Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
___________________________________________ 
FORM 10-Q
___________________________________________
þ
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2016
OR
 ¨   
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from              to             
Commission file number 001-08641
____________________________________________ 
a021914coeurminingrpmshsma19.jpg
COEUR MINING, INC.
(Exact name of registrant as specified in its charter)
____________________________________________
Delaware
 
82-0109423
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
104 S. Michigan Ave., Suite 900 Chicago, Illinois
 
60603
(Address of principal executive offices)
 
(Zip Code)
(312) 489-5800
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes  þ    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)    Yes  þ    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
þ
Accelerated filer
 
 ¨   
 
 
 
 
Non-accelerated filer
 
 ¨   
Smaller reporting company
 
 ¨   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  þ
The Company has 300,000,000 shares of common stock, par value of $0.01, authorized of which 170,326,192 shares were issued and outstanding as of October 24, 2016.


COEUR MINING, INC.
INDEX
 
 
Page
Part I.
 
 
 
 
 
 
 
 
 
 
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
 
 
 
 
Condensed Consolidated Statements of Cash Flows (Unaudited)
 
 
 
 
Condensed Consolidated Balance Sheets (Unaudited)
 
 
 
 
Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited)
 
 
 
 
Notes to Condensed Consolidated Financial Statements (Unaudited)
 
 
 
 
 
 
 
 
Consolidated Financial Results
 
 
 
 
Results of Operations
 
 
 
 
Liquidity and Capital Resources
 
 
 
 
Non-GAAP Financial Performance Measures
 
 
 
 
 
 
 
 
 
 
 
Part II.
 
 
 
 
 
 
 
 
Item 1A. Risk Factors
 
 
 
 
 
 
 
 
Item 5. Other Information
 
 
 
 
Item 6. Exhibits
 
 
 
Signatures



2

PART I
Item 1.        Financial Statements

COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
 
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
 
2016
 
2015
 
2016
 
2015
 
Notes
In thousands, except share data
Revenue
3
$
176,247

 
$
162,552

 
$
506,641

 
$
481,770

COSTS AND EXPENSES
 
 
 
 
 
 
 
 
Costs applicable to sales(1)
3
105,408

 
120,237

 
307,428

 
354,397

Amortization
 
27,763

 
35,497

 
93,232

 
107,560

General and administrative
 
7,113

 
6,694

 
22,789

 
23,979

Exploration
 
3,706

 
2,112

 
7,669

 
9,957

Write-downs
 
—

 
—

 
4,446

 
—

Pre-development, reclamation, and other
 
4,491

 
4,938

 
13,059

 
13,968

Total costs and expenses
 
148,481

 
169,478

 
448,623

 
509,861

OTHER INCOME (EXPENSE), NET
 
 
 
 
 
 
 
 
Fair value adjustments, net
10
(961
)
 
5,786

 
(13,235
)
 
3,657

Interest expense, net of capitalized interest
18
(8,068
)
 
(12,446
)
 
(30,063
)
 
(33,945
)
Other, net
7
(3,635
)
 
(8,893
)
 
(4,178
)
 
(14,257
)
Total other income (expense), net
 
(12,664
)
 
(15,553
)
 
(47,476
)
 
(44,545
)
Income (loss) before income and mining taxes
 
15,102

 
(22,479
)
 
10,542

 
(72,636
)
Income and mining tax (expense) benefit
8
54,455

 
8,260

 
53,118

 
8,451

NET INCOME (LOSS)
 
$
69,557

 
$
(14,219
)
 
$
63,660

 
$
(64,185
)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
 
 
 
 
 
 
 
 
Unrealized gain (loss) on equity securities, net of tax of $997 and $(1,177) for the three and nine months ended September 30, 2016, respectively
 
1,387

 
(931
)
 
4,533

 
(3,744
)
Reclassification adjustments for impairment of equity securities
 
—

 
483

 
20

 
2,028

Reclassification adjustments for realized (gain) loss on sale of equity securities
 
(2,965
)
 
—

 
(2,691
)
 
904

Other comprehensive income (loss)
 
(1,578
)
 
(448
)
 
1,862

 
(812
)
COMPREHENSIVE INCOME (LOSS)
 
$
67,979

 
$
(14,667
)
 
$
65,522

 
$
(64,997
)
 
 
 
 
 
 
 
 
 
NET INCOME (LOSS) PER SHARE
9
 
 
 
 
 
 
 
Basic
 
$
0.43

 
$
(0.11
)
 
$
0.41

 
$
(0.52
)
 
 
 
 
 
 
 
 
 
Diluted
 
$
0.42

 
$
(0.11
)
 
$
0.40

 
$
(0.52
)
(1) Excludes amortization.
The accompanying notes are an integral part of these consolidated financial statements.


3

COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
 
2016
 
2015
 
2016
 
2015
 
Notes
In thousands
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
 
 
 
Net income (loss)
 
$
69,557

 
$
(14,219
)
 
$
63,660

 
(64,185
)
Adjustments:
 
 
 
 
 

 
 
Amortization
 
27,763

 
35,497

 
93,232

 
107,560

Accretion
 
2,184

 
3,629

 
8,201

 
10,305

Deferred income taxes
 
(49,463
)
 
(1,233
)
 
(66,738
)
 
(8,470
)
Loss on extinguishment of debt
 
10,040

 
—

 
10,040

 
524

Fair value adjustments, net
10
961

 
(5,786
)
 
13,235

 
(3,657
)
Stock-based compensation
5
2,312

 
1,639

 
7,534

 
6,393

Impairment of equity securities
13
—

 
483

 
20

 
2,028

Write-downs
 
—

 
—

 
4,446

 
—

Other
 
(5,236
)
 
8,541

 
(4,763
)
 
13,321

Changes in operating assets and liabilities:
 
 
 
 
 

 
 
Receivables
 
19,672

 
11,011

 
10,751

 
11,225

Prepaid expenses and other current assets
 
(2,816
)
 
(2,055
)
 
(2,435
)
 
(3,222
)
Inventory and ore on leach pads
 
(8,900
)
 
5,380

 
(24,408
)
 
10,713

Accounts payable and accrued liabilities
 
(18,262
)
 
(6,117
)
 
(12,407
)
 
(12,210
)
CASH PROVIDED BY OPERATING ACTIVITIES
 
47,812

 
36,770

 
100,368

 
70,325

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 
Capital expenditures
 
(25,627
)
 
(23,861
)
 
(71,087
)
 
(65,158
)
Acquisitions, net
12
(1,427
)
 
(122
)
 
(1,427
)
 
(111,290
)
Proceeds from the sale assets
 
4,802

 
333

 
16,104

 
498

Purchase of investments
 
(21
)
 
(3
)
 
(120
)
 
(1,876
)
Sales and maturities of investments
 
5,432

 
60

 
7,077

 
529

Other
 
(1,299
)
 
7

 
(4,218
)
 
(1,836
)
CASH USED IN INVESTING ACTIVITIES
 
(18,140
)
 
(23,586
)
 
(53,671
)
 
(179,133
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
 
 
 
Issuance of common stock
 
49,513

 
—

 
122,584

 
—

Issuance of notes and bank borrowings
18
—

 
—

 
—

 
153,500

Payments on debt, capital leases, and associated costs
 
(107,868
)
 
(2,618
)
 
(120,551
)
 
(77,838
)
Gold production royalty payments
 
(7,563
)
 
(10,159
)
 
(27,155
)
 
(30,281
)
Other
 
1,051

 
(34
)
 
323

 
(529
)
CASH PROVIDED (USED IN) BY FINANCING ACTIVITIES
 
(64,867
)
 
(12,811
)
 
(24,799
)
 
44,852

Effect of exchange rate changes on cash and cash equivalents
 
121

 
(533
)
 
(95
)
 
(1,197
)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
 
(35,074
)
 
(160
)
 
21,803

 
(65,153
)
Cash and cash equivalents at beginning of period
 
257,591

 
205,868

 
200,714

 
270,861

Cash and cash equivalents at end of period
 
$
222,517

 
$
205,708

 
$
222,517

 
$
205,708


The accompanying notes are an integral part of these consolidated financial statements.

4

COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
 
 
September 30, 2016
 
December 31, 2015
ASSETS
Notes
 
In thousands, except share data
CURRENT ASSETS
 
 
 
 
 
Cash and cash equivalents
 
 
$
222,517

 
$
200,714

Receivables
14
 
67,662

 
85,992

Inventory
15
 
89,761

 
81,711

Ore on leach pads
15
 
70,446

 
67,329

Prepaid expenses and other
 
 
17,125

 
10,942

 
 
 
467,511

 
446,688

NON-CURRENT ASSETS
 
 
 
 
 
Property, plant and equipment, net
16
 
217,401

 
195,999

Mining properties, net
17
 
552,054

 
589,219

Ore on leach pads
15
 
63,034

 
44,582

Restricted assets
13
 
17,740

 
11,633

Equity securities
13
 
6,208

 
2,766

Receivables
14
 
32,427

 
24,768

Deferred tax assets

 
1,854

 
1,942

Other
 
 
12,713

 
14,892

TOTAL ASSETS
 
 
$
1,370,942

 
$
1,332,489

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
 
Accounts payable
 
 
$
49,972

 
$
48,732

Accrued liabilities and other
 
 
43,569

 
53,953

Debt
18
 
12,512

 
10,431

Royalty obligations
10
 
5,722

 
24,893

Reclamation
4
 
1,432

 
2,071

 
 
 
113,207

 
140,080

NON-CURRENT LIABILITIES
 
 
 
 
 
Debt
18
 
389,233

 
479,979

Royalty obligations
10
 
6,556

 
4,864

Reclamation
4
 
87,277

 
83,197

Deferred tax liabilities

 
81,484

 
147,132

Other long-term liabilities
 
 
60,854

 
55,761

 
 
 
625,404

 
770,933

STOCKHOLDERS’ EQUITY
 
 
 
 
 
Common stock, par value $0.01 per share; authorized 300,000,000 shares, issued and outstanding 167,565,649 at September 30, 2016 and 151,339,136 at December 31, 2015
 
 
1,676

 
1,513

Additional paid-in capital
 
 
3,169,631

 
3,024,461

Accumulated other comprehensive income (loss)
 
 
(1,860
)
 
(3,722
)
Accumulated deficit
 
 
(2,537,116
)
 
(2,600,776
)
 
 
 
632,331

 
421,476

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
$
1,370,942

 
$
1,332,489


The accompanying notes are an integral part of these consolidated financial statements.


5

COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
In thousands
Common
Stock
Shares
 
Common
Stock Par
Value
 
Additional
Paid-In Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total
Balances at December 31, 2015
151,339

 
$
1,513

 
$
3,024,461

 
$
(2,600,776
)
 
$
(3,722
)
 
$
421,476

Net income (loss)
—

 
—

 
—

 
63,660

 
—

 
63,660

Other comprehensive income (loss)
—

 
—

 
—

 
—

 
1,862

 
1,862

Issuance of common stock
14,286

 
143

 
138,181

 
—

 
—

 
138,324

Common stock issued under stock-based compensation plans, net
1,940

 
20

 
6,989

 
—

 
—

 
7,009

Balances at September 30, 2016
167,565

 
$
1,676

 
$
3,169,631

 
$
(2,537,116
)
 
$
(1,860
)
 
$
632,331

The accompanying notes are an integral part of these consolidated financial statements.

6
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements


NOTE 1 - BASIS OF PRESENTATION
The interim condensed consolidated financial statements of Coeur Mining, Inc. and its subsidiaries (collectively, “Coeur” or the “Company”) are unaudited. In the opinion of management, all adjustments and disclosures necessary for the fair presentation of these interim statements have been included. The results reported in these interim statements may not be indicative of the results which will be reported for the year ending December 31, 2016. The condensed consolidated December 31, 2015 balance sheet data was derived from audited consolidated financial statements. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Recent Accounting Standards
In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230),” which provides guidance on presentation and classification of certain cash receipts and payments in the statement of cash flows. These changes become effective for the Company's fiscal year beginning January 1, 2018. The Company is currently evaluating the potential impact of implementing these changes on the Company's consolidated cash flows.
In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which amends several aspects of the accounting for share-based payment transaction, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. These changes become effective for the Company's fiscal year beginning January 1, 2017. The Company is currently evaluating the potential impact of implementing these changes on the Company's consolidated financial position, results of operations, and cash flows.
In February 2016, the FASB issued ASU 2016-02, “Leases,” which will require lessees to recognize assets and liabilities for the rights and obligations created by most leases on the balance sheet. These changes become effective for the Company's fiscal year beginning January 1, 2019. Modified retrospective adoption for all leases existing at, or entered into after, the date of initial application, is required with an option to use certain transition relief. The Company is currently evaluating the potential impact of implementing these changes on the Company's consolidated financial position, results of operations, and cash flows.
In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes,” which requires entities with a classified balance sheet to present all deferred tax assets and liabilities as non-current. The updated guidance became effective upon early adoption for the Company's fiscal year beginning January 1, 2015, and resulted in a reclassification of amounts from Current deferred tax assets to Non-current deferred tax assets and Current deferred tax liabilities to Non-current deferred tax liabilities in the current and prior periods.
In September 2015, the FASB issued ASU 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments,” which eliminates the requirement for an acquirer to retrospectively adjust the financial statements for measurement-period adjustments that occur in periods after a business combination is consummated. These changes become effective for the Company's fiscal year beginning January 1, 2016. The Company's adoption had no impact on the Company's consolidated financial position, results of operations, and cash flows.
In August 2015, the FASB issued ASU 2015-14, “Deferral of the Effective Date,” which defers the effective date of ASU 2014-09, “Revenue from Contracts with Customers” to January 1, 2018. The Company is currently evaluating the potential impact of adopting the prescribed changes on the Company's consolidated financial position, results of operations, and cash flows.    
In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” which provides a revised, simpler measurement for inventory to be measured at the lower of cost and net realizable value. These changes become effective for the Company's fiscal year beginning January 1, 2018. The Company is currently evaluating the potential impact of implementing these changes on the Company's consolidated financial position, results of operations, and cash flows.
In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs,” which requires that debt issuance costs related to a recognized debt liability be presented as a reduction to the carrying amount of that debt liability, not as an asset. The updated guidance became effective under early adoption for the Company's fiscal year beginning January 1, 2015, and resulted in a reclassification of amounts from Other Non-current Assets to Debt in the current and prior periods.
In February 2015, the FASB issued ASU 2015-02, “Amendments to the Consolidation Analysis,” which amends the consolidation requirements in ASC 810. These changes become effective for the Company's fiscal year beginning January 1, 2016. The Company's adoption had no impact on the Company's consolidated financial position, results of operations, and cash flows.


7
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

NOTE 3 – SEGMENT REPORTING
The Company’s operating segments include the Palmarejo complex, Rochester, Kensington, Wharf, and San Bartolomé mines, and Coeur Capital. All operating segments are engaged in the discovery and mining of gold and silver and generate the majority of their revenues from the sale of these precious metals with the exception of Coeur Capital, which primarily holds the Endeavor silver stream. Other includes the La Preciosa project, Joaquin project, corporate office, elimination of intersegment transactions, and other items necessary to reconcile to consolidated amounts.
Financial information relating to the Company’s segments is as follows (in thousands):
Three months ended September 30, 2016
Palmarejo
 
Rochester
 
Kensington
 
Wharf
 
San Bartolomé
 
Coeur Capital
 
Other
 
Total
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Metal sales
$
30,663

 
$
37,946

 
$
40,164

 
$
39,316

 
$
27,485

 
$
812

 
$
—

 
$
176,386

Royalties
—

 
—

 
—

 
—

 
—

 
(139
)
 
—

 
(139
)
 
30,663

 
37,946

 
40,164

 
39,316

 
27,485

 
673

 
—

 
176,247

Costs and Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Costs applicable to sales(1)
16,033

 
21,783

 
26,709

 
19,697

 
20,813

 
373

 
—

 
105,408

Amortization
5,761

 
5,244

 
8,046

 
6,461

 
1,723

 
138

 
390

 
27,763

Exploration
1,262

 
129

 
1,208

 
2

 
—

 
70

 
1,035

 
3,706

Write-downs
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Other operating expenses
305

 
703

 
263

 
521

 
1,165

 
64

 
8,583

 
11,604

Other income (expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value adjustments, net
(110
)
 
(851
)
 
—

 
—

 
—

 
—

 
—

 
(961
)
Interest expense, net
(184
)
 
(157
)
 
(30
)
 
(22
)
 
(8
)
 
(34
)
 
(7,633
)
 
(8,068
)
Other, net
(2,223
)
 
17

 
(7
)
 
45

 
549

 
2,974

 
(4,990
)
 
(3,635
)
Income and mining tax (expense) benefit
35,671

 
7,844

 
—

 
30,208

 
5,905

 
3,803

 
(28,976
)
 
54,455

Net income (loss)
$
40,456

 
$
16,940

 
$
3,901

 
$
42,866

 
$
10,230

 
$
6,771

 
$
(51,607
)
 
$
69,557

Segment assets(2)
$
430,716

 
$
212,477

 
$
192,204

 
$
105,456

 
$
81,704

 
$
9,148

 
$
78,205

 
$
1,109,910

Capital expenditures
$
10,012

 
$
3,383

 
$
8,602

 
$
567

 
$
3,001

 
$
—

 
$
62

 
$
25,627

(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interest
Three months ended September 30, 2015
Palmarejo
 
Rochester
 
Kensington
 
Wharf
 
San Bartolomé
 
Coeur Capital
 
Other
 
Total
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Metal sales
$
49,187

 
$
34,638

 
$
30,466

 
$
27,986

 
$
17,391

 
$
1,264

 
$
—

 
$
160,932

Royalties
—

 
—

 
—

 
—

 
—

 
1,620

 
—

 
1,620

 
49,187

 
34,638

 
30,466

 
27,986

 
17,391

 
2,884

 
—

 
162,552

Costs and Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs applicable to sales(1)
34,093

 
25,436

 
24,973

 
17,777

 
17,483

 
475

 
—

 
120,237

Amortization
8,617

 
6,731

 
8,499

 
5,642

 
3,526

 
1,983

 
499

 
35,497

Exploration
1,087

 
49

 
217

 
—

 
54

 
(362
)
 
1,067

 
2,112

Other operating expenses
303

 
742

 
254

 
517

 
1,059

 
(38
)
 
8,795

 
11,632

Other income (expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value adjustments, net
2,998

 
1,752

 
—

 
—

 
—

 
—

 
1,036

 
5,786

Interest expense, net
(928
)
 
(168
)
 
(51
)
 
—

 
(100
)
 
—

 
(11,199
)
 
(12,446
)
Other, net
(7,870
)
 
1

 
1

 
53

 
347

 
(455
)
 
(970
)
 
(8,893
)
Income and mining tax (expense) benefit
10,370

 
(1,053
)
 
406

 
(907
)
 
(1,029
)
 
291

 
182

 
8,260

Net income (loss)
$
9,657

 
$
2,212

 
$
(3,122
)
 
$
3,195

 
$
(5,513
)
 
$
662

 
$
(21,310
)
 
$
(14,219
)
Segment assets(2)
$
653,501

 
$
192,348

 
$
193,712

 
$
124,754

 
$
165,931

 
$
51,553

 
$
76,860

 
$
1,458,659

Capital expenditures
$
10,514

 
$
5,281

 
$
5,522

 
$
665

 
$
1,786

 
$
—

 
$
93

 
$
23,861

(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests


8
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements


Nine months ended September 30, 2016
Palmarejo
 
Rochester
 
Kensington
 
Wharf
 
San Bartolomé
 
Coeur Capital
 
Other
 
Total
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Metal sales
$
108,748

 
$
103,689

 
$
112,376

 
$
101,250

 
$
73,948

 
$
3,208

 
$
—

 
$
503,219

Royalties


 


 


 


 


 
3,422

 
—

 
3,422

 
108,748


103,689

 
112,376


101,250


73,948


6,630


—


506,641

Costs and Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs applicable to sales(1)
59,936

 
65,989

 
73,738

 
49,500

 
56,955

 
1,310

 
—

 
307,428

Amortization
27,815

 
15,994

 
26,203

 
15,640

 
5,330

 
1,019

 
1,231

 
93,232

Exploration
2,625

 
426

 
2,138

 
2

 


 
276

 
2,202

 
7,669

Write-downs


 


 


 


 


 
4,446

 
—

 
4,446

Other operating expenses
898

 
2,084

 
772

 
1,702

 
2,532

 
239

 
27,621

 
35,848

Other income (expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value adjustments, net
(5,814
)
 
(5,787
)
 


 


 


 


 
(1,634
)
 
(13,235
)
Interest expense, net
(1,343
)
 
(509
)
 
(107
)
 
(49
)
 
(18
)
 
(34
)
 
(28,003
)
 
(30,063
)
Other, net
(7,818
)
 
(3,840
)
 
(26
)
 
259

 
1,275

 
6,716

 
(744
)
 
(4,178
)
Income and mining tax (expense) benefit
38,922

 
7,429

 
—

 
29,972

 
5,182

 
236

 
(28,623
)
 
53,118

Net income (loss)
$
41,421

 
$
16,489

 
$
9,392

 
$
64,588

 
$
15,570

 
$
6,258

 
$
(90,058
)
 
$
63,660

Segment assets(2)
$
430,716

 
$
212,477

 
$
192,204

 
$
105,456

 
$
81,704

 
$
9,148

 
$
78,205

 
$
1,109,910

Capital expenditures
$
27,690

 
$
10,557

 
$
24,228

 
$
3,488

 
$
4,839

 
$
—

 
$
285

 
$
71,087

(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
Nine months ended September 30, 2015
Palmarejo
 
Rochester
 
Kensington
 
Wharf
 
San Bartolomé
 
Coeur Capital
 
Other
 
Total
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Metal sales
$
127,455

 
$
115,010

 
$
116,971

 
$
48,359

 
$
62,304

 
$
6,292

 
$
—

 
$
476,391

Royalties
—

 
—

 
—

 
—

 
—

 
5,379

 
—

 
5,379

 
127,455

 
115,010

 
116,971

 
48,359

 
62,304

 
11,671

 
—

 
481,770

Costs and Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs applicable to sales(1)
98,695

 
81,221

 
81,844

 
34,410

 
55,767

 
2,460

 
—

 
354,397

Amortization
24,997

 
18,962

 
32,738

 
9,133

 
13,487

 
6,753

 
1,490

 
107,560

Exploration
4,047

 
1,272

 
2,311

 
—

 
132

 
(212
)
 
2,407

 
9,957

Other operating expenses
940

 
2,190

 
1,015

 
1,188

 
1,544

 
(8
)
 
31,078

 
37,947

Other income (expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value adjustments, net
1,882

 
596

 
—

 
—

 
—

 
—

 
1,179

 
3,657

Interest expense, net
(3,112
)
 
(598
)
 
(172
)
 
—

 
(674
)
 
—

 
(29,389
)
 
(33,945
)
Other, net
(9,478
)
 
(38
)
 
(16
)
 
108

 
1,219

 
(2,904
)
 
(3,148
)
 
(14,257
)
Income and mining tax (expense) benefit
9,836

 
(1,753
)
 
(587
)
 
(495
)
 
(2,240
)
 
266

 
3,424

 
8,451

Net income (loss)
$
(2,096
)
 
$
9,573

 
$
(1,712
)
 
$
3,241

 
$
(10,322
)
 
$
40

 
$
(62,909
)
 
$
(64,185
)
Segment assets(2)
$
653,501

 
$
192,348

 
$
193,712

 
$
124,754

 
$
165,931

 
$
51,553

 
$
76,860

 
$
1,458,659

Capital expenditures
$
30,421

 
$
14,451

 
$
14,380

 
$
1,959

 
$
3,729

 
$
—

 
$
218

 
$
65,158

(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests

Assets
September 30, 2016

December 31, 2015
Total assets for reportable segments
$
1,109,910

 
$
1,103,310

Cash and cash equivalents
222,517

 
200,714

Other assets
38,515


28,465

Total consolidated assets
$
1,370,942


$
1,332,489



9
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Geographic Information
Long-Lived Assets
September 30, 2016

December 31, 2015
Mexico
$
403,185

 
$
390,694

United States
327,448

 
336,210

Bolivia
32,361

 
35,201

Australia
3,102

 
5,952

Argentina
10,227

 
10,871

Other
5,513

 
9,058

Total
$
781,836


$
787,986

 

Revenue
Three months ended September 30,
 
Nine months ended
September 30,
2016
 
2015
 
2016
 
2015
United States
$
117,425

 
$
93,091

 
$
317,315

 
$
280,340

Mexico
30,663

 
50,170

 
109,674

 
129,753

Bolivia
27,485

 
17,391

 
73,948

 
62,304

Australia
812

 
1,264

 
3,207

 
6,292

Other
(138
)
 
636

 
2,497

 
3,081

Total
$
176,247


$
162,552


$
506,641


$
481,770


NOTE 4 – RECLAMATION
Reclamation and mine closure costs are based principally on legal and regulatory requirements. Management estimates costs associated with reclamation of mining properties. On an ongoing basis, management evaluates its estimates and assumptions, and future expenditures could differ from current estimates.
Changes to the Company’s asset retirement obligations for operating sites are as follows:
 
Three months ended September 30,
 
Nine months ended September 30,
In thousands
2016
 
2015
 
2016
 
2015
Asset retirement obligation - Beginning
$
85,545

 
$
87,601

 
$
82,072

 
$
67,214

Accretion
2,059

 
2,038

 
6,027

 
5,652

Additions and changes in estimates
(239
)
 
—

 
(118
)
 
18,270

Settlements
(183
)
 
(2,363
)
 
(799
)
 
(3,860
)
Asset retirement obligation - Ending
$
87,182

 
$
87,276

 
$
87,182

 
$
87,276

The Company has accrued $1.5 million and $3.2 million at September 30, 2016 and December 31, 2015, respectively, for reclamation liabilities related to former mining activities, which are included in Reclamation.

NOTE 5 – STOCK-BASED COMPENSATION
The Company has stock incentive plans for executives and eligible employees. Stock awards include stock options, restricted stock, and performance shares. Stock-based compensation expense for the three and nine months ended September 30, 2016 and 2015 was $2.3 million and $1.6 million and $7.5 million and $6.4 million, respectively. At September 30, 2016, there was $8.1 million of unrecognized stock-based compensation cost which is expected to be recognized over a weighted-average remaining vesting period of 1.5 years. During the nine months ended September 30, 2016, the supplemental incentive accrual increased $0.8 million to $2.0 million.


10
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

The following table summarizes the grants awarded during the nine months ended September 30, 2016:
Grant date
 
Restricted
stock
 
Grant date fair
value of
restricted stock
 
Stock options
 
Grant date
fair value of
stock
options
 
Performance
shares
 
Grant date fair
value of
performance
shares
January 20, 2016
 
1,030,833

 
$
1.81

 
165,479

 
$
0.86

 
1,428,314

 
$
1.78

March 21, 2016
 
685,633

 
$
5.76

 
17,772

 
$
2.84

 
8,763

 
$
3.76

August 1, 2016
 
34,446

 
$
15.64

 
 
 
 
 
 
 
 
September 22, 2016
 
17,834

 
$
13.00

 
 
 
 
 
 
 
 

The following options and stock appreciation rights were exercisable during the nine months ended September 30, 2016:
Award Type
 
Number of 
Exercised Units
 
Weighted Average
Exercised Price
 
Number of Exercisable Units
 
Weighted Average
Exercisable Price
Stock options
 
165,369

 
$
7.88

 
296,186

 
$
18.11

Stock appreciation rights
 
—

 
$
—

 
42,152

 
$
14.14


NOTE 6 – RETIREMENT SAVINGS PLAN
The Company has a 401(k) retirement savings plan that covers all eligible U.S. employees. Eligible employees may elect to contribute up to 75% of base salary, subject to ERISA limitations. In addition, the Company has a deferred compensation plan for employees whose benefits under the 401(k) plan are limited by federal regulations. The Company generally makes matching contributions equal to 100% of the employee’s contribution up to 4% of the employee's salary. The Company may also provide an additional contribution based on an eligible employee's salary. Total plan expenses (income) recognized for the three and nine months ended September 30, 2016 and 2015 were $2.3 million and $(0.7) million and $4.2 million and $2.8 million, respectively.

NOTE 7 - OTHER, NET

Other, net consists of the following:
 
 
Three months ended September 30,
 
Nine months ended September 30,
In thousands
 
2016
 
2015
 
2016
 
2015
Gain (loss) on extinguishment of debt
 
$
(10,040
)
 
$
—

 
$
(10,040
)
 
$
(271
)
Foreign exchange loss
 
(1,466
)
 
(8,910
)
 
(7,286
)
 
(13,172
)
Gain on sale of assets
 
4,498

 
333

 
8,983

 
396

Gain (loss) on sale of investments
 
2,965

 
(12
)
 
2,691

 
(916
)
Impairment of equity securities
 
—

 
(483
)
 
(20
)
 
(2,028
)
Other
 
408


179


1,494


1,734

Other, net
 
$
(3,635
)
 
$
(8,893
)
 
$
(4,178
)
 
$
(14,257
)

NOTE 8 – INCOME AND MINING TAXES
The following table summarizes the components of Income and mining tax (expense) benefit for the three and nine months ended September 30, 2016 and 2015 by significant jurisdiction:
 
Three months ended September 30,
 
Nine months ended September 30,
 
2016
 
2015
 
2016
 
2015
In thousands
Income (loss) before tax
Tax (expense) benefit
 
Income (loss) before tax
Tax (expense) benefit
 
Income (loss) before tax
Tax (expense) benefit
 
Income (loss) before tax
Tax (expense) benefit
United States
$
3,286

$
10,712

 
$
(16,168
)
$
(1,080
)
 
$
(5,956
)
$
8,370

 
$
(46,640
)
$
1,123

Argentina
(301
)
67

 
(731
)
(2
)
 
3,137

(183
)
 
(2,083
)
(3
)
Mexico
3,020

37,821

 
(1,412
)
11,951

 
(1,136
)
42,155

 
(16,666
)
11,234

Bolivia
4,325

5,904

 
(4,483
)
(1,029
)
 
10,388

5,182

 
(8,081
)
(2,240
)
Other jurisdictions
4,772

(49
)
 
315

(1,580
)
 
4,109

(2,406
)
 
834

(1,663
)
 
$
15,102

$
54,455

 
$
(22,479
)
$
8,260

 
$
10,542

$
53,118

 
$
(72,636
)
$
8,451


11
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements


The Company’s effective tax rate is impacted by recurring items, such as foreign exchange rates on deferred tax balances, uncertain tax position and mining tax expense accruals, and the full valuation allowance on the deferred tax assets relating to losses in the United States and certain foreign jurisdictions. During the third quarter, the Company completed a legal entity reorganization to integrate recent acquisitions resulting in a valuation allowance release of $40.8 million and recorded a $15.0 million deferred tax benefit related to unremitted earnings. In addition, the Company's consolidated effective income and mining tax rate is a function of the combined effective tax rates and foreign exchange rates in the jurisdictions in which it operates. Variations in the jurisdictional mix of income and loss and foreign exchange rates result in significant fluctuations in our consolidated effective tax rate.
A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related tax benefits will not be realized. Each quarter, the Company analyzes its deferred tax assets and, if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance. Conversely, if it is determined that the Company will ultimately be more likely than not able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of risk factors that could impact the Company’s ability to realize its deferred tax assets. For additional information, please see the sections titled “Risk Factors” set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2015 and the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016.
The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The statute of limitations remains open from 2012 forward for the U.S. federal jurisdiction and from 2008 forward for certain other foreign jurisdictions. As a result of statutes of limitation that will begin to expire within the next 12 months in various jurisdictions and possible settlements of audit-related issues with taxing authorities in various jurisdictions with respect to which none of the issues are individually significant, the Company believes that it is reasonably possible that the total amount of its net unrecognized income tax benefits will decrease between $3.5 million and $4.5 million in the next 12 months.
At September 30, 2016 and December 31, 2015, the Company had $22.6 million and $17.9 million of total gross unrecognized tax benefits, respectively. If recognized, these unrecognized tax benefits would positively impact the Company’s effective income tax rate. The Company’s continuing practice is to recognize potential interest and/or penalties related to unrecognized tax benefits as part of its income tax expense. At September 30, 2016 and December 31, 2015, the amount of accrued income-tax-related interest and penalties was $9.0 million and $9.2 million, respectively.
    

12
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

NOTE 9 – NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock.
For the three and nine months ended September 30, 2016 and 2015, 215,298 and 3,302,701 shares and 404,543 and 3,251,347 shares, respectively, of common stock equivalents related to equity-based awards were not included in the diluted per share calculation as the shares would be antidilutive.
The 3.25% Convertible Senior Notes (“Convertible Notes”) were not included in the computation of diluted net income (loss) per share for the three and nine months ended September 30, 2016 and 2015 because there is no excess value upon conversion over the principal amount of the Convertible Notes. The outstanding Convertible Notes were redeemed in the third quarter of 2016.
 
Three months ended September 30,
 
Nine months ended September 30,
In thousands except per share amounts
2016
 
2015
 
2016
 
2015
Net income (loss) available to common stockholders
$
69,557

 
$
(14,219
)
 
$
63,660

 
$
(64,185
)
Weighted average shares:
 
 
 
 
 
 
 
Basic
161,039

 
135,247

 
155,108

 
124,478

Effect of stock-based compensation plans
4,789

 
—

 
3,284

 
—

Diluted
165,828


135,247


158,392


124,478

Income (loss) per share:
 
 
 
 
 
 
 
Basic
$
0.43

 
$
(0.11
)
 
$
0.41

 
$
(0.52
)
Diluted
$
0.42

 
$
(0.11
)
 
$
0.40

 
$
(0.52
)

During the second quarter 2016, the Company completed a $75.0 million “at the market” stock offering (“$75.0 million offering”). In connection with the $75.0 million offering, the Company sold 9,253,016 shares of its common stock at an average price of $8.11 per share.
Pursuant to an equity distribution agreement dated September 9, 2016, the Company may issue and sell shares of its common stock from time to time through ordinary broker transactions having an aggregate offering price of up to $200.0 million, with the net proceeds available for repayment of indebtedness and other general corporate purposes. The terms of sales transactions under the agreement, including trading day(s), number of shares sold in the aggregate, number of shares sold per trading day, and the floor selling price per share, are proposed by the Company to the sales agents. Whether or not the Company engages in sales from time to time may depend on a variety of factors, including share price, our cash resources, customary black-out restrictions, and whether we have any material nonpublic information. The agreement can be terminated by the Company at any time, and the Company has initially authorized sales under the agreement through no later than June 30, 2017. The shares issued under the equity distribution agreement are registered under the Securities Act of 1933, as amended, pursuant to the Company's shelf registration statement on Form S-3, which was filed with the SEC on March 29, 2016. At September 30, 2016, the Company had sold 4,293,785 shares under the agreement for net proceeds of approximately $53.4 million, net of commissions and fees of approximately $1.2 million.
    
NOTE 10 – FAIR VALUE MEASUREMENTS
 
 
Three months ended September 30,
 
Nine months ended September 30,
In thousands
 
2016
 
2015
 
2016
 
2015
Palmarejo royalty obligation embedded derivative
 
$
(110
)
 
$
2,983

 
$
(5,866
)
 
$
1,823

Rochester net smelter returns (“NSR”) royalty obligation
 
(851
)
 
1,752

 
(5,787
)
 
596

Silver and gold options
 
—

 
1,051

 
(1,582
)
 
1,238

Fair value adjustments, net
 
$
(961
)
 
$
5,786

 
$
(13,235
)
 
$
3,657

Accounting standards establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1), secondary priority to quoted prices in inactive markets or observable inputs (Level 2), and the lowest priority to unobservable inputs (Level 3).

13
Coeur Mining, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:
 
Fair Value at September 30, 2016
In thousands
Total
 
Level 1
 
Level 2
 
Level 3  
Assets:
 
 
 
 
 
 
 
Equity securities
$
6,208

 
$
6,201

 
$
—

 
$
7

Liabilities:
 
 
 
 
 
 
 
Rochester NSR royalty obligation
12,278

 
—

 
—

 
12,278

Other derivative instruments, net
130

 
—

 
130

 
—

 
$
12,408

 
$
—

 
$
130

 
$
12,278

 
 
Fair Value at December 31, 2015
In thousands
Total
 
Level 1
 
Level 2
 
Level 3  
Assets:
 
 
 
 
 
 
 
Equity securities
$
2,766

 
$
2,756

 
$
—