Coeur Mining, Inc. (NYSE:CDE) Q2 2018 Earnings Conference Call Transcript

Jul 26, 2018 • 11:00 am ET

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Coeur Mining, Inc. (NYSE:CDE) Q2 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning. Welcome to the Coeur Mining Second Quarter 2018 Financial Results Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation there will be an opportunity to ask questions. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Jonathan Chung, Associate Investor Relations. Please go ahead.

Executive
Jonathan Chung

Thank you and good morning. Welcome to Coeur Mining's second quarter earnings conference call. Our results were released after yesterday's market close, and a copy of the press release and slides for today's call are available on our website.

I would like to remind everyone that our press release and some of our comments today include forward-looking statements from which actual results may differ. Please review the cautionary statements included in our press release and presentation as well as the risk factors described in our recent 10-Q and 2017 10-K.

I'll now turn it over to Mitch.

Executive
Mitchell Krebs

Thanks, Jonathan, and good morning. Thank you everyone for joining our second quarter earnings call.

As we head into the second half of the year, we are on track to deliver solid 2018 results. We increased our full year production guidance earlier this month, and we have now reduced our full year cost guidance ranges, mostly due to the strong performance of our Palmarejo operation in Mexico. Meanwhile, we are well positioned to deliver on several important initiatives that advance our strategy of discovering, developing and operating a balanced portfolio of high quality precious metals mines in safe jurisdictions.

For the quarter, we've reported revenue of $170 million and net income of $2.9 million, representing quarter-over-quarter and year-over-year increases. Adjusted EBITDA increased 52% year-over-year to $48 million and all-in-sustaining costs declined 6% to $14.65 per ounce.

Quarterly cash flow was impacted by two items we've previously discussed with you. We invested approximately $26 million during the quarter at Silvertip to complete our initial drill program and to bring the mine closer to commercial production, which we expect to happen this quarter. And we paid $31 million of Mexican taxes early in the second quarter. About $17 million of that related to 2017 earnings and about $14 million of that related to the year-to-date 2018 earnings.

In terms of our second quarter results, Palmarejo led the way once again. Both gold and silver productions were about 40% higher year-over-year, driven by higher grades. Costs were below $7 per silver equivalent ounce for the third consecutive quarter at $6.64 per silver equivalent ounce. The new ADR plant we constructed for $2.4 million and started up in April, has already generated over $4 million in savings by mid-July. It's a great example of the kind of returns that optimization investments like these can provide and why they rank so high among our capital allocation priorities, which are laid out on Slide 8.

As we anticipated, Wharf and Rochester both delivered stronger quarters compared to the first three months of the year and are expected to build