with its most recent production guidance published October 31, 2018, are shown below.

2018 Production Results2

          Silver Equivalent1
Silver Gold Zinc Lead 60:1   Average Spot
    (K oz)   (oz)   (K lbs)   (K lbs)   (K oz)   (K oz)
Palmarejo 7,516 122,722 14,880 17,429
Rochester 5,038 54,388 8,301 9,431
Wharf 51 76,840 4,661 6,206
Kensington 113,778 6,827 9,190
Silvertip   340     6,781   3,913   943   1,117
Total   12,945   367,728   6,781   3,913   35,612   43,373
 

2018 Production Guidance3

          Silver Equivalent1
Silver Gold Zinc Lead 60:1   Average Spot
    (K oz)   (oz)   (K lbs)   (K lbs)   (K oz)   (K oz)
Palmarejo 7,500 - 7,900 115,000 - 120,000 14,400 - 15,100 16,782 - 17,586
Rochester 4,800 - 5,200 48,000 - 52,000

7,680 - 8,320 8,674 - 9,397
Wharf 85,000 - 90,000

5,100 - 5,400 6,861 - 7,264
Kensington 115,000 - 120,000

 

6,900 - 7,200 9,282 - 9,686
Silvertip   700 - 1,200     13,000 - 23,000   11,000 - 18,000   2,030 - 3,480   2,515 - 4,316
Total   13,000 - 14,300   363,000 - 382,000   13,000 - 23,000   11,000 - 18,000   36,110 - 39,500   44,114 - 48,248
 

Financial Results and Conference Call

Coeur will report its fourth quarter and full-year 2018 financial results on February 20, 2019 after the New York Stock Exchange closes for trading. There will be a conference call on February 21, 2019 at 11:00 a.m. Eastern Time.

      Dial-In Numbers:       (855) 560-2581 (U.S.)
(855) 669-9657 (Canada)
(412) 542-4166 (International)
Conference ID: Coeur Mining

Hosting the call will be Mitchell J. Krebs, President and Chief Executive Officer of Coeur, who will be joined by Thomas S. Whelan, Senior Vice President and Chief Financial Officer, Terry F. D. Smith, Senior Vice President of Operations, Hans Rasmussen, Senior Vice President of Exploration, and other members of management. A replay of the call will be available through March 7, 2019.

      Replay numbers:       (877) 344-7529 (U.S.)
(855) 669-9658 (Canada)
(412) 317-0088 (International)
Conference ID: 101 27 575
 

About Coeur

Coeur Mining, Inc. is a well-diversified, growing precious metals producer with five mines in North America. Coeur produces from its wholly-owned operations: the Palmarejo silver-gold complex in Mexico, the Silvertip silver-zinc-lead mine in British Columbia, the Rochester silver-gold mine in Nevada, the Wharf gold mine in South Dakota, and the Kensington gold mine in Alaska. In addition, the Company has interests in several precious metals exploration projects throughout North America.

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 recoveries, mining rates, throughput, development efforts, grades, operations at Rochester, improvements at Silvertip, and timing of obtaining permit amendment approval for Silvertip. 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 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, silver, zinc, and lead 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, the uncertainties inherent in the estimation of gold and silver reserves, changes that could result from Coeur's future acquisition of new mining properties or businesses, the loss or insolvency of any third-party smelter or refiner with whom Coeur does business, 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 Form 10-K and Form 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.

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 sedar.com.

Notes

  1. Silver equivalence assumes silver-to-gold, -lead and -zinc ratios of 60:1, 0.05:1 and 0.06:1, respectively, except where noted as average spot prices. Please see the table below for average applicable spot prices and corresponding ratios.
  2. Fourth quarter and full-year 2018 production and sales figures include pre-commercial production from Kensington (Jualin) and Silvertip.
  3. Full-year 2018 production guidance includes pre-commercial production from Kensington (Jualin) and Silvertip.

Average Spot Prices

               
    2018   4Q 2018   3Q 2018   2Q 2018   1Q 2018   2017   4Q 2017
Average Silver Spot Price Per Ounce $ 15.71 $ 14.54 $ 15.02 $ 16.53 $ 16.77 $ 17.05 $ 16.73
Average Gold Spot Price Per Ounce $ 1,268 $ 1,226 $ 1,213 $ 1,306 $ 1,329 $ 1,257 $ 1,275
Average Silver to Gold Spot Equivalence 81:1 84:1 81:1 79:1 79:1 74:1 76:1
Average Zinc Spot Price Per Pound $ 1.33 $ 1.19 $ 1.15 $ 1.41 $ 1.55 $ 1.31 $ 1.47
Average Silver to Zinc Spot Equivalence 0.08:1 0.08:1 0.08:1 0.09:1 0.09:1 0.08:1 0.09:1
Average Lead Spot Price Per Pound $ 1.02 $ 0.89 $ 0.95 $ 1.08 $ 1.14 $ 1.05 $ 1.13
Average Silver to Lead Spot Equivalence 0.06:1 0.06:1 0.06:1 0.07:1 0.07:1 0.06:1 0.07:1

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