Q2 2025 Coeur Mining Inc Earnings Call

Completion. Maybe.

Good day and welcome to the core. Mining second quarter, 2025 Financial results conference call.

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I would now like to turn the conference over to Mitch Krebs chairman president and chief executive officer.

Please go ahead.

Good morning everyone. And thanks for joining our call today to discuss our second quarter results.

Joining me are Mick. Epha McGrath, and Tom whan along with other members of the team.

And we will all be available to answer your questions at the end of the call.

Before I kick off, please note our cautionary language regarding forward-looking statements and refer to our SEC filings that are on our website.

The second quarter highlights shown on slide 3. Reflect the continuing transformation of core. Mining into a peer leading, precious metals producer with best-in-class silver exposure.

The numerous all-time records achieved during the quarter highlight the fundamental step change that is now fully underway.

The intersection of higher prices with a mind portfolio hitting its stride led to these impressive results, including free cash flow of 146 million.

Which led to the repayment of the remaining balance on a revolving credit facility.

Helped fund initial repurchases, under our new share repurchase program and still resulted in a much higher cash balance at quarter end.

With our strong first half performance. And with further production increases expected in the second half,

We're updating our full-year expectations for adjusted EBITDA to over $800 million.

And for free cash flow to more than dollars.

At these levels, our balance sheet is expected to continue strengthening, and a rapid Pace with the potential to be in a net cash position at year end.

All 5 operations, delivered strong production, cost and financial performance. During the second quarter, which Mick and Tom will talk more about in a few minutes.

2 key drivers that made the quarter. So strong were the continued progress at Rochester and the First full quarter of contribution from Lost chispas.

At losses, the integration has been nearly seamless and is essentially complete at this point.

The operation continues to deliver high-grade production. At very low costs and positions core as a flagship, Global silver producer with a peer leading growth profile.

what's more a reoriented drilling program at lost cheeses is delivering exciting, exploration results, which Eva will talk more about

At Rochester, which is America's largest source of domestically produced and refined silver, there was a sizable jump in crushed tons. In the second quarter, this is leading to expectations for a strong second half and for Rochester to achieve its full year guidance.

Mick will provide some additional details on Rochester's progress shortly.

On the topic of guidance, we've also reaffirmed, our overall companywide 2025 production and cost guidance ranges.

Based on what is expected to be an even stronger. Second half of production growth higher margins and strong cash flow.

Those full year 2025 gold and silver production levels. Summarized on slide 4 represent. Year-over-year expected increases of 20% and 62% respectively.

With that, I'll turn the call over to Mick.

Thanks Mitch.

Consolidated gold and silver production, increased 25% and 27% respectively, compared to the last quarter.

Totaling 108,000 oz of gold and 4.7 million oz of silver.

Total adjusted cost per ounce for gold and silver decreased by 5% and 6% respectively compared to last quarter.

$160 per ounce for gold and 13.41 per ounce for silver.

Now, let's take a look at the individual site contributions to this solid performance.

Beginning with last cheese pass.

The team continues to deliver great results.

With silver production, reaching nearly 1.5 million ounces and gold production. Adding 16,000 Oz. Both running ahead of annual guided levels.

As Mitch mentioned, the team continues to thrive as part of seos organization with numerous great examples of cross-pollinating ideas and best practices.

Staying in Mexico, and turning to palmeiro.

The main driver of the generated free cash flow, which reached $42 million, was the increase in gold and silver production, with rises of 18% and 6%, respectively, compared to the first quarter.

The new Hidalgo access portal continues to enhance overall mining flexibility and efficiency.

And it's opening up new zones within the independency of deposit.

Total tons, milled at palmery Hall. Achieved their highest quarterly levels in over a year.

Tremendous results from the team.

Turning to Nevada.

The good news continued at Rochester where positive Trends in each phase of the operation. Sustained our momentum in the second quarter.

Production of silver and gold increased by 13% and 7%. Respectively, compared to the prior quarter and by 50% and 79% respectively compared to last year's second quarter,

The team did a great job driving off crushed, tone by 24% compared to the previous quarter to 6.7 million tons.

This additional crushed, ore continues to displace direct Department material which fell to 1.1 million, tons of the total 7.9 million tons placed during the quarter,

Looking ahead, we anticipate more progress in driving crushed tones. In the second half of the Year. While our focus on average particle size distribution and recoveries continues with several successful modifications. We made to the crusher Corridor during a scheduled down period late last month.

Moving to Kensington.

The higher gold price, a 17% quarter over quarter production, increase, and a 9%. Quarter of a quarter decline, in casts per ounce combined to generate 20 million of free cash flow for the quarter.

With the multi-year capital investment program in underground 9 development. Now wrapped up.

The external contractor force was demobilized from Say, by June 1.

The team also made good progress towards completing a new rebore project that will contribute further to the efficiency improvements already in place at this revitalized operation.

Kensington remains, well, positioned at the halfway mark to deliver sustained free cash flow with great app. Operating flexibility.

Finishing up with dwarf.

Strong, gold grade under leech led to a great second quarter.

Quarterly gold production increased by 18% to over 24,000 Oz marking the mind's. Second highest production level in 2 years and leading to free cash flow of 38 million.

While we anticipate some great moderation over the months ahead, Wharf is teed up for another strong year.

With that, I'll pass the call over to Ether.

Thanks Mick.

Exploration continued to Pace in the second quarter with up to 27 rigs drilling across the portfolio.

The team at lastest pass has been extremely busy with up to 8, ring on that property.

As you can see on slide 13. The key areas of focus are expansion and infill drilling on the barbecuer block with the objectives of extending and infilling extensions to the known veins adjacent to existing operations.

In addition we are undertaking a significant expansion drill program on the last chispas block and in the Gap zone between there and Bobby Kenora

The Augusta vein discovered earlier this year, continues to grow and continues to return multi kilo intercepts.

The geological understanding of this part of the land package is growing rapidly.

And this is assisting with even more effective expiration targeting.

A new underground Ram to this Zone. Will greatly enhance drill access in the second half of 2025.

So, we're 7 rigs were active slide. 14 highlights the large number of targets that are being drilled with the focus on the Hidalgo Corridor, which is the Northwestern continuation of the Mind Trend. Excellent results have been achieved here with the trend extended by 350 M along strike year to date.

In addition drilling on the recently, Consolidated independencia sewer block is progressing. Well, with the southeastward extension of the nasion, Bruno, and independencia veins being tested and previous drilling by Fresno being validated.

Many results are pending, but visual inspection of the core indicates the continuation of known veins.

At San Miguel located further to the east in the guaza para is Trend drilling to validate historic resources, commenced late in the quarter and is off to a very good start with visual results today that are highly encouraging.

We expect that these 3 programs will add meaningfully to pomero year end resource calculations.

At Kensington 4 rigs were active, and the drilling base has exceeded expectations with the programmed meters, being achieved ahead of schedule and under budget.

excellent results have been obtained from all expansion and infill zones in both upper and lower Kensington from infill at Elmyra in the recently, discovered Elmyra hanging wall Zone and at the Johnson Target

We're confident that these results will continue to support a consistent life of mine.

At the Wharf, as shown on slide 15, up to 2.

To focus is turning to infill drilling, Northwest of Juno where expansion Drilling in 2024 showed mineralization continuing for an additional 500 ft.

Results received to date. Indicate that these programs are untargeted to add meaningfully till horse life of mine.

At Silver Tip, exploration programs, kicked off with 4 eggs, active on the project during the quarter.

In addition, final preparations were made for a busy summer program that got underway just a quarter end.

We look forward to providing updates in the coming quarters.

I'll now turn the call over to Tom.

Thanks epha as highlighted on, slide 8, our strong, 2q financial results, paint the clearest picture yet. Of course, ultimate potential with the inclusion of a full quarter of last Tuesday in our earnings results.

A 15 and 5% increase in gold and silver prices respectively. Combined with 20%, higher sales, volumes led to an adjusted ibida margin of 51%

Which is more than double our margin this time last year.

Slide 12 provides some color on the easing inflationary pressures on our key operating costs.

Despite an 8% appreciation in the Mexican peso this quarter. We've been able to protect and expand margins due to our strong cost controls, and the lack of any meaningful tariff impact on our business today,

It was great to have Rochester and Kensington join the free cash flow party this quarter.

In fact, all five mines delivered meaningful free cash flow for the company, which led us to achieve several quarterly record numbers, including $146 million of free cash flow.

$244 million of adjusted EBITDA and $127 million of adjusted net income, or $0.20 per share.

Briefly touching on the balance sheet on slide 11, we are proud to announce that we have fully repaid the $110 million balance that had remained on our revolving credit facility by quarter end.

Which was 1 quarter ahead of schedule.

Our total debt including 90 million of capital. Leases is now below 4008 250 million, decrease from this time last year.

Cash and cash equivalents increased 44% versus q1 to 112 million.

Incredibly, our long-term Target of achieving a net debt to Eva de ratio of nil is now within sight, which led to our confidence to announce and initiate our return of capital strategy. This quarter with the 75 million buyback program that Mitch mentioned

It is all coming together nicely just at the right time.

Guidance and are updated forecast pricing of 3,200.32 for gold and silver respectively. We expect to generate second half free cash flow of between 250 to 300 million.

core remains, ideally, positioned to deliver sector leading returns to our shareholders, and pursue, the full Suite of high return, organic growth projects in our pipeline,

Note, 3 of the interim financial statements in the 10q provides the details of our preliminary purchase price allocation of Silver Crest.

I wanted to provide an important update on 3D during the q1 earnings call which impact EPS, but do not impact free cash flow.

First of all, the inventory acquired in the 150,000-ton stockpile that last cheese bus was recorded at fair value.

Which has led to higher reported costs applicable to sales as we monetize the inventory from the stockpile.

Through the end of Q2, we have processed 2/3 of the acquired stockpiled material. So this accounting nuanced should come to a close early in the fourth quarter.

Secondly with just over a billion dollars of the 1.5 billion purchase price paid for silvercrest allocated to the property plant and equipment and Mining properties balances at last cheapest. Higher amortization expense is being recorded as expected and third the 336 million deferred tax liability which arose from the purchase price accounting. Allocation exercise is subject to Foreign Exchange fluctuations in accordance with the US gaap

Within 8% appreciation of the peso during the quarter. The tax line included, a non-cash, 28 million provision, which we have highlighted in the adjusted. Net income reconciliation.

With that, I'll now pass the call back to Mitch.

Thanks Tom before, moving to the Q&A, I want to quickly highlight slide 16 that summarizes our top priorities for the second half of the year.

Sitting at midyear, I'm proud of the progress we've made on each of these fronts.

But there's still work to be done to unlock the compelling upside potential. That remains embedded in our company.

With that. Let's go ahead and open it up for questions.

We will now begin the question and answer session.

To ask a question, you may press star then 1 on your touchtone phone if you are speaking if you are using a speaker-phone please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star. Then 2 at this time we will pause momentarily to assemble our roster.

The first question is from Joseph rager with Roth Capital Partners. Please go ahead.

Hey, you mentioned team. Thanks for taking the questions and congrats on a great quarter.

Yeah. Hi Joe. Thanks.

Yes. So, I guess the first thing is just talking about the upside of the company, Silver Tip, given what the silver market is today.

Is there any opportunity to accelerate that into a development project and then if you did, what what would the timeline look like to to bring that into production? Um, or is it just not something? You guys are ready to do yet?

Yeah, good question.

Um, I think in the first quarter, uh, call, we talked about this sort of 5 year time frame to get silver tip to a, a go, no-go decision. Um, and, and you know, maybe there are some opportunities to shave a little bit of time off of that, especially with

Some of uh Canada's support for uh critical minerals projects, you know, expedited permitting, things like that, you know, uh that said you know we we want to make sure that we don't cut any Corners that we do it, right. You know, that's going to require us to go through the the typical project stage Gates. We did kick off an initial assessment last month, so that's sort of Step 1 and we'll keep, you know, progressing. Um, you know, through those, uh, Milestones, uh, there's still drilling to be done. And there's permitting to be done. So, you know, maybe that 5 year time frame could be moved in a little bit, but I still think, you know, it's it's out there, you know, a few, a few more years for sure. And which gives us a nice clean Runway here, still to generate good, strong free cash flow and and stay focused on everything that we have out ahead of us. Does that help answer the question?

Yeah, no, that's helpful. Um, and then uh, following on that

1 of the big things in the portfolio but beyond that. What do you see as the the biggest items that you guys can focus on to drive production growth? You know, between now and then

Yeah, it really goes to the, the brownfields exploration potential that we have around our existing sites and it's not just 1 or 2, it's really across the the collection of of assets. You know, we've over the last decade, you know we've methodically added to our land positions around each of our assets. We've more than tripled our land position, these are prospective deposits. You know, I go through the list, but many of them we talked about today, but, uh, Wharf has great opportunity palmeiro, especially off to the east, has immense opportunity. We started to realize some of the potential at at Kensington. And there's, there's more there to do and then with the, the addition of lost cheese, but earlier this year, you know, there's a lot of a lot of potential there to to Target with, with increased levels of of exploration. So, you know, even with this year I think our our guidance range midpoint of our exploration guidance. Range is around 85 million dollars, you know, to the extent that we can, um,

Accelerate, some of that next year and Beyond to try and capture some of those opportunities around existing operations, obviously High return low-risk, um, organic growth. There that's a, that's what comes to my mind. Um, first, is there anything guys that, I

Left off there that you'd want to add.

We will continue to optimize Rochester, of course, and uh, drive that performance. Uh so there's there's more, uh, growth plan to come from Rochester. Uh, but overall, it's a, it's incremental improvements around operations, and performance for portfolio.

Okay, uh well again you're asking a good quarter, I'll turn it over.

Thanks Joe.

again, if you have a question, please press star then 1

The next question comes from Brian. MacArthur with Raymond James, please go ahead.

Good morning and thank you for taking my question. Um, I suspect this is for Tom, but I'm just on the free cash flow basis. I'm just trying to figure out.

the taxes because I thought in the US you're kind of had a lot of nols, but when I look at it, this quarter like the first taxes are a negative, now you mentioned, you've got this true up and everything else um but what I'm really just trying to figure out is how I could think about this um going forward whether anything's changed or whether I should still continue to just tax you

Mexico at the standard rate in the US at at zero. I just I just not sort of seeing it in the financials, uh, the way I thought I might,

Yeah, Tom, go ahead. Yes, thanks. Well, you're thinking about it the right way.

Uh, in terms of cash taxes.

Um, you know, Mexico will continue to pay quarterly installments.

Uh, as well as you know, that big 1-time uh, true up at quarter end or at in the first quarter.

Along with the IBA de tax. Um,

but interestingly enough, you know, we had as we talked about in the 10K 2, 630 million of net operating losses. And we're actually starting to chew through those uh, pretty aggressively but for the time being best to just keep uh, zero tax rate, um, in the US and the Mexican taxes and they're, they're a bit, lumpy in that first quarter as we, you know, you true up

Um, for the year.

And uh as as well as K the ebda tax. So um and

I'd have to uh maybe find a way to to point to uh the the taxes paid in the 10q. Uh maybe work with the offline on that 1 just to help you refine your estimation process.

No, that'd be great tone. I wasn't trying to be difficult. I was actually just trying to figure out, I thought there might even be a little more tax flow there in the quarter. So that's um that's great and uh I just wanted to make sure nothing major had changed going forward. So that's great. Thank you very much. That's helpful.

Okay. Thanks Brian.

The next question is from Alex. Um, Terren you with National Bank, please go ahead.

Hi guys. Uh congratulations again on a on another good quarter. Um hi Alex. Thanks.

uh, 2 questions for you, uh, 1 on the ncab and other, I lost chose on the ncab and just wondering, uh, you know,

And, uh, and and discussions on growth. We've had had, uh, in the past, uh, over the past call here. Um, and just wondering, you know, even if there's a chance to to increase that. Um, so that's the first 1 and then just unless Chief bus, um expiration obviously hitting some really nice intercepts, uh, mine life look. Looks to be kind of set to to grow their, uh, I don't know. I mean, maybe just remind me of a refresh, my memory, what's the potential of that? Mind to increase or, or put another way? Maybe what's the, what's the constraints on on production growth there right now?

Yeah, okay great good 2, good questions, Alex. I'll start with the the buyback and then maybe epha.

Make you can, um, weigh in on the Lost Cheese bus. So, in the US context, Alex, that buyback program.

uh, we don't really refer to them as NCBS here in the, in the US. But there is a discretionary component to how we're approaching it and then, a non-discretionary. So when we're in blackout periods, which is about half the trading days of a year, we put in place a 10B 51 plan with some parameters, so that there can be some repurchase activity during those periods when we're when we're blacked out. And then when we're not blacked out, we can pursue, you know, non-discretionary or sorry discretion discretionary purchases um, during those those windows. And so, you know, with the way we the timing worked out this time, you know, we got the through the board process. We announced it in may we we by the time we got everything in

Place. We wanted to get some repurchases done before we went into blackout there, weren't any repurchases done during this recent blackout uh, period. Uh but now as we come out of that here on the, on the back of second quarter results, you know, we look to to step up our our repurchase activity. You know, we didn't put this program in place to not. Um, use it, use it up and so we will get about that uh, here now, uh, post second quarter results and and hopefully, we'll see more activity during the next Blackout, um, than we did during this, this, this current current 1. So hopefully, hopefully that helps answers the the buyback question unless cheese puss. Um,

yeah, I'll let Eva talk a little bit about exploration. They can talk about Mining and processing potential. But as far as you know, the the game plan there really was to to come in here in year 1. Continue with the consistent uh, performance that lost cheese, but says delivered in its first 2 years of operation. And with that, hopefully, we can replace what we mine this year here, in 2025, and, and kind of maintain that 6 or so my year. Mine life, uh, that we inherited when we when we closed on that. On that transaction. I think with the results that we're delivering so far from exploration, we're feeling good about that goal here in in 2020, uh 5 looking out a little bit further. Bea do you want to just talk about where the focus is going to be kind of in mind and near mine and the and the existing block

Box. Yes. And then maybe you can talk just from a mining and processing standpoint. What opportunities might exist there? Yep. Go ahead.

It's a it's a good question Alex. So we're um if you look at slide 13 we're really busy on 2 main blocks at the moment on the bar Kenora block and really what that's doing is sort of like a a expiration by numbers. We're stepping out from existing um veins and then infilling so we can continue to mine. Um,

Through existing and just to extend it, uh, infrastructure and the results from there are typical from the public and or block. It's a very high grade block. And when we drill there, we had new events in holes. It's just the type of system that is so that we're very, very happy with the results. We're getting down there. We're doing it. We focused also a lot on the last chest pass block. Uh, that hasn't seen as much work historically, but we are starting to see some higher grades there. And in the Gap zone between that block and the babic in order of block, which are actually highly encouraging, because there's a slight change in the geology. But we're seeing really, really uh, Rich mineralization continued through there. So we're we're increasingly optimistic about those blocks. So I'll get these on the on the expiration front. So when I said in my comments about a reoriented drill program, what we really did is pull in some of the regional, uh, exploration that uh, sober Crest had targeted for your 2025 and we're really focused.

In in the mind, Bobby canor is the most drilled area, but going up there to Las chispas block. And then in between lost gpus, and Bobby, Kenora has given us some some more Runway here that we're excited about. Yeah, yeah. The focus is to really get to grips with with this main Assets in 2025, and then consider the regional in the future.

Really would have been a a thin vien underground mine having that 6 years of of mine life visibility in front of us. It's really more than adequate as long as we can. Then continue Zea said to to try and maintain that cover the depletion from an operational perspective. We're seeing a lot of flexibility, uh, plenty of capacity in the processing plant, which gives us some, you know, potential Ops Side Opportunities. If we continue to find uh, the the capacity underground, and we have a, you know, a good size stockpile that gives us a nice. Um, operational flexibility to maintain performance. And as we said in the in the dialogue where slightly ahead of where we're we're expected. Um, performance there for this year and we we uh, expect to continue that for the rest of the year.

Does that get you? What you need there, Alex? Yeah. No that's excellent. Thank you.

Okay great. Yeah, thanks.

At this time, there are no further questions, which concludes our question and answer session. I would like to turn the conference back over to Mitch Krebs for any closing, remarks.

Yeah, thanks everybody. Before I wrap up, I just want to say thanks to the team that's here with me in the room and throughout the company for executing such a terrific quarter. And really getting the company to, to where, uh, where we are today. It's been a lot of years of a lot of lot of heavy lifting and a lot of great work by a lot of people. So I just want to make sure

And extend my my gratitude for that. Um and we appreciate everyone's time here on the call today during uh a day. That's got a lot of lot of companies reporting. So thank you for joining. Uh we look forward to discussing our third quarter results with you in early November until then enjoy the rest of your summer. Have a good day.

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