NYSE:CDE Coeur Mining Q1 2024 Earnings Report $6.26 +0.16 (+2.62%) Closing price 04/16/2025 03:58 PM EasternExtended Trading$6.18 -0.08 (-1.28%) As of 08:28 AM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Coeur Mining EPS ResultsActual EPS-$0.05Consensus EPS -$0.06Beat/MissBeat by +$0.01One Year Ago EPS-$0.11Coeur Mining Revenue ResultsActual Revenue$213.10 millionExpected Revenue$203.43 millionBeat/MissBeat by +$9.67 millionYoY Revenue Growth+13.80%Coeur Mining Announcement DetailsQuarterQ1 2024Date5/1/2024TimeAfter Market ClosesConference Call DateThursday, May 2, 2024Conference Call Time11:00AM ETUpcoming EarningsCoeur Mining's Q1 2025 earnings is scheduled for Wednesday, May 7, 2025, with a conference call scheduled on Thursday, May 8, 2025 at 11:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Coeur Mining Q1 2024 Earnings Call TranscriptProvided by QuartrMay 2, 2024 ShareLink copied to clipboard.There are 10 speakers on the call. Operator00:00:00Good morning, and welcome to the Coeur Mining First Quarter of 2024 Financial Results Conference Call. All participants will be in a listen only mode. After today's remarks, there will be an opportunity to ask questions. Please also note that this event is being recorded today. I would now like to turn the conference over to Mitch Krebs, President and Chief Executive Officer. Operator00:00:34Please go ahead. Speaker 100:00:37Okay. Hello, everyone, and thanks for joining our call. Before we start, I want to point out our cautionary language on forward looking statements in today's slide deck and refer you to our SEC filings on our website. I'll kick off with some brief highlights on Slide 3 before turning the call over to Mick, Tom and Aoife. Overall, we had a solid 1st 3 months of the year. Speaker 100:01:02Both Palmarejo and Wharf had strong quarters compared to plan, which puts the company in a great position a successful 2024. Slide 4 does a nice job of showing where production stood after the Q1 compared to the quarter by quarter guidance profile we provided earlier this year. We often talk about the strategic importance of being a multi asset company and having a balanced portfolio of operations and the Q1 was a great example of that. Palmarejo's and Wharf's outperformance helped to offset Rochester's planned transitional quarter over to the new crusher, which began to process fresh ore on March 8. Commercial production was achieved just 3 weeks later, which was a great accomplishment, but it's what has been happening underneath the hood there that leads to our excitement for the balance of 2024 and beyond. Speaker 100:01:57More on Rochester in a minute. On a company wide basis, overall revenue increased 14% year over year, while adjusted EBITDA jumped 76%. Capital expenditures dropped off significantly during the quarter with the Rochester expansion now in the rearview mirror. We're on track to flip to positive free cash flow in the second half of the year, which will be earmarked for debt repayment. That deleveraging process can be further accelerated assuming current silver and gold prices continue, leading to a rapid and dramatic improvement in our overall financial condition and outlook. Speaker 100:02:40In the middle of all these positive catalysts stands Rochester, which is routinely processing and placing over 70,000 tons of ore per day and occasionally exceeding run rate throughput levels as we put the new crushing circuit through its paces. The rapid ramp up curve is a real testament to the knowledge and operating experience the team is bringing to bear at this world class operation. Before turning the call over to Mick for some additional Rochester details, I want to touch briefly on our progress and plans at some other key initiatives that are expected to augment the near term growth we anticipate from Rochester. First up is Kensington, which is in its final full year of elevated investment aimed at extending its mine life and enhancing its operational flexibility. Positive exploration results and impressive underground development progress are pointing to the potential for a substantial mine life extension by the end of this year, which Aoife will talk more about in a few minutes. Speaker 100:03:46Over the medium term, we continue developing a comprehensive drilling and development plan at Palmarejo on the recently acquired lands located to the east of the current operation. The goal is to hit the ground running once the acquisition of these concessions from Fresnillo is completed, hopefully later this year. The nearest of the 2 acquired blocks to Palmarejo's existing infrastructure sits just outside the boundaries of the Franklin, Nevada gold stream and has the potential to materially supplement our production and cash flow profile within the next 3 years. Over the longer term, excitement continues to build at our high grades silvertip polymetallic exploration project in British Columbia, which Ipa will cover shortly. The convergence of all of these catalysts, higher commodity prices, a completed Rochester, a stable suite of U. Speaker 100:04:43S. Centric mines in North America and a world class Canadian exploration project sets us apart from our peers and leaves us very well positioned. Finally, we published our 2023 ESG report last week, which is summarized on Slide 16. The report does a great job detailing our leadership in this area and highlights our efforts to continue raising the bar as we try to keep pursuing a higher standard. With that, I'll turn the call over to Mick. Speaker 200:05:16Thanks, Mitch. Before reviewing our Q1 operating results, I'll now hand over to Mr. Chairman to spend some time with Core's 2020 3 ESG report, if you haven't already. While Rochester's construction was a significant priority over the last 3 years, I'm an operator at heart and experience is taught that building a very strong foundation in sustainability, responsibility and safety to deliver operational success. In addition to the strong results Mitch highlighted, I'm particularly proud to call out 2 headlines from the ESG report. Speaker 200:05:54First, our number one position among our peer group in key safety indicators for the 2nd year in a row and second, our decision to adopt the global industry standard on tailings management. One of only 17% of non ICMM member companies in the industry to do so. Setting the pace is not always the easy thing to do, but it is the right thing to do and we'll continue to dedicate ourselves to leading in both these areas. Turning to our quarterly results. We are pleased with the solid start to the year. Speaker 200:06:30As Slide 4 illustrates, 2024 production is expected to be significantly weighted towards the second half, consistent with the production guidance we provided earlier this year. Rochester's ramp up and day to day operating improvement will drive most of that change in quarterly production. Same with Rochester, silver and gold production in the Q1 totaled nearly 700,005,800 ounces respectively, right in line with our expectations. Following the 4th quarter flush of ounces from all placed closest to the new PADD 6 liner, our focus in 1Q was commissioning the crusher and starting the placement of ore in the cells using only crushed ore from the new circuit, which commenced on March 8. The cushion circuit wins when we wanted to run, and we're maximizing our planned balance to refine and optimize operations. Speaker 200:07:26What is really stood out in the early warning is the tremendous flexibility of the new 3 stage line, having intermediate stockpiles and all feed can bypass certain stages as needed, giving the team unprecedented levels of control over ultimate size fraction of the ore going to Part VI. Mining rates and refining capacity are more than keeping up with the increased throughput. Looking ahead, we remain on track to reach the conclusion of the ramp up by the end of the second quarter. The priority in the second half of the year will be on optimizing mining and processing rates and downing in push size to maximize recoveries. Rochester remains on track for 2024 guidance. Speaker 200:08:12It's an exciting time and we're pleased with our progress, but we're keeping our heads down as there remains more work to be done to get this operation properly positioned for its long run-in Northern Nevada. Moving on to Palmarejo on Slide 23. The team hit the ground winning in the Q1, reaching its highest quarterly gold in silver production levels in several years. Higher than expected growth from Guadalupe and Independencia grew up strong quarterly free cash flow and positions us well for the balance of 2024. Continued high diesel prices in Mexico and other headwinds on cost side of Palmarejo remain a challenge. Speaker 200:08:51The team continues to focus on mining and plant efficiency programs aimed at reining in costs and with continued inflationary pressures in Mexico. Moving to Kensington, the focus in the Q1 was on stabilizing the operation following the challenging 20 23 as our multi year investment in mine development continues. Mitch mentioned the positive results on that front with that investment now about 71% complete for the current scope of the project. We are seeing a clear path to substantial mine life extension there and perhaps more importantly to the prospect of increased work faces underground and with it more consistent performance. Lastly, at Wharf, results were ahead of plan with the Q1 benefiting from 10 and events is placed on each. Speaker 200:09:41Due to seasonality, the Q1 is typically worth lowest of the year. So we're particularly pleased to see the mine off to a good start in 2024. With 3 Maine's performing well and Rochester well positioned to complete the ramp up, we remain comfortable with our 2024 production guidance. With that, I'll pass the call over to Tom. Speaker 300:10:04Thanks, Nick. I'll touch briefly on our Q1 financial results before spending a moment discussing our financial position and balance sheet, including our plans to materially delever beginning in Q3. As detailed on Slide 9, higher year over year gold production led to a 14% increase in consolidated revenue and a 76% increase in adjusted EBITDA, driven by the strong starts to the year at Palmarejo and Wharf along with continued favorable metals prices. As expected, we had lower Q1 production at Rochester due to the decision to dismantle the Stage 4 crusher during 4Q 2023. The dismantling of the Stage 4 crusher is now complete, which has provided access to higher grades from the Yankee pit. Speaker 300:10:56Turning to costs on Slide 11, we continue to see moderating inflationary pressures across our U. S. Operations. However, we are experiencing inflationary pressures in Mexico. Costs in Mexico have also been affected by the continued strong peso. Speaker 300:11:13Operating cash flow during the quarter was impacted by 2 one time annual payments totaling $22,000,000 the annual EBITDA mining tax in Mexico and the company wide 2023 annual incentive payouts along with the $8,000,000 semiannual interest payment on our senior notes. Turning to the balance sheet, the company is poised for a sustained period of positive free cash flow following the successful ramp up at Rochester as Mick described earlier. Capital expenditures at Rochester were approximately $20,000,000 during the Q1, a $45,000,000 decrease from the average quarterly Rochester CapEx in 2023, which contributed to the lowest quarterly capital expenditures level at Core since the Q4 of 2020. As noted on Slide 12, we ended the quarter with an improved net debt to EBITDA ratio of 3.2x and approximately $225,000,000 drawn on our $400,000,000 revolving credit facility. Speaker 100:12:18We would Speaker 300:12:18note that we do expect to draw further on the revolver during the 2nd quarter as we await the breakthrough of silver ounces at Rochester. However, beginning in the Q3, the company expects to begin aggressively paying down the revolver and our prepaid gold sales agreements as we drive towards achieving our long term leverage targets of total debt to EBITDA of 1x and net debt to EBITDA of nil. While our work is not yet done, we entered 2024 a significantly stronger company with improving flexibility to fund our robust asset portfolio and maximize our potential in a strengthening commodity price environment. 2 final important reminders. No ATM is currently in place or is being contemplated and the company's remaining hedges roll off at the end of the second quarter commensurate with the Rochester ramp up to full nameplate capacity. Speaker 300:13:17I'll now pass the call to Aoife. Speaker 400:13:20Thanks, Tom, and good morning, everyone. To continue the good news story presented by Mitch, Mick and Tom, exploration is off to a great start in 2024. A key highlight of this quarter is the drilling at Kensington, where the program is going very well and the rigs are over performing relative to budgeted footage. At Lower Kensington, the recently identified Zone 50 is being traced over additional strike length and is continuing to be a focus for exploration to add to mine life in the very near term. In Upper Kensington, results from already outlined portions of Zone 30 being investigated. Speaker 400:14:13At the nearby Elmira deposit, infill and extension drilling continue to intersect wide and rich zones, especially in the upper portions of the deposit. There is high confidence that inferred resources here will be converted this year. By the end of 2024, we anticipate extending mine life to approximately 5 years, representing roughly a doubling since the start of the program 2 years ago. At Rochester, drilling commenced early in the Q2 with a program there designed to test high grade potential on recently identified structures around the Rochester pit. Preparation work for drilling at Nevada Packard, located south of Rochester, is also well underway. Speaker 400:15:02At Silvertip, we began the year with a comprehensive project review that included 1 of the world's foremost carbonate replacement deposit experts. Significant leaps forward are being taken in our understanding of the controls to mineralization. And this new knowledge is guiding the planning for Coors' busiest summer program ever. We aim to drill much more aggressive step outs from known deposits and to identify high potential targets. Ultimately, the goal is to ensure rapid resource growth over the next few years in order to allow a restart decision on this world class high grade deposit. Speaker 400:15:41At Palmarejo, our aggressive 2024 programs are well underway with a key focus being scout and expansion drilling across the district in order to fast track the growth of our inferred pipeline. This will include scout drilling on 3 new targets outside the area burdened by the Franco Nevada stream. At Wharf, we're finalizing preparations for brownfield drill programs aimed at adding very high return ounces to our mine life. With that, I'll hand the call back to Mitch. Speaker 100:16:16Thanks, Aoife. Before moving to the Q and A, I want to quickly highlight Slide 13 that summarizes our top priorities for the remainder of the year. Following seemingly every conceivable challenge thrown our way, we've arrived at this inflection point that we've been working toward for almost 4 years. With the safe ramp up and optimization initiatives at Rochester remaining job 1, we will continue pursuing the opportunities at our other assets I mentioned earlier. As we reach the free cash flow inflection point in the second half, we look forward to beginning the deleveraging process and ending the year with a lot of momentum as we head into what should be a very strong 2025. Speaker 100:17:02Our U. S. Centric exclusively North American precious metals assets offer investors a unique investment proposition that is extremely well positioned for success, particularly in this current metals price environment and with silver's supply demand fundamentals now better than I've ever seen them. With that, let's go ahead and open it up for questions. Operator00:17:26We will now begin the question and answer session. And our first question will come from Michael Dudas with Vertical Research Partners. Please go ahead. Speaker 500:18:00Good morning, Mitch and team. Speaker 100:18:03Hi, Mike. Speaker 500:18:05I have 3 quick questions. First, Mitch, relative to Rochester, it seems like things are going quite well, you're hitting some milestones. As you reach this end of second quarter milestones and looking at second half, how do you feel relative to productivity to getting kind of a more normalized basis on this mine given all the changes that have occurred the last 3 years or so? Yes. Speaker 100:18:34I'll hand that one over to Mick in a second. But I think that it's fair to say that we get into the second half of the year at that run rate of around 88,000 tons a day, there'll still be a lot of optimization work to do, particularly around crush size and making sure we get to where we want to get there in terms of more of a 5eight inches average product size out there onto the new Stage 6 leach pad. So there'll be some dialing in to be done, but we'll still see that pretty significant drop off in our cost structure, driven mostly by the volume pickup. And then hopefully, we'll be heading into 2025 with some of those tweaks behind us and set up to see even some further improvements on the productivity and cost side. Nick, did I leave anything for you? Speaker 200:19:26Yes, a little bit. No, it's great. Q2 is really about getting open being steadily running at that average rate, and it's an average rate at 88. So we're already seeing that we're going a little bit higher than that, which gives you that good opportunity to really steady that rate out of 88,000 terms for the second half of the year, at which point when we dial in the crush size, if you remember the technical report was 5 eights and we're seeing things that and some confidence that we should be able to dial into that 5 eights push size. We don't know exactly how quickly, but we certainly expect that to be dialed in well through the second half of this year. Speaker 200:20:03And then if that all comes together, then we should land on recovery curves and we should see the performance that we expected to see. Speaker 500:20:13Thanks for that. Secondly, regarding Palmarejo, encouraged about some of the activity you're doing there on the exploration front. The thought on some of the opportunities outside the royalty boundary, which would be very helpful given where current gold prices are. You see some interesting opportunities in line of sight there to kind of work that through over the next couple of years into the mine plans? Speaker 100:20:36Yes. We share your excitement. In my mind, there are sort of 3 levels of opportunities there. There's the extensional stuff that's right to the east of that Franklin, Nevada property line or the AOI boundary. And those are extensions of things like Nacion and Independencia, where we are currently mining. Speaker 100:21:02So those represent more kind of near term opportunities. And then if you skip over further to the East, the company we acquired back in 2015, Paramount Gold and Silver, which gave us all that land over there to the east, they had a large resource over in what's called the Guazaparas area. So I think with in the medium term, we look at that as an opportunity to get in there, twin some of that historical drilling and get a resource onto our books, in the medium term. And then longer term, in between those 2, our team has been busy out there sampling and mapping and developing some drill targets that we think represents some big longer term opportunities to add new sources of production off there to the East. Aoife, anything you want to add to that? Speaker 400:21:56No, I think you've pretty much covered it, Mitch. But yes, there are definitely short-, medium-, and long term opportunities out there. And just to reiterate that it's a typical case, I suppose, in exploration until the work is actually the basic groundwork is done. You don't fully understand the prospectivity. And we've been really busy over the last 2 years doing that mapping and sampling. Speaker 400:22:20And as we get to understand the areas to the East a lot more, we're seeing the same level of prospectivity, especially in higher places than we see on the project. So we're very happy with how that's progressing. Speaker 500:22:33Appreciate that. And just my 3rd to finish up here. Good to see that the hedging roll off here in Q2. Given where prices are and maybe further, what are your thoughts on any hedging potential going forward and what would be the rationale behind doing or not still doing that? Speaker 100:22:51Yes. Our thinking there, Mike, right now is we had hedges in place during the construction of the Rochester expansion to serve as sort of insurance policy in essence as we've gone through this period of capital intensity. For now, we have nothing as you pointed out beyond the end of the second quarter and don't have any current plans to add anything, at least as we sit here today. But Tom, anything you want to Speaker 300:23:22add anything? No, I think yes, that's correct. People understood the need both from our equity holders as well as our creditors understood the importance of hedging, but no plans to hedge once the ramp up is complete. Speaker 500:23:38Excellent. Thank you, everyone. Speaker 100:23:40Okay. Thanks, Mike. Operator00:23:44And our next question will come from Mike Parkin with National Bank. Please go ahead. Speaker 600:23:50Hi, guys. Nice to hear that our activity is going so well. Thanks. How are you? Speaker 100:23:57Okay. Thanks. Speaker 600:24:00Just a couple of questions, mostly tied to Rochester. A couple of other questions were answered already on the first line of questioning. With Nevada, Barrick seems to certainly talk about labor tightness. Is that something you're seeing at Rochester or are you guys managing pretty well on staffing? Speaker 100:24:25Yes, we were just talking about that earlier this morning, Mike. We have had to add some people out there with this expansion, although not that many. And the team has not had an extremely difficult time filling those roles. I'd say where we do see things similar to Nevada Gold Mines is in some of those skilled trades that I think not only mining, but other industries are challenged to find electricians, mechanics, welders, things like that. That's a more challenging part of the labor pool. Speaker 100:25:03But in terms of what we've had to do at Rochester, we've had a lot of success on the labor front. But Nick, anything you want to add to that? Yes. Speaker 200:25:12I mean, super efficient expansion, of course, only 20% increase in the headcount. And that 20%, we managed to get those folks all on early to support the operational readiness program. And that's why we really saw that commission and this ramp up going so well, everyone was really conversant with the project. And now we're just seeing really quite typical turnover. I mean, everywhere, specialist skills like electrical, you sometimes wait a little bit longer to get the right person on the team. Speaker 200:25:44But otherwise, we're not seeing anything that's really giving a lot of concern. Speaker 100:25:48A lot of excitement out there, as you can imagine, Mike, good long mine life, good culture, long track record out there in the community. So it has a lot going forward and it's a place people enjoy working. So we've got a lot going for us out there. Speaker 600:26:09I guess that's an excellent point. You're on a relative basis, you're a lot better to commute to versus a lot of the Nevada Gold Mines operations in terms of like location relative to local communities with decent sized labor forces. Speaker 100:26:28Now, fair point. We bring people from a lot of different directions that otherwise probably couldn't or wouldn't make the drive all the way over further to the east there around Elko. The Lovelock area, Pershing County is a little bit more centrally located up there in the northern part of the state. So, fair number of our workforce comes from further to the West and to the Southwest Fallon, places like that. Speaker 600:26:57All right. Okay. And then you guys took down the old crushing circuit to access better grades. Can you give us a sense in terms of what you'd expect to be stacking on a blended grade basis? Is that something that will improve over the course of the year or should that be fairly steady state? Speaker 100:27:20Well, this year, now that we're into that area under the old X pit that we call Yankee, Yankee pit, Yankee zone does have some higher grade material particularly on the silver side. And that was one of the big incentives for getting in there and getting that ex pit removed when we did so that we could start prepping that area so that we could be in there here in 2024 from a mining standpoint, which we are and those grades seem to be as advertised. And so this year, you will see a little bit on the silver a kick on the silver gold or silver grade profile relative to outer years as a result of being in that Yankee area. Speaker 200:28:06Nick, did I miss anything there? No. Spot on. The gold grade is inherently low at Rochester, right? So we'll see that, that isn't changing too much. Speaker 200:28:17And both, we're getting a decent kick at least in the short term from the Yankee area for silver, which we're looking forward to seeing coming through the pipe. Speaker 600:28:28And then on your leach curves, usually gold is obviously steeper than silver on the heat. When would you expect to kind of achieve like a steady state recovery rate or call it within the 90th percentile, 95th percentile, you're going to get up to maximum throughput around quarter end. Would it be fair to assume it takes a couple more quarters after that, so kind of starting in 2025, you'd probably see silver recoveries stabilizing at that point? Speaker 100:29:02Yes, great question. Probably in the Q3, when we are on this call to talk about Q3, we'll have some data to talk about. And then obviously, in conjunction with our year end, we'll have a lot more visibility to share and talk about. But Mick, do you want to talk a little bit about the curves and reaching kind of steady state? Speaker 200:29:24Yes. And I think steady out, We expect to be steady on both silver and gold through 2025. Speaker 600:29:39Super. Thanks very much guys and all the best with the final ramp up. Speaker 100:29:44Yeah. Thanks a lot, Mike. Appreciate it. Operator00:29:48Our next question will come from Kevin O'Halloran with BMO Capital Markets. Please go ahead. Speaker 700:30:02Maybe just the first one on the LCM adjustment at Rochester. You mentioned there was a positive revaluation on some of the legacy leach pads. Was that included in this Q1 LCM adjustment? Or is that something we should be looking for in future quarters? Speaker 300:30:21Tom, you want to take that? Yes. So we added approximately 900,000 ounces of silver and 6000 ounces of gold. So we actually updated our model as a change in estimate and we recorded that in the Q1. So the LCM would have been actually much higher had we not made that adjustment. Speaker 300:30:46But again, the team had gathered enough data and we felt confident that the recovery curves on the historic pads supported that the higher amount of gold and silver that we're expecting to see here in 'twenty four. So I hope that made sense. Speaker 700:31:03Yes. No, that's helpful for sure. Do you have a sense of where that number would have been without the positive offset? Or maybe even just more broadly, what should we be looking for going forward on the LCM? Speaker 300:31:18Yes. Look, it would have added in $10,000,000 to $12,000,000 range benefit. So we would have otherwise had a larger LCM. The question I always get is, so is this it for LCMs? I'd like to hedge a little bit just to give Mick the bandwidth to get this ramp up done safely and make sure things go really smoothly. Speaker 300:31:43Could we have one in the Q2? Maybe depends on prices, silver prices, how fast we start to see some of that silver come through. But certainly, Q3 forward, absolutely, we're out of the LCM business. Speaker 700:32:01Okay, great. Thanks for that. Maybe you guys touched already on the higher grades under the X pit crusher at Rochester, but can you maybe comment more broadly on where you're seeing or where you're looking for upside at Rochester in terms of the grade profile maybe sort of beyond this year? Speaker 100:32:23Yes. No, great question. We in 2024, our budget out there is somewhere around $9,000,000 for Rochester, which is a big increase relative to recent periods when we've been more focused on the construction of the expansion. You go back to the mid-80s at Rochester, when the Rochester pit was first identified, the blinders were sort of put on, I think, and all focus was on that structure and blinders kind of been taken off and we've started to look more regionally. You might recall we added almost doubled our land position out there when we acquired a lot of the land off to the west from Alio Gold a few years ago. Speaker 100:33:18So EFA came into the picture here a couple of years ago and has really helped accelerate our thinking around where some higher grade material could be on our existing land package. And I'll turn it over to her in a second, but most of the focus right now is really on the eastern side of the existing pit, one area we call East Rochester. And then about 3, 4, 5 miles to the south of the Rochester pit is a historic mining area called Nevada Packard. There's going to be some drilling down there as well where we think there's some potential for some higher grade. And then between those 2, from the Rochester pit down to Nevada Packard, There's a lot of opportunity untapped potential there that we'll start to investigate going forward. Speaker 100:34:05Aoife, did I steal all your thunder? Or is there anything else you want to highlight? Speaker 400:34:10No, that's just the gist of it. But just to reiterate that the mine life really is from those 2 pits. I mean, it's phenomenal that we have that much mine life ahead of us and we're beginning to look more seriously at the area between them because it's working on the geology models. We're seeing that there's potential for higher grades on a whole host of a suite of structures that make up a really wide deformation zone basically between those two deposits. So it's most of what we will be looking at in the next few years is already on POA 11. Speaker 400:34:51It's right there. It's permitted. We have good access. We're every day, we're increasing our understanding of the BLG. So there's a lot of potential right on our doorstep. Speaker 400:35:01It's a great position to be in, given the runway we have with that mine light ahead of us already. It's been really good. Speaker 200:35:10And yes, and additional to that, there is one area which is underneath our old historic leach pad number 1, right adjacent to the current pit. We call it the wedge actually. It's currently in the mine plan as waste because we can't drill down through the old reach pad, but we have put some horizontal drills into that and it's given a little bit of excitement. We still have to investigate it, but that's 40,000,000 tons of waste currently in my plan. And in the next couple of years, we'll look to investigate that and see how much of that we can convert. Speaker 200:35:45But we're optimistic that and that will present some really investment material that might be higher grade than the current main plan. Speaker 700:35:59Okay, great. Thanks. I appreciate the answers and I'll pass it on to the next caller. Operator00:36:04Thanks, Kevin. And our next question will come from Joseph Reagor with ROTH MKM. Please go ahead. Speaker 800:36:14Hey, Mitch and team. Thanks for taking the questions. Speaker 100:36:17Hey, Joe. Good to hear from you. Speaker 800:36:19Yes. So most of my questions have been answered, but I did have a question. In the cash flow for Q1, there was $55,200,000 impact from deferred revenue recognition, which compared to prior quarter seemed a bit high. What was driving that? What are the components that go into that? Speaker 800:36:41And should we expect that to be lower in the quarters ahead? Speaker 100:36:48Tom, do you want to cover that? Sure. Speaker 300:36:49So in the financial statements, you'll see a reference to some gold prepaid activity. So we've got a prepaid at Kensington, which we've historically used to help us manage short term working capital. And last year, we added prepaids at both Rochester and Morf, again, all just in the effort to smooth out the working capital as we went through the last of the expansion and are awaiting these wonderful ounces that Nick is placing on the pad. So we extended those. We renewed those prepaids again. Speaker 300:37:23There was $55,000,000 outstanding at the end of December. We paid it all back and then drew down on those prepaids again. So it's a nice way to help us manage working capital. In particular, the Q1 has 3 lumpy payments. The annual incentive bonus would pay the Mexican EBITDA tax as well as the semi annual payment on the bond coupon. Speaker 300:37:49And so it was just it's a helpful way to manage working capital. As I mentioned in the starting in the Q3, once all the free cash flow starts to arrive, the plan would be to begin delevering and we'll delever based on what's going to be the highest interest rate. So the between the revolver and prepaid. So expect to see those balances decrease in the second half. Speaker 800:38:15Okay. I appreciate the color on that. And then one other question, just on kind of the overall company performance in Q1. It seems like you guys are already ahead of plan and the range on guidance at Rochester is a little wide. Is the plan like later this year to tighten that up once you kind of see what the 1st 2 or 3 quarters look like? Speaker 100:38:47Yes, I think that's a fair point, Joe, that as we get past the end of the second quarter with that run rate at Rochester, that's a big milestone for us. On the backside of that, refreshing Rochester's full year guidance would be probably a good thing to do. So, you can look for that probably as we think about Q3 results. Speaker 800:39:18Okay. All right. That sounds good. Thanks, guys. I'll turn it over. Speaker 100:39:22Okay. Yes. Thanks, Joe. Operator00:39:31Our next question here Our next question here will come from Brian MacArthur with Raymond James. Speaker 900:39:36Please go ahead. Good morning and thank you for taking my question. Can you just review where we are on your NOLs, your tax pools in the United States? Because as you eventually start to ramp up Rochester and generate cash and you have Wharf in the U. S. Speaker 900:39:51And Kensington in the U. S. Is most of that going to the bottom line? Because if I remember, there were significant tax pools. If you could just review how that works, because that should impact, I guess, how much free cash flow there is available? Speaker 100:40:04Yes, great point. It's an often underappreciated asset that we have and that we will start to take advantage of. Tom, do you want to give Brian the Speaker 300:40:14Yes. At my memory in the 10 ks is over $630,000,000 of NOLs. And so we're not going to be paying any federal income tax in the near future. So absolutely, you should be forecasting 0 federal income taxes for the foreseeable future. We do pay tax in Nevada. Speaker 300:40:40There's a state tax there as well as Wharf. And at these higher prices, there's maybe a small amount at Kensington as well, but nothing particularly material. Speaker 900:40:53Sorry. And that was going to be my second question. So just in Nevada, do you pay it or do you get to credit all the capital you've just spent so that gets deferred a little bit too or do you start paying that right away? Speaker 300:41:04No, we will there's a Nevada net proceeds tax that we will start paying right away. Speaker 900:41:10Great. Thanks very much. That's very helpful. Speaker 100:41:13Thanks, Brian. Operator00:41:16And this will conclude our question and answer session. I would now like to turn the conference back over to Mitch Krebs for any closing remarks. Speaker 100:41:24All right. Well, hey, we appreciate everybody's time today and look forward to speaking with you all in August to discuss our Q2 results. Have a great rest of the day. Thanks again. Operator00:41:39The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.Read moreRemove AdsPowered by Conference Call Audio Live Call not available Earnings Conference CallCoeur Mining Q1 202400:00 / 00:00Speed:1x1.25x1.5x2xRemove Ads Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Coeur Mining Earnings HeadlinesBrokerages Set Coeur Mining, Inc. (NYSE:CDE) Price Target at $8.10April 17 at 1:39 AM | americanbankingnews.comWhy Newmont, Coeur Mining, and Barrick Gold Stocks Popped TodayApril 11, 2025 | fool.comTrump’s betrayal exposed Trump’s Final Reset Inside the shocking plot to re-engineer America’s financial system…and why you need to move your money now.April 17, 2025 | Porter & Company (Ad)Is Coeur Mining, Inc. (CDE) the Best Low Cost Stock to Buy According to Billionaires?April 9, 2025 | finance.yahoo.comIs Coeur Mining, Inc. (CDE) the Best Low Cost Stock to Buy According to Billionaires?April 9, 2025 | msn.comCoeur Mining price target raised to $9.50 from $8.50 at Raymond JamesApril 5, 2025 | markets.businessinsider.comSee More Coeur Mining Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Coeur Mining? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Coeur Mining and other key companies, straight to your email. Email Address About Coeur MiningCoeur Mining (NYSE:CDE) explores for precious metals in the United States, Canada, and Mexico. The company primarily explores for gold, silver, zinc, and lead properties. It markets and sells its concentrates to third-party customers, smelters, under off-take agreements. The company was formerly known as Coeur d'Alene Mines Corporation and changed its name to Coeur Mining, Inc. in May 2013. 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There are 10 speakers on the call. Operator00:00:00Good morning, and welcome to the Coeur Mining First Quarter of 2024 Financial Results Conference Call. All participants will be in a listen only mode. After today's remarks, there will be an opportunity to ask questions. Please also note that this event is being recorded today. I would now like to turn the conference over to Mitch Krebs, President and Chief Executive Officer. Operator00:00:34Please go ahead. Speaker 100:00:37Okay. Hello, everyone, and thanks for joining our call. Before we start, I want to point out our cautionary language on forward looking statements in today's slide deck and refer you to our SEC filings on our website. I'll kick off with some brief highlights on Slide 3 before turning the call over to Mick, Tom and Aoife. Overall, we had a solid 1st 3 months of the year. Speaker 100:01:02Both Palmarejo and Wharf had strong quarters compared to plan, which puts the company in a great position a successful 2024. Slide 4 does a nice job of showing where production stood after the Q1 compared to the quarter by quarter guidance profile we provided earlier this year. We often talk about the strategic importance of being a multi asset company and having a balanced portfolio of operations and the Q1 was a great example of that. Palmarejo's and Wharf's outperformance helped to offset Rochester's planned transitional quarter over to the new crusher, which began to process fresh ore on March 8. Commercial production was achieved just 3 weeks later, which was a great accomplishment, but it's what has been happening underneath the hood there that leads to our excitement for the balance of 2024 and beyond. Speaker 100:01:57More on Rochester in a minute. On a company wide basis, overall revenue increased 14% year over year, while adjusted EBITDA jumped 76%. Capital expenditures dropped off significantly during the quarter with the Rochester expansion now in the rearview mirror. We're on track to flip to positive free cash flow in the second half of the year, which will be earmarked for debt repayment. That deleveraging process can be further accelerated assuming current silver and gold prices continue, leading to a rapid and dramatic improvement in our overall financial condition and outlook. Speaker 100:02:40In the middle of all these positive catalysts stands Rochester, which is routinely processing and placing over 70,000 tons of ore per day and occasionally exceeding run rate throughput levels as we put the new crushing circuit through its paces. The rapid ramp up curve is a real testament to the knowledge and operating experience the team is bringing to bear at this world class operation. Before turning the call over to Mick for some additional Rochester details, I want to touch briefly on our progress and plans at some other key initiatives that are expected to augment the near term growth we anticipate from Rochester. First up is Kensington, which is in its final full year of elevated investment aimed at extending its mine life and enhancing its operational flexibility. Positive exploration results and impressive underground development progress are pointing to the potential for a substantial mine life extension by the end of this year, which Aoife will talk more about in a few minutes. Speaker 100:03:46Over the medium term, we continue developing a comprehensive drilling and development plan at Palmarejo on the recently acquired lands located to the east of the current operation. The goal is to hit the ground running once the acquisition of these concessions from Fresnillo is completed, hopefully later this year. The nearest of the 2 acquired blocks to Palmarejo's existing infrastructure sits just outside the boundaries of the Franklin, Nevada gold stream and has the potential to materially supplement our production and cash flow profile within the next 3 years. Over the longer term, excitement continues to build at our high grades silvertip polymetallic exploration project in British Columbia, which Ipa will cover shortly. The convergence of all of these catalysts, higher commodity prices, a completed Rochester, a stable suite of U. Speaker 100:04:43S. Centric mines in North America and a world class Canadian exploration project sets us apart from our peers and leaves us very well positioned. Finally, we published our 2023 ESG report last week, which is summarized on Slide 16. The report does a great job detailing our leadership in this area and highlights our efforts to continue raising the bar as we try to keep pursuing a higher standard. With that, I'll turn the call over to Mick. Speaker 200:05:16Thanks, Mitch. Before reviewing our Q1 operating results, I'll now hand over to Mr. Chairman to spend some time with Core's 2020 3 ESG report, if you haven't already. While Rochester's construction was a significant priority over the last 3 years, I'm an operator at heart and experience is taught that building a very strong foundation in sustainability, responsibility and safety to deliver operational success. In addition to the strong results Mitch highlighted, I'm particularly proud to call out 2 headlines from the ESG report. Speaker 200:05:54First, our number one position among our peer group in key safety indicators for the 2nd year in a row and second, our decision to adopt the global industry standard on tailings management. One of only 17% of non ICMM member companies in the industry to do so. Setting the pace is not always the easy thing to do, but it is the right thing to do and we'll continue to dedicate ourselves to leading in both these areas. Turning to our quarterly results. We are pleased with the solid start to the year. Speaker 200:06:30As Slide 4 illustrates, 2024 production is expected to be significantly weighted towards the second half, consistent with the production guidance we provided earlier this year. Rochester's ramp up and day to day operating improvement will drive most of that change in quarterly production. Same with Rochester, silver and gold production in the Q1 totaled nearly 700,005,800 ounces respectively, right in line with our expectations. Following the 4th quarter flush of ounces from all placed closest to the new PADD 6 liner, our focus in 1Q was commissioning the crusher and starting the placement of ore in the cells using only crushed ore from the new circuit, which commenced on March 8. The cushion circuit wins when we wanted to run, and we're maximizing our planned balance to refine and optimize operations. Speaker 200:07:26What is really stood out in the early warning is the tremendous flexibility of the new 3 stage line, having intermediate stockpiles and all feed can bypass certain stages as needed, giving the team unprecedented levels of control over ultimate size fraction of the ore going to Part VI. Mining rates and refining capacity are more than keeping up with the increased throughput. Looking ahead, we remain on track to reach the conclusion of the ramp up by the end of the second quarter. The priority in the second half of the year will be on optimizing mining and processing rates and downing in push size to maximize recoveries. Rochester remains on track for 2024 guidance. Speaker 200:08:12It's an exciting time and we're pleased with our progress, but we're keeping our heads down as there remains more work to be done to get this operation properly positioned for its long run-in Northern Nevada. Moving on to Palmarejo on Slide 23. The team hit the ground winning in the Q1, reaching its highest quarterly gold in silver production levels in several years. Higher than expected growth from Guadalupe and Independencia grew up strong quarterly free cash flow and positions us well for the balance of 2024. Continued high diesel prices in Mexico and other headwinds on cost side of Palmarejo remain a challenge. Speaker 200:08:51The team continues to focus on mining and plant efficiency programs aimed at reining in costs and with continued inflationary pressures in Mexico. Moving to Kensington, the focus in the Q1 was on stabilizing the operation following the challenging 20 23 as our multi year investment in mine development continues. Mitch mentioned the positive results on that front with that investment now about 71% complete for the current scope of the project. We are seeing a clear path to substantial mine life extension there and perhaps more importantly to the prospect of increased work faces underground and with it more consistent performance. Lastly, at Wharf, results were ahead of plan with the Q1 benefiting from 10 and events is placed on each. Speaker 200:09:41Due to seasonality, the Q1 is typically worth lowest of the year. So we're particularly pleased to see the mine off to a good start in 2024. With 3 Maine's performing well and Rochester well positioned to complete the ramp up, we remain comfortable with our 2024 production guidance. With that, I'll pass the call over to Tom. Speaker 300:10:04Thanks, Nick. I'll touch briefly on our Q1 financial results before spending a moment discussing our financial position and balance sheet, including our plans to materially delever beginning in Q3. As detailed on Slide 9, higher year over year gold production led to a 14% increase in consolidated revenue and a 76% increase in adjusted EBITDA, driven by the strong starts to the year at Palmarejo and Wharf along with continued favorable metals prices. As expected, we had lower Q1 production at Rochester due to the decision to dismantle the Stage 4 crusher during 4Q 2023. The dismantling of the Stage 4 crusher is now complete, which has provided access to higher grades from the Yankee pit. Speaker 300:10:56Turning to costs on Slide 11, we continue to see moderating inflationary pressures across our U. S. Operations. However, we are experiencing inflationary pressures in Mexico. Costs in Mexico have also been affected by the continued strong peso. Speaker 300:11:13Operating cash flow during the quarter was impacted by 2 one time annual payments totaling $22,000,000 the annual EBITDA mining tax in Mexico and the company wide 2023 annual incentive payouts along with the $8,000,000 semiannual interest payment on our senior notes. Turning to the balance sheet, the company is poised for a sustained period of positive free cash flow following the successful ramp up at Rochester as Mick described earlier. Capital expenditures at Rochester were approximately $20,000,000 during the Q1, a $45,000,000 decrease from the average quarterly Rochester CapEx in 2023, which contributed to the lowest quarterly capital expenditures level at Core since the Q4 of 2020. As noted on Slide 12, we ended the quarter with an improved net debt to EBITDA ratio of 3.2x and approximately $225,000,000 drawn on our $400,000,000 revolving credit facility. Speaker 100:12:18We would Speaker 300:12:18note that we do expect to draw further on the revolver during the 2nd quarter as we await the breakthrough of silver ounces at Rochester. However, beginning in the Q3, the company expects to begin aggressively paying down the revolver and our prepaid gold sales agreements as we drive towards achieving our long term leverage targets of total debt to EBITDA of 1x and net debt to EBITDA of nil. While our work is not yet done, we entered 2024 a significantly stronger company with improving flexibility to fund our robust asset portfolio and maximize our potential in a strengthening commodity price environment. 2 final important reminders. No ATM is currently in place or is being contemplated and the company's remaining hedges roll off at the end of the second quarter commensurate with the Rochester ramp up to full nameplate capacity. Speaker 300:13:17I'll now pass the call to Aoife. Speaker 400:13:20Thanks, Tom, and good morning, everyone. To continue the good news story presented by Mitch, Mick and Tom, exploration is off to a great start in 2024. A key highlight of this quarter is the drilling at Kensington, where the program is going very well and the rigs are over performing relative to budgeted footage. At Lower Kensington, the recently identified Zone 50 is being traced over additional strike length and is continuing to be a focus for exploration to add to mine life in the very near term. In Upper Kensington, results from already outlined portions of Zone 30 being investigated. Speaker 400:14:13At the nearby Elmira deposit, infill and extension drilling continue to intersect wide and rich zones, especially in the upper portions of the deposit. There is high confidence that inferred resources here will be converted this year. By the end of 2024, we anticipate extending mine life to approximately 5 years, representing roughly a doubling since the start of the program 2 years ago. At Rochester, drilling commenced early in the Q2 with a program there designed to test high grade potential on recently identified structures around the Rochester pit. Preparation work for drilling at Nevada Packard, located south of Rochester, is also well underway. Speaker 400:15:02At Silvertip, we began the year with a comprehensive project review that included 1 of the world's foremost carbonate replacement deposit experts. Significant leaps forward are being taken in our understanding of the controls to mineralization. And this new knowledge is guiding the planning for Coors' busiest summer program ever. We aim to drill much more aggressive step outs from known deposits and to identify high potential targets. Ultimately, the goal is to ensure rapid resource growth over the next few years in order to allow a restart decision on this world class high grade deposit. Speaker 400:15:41At Palmarejo, our aggressive 2024 programs are well underway with a key focus being scout and expansion drilling across the district in order to fast track the growth of our inferred pipeline. This will include scout drilling on 3 new targets outside the area burdened by the Franco Nevada stream. At Wharf, we're finalizing preparations for brownfield drill programs aimed at adding very high return ounces to our mine life. With that, I'll hand the call back to Mitch. Speaker 100:16:16Thanks, Aoife. Before moving to the Q and A, I want to quickly highlight Slide 13 that summarizes our top priorities for the remainder of the year. Following seemingly every conceivable challenge thrown our way, we've arrived at this inflection point that we've been working toward for almost 4 years. With the safe ramp up and optimization initiatives at Rochester remaining job 1, we will continue pursuing the opportunities at our other assets I mentioned earlier. As we reach the free cash flow inflection point in the second half, we look forward to beginning the deleveraging process and ending the year with a lot of momentum as we head into what should be a very strong 2025. Speaker 100:17:02Our U. S. Centric exclusively North American precious metals assets offer investors a unique investment proposition that is extremely well positioned for success, particularly in this current metals price environment and with silver's supply demand fundamentals now better than I've ever seen them. With that, let's go ahead and open it up for questions. Operator00:17:26We will now begin the question and answer session. And our first question will come from Michael Dudas with Vertical Research Partners. Please go ahead. Speaker 500:18:00Good morning, Mitch and team. Speaker 100:18:03Hi, Mike. Speaker 500:18:05I have 3 quick questions. First, Mitch, relative to Rochester, it seems like things are going quite well, you're hitting some milestones. As you reach this end of second quarter milestones and looking at second half, how do you feel relative to productivity to getting kind of a more normalized basis on this mine given all the changes that have occurred the last 3 years or so? Yes. Speaker 100:18:34I'll hand that one over to Mick in a second. But I think that it's fair to say that we get into the second half of the year at that run rate of around 88,000 tons a day, there'll still be a lot of optimization work to do, particularly around crush size and making sure we get to where we want to get there in terms of more of a 5eight inches average product size out there onto the new Stage 6 leach pad. So there'll be some dialing in to be done, but we'll still see that pretty significant drop off in our cost structure, driven mostly by the volume pickup. And then hopefully, we'll be heading into 2025 with some of those tweaks behind us and set up to see even some further improvements on the productivity and cost side. Nick, did I leave anything for you? Speaker 200:19:26Yes, a little bit. No, it's great. Q2 is really about getting open being steadily running at that average rate, and it's an average rate at 88. So we're already seeing that we're going a little bit higher than that, which gives you that good opportunity to really steady that rate out of 88,000 terms for the second half of the year, at which point when we dial in the crush size, if you remember the technical report was 5 eights and we're seeing things that and some confidence that we should be able to dial into that 5 eights push size. We don't know exactly how quickly, but we certainly expect that to be dialed in well through the second half of this year. Speaker 200:20:03And then if that all comes together, then we should land on recovery curves and we should see the performance that we expected to see. Speaker 500:20:13Thanks for that. Secondly, regarding Palmarejo, encouraged about some of the activity you're doing there on the exploration front. The thought on some of the opportunities outside the royalty boundary, which would be very helpful given where current gold prices are. You see some interesting opportunities in line of sight there to kind of work that through over the next couple of years into the mine plans? Speaker 100:20:36Yes. We share your excitement. In my mind, there are sort of 3 levels of opportunities there. There's the extensional stuff that's right to the east of that Franklin, Nevada property line or the AOI boundary. And those are extensions of things like Nacion and Independencia, where we are currently mining. Speaker 100:21:02So those represent more kind of near term opportunities. And then if you skip over further to the East, the company we acquired back in 2015, Paramount Gold and Silver, which gave us all that land over there to the east, they had a large resource over in what's called the Guazaparas area. So I think with in the medium term, we look at that as an opportunity to get in there, twin some of that historical drilling and get a resource onto our books, in the medium term. And then longer term, in between those 2, our team has been busy out there sampling and mapping and developing some drill targets that we think represents some big longer term opportunities to add new sources of production off there to the East. Aoife, anything you want to add to that? Speaker 400:21:56No, I think you've pretty much covered it, Mitch. But yes, there are definitely short-, medium-, and long term opportunities out there. And just to reiterate that it's a typical case, I suppose, in exploration until the work is actually the basic groundwork is done. You don't fully understand the prospectivity. And we've been really busy over the last 2 years doing that mapping and sampling. Speaker 400:22:20And as we get to understand the areas to the East a lot more, we're seeing the same level of prospectivity, especially in higher places than we see on the project. So we're very happy with how that's progressing. Speaker 500:22:33Appreciate that. And just my 3rd to finish up here. Good to see that the hedging roll off here in Q2. Given where prices are and maybe further, what are your thoughts on any hedging potential going forward and what would be the rationale behind doing or not still doing that? Speaker 100:22:51Yes. Our thinking there, Mike, right now is we had hedges in place during the construction of the Rochester expansion to serve as sort of insurance policy in essence as we've gone through this period of capital intensity. For now, we have nothing as you pointed out beyond the end of the second quarter and don't have any current plans to add anything, at least as we sit here today. But Tom, anything you want to Speaker 300:23:22add anything? No, I think yes, that's correct. People understood the need both from our equity holders as well as our creditors understood the importance of hedging, but no plans to hedge once the ramp up is complete. Speaker 500:23:38Excellent. Thank you, everyone. Speaker 100:23:40Okay. Thanks, Mike. Operator00:23:44And our next question will come from Mike Parkin with National Bank. Please go ahead. Speaker 600:23:50Hi, guys. Nice to hear that our activity is going so well. Thanks. How are you? Speaker 100:23:57Okay. Thanks. Speaker 600:24:00Just a couple of questions, mostly tied to Rochester. A couple of other questions were answered already on the first line of questioning. With Nevada, Barrick seems to certainly talk about labor tightness. Is that something you're seeing at Rochester or are you guys managing pretty well on staffing? Speaker 100:24:25Yes, we were just talking about that earlier this morning, Mike. We have had to add some people out there with this expansion, although not that many. And the team has not had an extremely difficult time filling those roles. I'd say where we do see things similar to Nevada Gold Mines is in some of those skilled trades that I think not only mining, but other industries are challenged to find electricians, mechanics, welders, things like that. That's a more challenging part of the labor pool. Speaker 100:25:03But in terms of what we've had to do at Rochester, we've had a lot of success on the labor front. But Nick, anything you want to add to that? Yes. Speaker 200:25:12I mean, super efficient expansion, of course, only 20% increase in the headcount. And that 20%, we managed to get those folks all on early to support the operational readiness program. And that's why we really saw that commission and this ramp up going so well, everyone was really conversant with the project. And now we're just seeing really quite typical turnover. I mean, everywhere, specialist skills like electrical, you sometimes wait a little bit longer to get the right person on the team. Speaker 200:25:44But otherwise, we're not seeing anything that's really giving a lot of concern. Speaker 100:25:48A lot of excitement out there, as you can imagine, Mike, good long mine life, good culture, long track record out there in the community. So it has a lot going forward and it's a place people enjoy working. So we've got a lot going for us out there. Speaker 600:26:09I guess that's an excellent point. You're on a relative basis, you're a lot better to commute to versus a lot of the Nevada Gold Mines operations in terms of like location relative to local communities with decent sized labor forces. Speaker 100:26:28Now, fair point. We bring people from a lot of different directions that otherwise probably couldn't or wouldn't make the drive all the way over further to the east there around Elko. The Lovelock area, Pershing County is a little bit more centrally located up there in the northern part of the state. So, fair number of our workforce comes from further to the West and to the Southwest Fallon, places like that. Speaker 600:26:57All right. Okay. And then you guys took down the old crushing circuit to access better grades. Can you give us a sense in terms of what you'd expect to be stacking on a blended grade basis? Is that something that will improve over the course of the year or should that be fairly steady state? Speaker 100:27:20Well, this year, now that we're into that area under the old X pit that we call Yankee, Yankee pit, Yankee zone does have some higher grade material particularly on the silver side. And that was one of the big incentives for getting in there and getting that ex pit removed when we did so that we could start prepping that area so that we could be in there here in 2024 from a mining standpoint, which we are and those grades seem to be as advertised. And so this year, you will see a little bit on the silver a kick on the silver gold or silver grade profile relative to outer years as a result of being in that Yankee area. Speaker 200:28:06Nick, did I miss anything there? No. Spot on. The gold grade is inherently low at Rochester, right? So we'll see that, that isn't changing too much. Speaker 200:28:17And both, we're getting a decent kick at least in the short term from the Yankee area for silver, which we're looking forward to seeing coming through the pipe. Speaker 600:28:28And then on your leach curves, usually gold is obviously steeper than silver on the heat. When would you expect to kind of achieve like a steady state recovery rate or call it within the 90th percentile, 95th percentile, you're going to get up to maximum throughput around quarter end. Would it be fair to assume it takes a couple more quarters after that, so kind of starting in 2025, you'd probably see silver recoveries stabilizing at that point? Speaker 100:29:02Yes, great question. Probably in the Q3, when we are on this call to talk about Q3, we'll have some data to talk about. And then obviously, in conjunction with our year end, we'll have a lot more visibility to share and talk about. But Mick, do you want to talk a little bit about the curves and reaching kind of steady state? Speaker 200:29:24Yes. And I think steady out, We expect to be steady on both silver and gold through 2025. Speaker 600:29:39Super. Thanks very much guys and all the best with the final ramp up. Speaker 100:29:44Yeah. Thanks a lot, Mike. Appreciate it. Operator00:29:48Our next question will come from Kevin O'Halloran with BMO Capital Markets. Please go ahead. Speaker 700:30:02Maybe just the first one on the LCM adjustment at Rochester. You mentioned there was a positive revaluation on some of the legacy leach pads. Was that included in this Q1 LCM adjustment? Or is that something we should be looking for in future quarters? Speaker 300:30:21Tom, you want to take that? Yes. So we added approximately 900,000 ounces of silver and 6000 ounces of gold. So we actually updated our model as a change in estimate and we recorded that in the Q1. So the LCM would have been actually much higher had we not made that adjustment. Speaker 300:30:46But again, the team had gathered enough data and we felt confident that the recovery curves on the historic pads supported that the higher amount of gold and silver that we're expecting to see here in 'twenty four. So I hope that made sense. Speaker 700:31:03Yes. No, that's helpful for sure. Do you have a sense of where that number would have been without the positive offset? Or maybe even just more broadly, what should we be looking for going forward on the LCM? Speaker 300:31:18Yes. Look, it would have added in $10,000,000 to $12,000,000 range benefit. So we would have otherwise had a larger LCM. The question I always get is, so is this it for LCMs? I'd like to hedge a little bit just to give Mick the bandwidth to get this ramp up done safely and make sure things go really smoothly. Speaker 300:31:43Could we have one in the Q2? Maybe depends on prices, silver prices, how fast we start to see some of that silver come through. But certainly, Q3 forward, absolutely, we're out of the LCM business. Speaker 700:32:01Okay, great. Thanks for that. Maybe you guys touched already on the higher grades under the X pit crusher at Rochester, but can you maybe comment more broadly on where you're seeing or where you're looking for upside at Rochester in terms of the grade profile maybe sort of beyond this year? Speaker 100:32:23Yes. No, great question. We in 2024, our budget out there is somewhere around $9,000,000 for Rochester, which is a big increase relative to recent periods when we've been more focused on the construction of the expansion. You go back to the mid-80s at Rochester, when the Rochester pit was first identified, the blinders were sort of put on, I think, and all focus was on that structure and blinders kind of been taken off and we've started to look more regionally. You might recall we added almost doubled our land position out there when we acquired a lot of the land off to the west from Alio Gold a few years ago. Speaker 100:33:18So EFA came into the picture here a couple of years ago and has really helped accelerate our thinking around where some higher grade material could be on our existing land package. And I'll turn it over to her in a second, but most of the focus right now is really on the eastern side of the existing pit, one area we call East Rochester. And then about 3, 4, 5 miles to the south of the Rochester pit is a historic mining area called Nevada Packard. There's going to be some drilling down there as well where we think there's some potential for some higher grade. And then between those 2, from the Rochester pit down to Nevada Packard, There's a lot of opportunity untapped potential there that we'll start to investigate going forward. Speaker 100:34:05Aoife, did I steal all your thunder? Or is there anything else you want to highlight? Speaker 400:34:10No, that's just the gist of it. But just to reiterate that the mine life really is from those 2 pits. I mean, it's phenomenal that we have that much mine life ahead of us and we're beginning to look more seriously at the area between them because it's working on the geology models. We're seeing that there's potential for higher grades on a whole host of a suite of structures that make up a really wide deformation zone basically between those two deposits. So it's most of what we will be looking at in the next few years is already on POA 11. Speaker 400:34:51It's right there. It's permitted. We have good access. We're every day, we're increasing our understanding of the BLG. So there's a lot of potential right on our doorstep. Speaker 400:35:01It's a great position to be in, given the runway we have with that mine light ahead of us already. It's been really good. Speaker 200:35:10And yes, and additional to that, there is one area which is underneath our old historic leach pad number 1, right adjacent to the current pit. We call it the wedge actually. It's currently in the mine plan as waste because we can't drill down through the old reach pad, but we have put some horizontal drills into that and it's given a little bit of excitement. We still have to investigate it, but that's 40,000,000 tons of waste currently in my plan. And in the next couple of years, we'll look to investigate that and see how much of that we can convert. Speaker 200:35:45But we're optimistic that and that will present some really investment material that might be higher grade than the current main plan. Speaker 700:35:59Okay, great. Thanks. I appreciate the answers and I'll pass it on to the next caller. Operator00:36:04Thanks, Kevin. And our next question will come from Joseph Reagor with ROTH MKM. Please go ahead. Speaker 800:36:14Hey, Mitch and team. Thanks for taking the questions. Speaker 100:36:17Hey, Joe. Good to hear from you. Speaker 800:36:19Yes. So most of my questions have been answered, but I did have a question. In the cash flow for Q1, there was $55,200,000 impact from deferred revenue recognition, which compared to prior quarter seemed a bit high. What was driving that? What are the components that go into that? Speaker 800:36:41And should we expect that to be lower in the quarters ahead? Speaker 100:36:48Tom, do you want to cover that? Sure. Speaker 300:36:49So in the financial statements, you'll see a reference to some gold prepaid activity. So we've got a prepaid at Kensington, which we've historically used to help us manage short term working capital. And last year, we added prepaids at both Rochester and Morf, again, all just in the effort to smooth out the working capital as we went through the last of the expansion and are awaiting these wonderful ounces that Nick is placing on the pad. So we extended those. We renewed those prepaids again. Speaker 300:37:23There was $55,000,000 outstanding at the end of December. We paid it all back and then drew down on those prepaids again. So it's a nice way to help us manage working capital. In particular, the Q1 has 3 lumpy payments. The annual incentive bonus would pay the Mexican EBITDA tax as well as the semi annual payment on the bond coupon. Speaker 300:37:49And so it was just it's a helpful way to manage working capital. As I mentioned in the starting in the Q3, once all the free cash flow starts to arrive, the plan would be to begin delevering and we'll delever based on what's going to be the highest interest rate. So the between the revolver and prepaid. So expect to see those balances decrease in the second half. Speaker 800:38:15Okay. I appreciate the color on that. And then one other question, just on kind of the overall company performance in Q1. It seems like you guys are already ahead of plan and the range on guidance at Rochester is a little wide. Is the plan like later this year to tighten that up once you kind of see what the 1st 2 or 3 quarters look like? Speaker 100:38:47Yes, I think that's a fair point, Joe, that as we get past the end of the second quarter with that run rate at Rochester, that's a big milestone for us. On the backside of that, refreshing Rochester's full year guidance would be probably a good thing to do. So, you can look for that probably as we think about Q3 results. Speaker 800:39:18Okay. All right. That sounds good. Thanks, guys. I'll turn it over. Speaker 100:39:22Okay. Yes. Thanks, Joe. Operator00:39:31Our next question here Our next question here will come from Brian MacArthur with Raymond James. Speaker 900:39:36Please go ahead. Good morning and thank you for taking my question. Can you just review where we are on your NOLs, your tax pools in the United States? Because as you eventually start to ramp up Rochester and generate cash and you have Wharf in the U. S. Speaker 900:39:51And Kensington in the U. S. Is most of that going to the bottom line? Because if I remember, there were significant tax pools. If you could just review how that works, because that should impact, I guess, how much free cash flow there is available? Speaker 100:40:04Yes, great point. It's an often underappreciated asset that we have and that we will start to take advantage of. Tom, do you want to give Brian the Speaker 300:40:14Yes. At my memory in the 10 ks is over $630,000,000 of NOLs. And so we're not going to be paying any federal income tax in the near future. So absolutely, you should be forecasting 0 federal income taxes for the foreseeable future. We do pay tax in Nevada. Speaker 300:40:40There's a state tax there as well as Wharf. And at these higher prices, there's maybe a small amount at Kensington as well, but nothing particularly material. Speaker 900:40:53Sorry. And that was going to be my second question. So just in Nevada, do you pay it or do you get to credit all the capital you've just spent so that gets deferred a little bit too or do you start paying that right away? Speaker 300:41:04No, we will there's a Nevada net proceeds tax that we will start paying right away. Speaker 900:41:10Great. Thanks very much. That's very helpful. Speaker 100:41:13Thanks, Brian. Operator00:41:16And this will conclude our question and answer session. I would now like to turn the conference back over to Mitch Krebs for any closing remarks. Speaker 100:41:24All right. Well, hey, we appreciate everybody's time today and look forward to speaking with you all in August to discuss our Q2 results. Have a great rest of the day. Thanks again. Operator00:41:39The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.Read moreRemove AdsPowered by