Coeur Mining, Inc.

and welcome to the Core Mining Fourth Quarter 2024 Financial Results 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 your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mitchell Krebs, Chairman, President, and CEO. Please go ahead.

Good morning, everyone, and thanks for joining our call today to discuss our fourth quarter and full year results. Before we start, we want to quickly 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 start with some quick highlights before turning the call over to Mick, Aoife, and Tom for some more color on our results and on our 2025 outlook. By any measure, 2024 was one of the most consequential years in Core's nearly 100-year history. The company is in the midst of an inflection point following a period of heavy investment to reposition us as a larger-scale, growing, lower-cost silver and gold producer with a more conservative balance sheet. The second half of last year marked the beginning of this inflection point with $85 million of free cash flow, $80 million of debt reduction, nearly $90 million of earnings, the successful ramp-up of our Rochester expansion, and the announcement of the Silvercrest acquisition. Our full year 2024 adjusted EBITDA more than doubled to $339 million compared to the prior year. Looking ahead to 2025, we're entering the year incredibly well positioned to deliver record results and be a true global leader among silver companies at just the right time. We expect production levels from our five North American operations to reach over 400,000 ounces of gold and over 18 million ounces of silver this year, which are 20% and 62% higher than last year's levels. We anticipate delivering record levels of EBITDA earnings and free cash flow that can be used to aggressively pay down debt and leave us with a peer-leading balance sheet by year end. The combination of Rochester's first full year post-expansion, ten and a half months of the newly acquired Las Chispas operation, steady performance from our other operations, and higher prices are the key drivers to this expected record year. Looking further out, our news release on Tuesday covering year-end 2024 reserves and resources showcased the company's strengthening pipeline of mineral inventory. Just a few quick highlights looking at slide 10. Over the past five years, we've invested $285 million in exploration that has led to a 26% increase in gold reserves, 30% increase in silver reserves, along with material increases in both gold and silver resources. putting us in a great position to further extend mine lives at our operations. Two great examples of this from last year's results are the sharp resource increases at Palmareo and Wharf. Palmareo's inferred resources jumped by 75% year-over-year, while Wharf's M&I resources doubled and its inferred resources tripled year-over-year, giving us a high level of confidence in delivering meaningful mine life extensions at these two operations in coming years. One other highlight from Tuesday's release is the addition of the high-grade Las Chispas asset, which provided a 12% boost to our overall reserve grade, which reflects the quality of this newly acquired asset. Mick, over to you.

Thanks, Mitch. Kerr's portfolio finished the year on a strong note, highlighted by great results at Wharf and Palmarejo, and continued growth at Rochester, coming less than a year since start-up and initial production. Beginning with Rochester, the newly expanded operation continues to trend positively, with tons placed during the quarter delivered within our targeted level of 7 to 8 million tons, on the way to a 34% increase in silver production. compared to the third quarter and 63% increase in gold production over the same period. This growth contributed to over $12 million of free cash flow during the quarter. We are also seeing continued success in the first month of the year as the team placed an additional 2.4 million tons on the leach pad, which was right on plan. Mining, crushing and recoveries continue to show strong sequential improvement even as periodic pauses to the circuit have taken place to address planned modifications and typical startup work. Placement of high-grade backfill material once again contributed to pad placement rates during the quarter. The relatively large size fraction of this material led to increased leach cycle times of silver, which presented a slightly lower than planned silver production in the quarter, but contributed to a strong overall finish to the year. As expected, costs applicable to sales were within full year guidance ranges and declined by 14% in the fourth quarter as throughput rates continue to claim. Looking ahead, 2025 production guidance of 7 million to 8.3 million ounces of silver and 60,000 to 75,000 ounces of gold represent year over year increases of 75% and 72% respectively. Higher sustained throughput rates are expected to continue driving down unit costs, which are shown on slide seven on a per tonne and per ounce basis. Turning to Palmarejo, the team delivered another solid quarter to cap a great year, with gold and silver production increasing 8% and 3% year over year, respectively, leading to $108 million of free cash flow, which was the highest level in seven years. Palmarejo also continues to position itself for the future with the completion of the Hidalgo portal leading to enhanced flexibility and access to new ore drives in 2025 and beyond. We expect another typical year of Silvan gold production at Palmarejo in 2025. Moving to Kensington, gold production increased throughout 2024. leading to a strong bounce-back year with 13% growth compared to 2023. With Kensington's multi-year investment and underground mine development and exploration now beginning to wind down, 2025 production guidance reflects the enhanced flexibility and successful reserve additions we achieved to set up Kensington for another 5% increase in production compared to 2024 and a return to positive free cash flow this year. Finishing up with Worf, as expected, fourth quarter production moderated compared to the unusually high third quarter result, but still managed to deliver annual gold growth of 5%, leading to a full year free cash flow of $95 million, which sets a new record for the operation. Worf's 2025 guidance reflects a similar year of stable production ahead. Turning briefly to a couple of key items on capex gains, slide 11 highlights a year of more typical sustaining capex spending following the completion of the Rochester expansion, with a few additional focused high return capital investments anticipated in 2025. At Kensington, we plan to commence a tailings down raise to realise the value from its extended main lease. At Rochester, we plan to complete some modifications after startup projects across the crushing system to further improve flexibility and drive efficiency. And finally, the recent success at Juneau and the North Foley targets at Wharf requires a modest increase in capital this year to support an expected material extension to its main life. With that, I'll pass the call over to Aoife.

Thanks, Mick. the fourth quarter closed out a very successful year for Coors exploration programmes. Starting with the good news at Kensington, the multi-year underground development and drilling programme is proving very successful, with a doubling of reserves since the programme began in mid-2022. Multiple new zones were discovered last year, which will be followed up on in 2025. Given this much more comfortable mine life, our focus would pivot towards maintaining this steady five-year life of mine and targeting higher-grade zones to maximise the operations cash flow. We also had a very busy year at Pamorejo, where the aim was to further bolster the inferred pipeline for future conversion to reserves. A new discovery was made in the Hidalgo corridor, the Libertad footwall vein, which was a significant contributor to the overall and sedition there. Furthermore, early stage work on the newly acquired Fresneo claims is outlining multiple new veins with an additional 12 kilometres of strike length outlined on the Independencia sewer block. These are located directly southeast of existing mine infrastructure and we recently commenced drilling to test the southeast extensions of the veins in the main mine corridor. 39% of last year's exploration budget at Palmareo was spent outside the area of interest impacted by the Franco-Nevada gold stream. And this is expected to increase to 60% in 2025, now that we've fully consolidated the lamb position to the east of existing operations. At Rochester, one program of note last year was the campaign targeting the previously undrilled portion of East Rochester, the Wedge, and also targeting higher grades on the Black Ridge and other faults. Higher grades were found on a sub-vertical structure in East Rochester and a large portion of colluvium in the wedge, previously thought to be waste, was shown to have mineralisation. The impacts of this work will be evaluated after a more aggressive drill programme planned for late this year and continuing into 2026. Last but not least, the three-pronged programme at Silvertip paid off in bounds. The underground near-mine drilling extended the southern silver and saddle zones along Strike. The programme of large drill step-outs intersected massive sulphide mineralisation in five of five holes up to one kilometre from the most recent resource shape for southern silver zone. And two more silvertip lookalikes were outlined in the regional programme. We plan to follow up on these during the upcoming summer seasons. Looking at slide nine, we expect to invest about 85 million on exploration in 2025. Like last year, this year's exploration will be weighted towards scout and expansion drilling with the aim of further bolstering our inferred resources for future conversion. We also aim to maintain steady mine lives now that we have successfully extended them across the portfolio over the past few years. With that, I'll pass the call to Tom.

Thanks, Aoife. The third quarter was the beginning of the major inflection point that we had all been waiting for since the launch of the Rochester expansion in 2020. The momentum continued during the fourth quarter with Rochester joining the free cash flow party with its first positive free cash flow quarter since 2019, driven by the steady progress of the ramp up of the crusher and the increase in ounces placed on the leech pad, as Mick described. Turning to the financial summary on slide eight, Key 2024 headlines included revenue exceeding the $1 billion mark, adjusted EBITDA increasing by almost $200 million to $339 million. Capital expenditures at $183 million were cut in half versus the prior year, which allowed us to increase our exploration expenditures to approximately $60 million. And our average quarterly free cash flow was $43 million during the second half of 2024. Turning to the balance sheet summary on slide 12, our planned debt reduction continued during the fourth quarter with another $30 million repaid on our revolving credit facility, leaving us with a significantly improved net debt to EBITDA ratio of 1.6 times versus 3.4 times one year ago. CORE's rapid balance sheet strengthening will accelerate in 2025 off the back of higher gold and silver production, stronger commodity prices, And of course, the closing of the Silvercrest transaction last Friday. We expect that our revolver balance, which stood at $195 million drawn at December 31st, 2024, will be repaid by the second half of 2025. And our long-stated goal of net debt to EBITDA of nil is in sight. We are excited to present the 2025 guidance on slide 14, which includes Las Chispas for the first time, albeit for only 10 and a half months. Key themes for 2025 include production growth driven by Rochester and Las Chispas, and an acceleration of free cash flow and debt repayment. Using a $2,700 gold price and a $30 silver price, we expect to average $75 to $100 million per quarter of free cash flow beginning in Q2 2025, which will be applied to debt reduction. This free cash flow generation includes an elevated exploration investment versus 2024, as we continue to find excellent opportunities to invest across our portfolio to generate returns above our cost of capital. The potential material mine life extension at Wharf jumps out as a poster child for our focus as a company on ROIC. Exciting times indeed. One note of caution, Q1 2025 will be a bit messy and not representative of the go-forward business, as Q1 will only include 45 days of Las Chispas operating results, and we will incur several one-time outflows, which will impact our operating cash flow during the quarter. Those outflows include an estimated $80 million of 1Q tax payments in Mexico related to the strong financial results at both Palmareo and Las Chispas in 2024. The payments associated with CORE's annual incentive plan and the semiannual interest payment on our long-term notes a much larger annual property tax payment at the expanded Rochester mine and Silvercrest transaction costs. It is important to highlight that absent these one-time outflows, first quarter free cash flow would have been expected to be positive.

I'll now pass the call back to Mitch. Thanks, Tom. Before moving to the Q&A, I want to quickly highlight slide 13 that summarizes our top priorities for 2025. With the completion of the Silvercrest acquisition last Friday, I just want to take a moment and quickly thank our team and the Silvercrest team for their efforts in making this transaction happen, and welcome the Las Chispas team to the company, as well as welcome Eric Fehr and Pierre Beaudoin to our board of directors. Thanks to a lot of hard work by a lot of people over many years, coupled with incredibly strong fundamentals for both gold and silver, We're seeing several key catalysts converge at once that have the company positioned better than ever heading into 2025. From a solid platform of five North American operations, Core provides near-term growth, unmatched silver exposure, dramatic cash flow increases, a rapidly strengthening balance sheet, peer-leading liquidity, and a fertile pipeline of exploration targets to support the next phase of growth in the years ahead. 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 telephone keypad. 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 comes from Joseph Greger with Roth Capital Partners. Please go ahead.

Hey, Mitch and team. Thanks for taking the questions and congrats on all the accomplishments.

Hey, Joe. Thanks.

So I guess first thing on the less cheapest acquisition, can you give us an update on what cash and bullion equated to at the time of the closing?

Yeah, thanks for the question. Obviously, the balance sheet that Silvercrest had was one of the key deal rationale points, using that cash and bullion to reduce debt here in the first quarter and then combined with the free cash flow from Las Chispas during the year, that should help us de-lever quite quickly. Tom, do you want to talk a little bit more about where they were at least at your end and how we see that playing out from here?

Sure. Sure. Thanks, Joe. So as they noted in their news release, $153 million in cash and $40 in bullion, and they didn't sell any of the bullion between year-end and Valentine's Day when we closed the transaction. They did pay a bunch of bills in the first 44 days, including a lot of their transaction costs, et cetera, et cetera. So that balance is a you know, closer to $100 million as we approached the closing date. But as Mitch said, you know, the game plan here is, you know, it's going to be a bit of a messy quarter as we deal with our transaction costs, the big tax bill. I mean, it's, you know, nearly $40 million for each of the two subsidiaries given the strong performance. So anyway, that's just want to highlight that Q1 is going to be a bit messy.

All right. That's helpful. Two other specific operational things I noticed. One, Kensington, the cost per ounce is going up a decent amount from last year, and then at Rochester there was a mention of crush size in Q4, that that was part of the reason for production being a little lower. Can you just touch on what Crush size issue is, is it behind you? And then on Kensington, what's driving the higher costs?

Yeah, I can, I'll start, I'll take, maybe I'll go with the second question first and then we'll hit Kensington second. Just on Rochester, I'll offer up a couple of comments and then Mick, you can give Joe some additional detail. Yeah, we did place a little bit more of that direct to pad material that we call DTP in the fourth quarter. I think about 3 million tons that went out onto the leach pad. came from that material. And that's previously mined, higher grade, slightly larger size material, more like a couple of inch size. And we did that to really offset some crusher downtime that we took during the quarter to take care of a few items that had been identified leading up to the fourth quarter. And we pulled some first quarter 2025 planned maintenance into the fourth quarter and, and decided to take care of those items just to set us up better for a good, strong, clean 2025. So that did impact slightly the, the, the, the crush size in the, in the, in the fourth quarter and, and, and was really the driver to the, the, the slightly lighter silver production. And when you think about 2025, you know, we'll, we'll, crush probably right around 30 million tons and then place on top of that another probably five or six million tons of that direct to pad material. You know, the limit on the, the permit limit on the crusher is 32 million tons. So that direct to pad material is profitable and it gives us an opportunity to kind of exceed that, that, that permit limit on the, on the crusher does have a slight impact on, on recovery given that larger crush size, but it's, It's profitable material. And just I'd say on the crush size overall, the progress toward the 5'8 goal continued to make a lot of progress. Mick can give you some additional details on that. I know we've run a couple of specific campaigns focused on hitting that in December and again in January. And we've definitely, the crusher has proven its ability to deliver that 5'8 product that we're targeting. But Mick, do you want to fill any blanks? on that and then also hit the Kensington question.

Yeah, for sure. Thanks, Joe. We're absolutely pumped. Actually, we're seeing that momentum build right across 2024. Since we started on the 8th of March, it's not that long ago, right? It feels like a while, but it's really not. we look across the whole of 2024 and we had around 70% of that material through the whole year that was passing that five eighths inch size fraction. So that performance is getting better and better. Still a bit of work to do. We did those tests, as Mitch mentioned, in December and January, and they were very specifically to understand you know the nature of the ore body and what the control limits were to ensure we can send that right blend to the crusher to hit that size fraction and you know we're not going to be able to do that all of the time because we are as you're higher up in the ore body we get some pretty soft ores and you know they're not really applicable to to putting through the tertiary crusher. So we bypassed those a little bit and we see a slightly higher size fraction now and again. But overall, those tests showed that when we want to and we provide that crusher with the right blend of hard and soft ores, it can hit that five eighths size fraction well. So overall, really, really happy about that.

On Kensington, Tom, you want to say something? Yeah, Joe, a couple of things on Kensington. As we've talked about, there's been a lot of work on the multi-year program. And so as a result, a few more people onsite, so labor and camp costs were higher, more expensed underground mine development. But the real thing to monitor there is just the sensitivity to the grade, right? If you pull out the chart on page nine of the earnings release, you sort of see, right? When Kensington's at 0.14, those costs really pop up and we need to, The more 0.16 quarters like we had in Q3, Q4, the better the cost goes. So it's a bit of the increased activity and then that sensitivity grade.

And a little bit of timing, Tom. There's a couple of power plant overhauls that were just scheduled for this year where we only did one last year. So there's just a little bit of timing around maintenance and reliability for the site.

All right. That's very helpful, guys. Thanks. I'll turn it over.

No, thanks, Joe.

Again, if you have a question, please press star then one. Our next question comes from Mike Parkin with National Bank. Please go ahead.

Hi, guys. Thanks for taking my question. Looking at slide five. Hi, guys. Great slide there, kind of given the quarterly expectations of the portfolio. Just wondering, with Rochester, with cold weather conditions, in the winter months, in the size of the pad, is there a thermal load that isn't quite sufficient there? That's when you get that bit of a softer Q1 on your gold production, your silver, because your leach kinetics just slow down and it kind of picks up as it warms up, or is it still more just grade tons under leach that are driving that more back half-weighted Obviously, because you're still getting up on a slower recovery there on a slower leech curve, but just wondering what's driving that significant back half weighted outlook for Rochester in the second half.

Yeah, thanks, Mike. I think it's a little bit of both, actually. But Mick can give you a little more detail.

Yeah, absolutely. So the main driver behind that really is, though, that momentum play that I talked about. So we get those residual ounces over a long period, particularly with silver, right, because the leech curves for gold are much faster, as you know, but silver takes a little bit longer. And because of the size fractions that we saw through last year, The momentum and the leach curves for that contribution through 2025 just build up throughout the year. So you see that momentum build through Q1, Q2 and into the back end of the year as we continue to feed those lower bedder size fractions to the heap leach pad. There is a bit of weather and obviously loading rates during those adverse weather conditions also impact that.

and rochester a little bit trickier in q1 but overall that's that's the main key reason okay and on that uh you guys are almost there on size i didn't remember to look for that actually last night where are you in terms of your fragmentation or like your your grind size stacking size at rochester are you at your your aim target or is there still a little bit of work to be done there

Yeah, I think it's fair to say that Mick mentioned some numbers earlier around 70% last year was hitting 5.8%. So we still got a little bit of work to do to get that up to 80%.

Yes, and we're seeing numbers that are north of that when we're feeding it with the right ore, which we can do. We did those tests in December and January and they showed that we can do that. We've now just got to optimise a little bit more on our blasting practices in the pit And then a little bit more controls and tuning on the crusher as to be expected. We're really only getting towards one year in now on that ramp up curve and it's really controlling in well there. So yeah, a little bit more work to do, but not too far to go. One thing that you will see and you have to think about is, of course, that direct to part material is of a higher size fraction. We don't put that through the crusher at all because it's already pretty well broken material and we wouldn't add any value by putting DTP through the crusher. So that goes straight to pad and that's at a slightly higher size fraction. So you have to think about how to unpick that from a recovery curve perspective. But the fantastic thing about DTP is, of course, that that doesn't go against our air permit for the crusher. So that limit of 32 million tons is crushed material where DTP can actually be put on the pad and generate value outside that 32 million ton limit. So very positive.

A couple of things, Mike, I'd just tack on there to what Mick said. Recovery rates are tracking expectations or predicted rates for the size of the material that we're putting out there. So we feel good about that, that we've got a good handle on that. And And I think as we look at 2025 and the setup there at Rochester of, you know, getting into that seven and a half to eight million ounce silver production level, 70,000 ounces or so of gold. And then those costs per ton, there's a good slide. I thought maybe when you said a good slide, Mike, you were going to say slide seven of that Rochester, the cost per ton. You know, we spent a lot of year telling people last year that we'd be getting into that kind of sub $2 ton production. mining cost and $3 a ton processing and $1 a ton or so on G&A. And sometimes people have looked at us with a little bit of skepticism. So it's nice to see that we're targeting those levels and obviously driving at these prices, especially the kind of cash flow out of Rochester this year that's going to be a key driver for us, along then with obviously the addition of Las Chispas.

No, for sure. I really appreciate that additional color you got there on 24, just showing the great improvement quarter over quarter on all your inputs. So congrats on doing well in Rochester. That's it for me, guys.

Yeah, okay. Thanks, Mike.

This concludes our question and answer session. I would like to turn the conference back over to Mitchell Krebs, Chairman, President, and CEO, for any closing remarks.

Okay. Well, thank you. Thanks, everyone, for taking the time. I know it's a busy reporting day. Appreciate it. We look forward to speaking again after we release our first quarter results here in the spring. Have a good day, and thanks again for your time.