Coeur Mining, Inc.

Good day and welcome to the Core Mining Second Quarter 2025 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 1 on a touch-tone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. 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 Routledge, Aoife McGrath, and Tom Whalen, 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 three 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 mine 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 $400 million. At these levels, Our balance sheet is expected to continue strengthening at a rapid pace with the potential to be in a net cash position at year end. All five operations delivered strong production, cost, and financial performance during the second quarter, which Mick and Tom will talk more about in a few minutes. Two key drivers that made the quarter so strong were the continued progress at Rochester and the first full quarter of contribution from Las Chispas. At Las Chispas, 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 Las Chispas is delivering exciting exploration results, which Aoife will talk more about. At Rochester, which is America's largest source of domestically produced and refined silver, another sizable jump in crushed tons in the second quarter 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 company-wide 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 four 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 ounces of gold and 4.7 million ounces of silver. Total adjusted cash per ounce for gold and silver decreased by 5% and 6% respectively compared to last quarter, to $1,260 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 Las Chispas, the team continues to deliver great results, with silver production reaching nearly 1.5 million ounces and gold production adding 16,000 ounces. both running ahead of annual guided levels. As Mitch mentioned, the team continues to thrive as part of COA's organization, with numerous great examples of cross-pollinating ideas and best practices. Staying in Mexico and turning to Palmarejo, The mine generated an especially strong $42 million of free cash flow, driven by gold and silver production increases 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 Independencia deposit. Total tons milled at Palmariho 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 up crushed tons by 24% compared to the previous quarter to 6.7 million tons. This additional crushed ore continues to displace direct to pad 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 tons 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-over-quarter decline in cash per ounce combined to generate $20 million of free cash flow for the quarter. With the multi-year capital investment programme in underground mine development now wrapped up, the external contractor force was demobilised from site by June 1. The team also made good progress towards completing a new raise-bore project that will contribute further to the efficiency improvements already in place at this revitalised operation. Kensington remains well positioned at the halfway mark to deliver sustained free cash flow with greater operating flexibility. Finishing up with Wharf, strong gold grade under leach led to a great second quarter. Quarterly gold production increased by 18% to over 24,000 ounces, marking the mine's second highest production level in two years and leading to free cash flow of $38 million. While we anticipate some great moderation over the months ahead, WARF is teed up for another strong year. With that, I'll pass the call over to Aoife.

Thanks, Mick. Exploration continued apace in the second quarter, with up to 27 rigs drilling across the portfolio. The team at Las Tispas has been extremely busy, with up to eight rigs drilling on that property. As you can see on slide 13, the key areas of focus are expansion and infill drilling on the Babicanora 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 Las Chispas block and in the gap zone between there and Babicanora. The Augusta vein, discovered earlier this year, continues to grow and continues to return multi-kilo intercepts. The geologic understanding of this part of the land package is growing rapidly, and this is assisting with even more effective exploration targeting. A new underground ramp to this zone will greatly enhance drill access in the second half of 2025. At Palmareo, where seven 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 mine trend. Excellent results have been achieved here, with the trend extended by 350 metres along strike year to date. In addition, drilling on the recently consolidated Independencia sewer block is progressing well, with the south-eastward extensions of the Nacion, Bruno and Independencia veins being tested, and previous drilling by Fresneo being validated. Many results are pending, but visual inspection of the core indicates continuation of known veins. At San Miguel, located further to the east in the Guasaparas trend, drilling to validate historic resources commenced late in the quarter, and is off to a very good start, with visual results to date that are highly encouraging. We expect that these three programmes will add meaningfully to Pomeréo's year-end resource calculations. At Kensington, four rigs were active and the drilling pace has exceeded expectations, with the programmed metres 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 Elmira, in the recently discovered Elmira hanging well zone and at the Johnson target. We're confident that these results will continue to support a consistent life of mine. At Wharf, as shown on slide 15, up to two rigs completed all expansion drilling at Juneau, Foley and the Wedge. The focus is turning to infill drilling northwest of Juneau, where expansion drilling in 2024 showed mineralization continuing for an additional 500 feet. Results received to date indicate that these programs are on target to add meaningfully to Warr's life of mine. At Silvertip, exploration programs kicked off with four rigs active on the project during the quarter. In addition, final preparations were made for a busy summer program that got underway just at quarter end. We look forward to providing updates in the coming quarters. I'll now turn the call over to Tom.

Thanks, Aoife. As highlighted on slide 8, our strong 2Q financial results paint the clearest picture yet of CORE's ultimate potential with the inclusion of a full quarter of Las Chifas 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 EBITDA 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 have been able to protect and expand margins, due to our strong cost controls and the lack of any meaningful tariff impact on our business to date. 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 20 cents per share. Briefly touching on the balance sheet on slide 11, we're proud to announce we have fully repaid the $110 million balance that had remained on our revolving credit facility by quarter end, which was one quarter ahead of schedule. Our total debt, including $90 million of capital leases, is now below $400 million, which is nearly a $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-DA 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. Based on our reconfirmed guidance and our updated forecast pricing of $3,200 and $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 pipelines. Note three of the interim financial statements in the 10Q provides the details of our preliminary purchase price allocation of Silvercrest. I wanted to provide an important update on three accounting nuances we highlighted 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 at Las Chispas 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 two-thirds of the acquired stockpiled material, so this accounting nuance 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 Las Chispas, 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 U.S. GAAP. With an 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 will 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 mid-year, 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 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 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, Mitch and team. Thanks for taking the questions and congrats on a great quarter. Yeah, hi, Joe. Thanks. Yeah, so I guess first thing, 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 would the timeline look like to bring that into production? Or is it just not something you guys are ready to do yet?

Yeah, good question. I think in the first quarter call, we talked about this sort of five-year timeframe to get Silvertip to a go, no-go decision phase. And maybe there are some opportunities to shave a little bit of time off of that, especially with some of Canada's support for critical minerals projects, expedited permitting, things like that. That said, we want to make sure that we don't cut any corners, that we do it right. That's going to require us to go through the typical project stage gates. We did kick off an initial assessment last month. So that's sort of step one. and we'll keep progressing through those milestones. There's still drilling to be done and there's permitting to be done. So maybe that five-year timeframe could be moved in a little bit, but I still think it's out there a few more years for sure, which gives us a nice clean runway here still to generate good, strong, free cashflow and stay focused on everything that we have out ahead of us. Does that help answer the question?

Yeah, that's helpful. And then following on that, silver tips obviously one of the big things in the portfolio, but beyond that, what do you see as the biggest items that you guys can focus on to drive production growth between now and then?

Yeah, it really goes to the brownfield exploration potential that we have around our existing sites. And it's not just one or two, it's really across the the collection of assets. Over the last decade, 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. I go through the list, many of them we talked about today, but Wharf has great opportunity. Palmareo, especially off to the east, has immense opportunity. We've started to realize some of the potential at Kensington, and there's more there. to do. And then with the addition of Las Chispas earlier this year, you know, there's a lot of potential there to target with increased levels of exploration. So, you know, even with this year, I think our guidance range, midpoint of our exploration guidance range is around $85 million, you know, to the extent that we can accelerate some of that next year and beyond to try and capture some of those opportunities around existing operations, obviously high return low-risk organic growth there. That's what comes to my mind 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 drive that performance so there's more growth planned to come from Rochester. But overall, it's incremental improvements around operations and performance as a portfolio.

Okay. Well, again, congrats on a good quarter. I'll turn it over. Thanks, Joe.

Again, if you have a question, please press star, then one. The next question comes from Brian McArthur with Raymond James. Please go ahead.

Hi, good morning, and thank you for taking my question. 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 U S you're kind of have a lot of NLLs, but when I look at it this quarter, like the deferred 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 should think about this, um, going forward, whether anything's changed or whether I can still continue to just tax, you know, Mexico at the standard rate in the U S at zero. I just, I just not sort of seeing it in the financial. the way I thought I might.

Yeah, Tom, go ahead. Yes, thanks. Well, you're thinking about it the right way in terms of cash taxes. You know, Mexico will continue to pay quarterly installments as well as, you know, that big one-time true-up in the first quarter along with the EBITDA tax. But interestingly enough, you know, we had as we talked about in the 10K, $630 million of net operating losses. And we're actually starting to chew through those pretty aggressively, but for the time being, best to just keep a zero tax rate in the US and the Mexican taxes. And they're a bit lumpy in that first quarter as we, you know, you true up for the year as well as pay the EBITDA tax. So, and again, I'd have to maybe find a way to point to the taxes paid in the 10Q, maybe work with the offline on that one, Brian, just to help you refine your estimation process.

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

Thanks, Brian.

The next question is from Alex Tarantiu with National Bank. Please go ahead.

Hi, guys. Congratulations again on another good quarter. Hi, Alex. Thanks. Two questions for you. One on the NCAB and another on Las Chispas. On the NCAB, I'm just wondering, you know, is this kind of discretionary? Is that how you're approaching it? Or do you have a program underway? I'm just trying to get a sense of how aggressive you may be on executing this, given your strong free cash flow and discussions on growth we've had over the past call here. And just wondering, you know, even if there's a chance to increase that. So that's the first one. And then just on Las Chispas, expiration obviously hitting some really nice intercepts. Mine life looks to be kind of set to grow there. I don't know. I mean, maybe just remind me or refresh my memory. What's the potential of that mine to increase or put another way, maybe what's the, what's the constraints on production growth there right now?

Yeah. Okay, great. Good. Two good questions, Alex. I'll start with the buyback and then maybe Aoife, Mick, you can weigh in on the, on the Las Chispas. So in the, in the U S context, Alex, that buyback program, uh, we don't really refer to them as NCIBs here 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 10B51 plan with some parameters so that there can be some repurchase activity during those periods when we're blacked out. And then when we're not blacked out, we can pursue non-discretionary, or sorry, discretionary purchases during those windows. And so, you know, with the way the timing worked out this time, you know, we got through the board process. We announced it in May. 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 period. But now as we come out of that here on the back of second quarter results, you know, we look to step up our repurchase activity. You know, we didn't put this program in place to not use it, use it up. And so we will get about that here now post second quarter results. And hopefully we'll see more activity during the next blackout than we did during this current one. So hopefully that helps answer the buyback question. On Las Chispas, Yeah, I'll let Aoife talk a little bit about exploration. They can talk about mining and processing potential. But as far as, you know, the game plan there really was to come in here in year one, continue with the consistent performance that Las Chispas has delivered in its first two years of operation. And with that, hopefully we can replace what we mined this year here in 2025 and kind of maintain that six or so year mine life that we had. inherited when we closed 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 2025. Looking out a little bit further, Aoife, do you want to just talk about where the focus is going to be kind of in mine and near mine and the existing blocks? Yes. And then, Mick, maybe you can talk just from a mining and processing standpoint, what opportunities might exist there?

Yep. Go ahead, Aoife. Good question, Alex. If you look at slide 13, we're really busy on two main blocks at the moment, on the Babi Kinora block, and really what that's doing is sort of like an exploration by numbers. We're stepping out from existing veins and then infilling so we can continue to mine through existing and just extended infrastructure. And the results from there are typical from the Babi Kinora block. It's a very high grade block. And when we drill there, we hit new veins in holes. It's just the type of system it is. So we're very, very happy with the results we're getting down there. We focused also a lot on the last Chispas block. 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 Babi Kinora block. which are actually highly encouraging because there's a slight change in the geology, but we're seeing really, really rich mineralization continue through there. So we're increasingly optimistic about those blocks. So all good news on the exploration front.

So when I said in my comments about a reoriented drill program, what we really did is pull in some of the regional exploration that Silvercrest had targeted for 2025, and we're really focused In the mine, Bobby Canora is obviously the most drilled area, but going up there to Las Chispas block and then in between Las Chispas and Bobby Canora has given us some more runway here that we're excited about.

Yeah, the focus is to really get to grips with his main assets in 2025 and then consider the regional in the future.

And then Mick from a mining processing company.

Yeah, from an operational perspective, really, with it being a thin-veined underground mine, having that six years of mine life visibility in front of us is really more than adequate, as long as we can then continue, as Aoife said, to try and maintain that and cover the depletion. From an operational perspective, we're seeing a lot of flexibility, plenty of capacity in the processing plant. which gives us some potential upside opportunities if we continue to find the capacity underground. And we have a good size stockpile that gives us a nice operational flexibility to maintain performance. And as we said in the dialogue, we're slightly ahead of where expected performance there for this year. And we 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 where we are today. It's been a lot of years of a 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 gratitude for that. And we appreciate everyone's time here on the call today during a day that's got a lot of companies reporting. So thank you for joining. 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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