Coeur Mining, Inc.

Good day and welcome to the second quarter 2024 financial results for CoAir Mining conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would like now to turn the conference over to Mr. Mitchell Krebs, President and CEO of Coair Mining. Please go ahead.

Mitchell Krebs Hello, everyone, and thanks for joining our call. Before we start, I want to point out our cautionary language regarding forward-looking statements in today's slide deck and refer you to our SEC filings on our website. I'll kick off with some highlights on slide three before turning the call over to the team, and then we'll open it up for questions. The main focus during the second quarter was getting Rochester ramped up and positioning the company to make the transition to positive free cash flow in the second half of the year. We were successful in that effort, with Rochester now consistently crushing and placing around 90,000 tons per day, which should drive sharp production increases and unit cost reductions in the second half. Rochester's silver and gold production both jumped nearly 40 percent in the second quarter which was a great sign that the team out in Nevada is building momentum heading into the back half of the year. Nick will provide some additional details on Rochester in a few minutes. Our three other operations are also on track for solid years as we pass the midway point. Palmareo generated another strong free cash flow quarter. Wharf remained consistent and on plan. And Kensington is now establishing a good rhythm after a couple of years of elevated investment and implementing several operational enhancements, which Mick will cover in greater detail. Our leading leverage to higher prices was on full display during the quarter. Prices in the second quarter were about 10 percent higher year over year, yet our quarterly adjusted EBITDA jumped 136 percent, and our LTM adjusted EBITDA increased 90 percent to $192 million. On the back of Rochester's ramp up, Kensington is set to have its own free cash flow inflection point in the second half of next year. The elevated levels of underground development and drilling over the past two years are expected to drop off mid-next year, leaving Kensington positioned to deliver positive free cash flow with greater operational flexibility and a longer mine life. Mick and Aoife will both touch on the progress at Kensington. It was great to close the acquisition last month of two key concessions from Fresneo and consolidate the land package to the east of Palmareo. IFA will talk in a couple minutes about our plans and priorities for this large prospective land position that sits outside the Franco-Nevada Gold Stream boundary and provides a whole new set of higher margin mine life extension opportunities at Palmareo. IFA will also cover the objectives and progress from the summer exploration program underway at Silverton. We continue to believe that the convergence of all of these catalysts, higher commodity prices, a ramped-up Rochester, a stable suite of U.S.-centric mines full of organic growth opportunities, and a world-class Canadian exploration project along with our impending transition to positive free cash flow, followed by a period of aggressive debt reduction, sets us apart from our peers and leaves us in a great place heading into the second half. Nick, over to you.

Thanks, Mitch. Rochester's successful ramp-up and consistent contributions from across our portfolio have the company well positioned at the midway point of 2024. More importantly, Coe's deeply embedded safety culture continues to show through in our overall safety performance. I'm pleased to report that a clean slate at Wharf in June marked one year of the operation without a lost time incident. Also in June, seven individuals at Rochester were honored with safety awards by the Nevada Mining Association. Congratulations to the team there for their contributions to pursuing a higher standard in safety. Turning to our second quarter results on slide four and kicking off with Rochester. Silver production in the second quarter increased to 973,000 ounces, while gold production increased to over 8,000 ounces, driven by more crushed tons placed with the new circuit. As reported on July 11th, placement of ounces during the second quarter was lighter than initially planned, but Rochester remains on track to deliver on 2024 production guidance. Over the first several weeks of the third quarter, throughput rates have regularly achieved or exceeded expected average running capacity of 88,000 tons per day, and the team continues to take full advantage of down periods to optimize and refine the operation. We crushed and placed nearly 2 million tons in July, and we remain well positioned to deliver crushing and placement rates of 7 to 8 million tons per quarter in the second half and into 2025. Concurrent with delivering these higher crushing replacement rates, our focus in the second half of 2024 will be on working down material crush size towards a targeted five-eighths of an inch in order to maximize recoveries. Moving on to Palmarejo, the mining followed up a very strong first quarter with another solid three months delivering over 25,000 ounces of gold and nearly 1.6 million ounces of silver. In June, the team broke ground on a third access portal at Hidalgo, which is expected to significantly enhance our underground mine development and exploration efforts at this future ore source located just north and west of Independencia. Following the completion of the transaction with Fresnillo, the operating team is working closely with the exploration team on plans to pursue near-term development opportunities, which IFA will discuss further in a moment. At Kensington, the operation continues to regain momentum, where significant improvements have been realized in long-haul drilling capacity, paste placement, and getting more stoke feed to the surface. As Mitch mentioned, the Kensington team have gone the hard yards to position the operation as a long-lived, revitalized source of free cash flow generation starting in the second half of next year. The multi-year capital development investment continues to advance well with progress ahead of schedule, with additional funds being allocated to the program to provide more operating flexibility and to access new ozones. The program now stands about 82% complete for the current scope of the project. Finishing up with WARF, strong grades drove increased gold production to 22,000 ounces in the quarter, while adjusted CAS decreased 29% compared to the first quarter to an impressive $822 per ounce. When Wharf was acquired by Kerr in 2015, reserves stood at approximately 560,000 ounces. At year-end 2023, nine years later, Wharf's gold reserves stood at over 760,000 ounces, with even further exploration upside. The team there has recently identified two new opportunities near existing mining areas aimed at substantially extending Wharf's already long life. The two targets, North Foley and Juneau, will be drill tested over the remainder of 2024 and 2025 to demonstrate the scope of the potential opportunity. With that, I'll pass the call over to Tom. Thanks, Mick.

I'll begin with a brief review of our second quarter financial results before spending a moment on our refreshed cost guidance as we hit the midway mark of 2024. And I'll finish with an update on our plans for delevering the balance sheet on the back of Rochester's and the overall company's return to free cash flow. As detailed on slide 10, CORE's rapidly improving financial results are due to the three-way combination of stronger gold and silver production, higher metals prices, and declining levels of capital spending at Rochester. With Rochester continuing to settle into steady state operation and the rest of the portfolio delivering 100% unhedged gold and silver production, that free cash flow inflection point We remain on track to achieve 2024 production guidance at each of our operations and have made the following refinements to our 2024 cost guidance. At Palmareo, higher grades combined with easing inflationary pressures and a weaker Mexican peso have resulted in a reduction in its 2024 CAS guidance. 2024 CAAS guidance at WARF has also been reduced as a result of better than expected crusher performance and mining efficiencies due to ongoing business improvement initiatives. At Rochester, we increased our CAAS guidance to reflect excess trucking capacity used during the first half of the year to place profitable but higher cost run of mine material, which helped to offset the lighter than planned tons placed on stage six through the first half of the year. In addition, Overall, 2024 CAPEX and expiration guidance has also been adjusted to reflect the following. At Rochester, we have increased the full-year capital guidance to reflect an earlier-than-planned final payment to our major contractor from the recently completed expansion. We also accelerated equipment purchases to lock in savings, and there were a handful of post-startup modifications. At Kensington, we increased our full-year capital range to reflect accelerated underground mine development and exploration investments, which reflect higher-than-plan productivity by both our underground mine development and drilling contractors. And at WARF, we increased our full-year exploration guidance to reflect drilling we plan to carry out at the recently identified opportunities that Mick just mentioned. This allocation of capital is consistent with our capital allocation framework as highlighted on slide 13. Turning to the balance sheet on slide 12, we ended the quarter with approximately $275 million drawn on our $400 million revolving credit facility. Our balance sheet ratios have already seen significant improvements since the high water mark one year ago, and we now sit below three times net debt to EBITDA for the first time in over two years. We expect to begin aggressively paying down the revolver as cash flows begin to accelerate over the second half of the year, as we drive towards our long-term leverage targets of total debt to EBITDA of one times and net debt to EBITDA of nil. I will now pass the call to Aoife.

Thanks, Tom. Starting at Palmareo on slide eight, the newly acquired concessions from Fresneo provide us with full access to the four Northwest trending mineralized belts in the district. Of these belts, the mine trend has seen the most historic expiration, with a high percentage of resource and reserve ounces coming from deposits here. The new Independencia sewer claim block, highlighted in the red oval in the center of the map, contains the southeast extension of the mine trend. It sits directly adjacent to our existing mining infrastructure and contains the continuation of a number of key veins, including Independencia and La Nacion. Fresneo conducted drilling on this block, and we are hopeful that with additional exploration, we can outline new resources in the very near term. Mapping is already well underway, and re-logging of Fresneo core and incorporating it into core's database and geological models are immediate aims, with drilling planned for early 2025. The new Guadalparez block of concessions outlined in the large red oval on the top right of the map is the most easterly northwest trending belt of mineralization at Pamoreo. It surrounds multiple advanced exploration targets containing significant drilling and historic resources that were added to Coors portfolio through the 2015 acquisition of Paramount Gold and Silver. This new block of Fresno concessions allows full access to these historic resources and opens up significant down-depth and along-strike opportunities. Validation of these historic resources and extension along strike and down-depth is a short- to medium-term exploration focus. Between the Northwest trending mine and Guadalajara's trends of mineralization exists the Camuchin-Escondida trend. This is the third of four identified belts at Palmareo and has a number of key exploration targets that are expected to span the short- to long-term exploration focus. Other key news for the quarter includes commencement of the largest summer program ever at Silvertip. We are undertaking a three-pronged approach this year, including near-mine extensions to known mineralization via underground drilling, larger step-outs on known structures to rapidly add resources via surface drawing, and regional scale exploration to identify silver-tipped lookalikes and larger structures with potential to host larger ore bodies. We look forward to providing an update on the program later in the year. At Kensington, the multi-year program is progressing well and is outlining new zones in upper and lower Kensington, and is showing continuity of mineralization between Elmira and Elmira South. We continue to be very encouraged for ongoing mine life growth throughout this program. With that, I'll hand the call back to Mitch.

Thanks, Eva. Before moving to the Q&A, I want to quickly highlight slide 14 that summarizes our top priorities for the remainder of the year. We're looking forward to delivering a strong and safe second half highlighted by higher production levels, positive free cash flow, and lower debt levels as we build up momentum heading into what should be a fantastic 2025. 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 one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw it, please press star, then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Joseph Regor of Roth Capital Partners. Please go ahead.

Hey, Mitch and team, thanks for taking my questions.

Hi, Joe.

So first thing, on Rochester, you guys suggested the cost guidance there, and there was some note about that being related to placement timing. Can you give us a little more color on that, like what exactly is driving that, and if there was any changes to your expectations as far as cost excluding that item?

Yeah, sure. I'll take a crack at it, and then, Nick, maybe you can. You can follow up. It's really, Joe, a function of the denominator versus the numerator, so no real changes at all in any of the inputs. It was really a function of timing of ounces placed out onto stage six. In the second quarter, we took a few more downs than planned to knock out some items that had been identified during the ramp-up to try and make sure we've got a good, clean second half ahead of us. And so just by a function of the timing of tons being put out there on stage six, that's really the driver behind what we decided to do with the cost guidance in the back half of the year for Rochester.

Nick, anything you want to add? Yeah, we're really happy with the ramp-up, but as Mitch said, we took the opportunity to really do the work so that once we got up to that nameplate capacity and run rate, we could stay there while in the second half optimizing the size PSD so we can get those recoveries up. So everything's going the way we expect it to, just a little bit delayed on a few of those answers to the pilot.

And I guess just to follow up one last thing, Joe, there, it was I think in the comments we made or maybe in the release, just With some of the downtime then, we took the opportunity with the trucks to haul some run-of-mine material, so that was also a part of the equation as we thought about second-half cost guidance for Rochester.

Okay, that's helpful. On the land that was acquired near Palmoreo, when do you think the earliest timeframe would be where you pull your first ounce out of the ground there?

Good question. We'll probably start seeing some drilling first part of next year, particularly in that nearer section that's outlined on that slide in the materials. Of course, a lot of the underground development then will have to come on the heels of defining mineralization further there really on the southeastern extension of of both into Peninsula and Nacion, which would probably put us into 2026 as far as the first window of seeing some ounces out of that near area that we just acquired from Fresnillo. Aoife, Nick, anything?

Yeah, the great thing is that underground, it's close to infrastructure. It's already areas that were mining, so it's really extensions of those areas. So as Mitch said, there's some work to do. We'll have to characterize it and we'll have to develop towards it, but it's not too far away.

Yep. The first The first program that we're going to undertake there is some re-logging of that old Fresneo core, and that's going to happen imminently. We've been mapping and sampling throughout that whole land package this year, and we would aim to get the drills in there pretty early next year. Okay.

Sounds good. And then, last thing, as cash flow increases and you guys are able to focus on debt repayment, what's the

cash balance you guys would like to cover and how much debt would you guys like um to wipe out over you know over the next couple of years yeah um tom do you want to talk about how we see the balance sheet and where we're where we're trying to get over the longer term yeah morning joe just uh i just go back to the our comments we're always aiming for a total debt to even uh long term of one time

and a net debt to EBITDA of nil. And so to get there, when you look at where our senior notes balance looks like right now, just under a shade under $300 million, that kind of marries up to what we think long-term EBITDA of the company is going to be on a go-forward basis. So once the free cash flow starts happening in the second half of the year, it's all going to be geared towards repaying that revolver I mean, how fast could we get that revolver paid? How fast could we get to that long-term goal? I think it would be a stretch to say we'd have it done by the end of 25, but certainly in 26. You know, it's not out of the question, though, in 25, if commodity prices were to bounce back up and stay at levels just a little bit higher than this. And in terms of the minimum cash, You know, we probably want to always have at least $50 million on the balance sheet, you know, operating in three jurisdictions. It's probably nicer to be maybe a little bit higher than that, but the bare minimum we need is $50 million.

Okay, good stuff, guys. I'll turn it over.

Yeah, thanks, Joe.

Once more, if you have a question, please press star, then 1. Our next question comes from Mark Ferrari of National Bank Finance. Please go ahead.

Hi, guys. Just wondering how the Rochester crushing circuit is performing on a reliability basis and if you guys are seeing any problem areas.

Yeah. Mick, do you want to give an update on kind of July, August, and then how you see the back half of this year going and then into 2025?

Yeah, really we're seeing good things. I mean, we're still only four or five months into what would be a longer ramp up and we hit the main plate. We're really happy about that. We're seeing consistent numbers on a daily basis, running at that sort of 90 to 100,000 tonnes per day. And so, you know, last month, even with a few downs, we delivered nearly 2 million tonnes to the pad. Our expectation is north of that for the rest of the year, expecting to land between 7 and 8 million tons per quarter. That's really set and worked well because during that period of 78 million tons, we are continuing to optimize for size fraction. We're already seeing that getting dialed in a little bit, and we're seeing some really good results coming from July and a good start to August. And so it's given us a lot of confidence that we'll hit the 32 million tons in 2025, and we'll have that size fraction dialed into the five-eighths and be getting the recoveries that we expect going forward. So, yeah, overall, everything's doing what we said it would do, and we're pretty happy with the performance.

Yeah, the first half theme was stabilized, and now the second half theme is optimized. And I think it's fair to say we're comfortably into that. that optimize mode there at Rochester.

Yeah, there's a few little jobs to do, but there are a couple of days there to fine-tune as we go through the back end of the year and we'll optimize that size fraction.

Okay, perfect. That's great color. That's all from me. Thank you.

Cheers. This concludes our question and answer session. I would like to turn the conference back over to Mr. Mitchell Krebs for any closing remarks.

Okay. Well, hey, we appreciate everybody's time today, and we look forward to talking again in November to discuss our third quarter results. Until then, have a good end of the summer and fall. Bye-bye.

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