Coeur Mining Takes Significant Steps in 2022

Q: What made 2022 an important year for Coeur Mining and what differentiates the company from other precious metals producers?

A: In 2022, we took a giant step forward in achieving our vision to become America’s premier precious metals mining company. Solid performance at each of the mine sites led to the achievement of consolidated annual production guidance for the third consecutive year and revenue of US$786 million.

Our strategy throughout the year remained focused on growth from our existing assets and on rationalizing our portfolio. We successfully divested noncore assets and prioritized our commitment to executing at our existing mines and completing the Rochester expansion. Several critical objectives were achieved last year that we believe are important drivers for the company’s short-, medium-, and long-term growth.

In the short-term, we advanced the largest expansion project in our company’s history at our Rochester, Nevada mine, which will make Rochester one of North America’s largest operations of its kind. This project, which remains on track for a midyear 2023 completion, is expected to drive an anticipated step change in Coeur’s production and cost profile and position us to transition the company back to positive free cash flow.

In the midterm, our sector-leading investment in exploration has yielded positive returns, especially at our gold mine in Kensington, Alaska, where reserves increased 56% last year, and has laid the foundation for continued expected returns from this multiyear investment.  Companywide, we have invested nearly US$245 million in exploration over the past five years, leading to nearly 2 million ounces of additional P&P reserves in excess of what was mined along with over 4 million ounces of new measured, indicated, and inferred resources.

We believe being a U.S. mining company with a balanced, prospective asset base, sector-leading investments in exploration and expansions, a focus on only operating in mining-friendly jurisdictions, and our unique metals mix combined with our leading ESG practices and strong culture, sets us apart from other precious metals producers.  

Q: What are the company’s expectations for 2023 compared to last year?

We anticipate 2023 will be a pivotal year for Coeur and by the end of the year, we believe that we will be on the cusp of a new growth phase. 

After a weaker expected first half of 2023 with elevated levels of spending to complete the Rochester expansion project, we expect to see sharply higher production levels, much lower capital spending and lower costs as we begin the commissioning process at the Rochester mine. Overall, our 2023 production guidance reflects modest increases over 2022.

Q: What factors have enabled the company’s strong production results and, most importantly, to increase its gold and silver reserves?

A: Our diversified asset portfolio, which includes a unique metals mix, and mining methods in mining-friendly jurisdictions are key factors that drive our production results. 

Our elevated, sector-leading investment in exploration over the past five years has led to significant reserve and resource increases, including a 12% increase in our gold reserves and a 3% increase in our silver reserves year-over-year. Over 80% of our exploration investment over the past five years has been focused on drilling activities surrounding our existing operations where we control large, prospective and underexplored land positions and possess the necessary permits, social license and processing infrastructure to take advantage of new discoveries and mine life extensions.

Q: What major external factors have impacted the company's finances and how is the company ensuring that it maintains healthy margins despite inflationary pressures?

A: Like every company in our sector, the highest inflation rates in decades have impacted our business. Our continuous business improvement program has addressed this challenge head-on by identifying a wide range of cost efficiencies and productivity enhancements throughout the company. Global volatility, COVID, and ongoing supply chain distributions have been challenging throughout the Rochester expansion project, and we are pleased that the project remains on schedule and on budget, which is a significant testament to the team.

Q: Where does Palmarejo stand in the company's portfolio and what are the company’s expectations there?

A: The Palmarejo complex is a key cornerstone asset in our portfolio and represented 39% of our 2022 revenue. We believe Palmarejo continues to provide opportunities for growth and has the potential to expand with time and exploration investment.

Average metals grades are expected to be slightly lower in 2023. We plan to continue to invest in exploration and take advantage of mill capacity and throughput to offset this expected decline in grades.

Q: What opportunities does the company see to further improve operations at Palmarejo and why is the Hidalgo area such an attractive prospect?

A: Coeur’s aggressive infill and expansion drilling campaign continues to demonstrate growth opportunities within the Independencia and Guadalupe deposits. Assays across multiple target areas, including the Hidalgo zone at the northwest edge of Independencia and near the Palmarejo Mine haul road, have returned high-grade intercepts, supporting significant near-mine growth potential. Preliminary designs have been completed for the development of the Hidalgo extension. 

Q: Besides Palmarejo, what are the company's organic growth opportunities and in which areas will most of the investment be targeted in 2023?

A: We have two key areas targeted for organic growth. First, the completion of our Rochester, Nevada, expansion project, which is a near-term transformational growth opportunity for Coeur. Second, continuing our multiyear development and drilling program that started last year at our Kensington, Alaska, mine, which already added approximately a year and a half to its mine life as of year-end 2022. Over the longer term, ongoing exploration success at the Silvertip exploration project in British Columbia, Canada, continues to demonstrate its potential to anchor the next leg of Coeur’s growth phase.

Q: What are the company's exploration objectives in the medium to long term and what opportunities do you believe Mexico can still offer to the company?

A: In 2022, we completed another strong year of exploration investment and we remain focused on our strategy of leveraging our existing infrastructure and monetizing newly discovered ounces faster.

Our long-term objective focuses on our large, underexplored areas at our Rochester, Nevada, Silvertip, BC and Palmarejo, Mexico sites. Specific to our Palmarejo complex, successful exploration has resulted in replaced depletion every year since 2016. 

Q: What were the company's most important ESG achievements in 2022 and what new ESG area will the company focus on?

A: We are committed to being an industry leader in our ESG practices as we work to supply the critical minerals for the present and future needs of our society. We have the unique opportunity to produce raw materials necessary for a modern, lower-carbon future and we are committed to minimizing our environmental footprint while making a positive impact on the communities where we operate.

A key objective in our ESG strategy is our aggressive climate strategy. In 2022, we conducted site-specific climate scenario analyses to help manage transition-related climate risk and identify potential opportunities. At the same time, we are making progress on reducing our emissions as we strive to meet our ambitious goal of a 35% reduction in net emissions intensity by the end of 2024.

Looking ahead, we will continue to look for ways to identify, understand and manage the most significant climate-related risks to build a more resilient company and contribute to a lower-carbon future.  

Coeur Mexicana and the Palmarejo team are key contributors to advancing our ESG practices. The Palmarejo team has long-standing relationships with the communities surrounding the mine. For over 20 years, Coeur Mexicana has operated two health clinics and provides free general healthcare to approximately 28 communities surrounding the Palmarejo complex. In 2021, the Dignified Housing Project was launched and provided 13 families with substantial housing improvements, rainwater harvesting systems and planting of family farms and orchards. In 2022, the Coeur Mexicana team was recognized by the Confederation of Industrial Chamber (CONCOMIN) with its Social Responsibility Award. Also in 2022, the team was recognized by the Mexican Center for Philanthropy (CEMEFI) with its Socially Responsible Company (ESR) distinction for the 12th time.