Coeur Mining Q2 2026 Earnings Call: Complete Transcript

Coeur Mining (NYSE: CDE ) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below. This content is powered APIs. For comprehensive financial data and transcripts, visit Access the full call at Summary Coeur Mining reported record financial results for the second quarter, surpassing $1 billion in revenue for the first time, driven by contributions from newly acquired New Afton and Rainy River operations.

The company achieved a record quarterly adjusted EBITDA and free cash flow, despite challenges such as lower prices and inflationary pressures. Coeur Mining increased its exploration investment and initiated a $750 million share buyback program, also paying its first dividend in 30 years. Rochester achieved a new quarterly record for tons crushed, indicating improved operational efficiency, while Wharf returned to normal operations after repairs. The company adjusted guidance for New Afton and Rainy River, anticipating a more gradual ramp-up in production rates.

Cash balance exceeded $1 billion, expected to increase with a strong second-half production and cash flow profile. Future expectations include significantly higher production and free cash flow in the second half of 2026, with a focus on exploration and organic growth projects. Full Transcript OPERATOR Good morning and welcome to the conference call to discuss Coeur's second quarter results. All participants will be in a listen-only mode for the duration of the call and, should you need any assistance today, please signal a conference specialist by pressing the star key followed by zero on your telephone keypad.

After today's presentation there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, you may press star then two. Please note that this event is being recorded today.

I would now like to turn the call over to Mitch Krebs, President and CEO. Please go ahead. Mitchell Krebs, President and Chief Executive Officer Hello everyone and thanks for joining our call to discuss Coeur's second quarter results. Before we start, please note our cautionary language regarding forward-looking statements and refer to our SEC filings on our website.

Starting off on Slide 3, Coeur's record second quarter results were driven in large part by the first full quarter of contributions from the recently acquired New Afton and Rainy River operations. Quarterly revenue passed the $1 billion mark for the first time in the company's history on the way to record quarterly adjusted EBITDA and free cash flow. Lower prices, inflationary pressures, below planned grades at three of our operations, and the pace of production ramp-ups at Rainy River and New Afton were all headwinds during the quarter.

10 per share, non-cash impact to second quarter EPS and EBITDA from the acquisition accounting driven by Rainy River stockpile inventory. That's worth highlighting off the back of nearly $400 million of quarterly free cash flow. Our ending cash balance exceeded $1 billion for the first time in history and is expected to continue increasing rapidly, turning the balance sheet into a significant source of strength. We intend to continue deploying this cash into record levels of exploration investment and into our organic growth projects to help us deliver peer-leading ROIC.

We also showed in the second quarter our commitment to returning capital to shareholders as we began to more actively repurchase shares under the expanded $750 million buyback program in the second half of the quarter, and we paid the company's first dividend in 30 years. The company's growing financial strength leaves us well positioned, which is expected to further increase with a significantly second-half-weighted production and cash flow profile. 8 million metric tons crushed, a 15% increase over the prior quarter. This progress in establishing crusher consistency and predictability has been a true team effort that deserves acknowledgment.

As Mick will walk you through, the team also completed the Phase 2A leach pad expansion during the quarter, leaving Rochester poised for very strong second half silver production given the significant number of ounces placed close to liner. It was also great to see Wharf bounce back with a strong quarter as they returned to more normal operations after recovering from damages to the crusher last November. We issued an exploration update last month highlighting the ongoing success we're having at our two Mexican operations.

Recent results at Palmarejo with the continued emergence off to the east, and at Las Chispas with drilling in the Gap Zone and at other new targets, underscores the continued impact of our brownfield exploration investments on our efforts to drive higher returns on invested capital. While our five legacy operations remain on track to deliver their full year guidance, we recalibrated New Afton's and Rainy River's guidance ranges for the nine months of Coeur's ownership in 2026.

The Rainy River adjustments reflect a more gradual expected ramp-up in underground production rates this year than previously assumed, and the New Afton modifications reflect the rate of cave growth we're seeing since the C-Zone development was completed in April. Mick will provide additional details on the great work being done to safely and sustainably deliver the performance at these two new assets. Meanwhile, I'm pleased to report that our post-acquisition integration efforts are advancing according to schedule.

-based North American platform of seven well-balanced operations offers investors liquid, high-quality exposure to the positive long-term outlook for gold, silver, and copper. Mick, over to you. Mick Routledge, Chief Operating Officer Thanks, Mitch. Coeur's operating results in the second quarter included several important developments that bode well for the strength of our enhanced portfolio as we look forward to the second half of 2026 and beyond.

As Mitch mentioned, we saw lower than planned grades at Kensington, Rochester, and Palmarejo, which are expected to rebound in the second half. Consistent with our guidance, a strong second-half tailwind at Rochester, aside from the higher planned grades, is the impressive progress of the crushing circuit, which continues to deliver strong, more consistent performance. 8 million tonnes crushed in 2Q that Mitch mentioned, approximately 97% ran through all three stages of crushing, highlighting the enhanced efficiency and flexibility of the operation.

As the crushing train moves further into a consistent operating rhythm, the pace of construction for Phase 2A of Leach Pad 6 accelerated during the quarter. Some of you may recall the initial flush of silver and gold production in 2023 following placement and irrigation of first ore close to liner on Pad 6 Phase 1. With Phase 2A ore placed exceeding 4 million tonnes through July and growing, we expect a similar spike to underpin strong second half 2026 production at Rochester. Phase 2B of Pad 6 is well on schedule and we expect it to be completed in Q4 of this year, providing additional capacity close to liner.

Turning briefly to Wharf, the team continued to exceed expectations and complete all repairs ahead of schedule following the fire incident in the crusher building last November. Two contract crushing units augmented ore placement rates on the pads as the repaired Wharf crusher achieved full capacity in May. Contract crushing has been fully demobilized and normal operations have now resumed. Moving to the Canadian assets, we have continued to work closely with the New Afton and Rainy River teams over the last four months on integration and mine plan optimization.

At New Afton, the primary focus remains on prioritizing healthy cave growth. Executing disciplined cave draw management in these early days is the most important factor we control to protect the long-term health and productivity of C-Zone. We increased tonnage draw from the western portion of the cave at similar grades to the north draw points, and we are still limiting tonnage from the higher-grade eastern portion of the cave. Following completion of its construction in April, daily mining rates during the quarter averaged approximately 12,000 tonnes per day.

We are pleased to report that we saw mining rates tick up further in July, including reaching 14,000 tonnes per day during the last week of the month as we've begun to increase draw rates in the west. We expect to achieve targeted throughput of 16,000 tonnes per day early in the fourth quarter, compared to the end of the second quarter as assumed in the original New Gold 2026 budget they approved late last year. As a result, we have refined New Afton's partial-year guidance to reflect this prudent approach, which is summarised on Slide 12.

At Rainy River, solid production from Phase Four of the open pit drove free cash flow of $123 million, the highest free cash flow of any mine in Coeur's long history. Open pit mining, processing, and underground development all performed well during the initial full quarter of Coeur's ownership, while waste stripping activities on Phase Five of the open pit remained ahead of schedule. It is important to note we kept the mill full all quarter via the operation's significant stockpile inventory.

We expect the acquired high- and medium-grade stockpiles to be depleted by the end of the third quarter, but we will be building up a new stockpile to provide that important level of flexibility with a goal of keeping the mill full at all times. Second quarter production was affected by lower than planned underground mining rates, which reflected some short-term execution challenges with the underground mining contractor. I'm pleased to report that after assuming control of the operation and addressing the gaps we observed, underground mining rates are now on the rise, as evidenced in the performance improvements we saw in July.

The gaps did require a relatively modest amount of additional capital and operating costs that Tom will highlight. However, we are expecting a very quick payback. Just to give you a sense, after averaging 2,300 tonnes per day in the second quarter, underground production rates jumped over 40% to approximately 3,300 tonnes per day in July, and we now expect to achieve our target of 5,000 tonnes per day by year end versus the third quarter as assumed in the original New Gold 2026 budget that they approved late last year.

Revised partial-year 2026 production guidance at Rainy River is shown on Slide 13, which reflects this slightly slower assumed ramp-up of underground mining rates. With that, I'll turn the call over to Tom. Tom Whelan, Chief Financial Officer Thanks, Mick. Turning to slide nine, I'll briefly run through our consolidated financial results.

Despite being our second lightest expected production quarter this year, our balanced seven-asset portfolio produced quarterly record financial results off the back of the inclusion of our first quarter of our Canadian assets. 1 billion, a 27% increase quarter over quarter, record EBITDA of $478 million. Despite the $141 million non-cash expense related to Rainy River's fair value uplift of the short-term stockpile which must flow through EBITDA, the P&L, and our reported CAS number, and record free cash flow of $388 million, or more than $4 million per day, an increase of 45% versus last quarter.

Our Canadian assets delivered 45% of overall quarterly free cash flow, or approximately $175 million. Despite both assets being in ramp-up mode, our Q2 results did see lower realized gold and silver prices than Q1, particularly in June. We are also seeing some signs of cost inflation, specifically diesel costs, as shown on slide 11. Slide 8 illustrates the tremendous impact of these accelerating cash flows on our balance sheet.

1 billion at June 30th represents a doubling of the balance versus year-end 2025. 02 dividend, and the elimination of $39 million of our higher-cost capital lease debt. We exited Q2 with liquidity of over $2 billion, leaving no doubt about our balance sheet strength. With expectations for significantly higher production during the second half of 2026, Coeur is poised to deliver even higher quarterly free cash flow for the remainder of the year.

5 billion, despite significantly lower assumed metals prices in the second half of 2026 and only nine months of lower than originally planned contribution from New Afton and Rainy River. What an amazing story. I wanted to highlight the key changes in our updated guidance on slide 21. We have tweaked our overall 2026 capex guidance at Rainy River to reflect $45 million of phase-five capitalized stripping costs previously guided as an operating cost and $25 million of expenditures related to underground development equipment and infrastructure to assist with the gaps Mick and his team identified.

Revised capex guidance also includes an additional $15 million at Silvertip for 2026 pre-feasibility study and related costs. Cash taxes were guided downwards to reflect lower assumed metals prices and lower Canadian taxes. Amortization guidance was also reduced as we completed our initial purchase price allocation for the newly acquired Canadian assets. Adjusted CAS guidance for gold and copper at New Afton increased as a result of the lower expected production.

However, it is important to note that we did not see an overall increase in total operating costs at New Afton. Adjusted gold CAS guidance at Rainy River also increased as a result of the lower expected production. We are also expecting a 10% increase in total operating costs, or approximately $30 million during 2026, for additional labor, rental equipment, and maintenance to address the gaps Mick and his team identified. I did want to spend a minute on the acquisition accounting related to the short-term inventory, including the significant short-term stockpile at Rainy River that we acquired at the transaction closing.

S. GAAP, is an important pointy-headed accounting matter to clearly understand given the magnitude and the pervasive impact it has on our financial results. While the impact is non-cash, the full-year total will be $244 million at Rainy River and $20 million at New Afton. We want to emphasize this non-cash amount must be included in our EBITDA, net income, and CAS.

During the first quarter, approximately $85 million of the fair value uplift hit our EBITDA, net income, and CAS. 10 per share, and the remaining $38 million is anticipated to flow through during Q3 as we expect to have depleted the remaining acquired short-term stockpile at Rainy River by the end of the quarter. As Mick mentioned, to give a better sense of the order of magnitude of this non-cash impact on our CAS, the Q2 impact at Rainy River was $2,036 per ounce of the total $3,788 CAS per ounce, and on a consolidated basis it represented $834 per ounce of the total $2,442 in CAS per ounce. I hope that made sense and I'll get off the accounting soapbox.

We remain extremely excited and proud of this platform we've created as a unique North America-only precious metals producer with a heart of silver. We are set up for a strong second half of free cash flow, continued capital returns, and cash accumulation on the balance sheet as we continue to deliver on our strategic plan. I'll now turn the call back to Mitch. Mitchell Krebs, President and Chief Executive Officer Thanks, Tom.

Before opening it up for Q&A, our key strategic priorities for the remainder of the year are shown on slide 20. We're looking forward to delivering sharp increases in production and cash flow during the second half that are expected to lead to record full-year 2026 results, leaving us well positioned to deliver another record year in 2027. With that, let's go ahead and open it up for questions. OPERATOR We will now begin the question-and-answer session.

To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. And to withdraw a question you may press star, then two. At this time we will pause just momentarily to assemble our roster.

And our first question here will come from Wayne Lamb with TD Securities. Please go ahead. Wayne Lamb, Analyst at TD Securities Yeah, thanks. Morning, guys.

Just want to understand the reset in the expectations for the new gold assets after just the first quarter of operation post the combined guidance, maybe starting with New Afton. What was the previously budgeted timeline to get to the 16,000 tons per day? Or was the revision here also largely grade-driven? Because I think most have baked in a ramp-up to reach the run-rate capacity.

But also seems like a second haircut taken at New Afton now from what New Gold management had previously guided to what was outlined in the combined guidance a few months ago to now.