Coeur Mining, Inc.

Good morning, and welcome to the Core Mining first quarter of 2024 financial results conference call. All participants will be in a listen-only mode, and should you need any assistance, please signal a conference specialist by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch-tone phone. And to withdraw a question, please press star, then two. Please also note that this event is being recorded today. I would now like to turn the conference over to Mitch Krebs, President and Chief Executive Officer. Please go ahead.

Okay. Hello, everyone, and thanks for joining our call. Before we start, I want to point out our cautionary language on forward-looking statements in today's slide deck and refer you to our SEC filings on our website. I'll kick off with some brief highlights on slide three before turning the call over to Mick, Tom, and Aoife. Overall, we had a solid first three months of the year. Both Palmareo and Wharf had strong quarters compared to plan, which puts the company in a great position for a successful 2024. Slide 4 does a nice job of showing where production stood after the first quarter compared to the quarter-by-quarter guidance profile we provided earlier this year. We often talk about the strategic importance of being a multi-asset company and having a balanced portfolio of operations, and the first quarter was a great example of that. Palmarios and Worf's outperformance helped to offset Rochester's planned transitional quarter over to the new crusher, which began to process fresh ore on March 8th. Commercial production was achieved just three weeks later, which was a great accomplishment but it's what has been happening underneath the hood there that leads to our excitement for the balance of 2024 and beyond. More on Rochester in a minute. On a company-wide basis, overall revenue increased 14% year-over-year, while adjusted EBITDA jumped 76%. Capital expenditures dropped off significantly during the quarter, with the Rochester expansion now in the rearview mirror. We're on track to flip to positive free cash flow in the second half of the year, which will be earmarked for debt repayment. That deleveraging process can be further accelerated, assuming current silver and gold prices continue, leading to a rapid and dramatic improvement in our overall financial condition and outlook. In the middle of all these positive catalysts stands Rochester, which is routinely processing and placing over 70,000 tons of ore per day and occasionally exceeding run rate throughput levels as we put the new crushing circuit through its paces. The rapid ramp-up curve is a real testament to the knowledge and operating experience the team is bringing to bear at this world-class operation. Before turning the call over to Nick for some additional Rochester details, I want to touch briefly on our progress and plans at some other key initiatives that are expected to augment the near-term growth we anticipate from Rochester. First up is Kensington, which is in its final full year of elevated investment aimed at extending its mine life and enhancing its operational flexibility. Positive exploration results and impressive underground development progress are pointing to the potential for a substantial mine life extension by the end of this year, which Ipa will talk more about in a few minutes. Over the medium term, we continue developing a comprehensive drilling and development plan at Palmareo on the recently acquired lands located to the east of the current operation. The goal is to hit the ground running once the acquisition of these concessions from Fresneo is completed, hopefully later this year. The nearest of the two acquired blocks to Palmareo's existing infrastructure sits just outside the boundaries of the Franco Nevada Gold Stream. and has the potential to materially supplement our production and cash flow profile within the next three years. Over the longer term, excitement continues to build at our high-grade silvertip polymetallic exploration project in British Columbia, which IFA will cover shortly. The convergence of all of these catalysts, higher commodity prices, a completed Rochester, a stable suite of U.S.-centric mines in North America, and a world-class Canadian exploration project sets us apart from our peers and leaves us very well positioned. Finally, we published our 2023 ESG report last week, which is summarized on slide 16. The report does a great job detailing our leadership in this area and highlights our efforts to continue raising the bar as we try to keep pursuing a higher standard. With that, I'll turn the call over to Mick.

Thanks, Mitch. Before reviewing our first quarter operating results, I'll add another recommendation to spend some time with CORE's 2023 ESG report, if you haven't already. While Rochester's construction was a significant priority over the last three years, I'm an operator at heart, and experience has taught that building a very strong foundation in sustainability, responsibility, and safety delivers operational success. In addition to the strong results Mitch highlighted, I'm particularly proud to call out two headlines from the ESG report. First, our number one position among our peer group in key safety indicators for the second year in a row. And second, our decision to adopt the global industry standard on tailings management, one of only 17% of non-ICMM member companies in the industry to do so. Setting the pace is not always the easy thing to do, that it is the right thing to do, and we'll continue to dedicate ourselves to leading in both these areas. Turning to our quarterly results, we're pleased with the solid start to the year. As slide four illustrates, 2024 production is expected to be significantly weighted toward the second half, consistent with the production guidance we provided earlier this year. Rochester's ramp-up and day-to-day operating improvement will drive most of that change in quarterly production. Same with Rochester, silver and gold production in the first quarter totalled nearly 700,000 and 5,800 ounces respectively, right in line with our expectations. Following the fourth quarter flush of ounces from all placed closest to the new Pad 6 liner, Our focus in 1Q was commissioning the crusher and starting the placement of ore into cells using only crushed ore from the new circuit, which commenced on March 8th. The crushing circuit runs when we want it to run, and we're maximising our planned downs to refine and optimise operations. What has really stood out in the early going is the tremendous flexibility of the new three-stage line, Having intermediate stockpiles and ore feed can bypass certain stages as needed, giving the team unprecedented levels of control over ultimate size fraction of the ore going to pad 6. Mining rates and refining capacity are more than keeping up with the increased throughput. Looking ahead, we remain on track to reach the conclusion of the ramp-up by the end of the second quarter. The priority in the second half of the year will be on optimising mining and processing rates and dialing in crush size to maximise recoveries. Rochester remains on track for 2024 gains. It's an exciting time and we're pleased with our progress, but we're keeping our heads down as there remains more work to be done to get this operation properly positioned for its long run in Northern Nevada. Moving on to Palmo Ajo on slide 23. The team hit the ground running in the first quarter, reaching its highest quarterly gold and silver production levels in several years. Higher unexpected growths from Guadalupe and Independencia do have strong quarterly food cash flow and positions us well for the balance of 2024. Continued high diesel prices in Mexico and other headwinds on the cost side of Palmeiro remain a challenge. The team continues to focus on mining and plant efficiency programs aimed at reining in costs and they've continued inflationary pressures in Mexico. Moving to Kensington, the focus in the first quarter was on stabilising the operation following the challenging 2023 as our multi-year investment in mine development continues. Mitch mentioned the positive results on that front, with that investment now about 71% complete for the current scope of the project. We're seeing a clear path to substantial mine life extension there, and perhaps more importantly, to the prospect of increased workplaces underground and with it more consistent performance. Lastly, at Wharf, results were ahead of plan, with the first quarter benefiting from timing advances placed on leach. Due to seasonality, the first quarter is typically Wharf's lowest of the year, so we're particularly pleased to see the mine off to a good start in 2024. With three names performing well and Rochester well positioned to complete the ramp up, we remain comfortable with our 2024 production gains. With that, I'll pass the call over to Tom.

Thanks, Nick. I'll touch briefly on our first quarter financial results before spending a moment discussing our financial position and balance sheet, including our plans to materially de-lever beginning in the third quarter. As detailed on slide 9, higher year-over-year gold production led to a 14% increase in consolidated revenue and a 76% increase in adjusted EBITDA, driven by the strong starts to the year at Palmoreto and Wharf, along with continued favorable metals prices. As expected, we had lower Q1 production at Rochester due to the decision to dismantle the Stage 4 crusher during 4Q 2023. The dismantling of the stage four pressure is now complete, which has provided access to higher grades from the Yankee Pit. Turning to costs on slide 11, we continue to see moderating inflationary pressures across our U.S. operations. However, we are experiencing inflationary pressures in Mexico. Costs in Mexico have also been affected by the continued strong peso. Operating cash flow during the quarter was impacted by two one-time annual payments totaling $22 million, the annual EBITDA mining tax in Mexico and the company-wide 2023 annual incentive payouts, along with the $8 million semi-annual interest payment on our senior notes. Turning to the balance sheet, the company is poised for a sustained period of positive free cash flow following the successful ramp-up at Rochester, as Mick described earlier. Capital expenditures at Rochester were approximately $20 million during the first quarter, a $45 million decrease from the average quarterly Rochester CapEx in 2023, which contributed to the lowest quarterly capital expenditures level at core since the fourth quarter of 2020. As noted on slide 12, we ended the quarter with an improved net debt to EBITDA ratio of 3.2 times, and approximately $225 million drawn on our $400 million revolving credit facility. We would note that we do expect to draw further on the revolver during the second quarter as we await the breakthrough of silver ounces at Rochester. However, beginning in the third quarter, the company expects to begin aggressively paying down the revolver and our prepaid gold sales agreements as we drive towards achieving our long-term leverage targets of total debt to EBITDA of one times and net debt to EBITDA of nil. While our work is not yet done, we enter 2024 a significantly stronger company with improving flexibility to fund our robust asset portfolio and maximize our potential in a strengthening commodity price environment. Two final important reminders. No ATM is currently in place or is being contemplated, and the company's remaining hedges roll off at the end of the second quarter commensurate with the Rochester ramp-up to full main plate capacity. I'll now pass the call to Aoife.

Thanks, Tom, and good morning, everyone. To continue the good news story presented by Mitch, Mick, and Tom, exploration is off to a great start in 2024. A key highlight of this quarter is the drilling at Kensington, where the program is going very well and the rigs are over-performing relative to budgeted footage. At Lower Kensington, the recently identified Zone 50 is being traced over additional strike length and is continuing to be a focus for exploration to add to mine life in the very near term. In Upper Kensington, results from already outlined portions of Zone 30 continue to impress, and excitingly, potential for new parallel zones has recently been identified and is being investigated. At the nearby Elmira deposit, infill and extension drilling continue to intersect wide and rich zones, especially in the upper portions of the deposit. There is high confidence that inferred resources here will be converted this year. By the end of 2024, We anticipate extending mine life to approximately five years, representing roughly a doubling since the start of the program two years ago. At Rochester, drilling commenced early in the second quarter, with a program there designed to test high-grade potential on recently identified structures around the Rochester pit. Preparation work for drilling at Nevada Packard, located south of Rochester, is also well underway. At Silver Tip, we began the year with a comprehensive project review that included one of the world's foremost carbonate replacement deposit experts. Significant leaps forward are being taken in our understanding of the controls to mineralization, and this new knowledge is guiding the planning for Coors' busiest summer program ever. We aim to drill much more aggressive step-outs from known deposits and to identify high-potential targets, Ultimately, the goal is to ensure rapid resource growth over the next few years in order to allow a restart decision on this world-class high-grade deposit. At Pomeréjo, our aggressive 2024 programmes are well underway, with a key focus being scout and expansion drilling across the district in order to fast-track the growth of our inferred pipeline. This will include scout drilling on three new targets outside the area burdened by the Franco-Nevada stream. At WARF, we're finalizing preparations for brownfield drill programs aimed at adding very high return ounces to our mine life. With that, I'll hand the call back to Mitch.

Thanks, Aoife. Before moving to the Q&A, I want to quickly highlight slide 13 that summarizes our top priorities for the remainder of the year. Following seemingly every conceivable challenge thrown our way, we've arrived at this inflection point that we've been working toward for almost four years. With the safe ramp up and optimization initiatives at Rochester remaining job one, we will continue pursuing the opportunities at our other assets I mentioned earlier. As we reach the free cash flow inflection point in the second half, we look forward to beginning the deleveraging process and ending the year with a lot of momentum as we head into what should be a very strong 2025. Our U.S.-centric, exclusively North American precious metals assets offer investors a unique investment proposition that is extremely well positioned for success, particularly in this current metals price environment and with silver's supply-demand fundamentals now better than I've ever seen them. 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 touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. And to withdraw a question, please press star, then 2. At this time, we will pause just momentarily to assemble our roster. And our first question will come from Michael Dudas with Vertical Research Partners. Please go ahead.

Good morning, Mitch and team. Hi, Mike. I have three quick questions. First, Mitch, relative to Rochester, it seems like things are going quite well. You're hitting some milestones. As you reach this end of second quarter milestones and looking at the second half, how do you feel relative to productivity to getting kind of a more normalized basis on this mine, given all the changes that have occurred the last three years or so?

Yeah. I'll hand that one over to Mick in a second, but I think it's fair to say that we get into the second half of the year at that run rate of around 88,000 tons a day. There'll still be a lot of optimization work to do, particularly around crush size and making sure we get to where we want to get there in terms of more of a five-eighths inch average product size out there onto the new stage six leech pad. So there'll be some dialing in to be done, but we'll still see that pretty significant drop off in our cost structure driven mostly by the volume pickup. And then hopefully we'll be heading into 2025 with some of those tweaks behind us and set up to see even some further improvements on the productivity and cost side. Nick, did I leave anything for

Yes, a little bit. It's great. Q2 is really about getting up and being steadily running at that average rate, and it's an average rate at 88, so we're already seeing that we're going to run a little bit higher than that, which gives us a good opportunity to really steady that rate out at 88,000 tonnes for the second half of the year, at which point when we dial in the crush size, if you remember the technical report was 5.8, and we're seeing things that and some confidence that we should be able to dial into that five-eighths crush size. We don't know exactly how quickly, but we certainly expect that to be dialed in well through the second half of this year. And then if that all comes together, then we should land on recovery curves, and we should see the performance that we expected to see.

Thanks for that. Secondly, regarding Palmoreo, I'm encouraged about some of the activity you're doing there on the exploration front. the thought on some of the opportunities outside the royalty bounty, which would be very helpful given where current gold prices are. Do you see some interesting opportunities and line of sight there to kind of work that through over the next couple of years into the mine plans?

Yeah. Yeah, we share your excitement. In my mind, there are sort of three levels of opportunities there. There's the extensional stuff that's right – to the east of that Franklin, Nevada property line or the AOI boundary. And those are extensions of things like Nacion and Independencia where we are currently mining. So those represent more kind of near-term opportunities. And then if you skip over further to the east, the company we acquired back in 2015, Paramount Gold and Silver, which gave us all that land over there to the east, they had a large resource over in what's called the Guazaparas area. So I think in the medium term, we look at that as an opportunity to get in there, twin some of that historical drilling, and get a resource onto our books in the medium term. And then longer term, in between those two, our team has been busy out there sampling and mapping and developing some drill targets that we think represent some big longer term opportunities to add new sources of production off there to the east. Eva, anything you want to add to that?

No, I think you've pretty much covered it, Mitch. But yeah, there are definitely short, medium and long-term opportunities out there. And just to reiterate that it's a typical case, I suppose, in exploration until the work is actually, the basic groundwork is done. You don't fully understand the prospectivity and we've been really busy over the last two years doing that mapping and sampling. And as we get to understand the area to the east a lot more, we're seeing the same level of prospectivity, if not even higher, in places than we see on the project. So we're very happy with how that's progressing.

Appreciate that. And just my third to finish up here. Good to see the hedging roll off here in Q2. Given where prices are and maybe in the Further, what are your thoughts on any hedging potential going forward, and what would be the rationale behind doing or not so doing it?

Yeah. Our thinking there, Mike, right now is we've had hedgers in place during the construction of the Rochester expansion to serve as sort of an insurance policy in essence as we've gone through this period of capital intensity. For now, we have nothing, as you pointed out, beyond the end of the second quarter and don't have any current plans to add anything, at least as we sit here today. But, Tom, anything you want to say?

No, I think, yeah, that's correct. People understood the need, both our equity holders as well as our creditors, understood the importance of hedging, but no plans to hedge once the ramp-up is complete.

Excellent. Thank you, everyone.

Okay. Thanks, Mike.

And our next question will come from Mike Parkin with National Bank. Please go ahead.

Hi, guys. Nice to hear that Rochester is going so well. Thanks. How are you?

Okay, thanks.

Just a couple questions mostly tied to Rochester. A couple other questions were answered already on the first line of questioning. With Nevada, Barrick seems to certainly talk about labor tightness. Is that something you're seeing at Rochester, or are you guys managing pretty well on staffing?

Yeah, we were just talking about that earlier this morning, Mike. We have had to add some people out there with this expansion, although not that many, and the team has not had a an extremely difficult time filling those roles. I'd say where we do see things similar to Nevada gold mines is in some of those skilled trades that I think not only mining, but other industries are challenged to find electricians, mechanics, welders, things like that. That's a more challenging part of the labor pool. But in terms of what we've had to... do at Rochester, we've had a lot of success on the labor front. Nick, anything you want to add to that?

Yeah, I mean, super efficient expansion, of course, only 20% increase in the headcount. And that 20%, we managed to get those folks all on early to support the operational readiness program. And that's why we really saw that commission and this ramp up going so well. Everyone was really conversing with the the project, and now we're just seeing really quite typical turnover. I mean, everywhere, specialist skills like electrical, you sometimes wait a little bit longer to get the right person on the team, but otherwise, we're not seeing anything that's really giving a lot of concern.

A lot of excitement out there, as you can imagine, Mike. Good long mine life, good culture, long track record out there in the community. So it... It has a lot going for it, and it's a place people enjoy working. So we've got a lot going for us out there.

I guess that's an excellent point. On a relative basis, you're a lot better to commute to versus a lot of the Nevada gold mines operations in terms of location relative to local communities with decent-sized labor forces.

Now, fair point, you know, we bring people from a lot of different directions that otherwise probably couldn't or wouldn't make the drive all the way over further to the east there around Elko. The Lovelock area, Pershing County is a little bit more centrally located up there in the northern part of the state. So a fair number of our workforce comes from further to the west and to the southwest, Fallon, places like that.

Right, okay. And then you guys took down the old crushing circuits access, better grades. Can you give us a sense in terms of what you'd expect to be stacking on a blended grade basis? Is that something that will improve over the course of the year, or should that be fairly steady state?

Well, this year, now that we're into that area under the old X pit that we call Yankee, the Yankee pit, the Yankee zone, does have some higher grade material, particularly on the silver side. And that was one of the big incentives for getting in there and getting that X pit removed when we did so that we could start prepping that area so that we could be in there here in 2024 from a mining standpoint, which we are, and those grades seem to be as advertised. And so this year you will see a little bit on the a kick on the silver grade profile relative to outer years as a result of being in that Yankee area. Nick, did I miss anything there?

No, spot on. The gold grade is inherently low at Rochester, right? So we'll see that that isn't changing too much. But we're getting a decent kick, at least in the short term, from the Yankee area for silver, which we're looking forward to seeing coming through the pike.

And then on your leech curves, usually gold's obviously steeper than silver on a heap. When would you expect to kind of achieve like a steady state recovery rate or, you know, call it within the 90th percentile, 95th percentile? You know, you're going to get up to maximum throughput around quarter end. Would it be fair to assume it takes a couple more quarters after that? So kind of starting in 2025, you'd probably see silver recovery stabilizing at that point?

Yeah, great question. Probably in the third quarter, when we are on this call to talk about third quarter, we'll have some data to talk about. And then obviously, in conjunction with our year end, we'll have a lot more visibility to share and talk about. But Mick, you want to talk a little bit about the curves and reaching

of steady state yeah and i think you nailed it exactly the gold curve we're going to see where we land and in the second half of this year and the silver curve really will steady out and we expect to be steady on both silver and gold through 2025. super thanks very much guys and all the best with the final ramp up yeah thanks a lot mike appreciate it

Our next question will come from Kevin O'Halloran with BMO Capital Markets. Please go ahead.

Hey, Mitch and team. Thanks for taking my question. Yeah, hi, Kevin. Hey, hey. Maybe just the first one on the LCM adjustment at Rochester. You mentioned there was a positive revaluation on some of the legacy leach pads. Was that included in this Q1 LCM adjustment, or is that something we should be looking for in future quarters?

Tom, you want to take that? Yeah. So we added approximately 900,000 ounces of silver and 6,000 ounces of gold. So we actually updated our model as a change in estimate, and we recorded that in the first quarter. So the LCM would have been actually much higher had we not made that adjustment. But again, the team had gathered enough data and we felt confident that the recovery curves on the historic pads supported the higher amount of gold and silver that we're expecting to see here in 24. So I hope that made sense.

Yeah, no, that's helpful for sure. Do you have a sense of where that number would have been without the positive offset? Or maybe even just more broadly, what should we be looking for going forward on the LCM?

Yeah, look, it would have added in the $10 to $12 million range benefit. So we would have otherwise had a larger LCM. The question I always get is, is this it for LCMs? I'd like to hedge a little bit just to give Mick the bandwidth to get this ramp up done safely and make sure things go really smoothly. Could we have one in the second quarter? Maybe. Depends on silver prices. how fast we start to see some of that silver come through. But certainly Q3 forward, absolutely, we're out of the LCM business.

Okay, great. Thanks for that. Maybe you guys touched already on the higher grades under the XPIC crusher at Rochester, but can you maybe comment more broadly on where you're seeing or where you're looking for upside?

um at Rochester in terms of the grade profile uh maybe sort of beyond this year yeah no great question we uh in 2024 our budget out there is somewhere around nine million um for Rochester which is a big increase relative to recent periods when we've been more focused you know on the on the construction of of the expansion um you go back to the mid 80s at Rochester when Rochester pit was first identified, you know, the blinders were sort of put on, I think, and all focus was on that structure and that deposit and ultimately that project. And only in the last, you know, few years has the, have the blinders kind of been taken off and we've started to look more regionally. You might recall, we added almost doubled our land position out there when we acquired a lot of the land off to the, to the west from Allio Gold a few years ago. So Aoife came into the picture here a couple years ago and has really helped accelerate our thinking around where some higher grade material could be on our existing land package. And I'll turn it over to her in a second, but most of the focus right now is really on the eastern side of the existing pit, one area we call East Rochester. And then about three, four, five miles to the south of the Rochester pit is a historic mining area called Nevada Packard. There's going to be some drilling down there as well where we think there's some potential for some higher grade. And then between those two, from the Rochester pit down to Nevada Packard, there's a lot of opportunity, untapped potential there that we'll start to investigate going forward. But, Aoife, did I steal all your thunder or is there anything else you want to highlight?

That's about the gist of it. Just to reiterate that the 16-year mine life really is from those two pits. It's phenomenal that we have that much mine life ahead of us and we're beginning to look more seriously at the area between them because of the work we're doing on the geology model. We're seeing that there's potential for higher grades on a whole suite of structures that make up a really wide deformation zone basically between those two deposits. So most of what we will be looking at in the next few years is already on POA 11. It's right there. It's permitted. We have good access. Every day we're increasing our understanding of the biology. So there's a lot of potential right on our doorstep. It's a great position to be in given the runway we have with that mine line ahead of us already. It's been really good.

And yeah, and additional to that, there is one area which is underneath our old historic leach pad number one, right adjacent to the current pit. We call it the wedge, actually. It's currently in what mine plans as waste because we can't drill down through the old your reach pad, but we have put some horizontal drills into that, and it's given me a little bit of excitement. We still have to investigate it, but that's 40 million tons of waste currently in my plan, and in the next couple of years, we'll look to investigate that and see how much of that we can convert, but we're optimistic that that'll present some really interesting material that may be higher grade than the current mine plant.

Okay, great. Thanks. I appreciate the answers, and I'll pass it on to the next caller.

Thanks, Kevin.

And our next question will come from Joseph Rigor with Roth MKM. Please go ahead.

Hey, Mitch and team. Thanks for taking the questions.

Hey, Joe. Good to hear from you.

Yeah. So most of my questions have been answered, but I did have a question. In the cash flow for Q1, there was a $55.2 million impact from deferred revenue recognition, which, you know, compared to prior quarters seemed a bit high. What was driving that? You know, what are the components that go into that? And, you know, should we expect that to be lower in the, you know, quarter's head?

Tom, do you want to cover that? Sure. So in the financial statements, you'll see a reference to some gold prepaid activity. So we've got a prepay at Kensington, which we historically used to help us manage short-term working capital. And last year, we added prepaids at both Rochester and Wharf. Again, all just in the effort to smooth out the working capital as we went through the last of the expansion and are awaiting these wonderful ounces that Nick is placing on the pad. So we extended those, we renewed those prepaids again. There was $55 million outstanding at the end of December. We paid it all back and then drew down on those prepaids again. So it's a nice way to help us manage working capital. In particular, the first quarter has three lumpy payments. The annual incentive bonus, we pay the Mexican EBITDA tax, as well as the semi-annual payment on the bond coupons. And so it's a helpful way to manage working capital. But as I mentioned, starting in the third quarter, once all the free cash flow starts to arrive, the plan would be to begin delevering. And we'll delever based on what's going to be the highest interest rate between the revolver and prepaid. So expect to see those balances decrease in the second half.

Okay. Thanks. I appreciate the color on that. And then one other question just on kind of the overall company performance in Q1. It seems like, you know, you guys are already ahead of plan, you know, and the range on guidance at Rochester is a little wide. Is the plan like later this year to tighten that up once, you know, you kind of see what the first two or three quarters look like?

Yeah, I think that's a fair point, Joe, that as we get past the end of the second quarter with that run rate at Rochester, that's a big milestone for us. On the backside of that, refreshing Rochester's full year guidance would be probably a good thing to do. So you can look for that probably as we think about third quarter results.

Okay. All right. That sounds good. Thanks, guys. I'll turn it over.

Okay. Yeah. Thanks, Joe.

As a reminder, if you have a question, you may press star then one to join the queue. Our next question here will come from Brian MacArthur with Raymond James. Please go ahead.

Good morning, and thank you for taking my question. Can you just review where we are on your NOLs, your tax pools in the United States? Because as you eventually start to ramp up, rochester and generate cash and you have wharf in the u.s and kensington in the u.s is is most of that going to the bottom line because if i remember there were significant tax pools if you can just review how that works because that should impact i guess how much free cash flow there is available yeah great point it's it's an often underappreciated asset that we that we have and that we will start to take advantage of tom do you want to give brian the yeah at uh

By memory in the 10K is over $630 million of NOLs. And so we're not going to be paying any federal income tax in the near future. So absolutely should be forecasting zero federal income taxes for CORE for the foreseeable future. We do pay tax in Nevada. There's a state tax there as well as WARF. And at these higher prices, there's maybe a small amount at Kensington as well, but nothing particular material.

Sorry, and that was going to be my second question. So just in Nevada, do you pay it or do you get to credit all the capital you've just spent? So that gets deferred a little bit too, or do you start paying that right away?

No, there's a Nevada net proceeds tax that we will start paying right away.

Great. Thanks very much. That's very helpful.

Thanks, Brian.

And this will conclude our question and answer session. I would now like to turn the conference back over to Mitch Krebs for any closing remarks.

All right. Well, hey, we appreciate everybody's time today and look forward to speaking with you all in August to discuss our second quarter results. Have a great rest of the day. Thanks again.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines.