Coeur Mining, Inc. · NYSE:CDE
Coeur Mining — Morgan Stanley Leveraged Finance Conference (June 2015)
42 slides from Coeur Mining's conference presentation, Jun 3, 2015
Slide 1: Morgan Stanley Leveraged Finance Conference
Morgan Stanley Leveraged Finance Conference Peter C. Mitchell, Sr. Vice President & Chief Financial Officer New Orleans, LA June 3, 2015
Slide 2: Cautionary Statements
Cautionary Statements This presentation contains forward‐looking statements within the meaning of securities legislation in the United States and Canada, including statements regarding anticipated repositioning, cash flow, returns, value creation, risk mitigation, rates of return, creation of projec
Slide 3: Investment Considerations
Investment Considerations Diversified portfolio of silver and gold assets Well‐advanced repositioning which may not be fully appreciated in the market Executing strategy to reduce costs, improve returns, and drive significant future free cash flow Palmarejo Rochester Kensington San Bartolomé W
Slide 4: Leading Producer of Silver and Gold
Leading Producer of Silver and Gold 2014 Silver Equivalent Production by Mine (millions of ounces) Revenue by Metal 0.6 22% 36% 34% 40% 48% 48% 7.1 Palmarejo 11.8 Rochester 78% 64% 66% Gold San Bartolomé 60% 52% 52% Silver 5.9 Kensington Endeavor 6.9 2009 2010 2011 2012 2013 2014 Production 40.0 400
Slide 5: Portfolio Includes 2 of the Top 15 Largest Primary Silver Mines
Portfolio Includes 2 of the Top 15 Largest Primary Silver Mines Ticker: Exchange CDE: NYSE Kensington Mine, Alaska Shares Outstanding1 136.0M 2014: 117,823 oz Au 2015E: 110,000 ‐ 115,000 oz Au Avg. Daily Volume1 $16.0M Wharf Mine, South Dakota 2015E: 74,000 – 78,000 oz Au 52‐week Low – High1 $3.37 –
Slide 6: Creating Value & Mitigating Risk Through Diversification
Creating Value & Mitigating Risk Through Diversification More balanced metals mix Long and Improved varied country mine lives Diversified risk profile portfolio of precious metals assets Increased Creating number of project operating pipeline assets NYSE: CDE 6
Slide 7: Creating Value Irrespective of Silver & Gold Prices
Creating Value Irrespective of Silver & Gold Prices Nearly all new management in past 24 Revamped months Revamped Board of corporate Directors organization Under‐appreciated Recent and well‐advanced Restructured acquisition repositioning & reduced activity FNV expected to accelerate obligation at re
Slide 8: Costs Tracking at or Below 2014 Results and 2015 Guidance
Costs Tracking at or Below 2014 Results and 2015 Guidance Adjusted Costs Applicable to Sales per AgEq oz1 Adjusted All‐in Sustaining Costs per AgEq oz1 $19.23 $17.66 $14.08 $13.71 $ per ounce $ per ounce 2014 1Q 2015 2014 1Q 2015 General & Administrative Expense Exploration Expense $21.7 $41.0 $37.5
Slide 9: Well-Capitalized with Financial Flexibility
Well‐Capitalized with Financial Flexibility Debt maturity schedule Amount Maturity Liquidity $179.6 (millions) Net Debt = $333.9 Senior unsecured notes $425.9 2021 Convertible notes $0.7 2028 Debt $447.8 $65.7 San Bartolomé letter of credit $9.8 2017 Short‐term credit agreement $49.8 2016 $0 $100 $2
Slide 10: Acquisition of Paramount: What Does it Do for Coeur?
Acquisition of Paramount: What Does it Do for Coeur? In April 2015, Coeur acquired Paramount Gold & Silver Corp. in an all‐stock transaction Anticipated to be accretive on 2016 and beyond operating cash flow, free cash flow, and to NAV Expected to meaningfully increase Palmarejo’s production a
Slide 11: Reserves Nearly Doubled at Palmarejo; Increased Companywide
Reserves Nearly Doubled at Palmarejo; Increased Companywide Reserves 12% Compared to 15 months ago, Palmarejo’s silver reserves have increased 30% and gold reserves have increased 54% 437.4 AgEq reserve oz in millions 389.4 106.6 AgEq oz in millions 58.6 Companywide YE 2014 Companywide Pro‐forma Pal
Slide 12: Acquisition of Wharf: What Does it Do for Coeur?
Acquisition of Wharf: What Does it Do for Coeur? Immediate Boost to ▪ Expected to increase Coeur’s 2015 EBITDA by over 30% and boost free cash flow Cash Flow and ▪ Expected to increase Coeur’s 2015 AgEq production by approximately 15% Production ▪ Provides opportunity to take advantage of existing U
Slide 13: Re-Scoped High-Grade Mine Plan for Kensington
Re‐Scoped High‐Grade Mine Plan for Kensington Reflects impact of new high‐grade mineralization (Jualin deposit) from ongoing exploration success Demonstrates strategy to source ore from higher‐grade areas over the life of the mine Jualin grade 3x higher than average reserve grade at Kensington
Slide 14: Coeur's Repositioning is Significant and is Well Underway
Coeur’s Repositioning is Significant and is Well Underway Coeur is now positioned to deliver near‐term, quality growth in production and free cash flow with costs expected to drop to among the lowest in the industry in 2017 Coeur Coeur 2014 2017 Silver Equivalent Production (millions of ounces) 32 4
Slide 15: Anticipated Milestones and Upcoming News Flow
Anticipated Milestones and Upcoming News Flow 2Q 2015 3Q 2015 3Q 2015 4Q 2015 / 1Q 2016 1Q 2016 New reserves for Complete open‐ Begin Jualin Underground Complete Wharf pit mining at decline development underground Palmarejo reaches mining at Independencia Palmarejo 2Q 2015 3Q 2015 4Q 2015 / 1Q 2016
Slide 16: Appendix
Appendix
Slide 17: Coeur Asset Detail
Coeur Asset Detail
Slide 18: Palmarejo Operating and Financial Overview
Palmarejo Operating and Financial Overview ▪ World’s 9th largest primary silver mine ▪ Transitioning to underground mining to maximize margins and cash flow rather than production ▪ Acquisition of Paramount (namely Independencia Este) provides second source of high‐grade ore to supplement rising pro
Slide 19: Rochester Operating and Financial Overview
Rochester Operating and Financial Overview ▪ 2nd largest primary silver mine in the United States Financial Stats 1Q 2015 Full Year Full Year (in millions, except per ounce amounts) 2014 2013 ▪ Completed 72 million ton leach pad capacity Revenue $44.0 $123.8 $119.3 expansion in 2013 Costs applicable
Slide 20: Kensington Operating and Financial Overview
Kensington Operating and Financial Overview Greater operational consistency achieved and higher tonnage mine plan is underway Development activity has begun for the recent high‐grade discovery at Jualin New sorting technology being implemented to further improve recovery rate Disciplined app
Slide 21: San Bartolomé Operating and Financial Overview
San Bartolomé Operating and Financial Overview ▪ One of the world’s largest pure silver mines ▪ Straightforward operation due to free‐digging surface mining techniques (no drilling or blasting) ▪ Strong operating performance since 2008 start up ▪ Most stable asset in Coeur’s portfolio: production, c
Slide 22: Wharf: The Newest Asset in Coeur's Portfolio
Wharf: The Newest Asset in Coeur’s Portfolio On February 20, 2015, Coeur closed the acquisition of the Wharf gold mine located near Lead, South Dakota from a subsidiary of Goldcorp, Inc.; All cash transaction with a purchase price of $103 million Open‐pit, heap leach gold mine which has produced
Slide 23: Coeur Capital Overview
Coeur Capital Overview Coeur Capital is a wholly‐owned subsidiary of Coeur that holds a portfolio of royalties, streams, and strategic equity investments Added one development stage royalty in 2014 2.5% NSR on La Cigarra project was created and purchased for $4.0 million Correnso recently st
Slide 24: Coeur Capital Offers Attractive Business Model
Coeur Capital Offers Attractive Business Model Royalties and streams generally have higher margin, less volatile cash flow Scalable business model Enhances Coeur’s Requires no capital expenditures, no exploration expense, and minimal G&A expenses Cash Flow Provides additional diversification
Slide 25: Silver and Gold Fundamentals
Silver and Gold Fundamentals
Slide 26: Gold: Fundamentals Remain Intact
Gold: Fundamentals Remain Intact Gold remains a store of value and an important component to any diverse portfolio ▪ Jewelry represents nearly 60% of global demand – the majority from China and India ▪ Dramatic reduction in ETF holdings over the past two years ▪ Central Bank purchases remain robust
Slide 27: Silver: "Green Shoots" for a Green Metal
Silver: “Green Shoots” for a Green Metal Despite high correlation with gold, nearly 60% of total demand from industrial applications ▪ Mine production set to decline meaningfully ▪ Scrap supply at twenty year low ▪ ETF holdings remain strong ▪ Expanding and diverse demand in electronics, solar panel
Slide 28: Silver Supply & Demand Overview
Silver Supply & Demand Overview World Silver Supply World Silver Demand Industrial Applications Photography Mine Production Net Government Sales Jewelry Silverware Scrap Net Producer Hedging Coins & Bars Producer De‐Hedging 1,200 1,200 1,000 1,000 800 800 Million ounces Million ounces 600 600 400 40
Slide 29: Update on Silver End Market Demand
Update on Silver End Market Demand 2005 2014 Investment 7% Investment Jewelry & 18% Silverware Industrial 27% 49% Jewelry & Industrial Silverware 52% 26% Photography 17% Photography 4% Practical Applications of Silver Solar panels Jet engines Ethylene oxide Water purification Computers C
Slide 30: 10-Year Gold and Silver Price History
10‐Year Gold and Silver Price History $3,000 $50 $2,700 $45 $2,400 $40 $2,100 $35 Silver Price US$ Gold Price US$ $1,800 $30 $1,500 $25 $1,200 $20 $900 $15 $600 $10 $300 $5 Gold Silver NYSE: CDE Source: Bloomberg. 30
Slide 31: Corporate Information & Non-GAAP Reconciliations
Corporate Information & Non‐ GAAP Reconciliations
Slide 32: Non-GAAP to U.S. GAAP Reconciliation
Non‐GAAP to U.S. GAAP Reconciliation (unaudited) Costs Applicable to Sales Silver Gold (dollars in thousands except per ounce costs) San Total Three months ended March 31, 2015 Palmarejo Rochester Endeavor Total Kensington Bartolomé Costs applicable to sales, including amortization (U.S. GAAP) $41,8
Slide 33: Non-GAAP to U.S. GAAP Reconciliation
Non‐GAAP to U.S. GAAP Reconciliation (unaudited) Costs Applicable to Sales Silver Gold (dollars in thousands except per ounce costs) San Total Full‐year ended December 31, 2013 Palmarejo Rochester Endeavor Total Kensington Bartolomé Costs applicable to sales, including amortization (U.S. GAAP) $322,
Slide 34: Non-GAAP to U.S. GAAP Reconciliation
Non‐GAAP to U.S. GAAP Reconciliation (unaudited) All‐In Sustaining Costs in thousands except per ounce costs 1Q 2015 FY 2014 Costs applicable to sales, including amortization (U.S. GAAP) $146,742 $635,516 Amortization 31,680 157,571 Costs applicable to sales 115,062 477,945 Treatment and refining co
Slide 35: Non-GAAP to U.S. GAAP Reconciliation
Non‐GAAP to U.S. GAAP Reconciliation (unaudited) LTM Adjusted EBITDA in thousands LTM 3/31/15 LTM 12/31/14 LTM 9/30/14 LTM 6/30/14 LTM 3/31/14 Net income (loss) ($1,151,980) ($1,155,884) ($658,374) ($708,105) ($700,024) Interest expense, net of capitalized interest 45,257 47,546 47,959 46,006 44,625
Slide 36: Coeur's Mineral Reserves
Coeur’s Mineral Reserves Grade (oz/ton) Ounces (contained) Year‐end 2014 Location Short tons Silver Gold Silver Gold Proven Reserves Rochester Nevada, USA 89,077,000 0.56 0.004 49,786,000 346,000 San Bartolomé Bolivia 1,206,000 2.73 ‐ 3,287,000 ‐ Kensington Alaska, USA 417,000 ‐ 0.187 ‐ 78,000 Endea
Slide 37: Coeur's Measured and Indicated Mineral Resources
Coeur’s Measured and Indicated Mineral Resources (Excluding Reserves) Grade (oz/ton) Ounces (contained) Year‐end 2014 Location Short tons Silver Gold Silver Gold Measured Resources Rochester Nevada, USA 72,228,000 0.45 0.003 32,565,000 218,000 Martha Argentina ‐ ‐ ‐ ‐ ‐ San Bartolomé Bolivia ‐ ‐ ‐ ‐
Slide 38: Coeur's Inferred Mineral Resources
Coeur’s Inferred Mineral Resources Grade (oz/ton) Ounces (contained) Year‐end 2014 Location Short tons Silver Gold Silver Gold Inferred Resources Rochester Nevada, USA 96,039,000 0.42 0.003 40,789,000 263,000 Martha Argentina 204,000 4.75 0.005 969,000 1,000 San Bartolomé Bolivia 66,000 1.68 ‐ 111,0
Slide 39: Wharf's Historical Mineral Reserves and Resources
Wharf’s Historical Mineral Reserves and Resources Tons Grade (oz/t) Ounces (000s) (000s) Gold Silver Gold Silver Proven and Probable Reserves Proven Reserves 15,179 0.022 0.078 340 1,190 Probable Reserves 8,245 0.026 0.108 220 890 Total Proven and Probable Reserves 23,424 0.024 0.089 560 2,080 Measu
Slide 40: Executive Leadership
Executive Leadership Mitchell J. Krebs – President and Chief Executive Officer. Mr. Krebs joined Coeur in 1995 after spending several years in the investment banking industry in New York. Mr. Krebs has held various positions in the corporate development department, including Senior Vice President of
Slide 41: Board of Directors
Board of Directors Robert E. Mellor – Former Chairman, Chief Executive Officer and President of Building Materials Holding Corporation (distribution, manufacturing and sales of building materials and component products) from 1997 to January 2010, director from 1991 to January 2010; member of the boa
Slide 42: Contact Information
Contact Information Corporate Office: Coeur Mining, Inc. 104 S. Michigan Ave, Suite 900 Chicago, Illinois 60603 Main Tel: (312) 489‐5800 Stock Tickers: CDE: NYSE Warrant Tickers: CDE.WS: NYSE; CDM.WT: TSX Website: coeur.com Contact: Bridget Freas Donna Mirandola Director, Investor Relations Director
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