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 June 30, 2017
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
____________________________________________ 
a021914coeurminingrpmshsma65.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, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
þ
Accelerated filer
 
¨   
 
 
 
 
Non-accelerated filer
 
¨   
Smaller reporting company
 
¨   
 
 
 
 
 
 
 
 
 
Emerging growth company
 
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
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 181,451,398 shares were issued and outstanding as of July 24, 2017.


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
 
 
 
 
Condensed Consolidated Statement of Changes in Stockholders’ Equity
 
 
 
 
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 June 30,
 
Six months ended June 30,
 
 
2017
 
2016
 
2017
 
2016
 
Notes
In thousands, except share data
Revenue
3
$
173,354

 
$
182,007

 
$
379,492

 
$
330,394

COSTS AND EXPENSES
 
 
 
 
 
 
 
 
Costs applicable to sales(1)
3
125,621

 
100,465

 
258,333

 
202,020

Amortization
 
32,946

 
37,505

 
73,050

 
65,470

General and administrative
 
7,042

 
7,400

 
17,175

 
15,676

Exploration
 
7,813

 
2,233

 
13,065

 
3,963

Write-downs
 
—

 
—

 
—

 
4,446

Pre-development, reclamation, and other
 
4,366

 
4,364

 
8,947

 
8,568

Total costs and expenses
 
177,788

 
151,967


370,570

 
300,143

OTHER INCOME (EXPENSE), NET
 
 
 
 
 
 
 
 
Loss on debt extinguishment
17
(9,342
)
 
—

 
(9,342
)
 
—

Fair value adjustments, net
10
336

 
(3,579
)
 
(864
)
 
(12,274
)
Interest expense, net of capitalized interest
17
(3,749
)
 
(10,875
)
 
(7,335
)
 
(21,995
)
Other, net
7
4,136

 
(1,857
)
 
25,275

 
(543
)
Total other income (expense), net
 
(8,619
)
 
(16,311
)

7,734

 
(34,812
)
Income (loss) before income and mining taxes
 
(13,053
)
 
13,729


16,656

 
(4,561
)
Income and mining tax (expense) benefit
8
2,098

 
768

 
(8,948
)
 
(1,338
)
NET INCOME (LOSS)
 
$
(10,955
)
 
$
14,497


$
7,708

 
$
(5,899
)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
 
 
 
 
 
 
 
 
Unrealized gain (loss) on equity securities, net of tax of ($1,164) and ($2,174) for the three and six months June 30, 2016, respectively
 
(18
)
 
2,103

 
(2,200
)
 
3,146

Reclassification adjustments for impairment of equity securities
 
305

 
20

 
426

 
20

Reclassification adjustments for realized (gain) loss on sale of equity securities
 
(203
)
 
(314
)
 
1,268

 
273

Other comprehensive income (loss)
 
84

 
1,809


(506
)
 
3,439

COMPREHENSIVE INCOME (LOSS)
 
$
(10,871
)
 
$
16,306


$
7,202

 
$
(2,460
)
 
 
 
 
 
 
 
 
 
NET INCOME (LOSS) PER SHARE
9
 
 
 
 
 
 
 
Basic
 
$
(0.06
)
 
$
0.09

 
$
0.04

 
$
(0.04
)
 
 
 
 
 
 
 
 
 
Diluted
 
$
(0.06
)
 
$
0.09

 
$
0.04

 
$
(0.04
)
(1) Excludes amortization.
The accompanying notes are an integral part of these condensed consolidated financial statements.


3

COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2017
 
2016
 
2017
 
2016
 
Notes
In thousands
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(10,955
)
 
$
14,497

 
7,708

 
(5,899
)
Adjustments:
 
 
 
 
 
 
 
 
Amortization
 
32,946

 
37,505

 
73,050

 
65,470

Accretion
 
2,593

 
2,848

 
5,107

 
6,017

Deferred taxes
 
(4,844
)
 
(15,170
)
 
(3,469
)
 
(17,275
)
Loss on debt extinguishment
 
9,342

 
—

 
9,342

 
—

Fair value adjustments, net
10
(336
)
 
3,579

 
864

 
12,274

Stock-based compensation
5
2,235

 
2,307

 
5,542

 
5,222

Gain on sale of the Joaquin project
 
—

 
—

 
(21,138
)
 
—

Write-downs
 
—

 
—

 
—

 
4,446

Other
 
(3,624
)
 
1,930

 
(5,822
)
 
494

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
Receivables
 
(1,916
)
 
(12,402
)
 
11,190

 
(8,921
)
Prepaid expenses and other current assets
 
3,612

 
(898
)
 
(687
)
 
381

Inventory and ore on leach pads
 
(997
)
 
(7,686
)
 
13,295

 
(15,508
)
Accounts payable and accrued liabilities
 
1,223

 
19,429

 
(10,432
)
 
5,855

CASH PROVIDED BY OPERATING ACTIVITIES
 
29,279


45,939


84,550

 
52,556

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 
Capital expenditures
 
(37,482
)
 
(23,288
)
 
(61,461
)
 
(45,460
)
Proceeds from the sale of assets
 
436

 
7,293

 
15,455

 
11,302

Purchase of investments
 
(8,948
)
 
(92
)
 
(9,964
)
 
(99
)
Sale of investments
 
898

 
648

 
10,918

 
1,645

Other
 
(61
)
 
(1,446
)
 
(1,607
)
 
(2,919
)
CASH USED IN INVESTING ACTIVITIES
 
(45,157
)

(16,885
)
 
(46,659
)

(35,531
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
 
 
 
Issuance of common stock
 
—

 
73,071

 
—

 
73,071

Issuance of notes and bank borrowings
17
244,958

 
—

 
244,958

 
—

Payments on debt, capital leases, and associated costs
17
(188,931
)
 
(6,712
)
 
(192,157
)
 
(12,683
)
Gold production royalty payments
 
—

 
(10,461
)
 
—

 
(19,592
)
Other
 
(473
)
 
(448
)
 
(3,720
)
 
(728
)
CASH PROVIDED BY FINANCING ACTIVITIES
 
55,554


55,450


49,081

 
40,068

Effect of exchange rate changes on cash and cash equivalents
 
329

 
(302
)
 
884

 
(216
)
INCREASE IN CASH AND CASH EQUIVALENTS
 
40,005

 
84,202


87,856

 
56,877

Cash and cash equivalents at beginning of period
 
210,033

 
173,389

 
162,182

 
200,714

Cash and cash equivalents at end of period
 
$
250,038

 
$
257,591


$
250,038

 
$
257,591


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

4

COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
June 30, 2017 (Unaudited)
 
December 31, 2016
ASSETS
Notes
In thousands, except share data
CURRENT ASSETS
 
 
 
 
Cash and cash equivalents
 
$
250,038

 
$
162,182

Receivables
13
69,656

 
60,431

Inventory
14
67,895

 
106,026

Ore on leach pads
14
75,699

 
64,167

Prepaid expenses and other
 
18,563

 
17,981

 
 
481,851

 
410,787

NON-CURRENT ASSETS
 
 
 
 
Property, plant and equipment, net
15
227,738

 
216,796

Mining properties, net
16
550,247

 
558,455

Ore on leach pads
14
69,954

 
67,231

Restricted assets
12
19,294

 
17,597

Equity securities
12
11,872

 
4,488

Receivables
13
15,140

 
30,951

Other
 
18,552

 
12,604

TOTAL ASSETS
 
$
1,394,648

 
$
1,318,909

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
Accounts payable
 
$
58,800

 
$
53,335

Accrued liabilities and other
 
41,250

 
42,743

Debt
17
13,014

 
12,039

Royalty obligations
10
—

 
4,995

Reclamation
4
3,599

 
3,522

 
 
116,663

 
116,634

NON-CURRENT LIABILITIES
 
 
 
 
Debt
17
271,766

 
198,857

Royalty obligations
10
—

 
4,292

Reclamation
4
99,541

 
95,804

Deferred tax liabilities
 
75,388

 
74,798

Other long-term liabilities
 
53,779

 
60,037

 
 
500,474

 
433,788

STOCKHOLDERS’ EQUITY
 
 
 
 
Common stock, par value $0.01 per share; authorized 300,000,000 shares, issued and outstanding 181,441,769 at June 30, 2017 and 180,933,287 at December 31, 2016
 
1,814

 
1,809

Additional paid-in capital
 
3,316,407

 
3,314,590

Accumulated other comprehensive income (loss)
 
(2,994
)
 
(2,488
)
Accumulated deficit
 
(2,537,716
)
 
(2,545,424
)
 
 
777,511

 
768,487

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
 
$
1,394,648

 
$
1,318,909


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


5

COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
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, 2016
180,933

 
$
1,809

 
$
3,314,590

 
$
(2,545,424
)
 
$
(2,488
)
 
$
768,487

Net income (loss)
—

 
—

 
—

 
7,708

 
—

 
7,708

Other comprehensive income (loss)
—

 
—

 
—

 
—

 
(506
)
 
(506
)
Common stock issued under stock-based compensation plans, net
509

 
5

 
1,817

 
—

 
—

 
1,822

Balances at June 30, 2017 (Unaudited)
181,442

 
$
1,814

 
$
3,316,407

 
$
(2,537,716
)
 
$
(2,994
)
 
$
777,511

The accompanying notes are an integral part of these condensed 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, 2017. The condensed consolidated December 31, 2016 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, 2016 (the “2016 10-K”).

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Recent Accounting Standards

In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805) - Clarifying the Definition of a Business,” which clarifies the definition of a business to assist entities in the evaluation of acquisitions and disposals of assets or businesses. 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 November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230) - Restricted Cash,” which will require entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents 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 financial position, results of operations, and cash flows.
In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments,” 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 this standard and does not expect this ASU to materially impact the Company’s consolidated net income, financial position or 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 became effective for the Company’s fiscal year beginning January 1, 2017, and the Company’s adoption had no impact 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 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 May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers”, which has subsequently been amended several times. The new standard provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition. These changes become effective for the Company’s fiscal year beginning January 1, 2018. The Company has substantially completed its analysis of the new standard and reviewed potential impacts from timing of when control is transferred to customers, variable consideration on concentrate sales and classification of refining fees.  The Company does not expect this ASU to materially impact the Company’s consolidated net income, financial position or 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, and the Rochester, Kensington, Wharf, and San Bartolomé mines. All operating segments are engaged in the discovery, mining, and production of gold and/or silver. Other includes the La Preciosa project, other mineral interests, strategic equity investments, corporate office, elimination of intersegment transactions, and other items necessary to reconcile to consolidated amounts. The Company eliminated Coeur Capital as a standalone reportable segment in the first quarter of 2017 and has classified the operating performance, segment assets, and capital expenditures of the Endeavor silver stream and other remaining non-core assets in Other. All prior period amounts have been adjusted to conform to the current presentation.
Financial information relating to the Company’s segments is as follows (in thousands):
Three months ended June 30, 2017
Palmarejo
 
Rochester
 
Kensington
 
Wharf
 
San Bartolomé
 
Other
 
Total
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
Metal sales
$
53,235

 
$
32,791

 
$
35,567

 
$
27,013

 
$
23,814

 
$
934

 
$
173,354

Costs and Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs applicable to sales(1)
33,894

 
24,161

 
27,988

 
15,768

 
23,392

 
418

 
125,621

Amortization
14,431

 
4,938

 
8,347

 
2,549

 
2,212

 
469

 
32,946

Exploration
3,124

 
315

 
1,980

 
3

 
—

 
2,391

 
7,813

Other operating expenses
310

 
831

 
350

 
632

 
298

 
8,987

 
11,408

Other income (expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss on debt extinguishment
—

 
—

 
—

 
—

 
—

 
(9,342
)
 
(9,342
)
Fair value adjustments, net
—

 
336

 
—

 
—

 
—

 
—

 
336

Interest expense, net
(102
)
 
(133
)
 
(113
)
 
(17
)
 
(5
)
 
(3,379
)
 
(3,749
)
Other, net
(498
)
 
2,344

 
(57
)
 
336

 
92

 
1,919

 
4,136

Income and mining tax (expense) benefit
(3,229
)
 
44

 
—

 
(1,060
)
 
245

 
6,098

 
2,098

Net income (loss)
$
(2,353
)

$
5,137


$
(3,268
)

$
7,320


$
(1,756
)

$
(16,035
)

$
(10,955
)
Segment assets(2)
$
397,254

 
$
241,381

 
$
207,103

 
$
104,311

 
$
62,864

 
$
83,338

 
$
1,096,251

Capital expenditures
$
11,202

 
$
13,816

 
$
8,649

 
$
1,471

 
$
375

 
$
1,969

 
$
37,482

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

Three months ended June 30, 2016
Palmarejo
 
Rochester
 
Kensington
 
Wharf
 
San Bartolomé
 
Other
 
Total
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
Metal sales
$
48,272

 
$
35,761

 
$
36,469

 
$
34,005

 
$
25,185

 
$
505

 
$
180,197

Royalties
—

 
—

 
—

 
—

 
—

 
1,810

 
1,810

 
48,272


35,761


36,469


34,005


25,185


2,315


182,007

Costs and Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs applicable to sales(1)
22,865

 
21,721

 
22,611

 
14,342

 
18,645

 
281

 
100,465

Amortization
14,765

 
5,437

 
9,808

 
5,128

 
1,853

 
514

 
37,505

Exploration
562

 
188

 
977

 
—

 
—

 
506

 
2,233

Write-downs
—

 
—

 
—

 
—

 
—

 
—

 
—

Other operating expenses
278

 
700

 
257

 
688

 
1,076

 
8,765

 
11,764

Other income (expense)
 
 
 
 
 
 
 
 
 
 


 


Loss on debt extinguishment
—

 
—

 
—

 
—

 
—

 
—

 
—

Fair value adjustments, net
(840
)
 
(2,687
)
 
—

 
—

 
—

 
(52
)
 
(3,579
)
Interest expense, net
(425
)
 
(181
)
 
(34
)
 
(27
)
 
(7
)
 
(10,201
)
 
(10,875
)
Other, net
(4,360
)
 
(3,860
)
 
1

 
204

 
411

 
5,747

 
(1,857
)
Income and mining tax (expense) benefit
3,153

 
8

 
—

 
(352
)
 
848

 
(2,889
)
 
768

Net income (loss)
$
7,330


$
995


$
2,783


$
13,672


$
4,863


$
(15,146
)

$
14,497

Segment assets(2)
$
427,938

 
$
207,764

 
$
196,403

 
$
113,821

 
$
83,814

 
$
84,219

 
$
1,113,959

Capital expenditures
$
8,863

 
$
3,885

 
$
7,536

 
$
1,511

 
$
1,317

 
$
176

 
$
23,288

(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

Six months ended June 30, 2017
Palmarejo
 
Rochester
 
Kensington
 
Wharf
 
San Bartolomé
 
Other
 
Total
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
Metal sales
$
130,939

 
$
71,770

 
$
73,531

 
$
57,264

 
$
44,398

 
$
1,590

 
$
379,492

Costs and Expenses
 
 
 
 
 
 
 
 
 
 
 
 


Costs applicable to sales(1)
76,895

 
50,600

 
56,431

 
32,088

 
41,614

 
705

 
258,333

Amortization
34,581

 
10,754

 
17,525

 
5,660

 
3,623

 
907

 
73,050

Exploration
4,755

 
459

 
2,819

 
3

 
—

 
5,029

 
13,065

Other operating expenses
611

 
1,641

 
695

 
1,251

 
1,050

 
20,874

 
26,122

Other income (expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss on debt extinguishment
—

 
—

 
—

 
—

 
—

 
(9,342
)
 
(9,342
)
Fair value adjustments, net
—

 
(864
)
 
—

 
—

 
—

 
—

 
(864
)
Interest expense, net
(227
)
 
(250
)
 
(153
)
 
(36
)
 
(12
)
 
(6,657
)
 
(7,335
)
Other, net
(127
)
 
2,312

 
(865
)
 
425

 
371

 
23,159

 
25,275

Income and mining tax (expense) benefit
(14,415
)
 
(454
)
 
—

 
(2,017
)
 
214

 
7,724

 
(8,948
)
Net income (loss)
$
(672
)

$
9,060


$
(4,957
)

$
16,634


$
(1,316
)

$
(11,041
)

$
7,708

Segment assets(2)
$
397,254

 
$
241,381

 
$
207,103

 
$
104,311

 
$
62,864

 
$
83,338

 
$
1,096,251

Capital expenditures
$
17,432

 
$
24,384

 
$
14,170

 
$
2,358

 
$
763

 
$
2,354

 
$
61,461

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

Six months ended June 30, 2016
Palmarejo
 
Rochester
 
Kensington
 
Wharf
 
San Bartolomé
 
Other
 
Total
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
Metal sales
$
78,085

 
$
65,743

 
$
72,212

 
$
61,934

 
$
46,463

 
$
2,396

 
$
326,833

Royalties
—

 
—

 
—

 
—

 
—

 
3,561

 
3,561

 
78,085


65,743


72,212


61,934


46,463


5,957

 
330,394

Costs and Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs applicable to sales(1)
43,903

 
44,206

 
47,029

 
29,803

 
36,142

 
937

 
202,020

Amortization
22,054

 
10,750

 
18,157

 
9,179

 
3,607

 
1,723

 
65,470

Exploration
1,363

 
297

 
930

 
—

 
—

 
1,373

 
3,963

Write-downs
—

 
—

 
—

 
—

 
—

 
4,446

 
4,446

Other operating expenses
593

 
1,381

 
509

 
1,181

 
1,367

 
19,213

 
24,244

Other income (expense)
 
 
 
 
 
 
 
 
 
 


 
 
Loss on debt extinguishment
—

 
—

 
—

 
—

 
—

 
—

 
—

Fair value adjustments, net
(5,704
)
 
(4,936
)
 
—

 
—

 
—

 
(1,634
)
 
(12,274
)
Interest expense, net
(1,159
)
 
(352
)
 
(77
)
 
(27
)
 
(10
)
 
(20,370
)
 
(21,995
)
Other, net
(5,595
)
 
(3,857
)
 
(19
)
 
214

 
726

 
7,988

 
(543
)
Income and mining tax (expense) benefit
3,251

 
(415
)
 
—

 
(236
)
 
(723
)
 
(3,215
)
 
(1,338
)
Net income (loss)
$
965


$
(451
)

$
5,491


$
21,722


$
5,340


$
(38,966
)
 
$
(5,899
)
Segment assets(2)
$
427,938

 
$
207,764

 
$
196,403

 
$
113,821

 
$
83,814

 
$
84,219

 
$
1,113,959

Capital expenditures
$
17,678

 
$
7,174

 
$
15,626

 
$
2,921

 
$
1,838

 
$
223

 
$
45,460

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

Assets
June 30, 2017

December 31, 2016
Total assets for reportable segments
$
1,096,251

 
$
1,122,038

Cash and cash equivalents
250,038

 
162,182

Other assets
48,359


34,689

Total consolidated assets
$
1,394,648


$
1,318,909



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

Geographic Information
Long-Lived Assets
June 30, 2017

December 31, 2016
Mexico
$
375,536

 
$
397,697

United States
365,519

 
338,897

Bolivia
29,918

 
31,539

Australia
2,684

 
2,983

Argentina
228

 
10,228

Other
5,601

 
5,564

Total
$
779,486


$
786,908

 
Revenue
Three months ended June 30,
 
Six months ended June 30,
2017
 
2016
 
2017
 
2016
United States
$
95,371

 
$
106,236

 
$
202,565

 
$
199,890

Mexico
53,235

 
48,489

 
130,939

 
79,011

Bolivia
23,814

 
25,185

 
44,398

 
46,463

Australia
934

 
504

 
1,590

 
2,395

Other
—


1,593

 
—


2,635

Total
$
173,354

 
$
182,007

 
$
379,492


$
330,394

        
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 June 30,
 
Six months ended June 30,
In thousands
2017
 
2016
 
2017
 
2016
Asset retirement obligation - Beginning
$
99,240

 
$
83,974

 
$
97,380

 
$
82,072

Accretion
2,397

 
2,009

 
4,735

 
3,968

Additions and changes in estimates
—

 
(130
)
 
—

 
121

Settlements
(510
)
 
(308
)
 
(988
)
 
(616
)
Asset retirement obligation - Ending
$
101,127


$
85,545

 
$
101,127

 
$
85,545

The Company has accrued $2.0 million and $1.9 million at June 30, 2017 and December 31, 2016, respectively, for reclamation liabilities related to former mining activities, which are included in Reclamation.


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

NOTE 5 – STOCK-BASED COMPENSATION
The Company has stock incentive plans for executives and eligible employees. Stock awards include performance shares, restricted stock and stock options. Stock-based compensation expense for the three and six months ended June 30, 2017 was $2.2 million and $5.5 million, respectively, compared to $2.3 million and $5.2 million for the three and six months ended June 30, 2016, respectively. At June 30, 2017, there was $8.9 million of unrecognized stock-based compensation cost which is expected to be recognized over a weighted-average remaining vesting period of 1.6 years.
The following table summarizes the grants awarded during the six months ended June 30, 2017:
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 18, 2017
 
236,581

 
$
11.47

 
—

 
$
—

 
316,213

 
$
11.58

March 7, 2017
 
539,858

 
$
7.60

 
14,820

 
$
3.91

 
—

 
$
—


The following options and stock appreciation rights were exercisable during the six months ended June 30, 2017:
Award Type
 
Number of 
Exercised Units
 
Weighted Average
Exercised Price
 
Number of Exercisable Units
 
Weighted Average
Exercisable Price
Stock options
 
16,400

 
$
1.81

 
462,181

 
$
13.74

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. 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 recognized for the three and six months ended June 30, 2017 were $1.8 million and $3.9 million, respectively, compared to $0.9 million and $1.9 million for the three and six months ended June 30, 2016, respectively. In addition, the Company has a deferred compensation plan for employees whose benefits under the 401(k) plan are limited by federal regulations.

NOTE 7 - OTHER, NET
Other, net consists of the following:
 
Three months ended June 30,
 
Six months ended June 30,
In thousands
2017
 
2016
 
2017
 
2016
Foreign exchange gain (loss)
$
1,000

 
$
(5,656
)
 
$
2,442

 
$
(5,819
)
Gain (loss) on sale of assets and investments
513

 
3,126

 
(1,552
)
 
4,211

Gain on sale of the Joaquin project
—

 
—

 
21,138

 
—

Gain on repurchase of the Rochester royalty obligation
2,332

 
—

 
2,332

 
—

Impairment of equity securities
(305
)
 
(20
)
 
(426
)
 
(20
)
Other
596


693


1,341

 
1,085

Other, net
$
4,136

 
$
(1,857
)
 
$
25,275

 
$
(543
)


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

NOTE 8 - INCOME AND MINING TAXES
The following table summarizes the components of Income and mining tax (expense) benefit for the three and six months ended June 30, 2017 and 2016 by significant jurisdiction:

 
Three months ended June 30,
 
Six months ended June 30,
 
2017
 
2016
 
2017
 
2016
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
$
(6,493
)
$
1,588

 
$
119

$
(1,810
)
 
$
14,221

$
(377
)
 
$
(9,242
)
$
(2,342
)
Argentina
(129
)
945

 
4,453

(1,793
)
 
(457
)
2,070

 
3,438

(250
)
Mexico
(2,195
)
(4,766
)
 
3,353

4,316

 
6,455

(14,689
)
 
(4,155
)
4,333

Bolivia
(2,001
)
245

 
4,016

848

 
(1,530
)
214

 
6,062

(722
)
Other jurisdictions
(2,235
)
4,086


1,788

(793
)

(2,033
)
3,834


(664
)
(2,357
)
 
$
(13,053
)
$
2,098

 
$
13,729

$
768

 
$
16,656

$
(8,948
)
 
$
(4,561
)
$
(1,338
)
    
The Company’s effective tax rate is impacted by recurring and nonrecurring items. These items include foreign exchange rates on deferred tax balances, mining taxes, uncertain tax positions, and a full valuation allowance on deferred tax assets related to losses in the United States and certain foreign jurisdictions. Changes in currency rates increased income and mining tax expense by $3.0 million and $8.6 million for the three and six months ended June 30, 2017, predominately due to the strength of the Mexican Peso. Also, favorable operating results at Palmarejo contributed to higher income and mining tax expense. 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. 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 factors that 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 2016 10-K.
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 2009 forward for certain other foreign jurisdictions. As a result of statutes of limitation that will begin to expire within the next twelve 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 $1.5 million and $2.5 million in the next twelve months.
At June 30, 2017 and December 31, 2016, the Company had $17.4 million and $19.6 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 June 30, 2017 and December 31, 2016, the amount of accrued income-tax-related interest and penalties was $8.4 million and $8.7 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 six months ended June 30, 2017, 852,176 and 1,426,480 common stock equivalents, respectively, related to equity-based awards were not included in the diluted earnings per share calculation as the shares would be antidilutive. Similarly, 439,721 and 1,600,669 common stock equivalents were excluded from the diluted earnings per share calculation for the three and six months ended June 30, 2016, respectively.
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 six months ended June 30, 2016 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 June 30,
 
Six months ended June 30,
In thousands except per share amounts
2017
 
2016
 
2017
 
2016
Net income (loss) available to common stockholders
$
(10,955
)
 
$
14,497

 
$
7,708

 
$
(5,899
)
Weighted average shares:
 
 
 
 
 
 
 
Basic
179,241

 
153,972

 
179,071

 
152,110

Effect of stock-based compensation plans
—

 
3,928

 
4,049

 
—

Diluted
179,241


157,900


183,120


152,110

Income (loss) per share:
 
 
 
 
 
 
 
Basic
$
(0.06
)
 
$
0.09

 
$
0.04


$
(0.04
)
Diluted
$
(0.06
)
 
$
0.09

 
$
0.04


$
(0.04
)

NOTE 10 – FAIR VALUE MEASUREMENTS
 
Three months ended June 30,
 
Six months ended June 30,
In thousands
2017
 
2016
 
2017
 
2016
Rochester royalty obligation
$
336

 
$
(878
)
 
$
(864
)
 
$
(5,756
)
Palmarejo royalty obligation embedded derivative
—

 
$
(2,687
)
 
$
—

 
(4,936
)
Silver and gold options
—


(14
)
 
—

 
(1,582
)
Fair value adjustments, net
$
336

 
$
(3,579
)
 
$
(864
)
 
$
(12,274
)
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).
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 June 30, 2017
In thousands
Total
 
Level 1
 
Level 2
 
Level 3  
Assets:
 
 
 
 
 
 
 
Equity securities
$
11,872

 
$
11,614

 
$
—

 
$
258

Other derivative instruments, net
4

 
—

 
4

 
—

 
$
11,876

 
$
11,614

 
$
4

 
$
258

Liabilities:
 
 
 
 
 
 
 
Other derivative instruments, net
$
169

 
$
—

 
$
169

 
$
—

 

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

 
Fair Value at December 31, 2016
In thousands
Total
 
Level 1
 
Level 2
 
Level 3  
Assets:
 
 
 
 
 
 
 
Equity securities
$
4,488

 
$
4,209

 
$
—

 
$
279

 
$
4,488

 
$
4,209

 
$
—

 
$
279

Liabilities:
 
 
 
 
 
 
 
Rochester royalty obligation
9,287

 
—

 
—

 
9,287

Other derivative instruments, net
762

 
—

 
762

 
—

 
$
10,049

 
$
—

 
$
762

 
$
9,287

The Company’s investments in equity securities are recorded at fair market value in the financial statements based primarily on quoted market prices. Such instruments are classified within Level 1 of the fair value hierarchy. Quoted market prices are not available for certain equity securities; these securities are valued using pricing models, which require the use of observable and unobservable inputs, and are classified within Level 3 of the fair value hierarchy.
The Company’s other derivative instruments, net, relate to concentrate and certain doré sales contracts valued using pricing models, which require inputs that are derived from observable market data, including contractual terms, forward market prices, yield curves, credit spreads, and other unobservable inputs. The model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy.
In May 2017, the Company repurchased the Rochester royalty obligation for $5.0 million in cash. The Company recorded a pre-tax gain of $2.3 million on this repurchase which is included in Other, net. The fair value of the Rochester royalty obligation was estimated based on observable market data including contractual terms, forward silver and gold prices, yield curves, and credit spreads, as well as the Company’s current mine plan which is considered a significant unobservable input. Therefore, the Company classified this obligation as a Level 3 financial liability.
No assets or liabilities were transferred between fair value levels in the six months ended June 30, 2017.
The following tables present the changes in the fair value of the Company's Level 3 financial assets and liabilities for the six months ended June 30, 2017:
 
Three Months Ended June 30, 2017
In thousands
Balance at the beginning of the period
 
Revaluation
 
Settlements
 
Gain on settlement
 
Balance at the
end of the
period
Assets:
 
 
 
 
 
 
 
 
 
Equity securities
$
279

 
$
(21
)
 
$
—

 
$
—

 
$
258

Liabilities:
 
 
 
 
 
 
 
 
 
Rochester royalty obligation
$
9,277

 
$
(336
)
 
$
(6,609
)
 
(2,332
)
 
$
—

 
Six Months Ended June 30, 2017
In thousands
Balance at the beginning of the period
 
Revaluation
 
Settlements
 
Gain on settlement
 
Balance at the
end of the
period
Assets:
 
 
 
 
 
 
 
 
 
Equity securities
$
279

 
$
(21
)
 
$
—

 
$
—

 
$
258

Liabilities:
 
 
 
 
 
 
 
 
 
Rochester royalty obligation
$
9,287

 
$
864

 
$
(7,819
)
 
(2,332
)
 
$
—

The fair value of financial assets and liabilities carried at book value in the financial statements at June 30, 2017 and December 31, 2016 is presented in the following table:
 
June 30, 2017
In thousands
Book Value
 
Fair Value
 
Level 1
 
Level 2
 
Level 3  
Liabilities:
 
 

 
 
 
 
 
 
5.875% Senior Notes due 2024(1)
$
244,827

 
$
238,497

 
$
—

 
$
238,497

 
$
—

(1)
Net of unamortized debt issuance costs of $5.2 million.

14
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements


 
December 31, 2016
In thousands
Book Value
 
Fair Value
 
Level 1
 
Level 2
 
Level 3  
Liabilities:
 
 
 
 
 
 
 
 
 
7.875% Senior Notes due 2021(1)
$
175,991

 
$
184,373

 
—

 
$