Coeur Mining, Inc. — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. Coeur is a precious-metals producer operating Palmarejo in Mexico and Rochester, Kensington and Wharf in the United States; Silvertip in Canada remained suspended. The filing includes full-year results, not a standalone fourth-quarter income statement.
Financial and operating performance
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | $785.6 million | $832.8 million |
| GAAP net income (loss) | $(78.1) million; $(0.28) per diluted share | $(31.3) million; $(0.13) per diluted share |
| Adjusted net income (loss), non-GAAP | $(89.1) million; $(0.32) per diluted share | $(1.4) million; $(0.01) per diluted share |
| Adjusted EBITDA, non-GAAP | $139.0 million | $216.1 million |
| Cash from operating activities | $25.6 million | $110.5 million |
| Capital expenditures | $352.4 million | $309.8 million |
| Free cash flow, non-GAAP | $(326.7) million | $(199.3) million |
| Total debt, including finance leases | $515.9 million | $487.5 million |
Gold and silver production was 330,346 ounces and 9.8 million ounces, respectively, versus 348,529 and 10.1 million in 2021. Average realized prices were $1,736 per gold ounce and $21.77 per silver ounce, compared with $1,652 and $25.06. No consolidated margin figure is clearly presented in the filing.
At year-end, cash and cash equivalents were $61.5 million ($63.2 million including restricted cash); $280.4 million remained available under the $390 million revolving credit facility. The company reported total liquidity of about $342 million, or about $382 million when adjusted for proceeds from the subsequent sale of its remaining Victoria Gold shares. The revolver had $80 million drawn and $29.6 million in letters of credit outstanding.
Changes versus 2021
- Revenue declined 6%, mainly from lower gold and silver volumes sold and a 13% decrease in realized silver prices; higher realized gold prices partly offset the decline.
- Costs applicable to sales rose $95.0 million, or 19%, with inflation—including fuel and consumables—and higher Rochester inventory valuation adjustments contributing. Rochester recorded $52.5 million of inventory write-downs across costs applicable to sales and amortization.
- Operating cash flow fell $84.9 million. The company’s non-GAAP free-cash-flow deficit widened as capital spending increased, primarily for Rochester’s expansion.
- The net loss widened despite a $62.2 million gain on the Sterling/Crown property sale. Lower equity-investment values drove $66.7 million of net fair-value losses; the company also recognized a $15.6 million realized loss on Victoria Gold shares sold during 2022.
- Gold reserves increased approximately 12% and silver reserves approximately 3% year over year, according to management. Kensington gold reserves grew about 56%.
Outlook, projects and material items
- 2023 production guidance: 320,000–370,000 ounces of gold and 10.0–12.0 million ounces of silver. Management expects stronger second-half output as Rochester ramps up after expansion completion and Wharf benefits from mine sequencing and expected higher grades.
- 2023 spending guidance: $120–$145 million sustaining capital and $200–$235 million development capital; exploration of $30–$35 million expensed and $10–$15 million capitalized; G&A of $36–$40 million. Guidance assumes $1,800 gold and $23 silver and excludes hedging effects.
- Rochester POA 11: 74% complete at year-end; estimated total project capital remained $650–$670 million, with $494 million incurred. Mechanical completion was targeted for mid-2023, with commissioning and ramp-up in the second half. Management deferred Rochester cost guidance until midyear and expected quarterly Rochester lower-of-cost-or-net-realizable-value adjustments of roughly $10–$15 million in 2023.
- Hedging: Year-end gold forwards covered 130,500 ounces through 2023, at an average ceiling/fixed price of about $1,957 per ounce. Additional early-2023 contracts brought reported weighted-average fixed prices to $1,961 per gold ounce and $24.55 per silver ounce. Hedging limits upside if market prices exceed contracted prices and creates counterparty and valuation risks.
- Funding and dilution: Two 2022 at-the-market offerings raised $147.4 million net through issuance of 36.8 million shares. The Sterling/Crown sale generated $150.2 million cash and potential contingent consideration; the remaining Victoria Gold shares were sold in January 2023 for about $39.8 million net. Management said it expected sufficient funding for the next 12 months, while identifying operating cash flow, asset sales, revolver borrowings and possible further equity financing as funding sources.
- Other significant matters: Silvertip remained on care and maintenance, with $21.0 million of carrying costs in 2022; a restart or expansion remains under evaluation. A $26 million Mexican VAT recovery claim remains in dispute after its carrying value was written down in 2021. The filing also describes a Kensington royalty dispute and ongoing Mexican water-rights litigation.
Risks and controls
Key risks include volatile precious-metal prices and input-cost inflation; production, grade and recovery variability; Rochester ramp-up, cost and recovery performance; financing and debt covenant constraints; permitting, environmental and reclamation obligations; water access and community or security disruptions; foreign-country legal and political exposure; and mineral reserve estimation uncertainty. The filing states that 2022 financial statements received an unqualified audit opinion and that management and the auditor concluded internal control over financial reporting was effective. The auditor identified valuation of Rochester leach-pad ore as a critical audit matter because it depends on estimates of ore grades, recovery rates and timing.
Investor verification priorities
- Track Rochester’s completion, final capital cost, commissioning, silver recoveries and the quarterly inventory write-downs anticipated for 2023.
- Compare realized production, costs and cash generation with guidance; assess whether operating cash flow can fund the capital program without additional borrowing or equity issuance.
- Review debt covenant headroom, revolver availability, interest expense and the terms of the November 2022 credit amendment.
- Verify hedge volumes, settlement prices and the effect of contracts on realized metal prices and cash flow.
- Monitor the Mexican VAT claim and water-rights proceedings, the Kensington royalty litigation, and progress toward any Silvertip restart decision.
- Assess the sensitivity of leach-pad inventory, reserves and asset values to metal prices, grades, recovery assumptions and operating costs.