Coeur Announces Increase in Liquidity and Near-Term Free Cash Flow Through $100 Million Senior Secured Financing and Enhancements to Rochester´s Mine Plan
CHICAGO, June 23, 2015 (GLOBE NEWSWIRE) -- Coeur Mining Inc. (“Coeur” or the “Company”) (NYSE:CDE) today entered into an agreement for a new $100 million, five-year, senior secured term loan. Reflecting the net proceeds from this financing and simultaneous repayment of the existing $50 million bridge loan due March 2016, the Company’s pro forma cash, cash equivalents, and short-term investments as of March 31, 2015 total $225 million. To further bolster liquidity, the Company has significantly enhanced Rochester’s 2016 operating plans and believes the existing leach pad has sufficient capacity to allow for the deferral of construction of the Stage V leach pad from 2016 to 2017 without materially affecting the mine’s long-term production schedules or unit costs, as summarized below:
- Stage V heap leach pad construction initially scheduled for 2016 has been deferred until 2017, postponing an estimated $26 million of the related capital expenditures;
- Overall expected capital spending for the Stage V heap leach pad has been reduced by $17 million by using existing conveyor and load-out equipment; and
- Higher grade tons originally expected to be mined in 2017 have been re-sequenced into 2016 to boost near-term production and cash flow
The net result of these enhancements is an approximately $80 million increase in Coeur’s 2016 expected free cash flow offset by an estimated $70 million decrease in expected free cash flow in 2017. The charts below detail the Company’s revised three-year outlook for total production, costs, Adjusted EBITDA, and cash flow based on an assumed silver price of $17.50 per ounce and gold price of $1,225 per ounce, which were the metal prices reflected in the prior three-year outlook provided in February 2015.
Click here for Coeur's three-year outlook
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Peter C. Mitchell, Coeur’s Senior Vice President and Chief Financial Officer, said, “The additional liquidity provided by this financing de-risks our balance sheet, providing ample financial flexibility to execute our strategy and continue our path to significant free cash flow by 2017. The ability to defer the Stage V leach pad construction at Rochester bolsters our liquidity over the next 18 months without disrupting Rochester’s mine plan or sacrificing the expected return of this important expansion project.”
Rochester Capital Deferral Details
The Company believes that existing leach capacity at Rochester is sufficient to support the mine plan through early 2018. Necessary approvals for the Stage V construction and the eventual Stage IV expansion are on-track to be received by early 2016 with preparatory work for Stage V to begin shortly thereafter. Major construction activities are expected to begin in the second quarter of 2017 with initial production from the Stage V leach pad expected to occur in late 2017.
$100 Million Senior Secured Financing Details
The term loan will have an all-in yield of approximately 9.5% inclusive of a 98% of par value issue price, will mature in June 2020, and does not contain any financial maintenance covenants. It will be amortized at 1% per year and includes an annual prepayment requirement of 50% of excess cash flow. The intended use of proceeds is to repay the $50 million bridge loan under Coeur’s credit agreement with the Bank of Nova Scotia, for general corporate purposes, and to pay transaction expenses. The loan is expected to close and the $50 million bridge loan is expected to be repaid on or before June 26, 2015.
Barclays Bank PLC acted as sole lead arranger and sole bookrunner for the financing.
About Coeur
Coeur Mining is the largest U.S.-based silver producer and a significant gold producer with five precious metals mines in the Americas employing approximately 2,100 people. Coeur produces from its wholly owned operations: the Palmarejo silver-gold mine in Mexico, the San Bartolomé silver mine in Bolivia, the Rochester silver-gold mine in Nevada, the Kensington gold mine in Alaska, and the Wharf gold mine in South Dakota. The Company also has a non-operating interest in the Endeavor mine in Australia in addition to royalties on the Cerro Bayo mine in Chile, the El Gallo complex in Mexico, the Zaruma mine in Ecuador, and the Correnso mine in New Zealand. In addition, the Company has two silver-gold exploration projects - the La Preciosa project in Mexico and the Joaquin project in Argentina. The Company also conducts ongoing exploration activities in Alaska, Argentina, Bolivia, Mexico, and Nevada. The Company owns strategic investment positions in several silver and gold development companies with projects in North and South America.
Cautionary Statement
This news release contains forward-looking statements within the meaning of securities legislation in the United States and Canada, including statements regarding financing needs, timing of closing of the term loan and repayment of the bridge loan, operating plans at the Rochester mine, production, costs, permitting, projected life of existing leach pad capacity, income, and cash flow. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause Coeur's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, the risk that the closing of the term loan and repayment of the bridge loan will not occur on the anticipated timeline, the risk that the anticipated benefits of recent acquisitions will not be realized, the risks and hazards inherent in the mining business (including risks inherent in developing large-scale mining projects, environmental hazards, industrial accidents, weather or geologically related conditions), changes in the market prices of gold and silver and a sustained lower price environment, the uncertainties inherent in Coeur's production, exploratory and developmental activities, including risks relating to permitting and regulatory delays, ground conditions, grade variability, any future labor disputes or work stoppages (including those involving third parties), the uncertainties inherent in the estimation of gold and silver ore reserves, changes that could result from Coeur's future acquisition of new mining properties or businesses, reliance on third parties to operate certain mines where Coeur owns silver production and reserves and the absence of control over mining operations in which Coeur or its subsidiaries hold royalty or streaming interests and risks related to these mining operations including results of mining and exploration activities, environmental, economic and political risks of the jurisdiction in which the mining operations are located, the loss of any third-party smelter to which Coeur markets silver and gold, the effects of environmental and other governmental regulations, the risks inherent in the ownership or operation of or investment in mining properties or businesses in foreign countries, Coeur's ability to raise additional financing necessary to conduct its business, make payments or refinance its debt, as well as other uncertainties and risk factors set out in filings made from time to time with the United States Securities and Exchange Commission, and the Canadian securities regulators, including, without limitation, Coeur's most recent report on Form 10-K. Actual results, developments and timetables could vary significantly from the estimates presented. Readers are cautioned not to put undue reliance on forward-looking statements. Coeur disclaims any intent or obligation to update publicly such forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, Coeur undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of Coeur, its financial or operating results or its securities.
Appendix
| Non-GAAP to U.S. GAAP Reconciliation: Adjusted All-In Sustaining Costs | |||
| in thousands except per ounce costs | FY 2014 | ||
| Costs applicable to sales, including amortization (U.S. GAAP) | $ | 635,516 | |
| Amortization | 157,571 | ||
| Costs applicable to sales | 477,945 | ||
| Treatment and refining costs | 4,943 | ||
| Sustaining capital | 61,199 | ||
| General & administrative | 40,845 | ||
| Exploration | 21,740 | ||
| Reclamation | 7,468 | ||
| Project & pre-development costs | 16,588 | ||
| Total | $ | 630,728 | |
| Silver equivalent ounces sold | 31,983 | ||
| All-in sustaining costs per silver equivalent ounce | $ | 19.72 | |
| Inventory adjustments | (0.49 | ) | |
| Adjusted all-in sustaining costs per silver equivalent ounce | $ | 19.23 | |
Non-GAAP to U.S. GAAP Reconciliation: Adjusted EBITDA | |||
| in thousands except per ounce costs | FY 2014 | ||
| Net income (loss) | ($ | 1,155,884 | ) |
| Interest expense, net of capitalized interest | 47,546 | ||
| Interest income and other, net | (1,375 | ) | |
| Income tax provision (benefit) | (459,244 | ) | |
| Amortization | 162,436 | ||
| Fair value adjustments, net | (3,618 | ) | |
| Impairment of marketable securities | 6,593 | ||
| Litigation settlement | -- | ||
| Inventory adjustments | 15,823 | ||
| Write-downs | 1,472,721 | ||
| Adjusted EBITDA | $ | 84,998 | |
For Additional Information:
Coeur Mining Inc.
Bridget Freas, Director, Investor Relations
(312) 489-5819
Donna Mirandola, Director, Corporate Communications
(312) 489-5842
www.coeur.com
