CDE 10-Q Quarterly Report June 30, 2015 | Alphaminr
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CDE 10-Q Quarter ended June 30, 2015

Balance Sheet
Cash Flow
Income Statement
Debt
COEUR MINING, INC.
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10-Q 1 cde-06301510q.htm 10-Q CDE-06.30.15 10Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
___________________________________________
FORM 10-Q
___________________________________________
þ
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2015
OR
¨
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to
Commission file number 001-08641
____________________________________________
COEUR MINING, INC.
(Exact name of registrant as specified in its charter)
____________________________________________
Delaware
82-0109423
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
104 S. Michigan Ave., Suite 900 Chicago, Illinois
60603
(Address of principal executive offices)
(Zip Code)
(312) 489-5800
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)    Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
þ
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ¨ No þ
The Company has 300,000,000 shares of common stock, par value of $0.01, authorized of which 137,114,122 shares were issued and outstanding as of July 31, 2015.


COEUR MINING, INC.
INDEX
Page
Part I.
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
Condensed Consolidated Statements of Cash Flows (Unaudited)
Condensed Consolidated Balance Sheets
Condensed Consolidated Statement of Changes in Stockholders' Equity
Notes to Condensed Consolidated Financial Statements (Unaudited)
Consolidated Financial Results
Results of Operations
Liquidity and Capital Resources
Non-GAAP Financial Performance Measures
Part II.
Item 6. Exhibits
Signatures





2

PART I. Financial Information
Item 1. Financial Statements

COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
Three months ended June 30,
Six months ended June 30,
2015
2014
2015
2014
Notes
In thousands, except share data
Revenue
3
$
166,263

$
164,562

$
319,219

$
324,195

COSTS AND EXPENSES
Costs applicable to sales (1)
3
119,097

118,687

234,160

225,583

Amortization
38,974

41,422

72,064

81,849

General and administrative
8,451

9,398

17,286

23,294

Exploration
3,579

5,153

7,845

9,370

Pre-development, reclamation, and other
2,267

8,760

9,030

15,775

Total costs and expenses
172,368

183,420

340,385

355,871

OTHER INCOME (EXPENSE), NET
Fair value adjustments, net
9
2,754

(8,282
)
(2,130
)
(19,717
)
Impairment of equity securities
12
(31
)
(934
)
(1,545
)
(3,522
)
Interest income and other, net
(2,821
)
(116
)
(3,817
)
(2,100
)
Interest expense, net of capitalized interest
17
(10,734
)
(12,310
)
(21,499
)
(25,365
)
Total other income (expense), net
(10,832
)
(21,642
)
(28,991
)
(50,704
)
Income (loss) before income and mining taxes
(16,937
)
(40,500
)
(50,157
)
(82,380
)
Income and mining tax (expense) benefit
7
260

(2,621
)
192

2,068

NET INCOME (LOSS)
$
(16,677
)
$
(43,121
)
$
(49,965
)
$
(80,312
)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
Unrealized gain (loss) on equity securities, net of tax of $7 for the three months ended June 30, 2015 and $487 and $253 for the three and six months ended June 30, 2014, respectively
(1,312
)
(773
)
(2,813
)
(401
)
Reclassification adjustments for impairment of equity securities, net of tax of $(362) and $(1,363) for the three and six months ended June 30, 2014, respectively
31

572

1,545

2,159

Reclassification adjustments for realized loss on sale of equity securities, net of tax of $(10) for the three and six months ended June 30, 2014, respectively
904

17

904

17

Other comprehensive income (loss)
(377
)
(184
)
(364
)
1,775

COMPREHENSIVE INCOME (LOSS)
$
(17,054
)
$
(43,305
)
$
(50,329
)
$
(78,537
)
NET INCOME (LOSS) PER SHARE
8
Basic
$
(0.12
)
$
(0.42
)
$
(0.42
)
$
(0.78
)
Diluted
$
(0.12
)
$
(0.42
)
$
(0.42
)
$
(0.78
)
(1) Excludes amortization.
The accompanying notes are an integral part of these condensed consolidated financial statements.


3

COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three months ended June 30,
Six months ended June 30,
2015
2014
2015
2014
Notes
In thousands
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
(16,677
)
$
(43,121
)
$
(49,965
)
(80,312
)
Adjustments:
Amortization
38,974

41,422

72,064

81,849

Accretion
3,526

4,502

6,676

9,093

Deferred income taxes
(5,053
)
(3,844
)
(7,237
)
(15,705
)
Loss on termination of revolving credit facility
—

—

—

3,035

Fair value adjustments, net
(2,754
)
8,282

2,130

19,717

Stock-based compensation
5
2,604

2,385

4,754

4,950

Impairment of equity securities
12
31

934

1,545

3,522

Foreign exchange and other
4,224

(54
)
5,303

(869
)
Changes in operating assets and liabilities:
Receivables
(2,342
)
4,921

214

10,544

Prepaid expenses and other current assets
160

3,551

(1,167
)
(4,558
)
Inventory and ore on leach pads
4,649

(1,606
)
5,333

(15,519
)
Accounts payable and accrued liabilities
9,521

13,118

(6,759
)
5,117

CASH PROVIDED BY OPERATING ACTIVITIES
36,863

30,490

32,891

20,864

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(23,677
)
(15,356
)
(41,297
)
(27,292
)
Acquisitions, net of cash acquired
11
(9,152
)
(2,250
)
(111,170
)
(2,250
)
Other
(103
)
12

(1,676
)
(13
)
Purchase of short-term investments and equity securities
(1,597
)
(2,139
)
(1,873
)
(48,360
)
Sales and maturities of short-term investments
399

800

469

890

CASH USED IN INVESTING ACTIVITIES
(34,130
)
(18,933
)
(155,547
)
(77,025
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of notes and bank borrowings
17
100,000

—

153,500

153,000

Payments on debt, capital leases, and associated costs
(66,626
)
(2,851
)
(75,220
)
(6,962
)
Gold production royalty payments
(9,754
)
(12,345
)
(20,122
)
(27,028
)
Other
(72
)
(160
)
(495
)
(406
)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
23,548

(15,356
)
57,663

118,604

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
26,281

(3,799
)
(64,993
)
62,443

Cash and cash equivalents at beginning of period
179,587

272,932

270,861

206,690

Cash and cash equivalents at end of period
$
205,868

$
269,133

$
205,868

$
269,133


The accompanying notes are an integral part of these condensed consolidated financial statements.

4

COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2015
(Unaudited)
December 31,
2014
ASSETS
Notes
In thousands, except share data
CURRENT ASSETS
Cash and cash equivalents
$
205,868

$
270,861

Receivables
13
112,159

116,921

Inventory
14
109,207

114,931

Ore on leach pads
14
67,458

48,204

Deferred tax assets

7,262

7,364

Prepaid expenses and other
17,442

15,523

519,396

573,804

NON-CURRENT ASSETS
Property, plant and equipment, net
15
254,574

227,911

Mining properties, net
16
864,884

501,192

Ore on leach pads
14
32,663

37,889

Restricted assets
8,377

7,037

Equity securities
12
4,216

5,982

Receivables
13
26,738

21,686

Deferred tax assets

64,120

60,151

Other
11,681

9,915

TOTAL ASSETS
$
1,786,649

$
1,445,567

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable
$
42,522

$
49,052

Accrued liabilities and other
47,590

51,513

Debt
17
9,121

17,498

Royalty obligations
9
41,999

43,678

Reclamation
4
3,786

3,871

Deferred tax liabilities

8,078

8,078

153,096

173,690

NON-CURRENT LIABILITIES
Debt
17
538,589

451,048

Royalty obligations
9
12,675

27,651

Reclamation
4
87,538

66,943

Deferred tax liabilities

223,868

111,006

Other long-term liabilities
43,233

29,911

905,903

686,559

STOCKHOLDERS’ EQUITY
Common stock, par value $0.01 per share; authorized 300,000,000 shares, issued and outstanding 137,122,762 at June 30, 2015 and authorized 150,000,000 shares, issued and outstanding 103,384,408 at December 31, 2014
1,371

1,034

Additional paid-in capital
2,982,019

2,789,695

Accumulated other comprehensive income (loss)
(3,172
)
(2,808
)
Accumulated deficit
(2,252,568
)
(2,202,603
)
727,650

585,318

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
1,786,649

$
1,445,567


The accompanying notes are an integral part of these condensed consolidated financial statements.


5

COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
In thousands
Common
Stock
Shares
Common
Stock Par
Value
Additional
Paid-In Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
Balances at December 31, 2014
103,384

$
1,034

$
2,789,695

$
(2,202,603
)
$
(2,808
)
$
585,318

Net income (loss)
—

—

—

(49,965
)
—

(49,965
)
Other comprehensive income (loss)
—

—

—

—

(364
)
(364
)
Common stock issued for the acquisition of Paramount Gold and Silver Corp.
32,667

327

188,490

—

—

188,817

Common stock issued under stock-based compensation plans, net
1,071

10

3,834

—

—

3,844

Balances at June 30, 2015 (Unaudited)
137,122

$
1,371

$
2,982,019

$
(2,252,568
)
$
(3,172
)
$
727,650

The accompanying notes are an integral part of these condensed consolidated financial statements.

6
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)


NOTE 1 -
BASIS OF PRESENTATION
The interim condensed consolidated financial statements of Coeur Mining, Inc. and its subsidiaries (collectively "Coeur" or "the Company") are unaudited. In the opinion of management, all adjustments and disclosures necessary for the fair presentation of these interim statements have been included. The results reported in these interim statements may not be indicative of the results which will be reported for the year ending December 31, 2015 . The condensed consolidated December 31, 2014 balance sheet data was derived from audited consolidated financial statements. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 .

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Recent Accounting Standards
In April 2015, the FASB issued ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs," which requires that debt issuance costs related to a recognized debt liability be presented as a reduction to the carrying amount of that debt liability, not as an asset. The updated guidance became effective under early adoption for the Company's fiscal year beginning January 1, 2015, and resulted in a reclassification of amounts from Other Non-current Assets to Debt in the current and prior periods.

In February 2015, the FASB issued ASU 2015-02, "Amendments to the Consolidation Analysis," which amends the consolidation requirements in ASC 810. These changes become effective for the Company's fiscal year beginning January 1, 2016. The Company is currently evaluating the potential impact of these changes on the Company's consolidated financial position, results of operations, and cash flows.
In May 2014, the FASB issued ASU 2014-09, " Revenue from Contracts with Customers. " The updated guidance provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition. These changes become effective for the Company's fiscal year beginning January 1, 2018. The Company is currently evaluating the potential impact of these changes on the Company's consolidated financial position, results of operations, and cash flows.

NOTE 3 – SEGMENT REPORTING
The Company’s operating segments include the Palmarejo, San Bartolomé, Rochester, Kensington, and Wharf mines, and Coeur Capital. All operating segments are engaged in the discovery and mining of gold and silver and generate the majority of their revenues from the sale of these precious metals with the exception of Coeur Capital, which holds the Endeavor silver stream and other precious metals royalties. Other includes the La Preciosa project, Joaquin project, Martha mine, corporate office, elimination of intersegment transactions, and other items necessary to reconcile to consolidated amounts.

7
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

Financial information relating to the Company’s segments is as follows (in thousands):
Three months ended June 30, 2015
Palmarejo
San Bartolomé
Kensington
Rochester
Wharf
Coeur Capital
Other
Total
Revenue
Metal sales
$
38,875

$
23,366

$
42,468

$
36,340

$
20,373

$
3,083

$
—

$
164,505

Royalties
—

—

—

—

—

1,758

—

1,758

38,875

23,366

42,468

36,340

20,373

4,841

—

166,263

Costs and Expenses
Costs applicable to sales (1)
30,112

19,157

27,452

24,392

16,632

1,352

—

119,097

Amortization
9,046

5,271

12,684

5,387

3,491

2,619

476

38,974

Exploration
1,837

43

432

501

—

75

691

3,579

Other operating expenses
324

241

526

307

506

13

8,801

10,718

Other income (expense)
Interest income and other, net
(505
)
420

(14
)
—

37

(924
)
(1,866
)
(2,852
)
Interest expense, net
(844
)
(293
)
(57
)
(205
)
—

—

(9,335
)
(10,734
)
Fair value adjustments, net
429

—

—

1,137

—

—

1,188

2,754

Income and mining tax (expense) benefit
837

195

(994
)
(350
)
(274
)
(623
)
1,469

260

Net income (loss)
$
(2,527
)
$
(1,024
)
$
309

$
6,335

$
(493
)
$
(765
)
$
(18,512
)
$
(16,677
)
Segment assets (2)
$
657,448

$
173,451

$
197,241

$
190,704

$
131,990

$
55,896

$
78,395

$
1,485,125

Capital expenditures
$
10,723

$
994

$
4,714

$
5,915

$
1,244

$
—

$
87

$
23,677

(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
Three months ended June 30, 2014
Palmarejo
San Bartolomé
Kensington
Rochester
Coeur Capital
Other
Total
Revenue
Metal sales
$
72,446

$
29,078

$
29,018

$
31,193

$
1,971

$
—

$
163,706

Royalties
—

—

—

—

856

—

856

72,446

29,078

29,018

31,193

2,827

—

164,562

Costs and Expenses
Costs applicable to sales (1)
49,551

20,695

23,218

24,381

842

—

118,687

Amortization
18,044

4,855

11,566

5,025

1,419

513

41,422

Exploration
1,637

57

1,636

738

109

976

5,153

Other operating expenses
325

194

199

844

263

16,333

18,158

Other income (expense)
Interest income and other, net
(1,202
)
691

4

32

(964
)
389

(1,050
)
Interest expense, net
(2,771
)
(11
)
(53
)
(261
)
—

(9,214
)
(12,310
)
Fair value adjustments, net
(4,989
)
—

—

(1,837
)
—

(1,456
)
(8,282
)
Income and mining tax (expense) benefit
1,342

(2,204
)
—

(419
)
263

(1,603
)
(2,621
)
Net income (loss)
$
(4,731
)
$
1,753

$
(7,650
)
$
(2,280
)
$
(507
)
$
(29,706
)
$
(43,121
)
Segment assets (2)
$
1,133,851

$
309,565

$
331,151

$
206,665

$
67,864

$
522,632

$
2,571,728

Capital expenditures
$
5,589

$
1,711

$
3,989

$
3,956

$
—

$
111

$
15,356

(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests

8
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)



Six months ended June 30, 2015
Palmarejo
San Bartolomé
Kensington
Rochester
Wharf
Coeur Capital
Other
Total
Revenue
Metal sales
$
78,269

$
44,913

$
86,506

$
80,371

$
20,373

$
5,028

$
—

$
315,460

Royalties
—

—

—

—

—

3,759

—

3,759

78,269

44,913

86,506

80,371

20,373

8,787

—

319,219

Costs and Expenses
Costs applicable to sales (1)
64,603

38,284

56,871

55,785

16,632

1,985

—

234,160

Amortization
16,380

9,961

24,238

12,230

3,491

4,770

994

72,064

Exploration
2,960

79

2,094

1,223

—

150

1,339

7,845

Other operating expenses
638

485

761

1,448

671

30

22,283

26,316

Other income (expense)
Interest income and other, net
(1,608
)
872

(18
)
(40
)
54

(2,449
)
(2,173
)
(5,362
)
Interest expense, net
(2,184
)
(574
)
(120
)
(430
)
—

—

(18,191
)
(21,499
)
Fair value adjustments, net
(1,116
)
—

—

(1,155
)
—

—

141

(2,130
)
Income and mining tax (expense) benefit
(534
)
(1,211
)
(994
)
(700
)
412

(24
)
3,243

192

Net income (loss)
$
(11,754
)
$
(4,809
)
$
1,410

$
7,360

$
45

$
(621
)
$
(41,596
)
$
(49,965
)
Segment assets (2)
$
657,448

$
173,451

$
197,241

$
190,704

$
131,990

$
55,896

$
78,395

$
1,485,125

Capital expenditures
$
19,907

$
1,943

$
8,859

$
9,170

$
1,295

$
—

$
123

$
41,297

(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
Six months ended June 30, 2014
Palmarejo
San Bartolomé
Kensington
Rochester
Coeur Capital
Other
Total
Revenue
Metal sales
$
140,434

$
56,632

$
65,079

$
55,347

$
4,860

$
—

$
322,352

Royalties
—

—

—

—

1,843

—

1,843

140,434

56,632

65,079

55,347

6,703

—

324,195

Costs and Expenses
Costs applicable to sales (1)
93,126

39,595

51,749

39,089

2,024

—

225,583

Amortization
36,702

9,313

22,275

9,476

3,121

962

81,849

Exploration
2,642

82

2,680

1,912

312

1,742

9,370

Other operating expenses
622

335

390

2,189

504

35,029

39,069

Other income (expense)
Interest income and other, net
(2,772
)
1,373

4

51

(3,512
)
(766
)
(5,622
)
Interest expense, net
(5,595
)
(31
)
(75
)
(266
)
—

(19,398
)
(25,365
)
Fair value adjustments, net
(15,225
)
—

—

(2,510
)
—

(1,982
)
(19,717
)
Income and mining tax (expense) benefit
5,171

(4,969
)
—

(419
)
(25
)
2,310

2,068

Net income (loss)
$
(11,079
)
$
3,680

$
(12,086
)
$
(463
)
$
(2,795
)
$
(57,569
)
$
(80,312
)
Segment assets (2)
$
1,133,851

$
309,565

$
331,151

$
206,665

$
67,864

$
522,632

$
2,571,728

Capital expenditures
$
9,331

$
3,152

$
8,700

$
4,915

$
—

$
1,194

$
27,292

(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests

Assets
June 30, 2015

December 31, 2014
Total assets for reportable segments
$
1,485,125

$
1,084,257

Cash and cash equivalents
205,868

270,861

Other assets
95,656

90,449

Total consolidated assets
$
1,786,649

$
1,445,567



9
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

Geographic Information
Long-Lived Assets
June 30, 2015

December 31, 2014
United States
$
355,289

$
275,594

Mexico
620,011

298,101

Bolivia
100,386

107,960

Australia
18,252

21,362

Argentina
10,937

10,970

Other
14,583

15,116

Total
$
1,119,458

$
729,103


Revenue
Three months ended June 30,
Six months ended June 30,
2015
2014
2015
2014
United States
$
99,180

$
60,212

$
187,249

$
120,427

Mexico
39,443

72,657

79,584

141,167

Bolivia
23,366

29,078

44,913

56,632

Australia
3,083

1,971

5,028

4,860

Other
1,191

644

$
2,445

$
1,109

Total
$
166,263

$
164,562

$
319,219

$
324,195


NOTE 4 – RECLAMATION
Reclamation and mine closure costs are based principally on legal and regulatory requirements. Management estimates costs associated with reclamation of mining properties. The Company uses assumptions about future costs, mineral prices, mineral processing recovery rates, production levels, capital costs, and reclamation costs. On an ongoing basis, management evaluates its estimates and assumptions, and future expenditures could differ from current estimates.
Changes to the Company’s asset retirement obligations for operating sites are as follows:
Three months ended June 30,
Six months ended June 30,
In thousands
2015
2014
2015
2014
Asset retirement obligation - Beginning
$
86,059

$
58,460

$
67,214

$
57,454

Accretion
1,990

1,435

3,614

2,752

Additions and changes in estimates
—

—

18,270

—

Settlements
(448
)
(100
)
(1,497
)
(411
)
Asset retirement obligation - Ending
$
87,601

$
59,795

$
87,601

$
59,795

The increase in asset retirement obligations in the six months ended June 30, 2015 is due to the acquisition of the Wharf gold mine. The Company has accrued $3.7 million and $3.6 million at June 30, 2015 and December 31, 2014 , respectively, for reclamation liabilities related to former mining activities, which are included in Reclamation.

NOTE 5 – STOCK-BASED COMPENSATION
The Company has stock incentive plans for executives and eligible employees. Stock awards include stock options, restricted stock, and performance shares. Stock-based compensation expense for the three and six months ended June 30, 2015 and 2014 was $2.6 million and $2.4 million and $4.8 million and $5.0 million , respectively. At June 30, 2015 , there was $13.7 million of unrecognized stock-based compensation cost expected to be recognized over a period of 1.7 years. During the six months ended June 30, 2015 , the supplemental incentive accrual increased $0.4 million to $1.4 million .
The following table summarizes the grants awarded during the six months ended June 30, 2015 :
Grant date
Restricted
stock
Grant date fair
value of
restricted stock
Stock options
Grant date
fair value of
stock
options
Performance
shares
Grant date fair
value of
performance
shares
May 13, 2015
1,217,814

$
5.57

310,128

$
2.65

809,293

$
6.97


10
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

The following options and stock appreciation rights were exercisable during the six months ended June 30, 2015 :
Award Type
Number of
Exercised Units
Weighted Average
Exercised Price
Number of Exercisable Units
Weighted Average
Exercisable Price
Options
—

$
—

331,181

$
19.62

Stock Appreciation Rights
—

$
—

46,572

$
14.06


NOTE 6 – RETIREMENT SAVINGS PLAN
The Company has a 401(k) retirement savings plan that covers all eligible U.S. employees. Eligible employees may elect to contribute up to 75% of base salary, subject to ERISA limitations. In addition, the Company has a deferred compensation plan for employees whose benefits under the 401(k) plan are limited by federal regulations. The Company makes matching contributions equal to 100% of the employee’s contribution up to 4% of the employee's salary. The Company may also provide a voluntary, noncontributory defined contribution based on an eligible employee's salary. Company contributions for the three and six months ended June 30, 2015 and 2014 were $1.6 million and $1.6 million and $3.2 million and $3.0 million , respectively.

NOTE 7 – INCOME AND MINING TAXES
The following table summarizes the components of Income and mining tax (expense) benefit for the three and six months ended June 30, 2015 and 2014 by significant jurisdiction:
Three months ended June 30,
Six months ended June 30,
2015

2014
2015
2014
In thousands
Income (loss) before tax
Tax (expense) benefit
Income (loss) before tax
Tax (expense) benefit
Income (loss) before tax
Tax (expense) benefit
Income (loss) before tax
Tax (expense) benefit
United States
$
(9,764
)
$
319


$
(31,370
)
$
(146
)
$
(30,471
)
$
2,204

$
(60,214
)
$
(292
)
Argentina
(656
)
(1
)

(688
)
(349
)
(1,352
)
(2
)
(2,892
)
4,083

Mexico
(5,582
)
548


(12,710
)
107

(15,255
)
(716
)
(28,716
)
3,828

Bolivia
(1,219
)
196


3,957

(2,205
)
(3,598
)
(1,211
)
8,649

(4,969
)
Other jurisdictions
284

(802
)
311

(28
)
519

(83
)
793

(582
)

$
(16,937
)
$
260

$
(40,500
)
$
(2,621
)
$
(50,157
)
$
192

$
(82,380
)
$
2,068


The Company’s effective tax rate is impacted by recurring items, such as the full valuation allowance on the deferred tax assets relating to losses in the United States and certain foreign jurisdictions, mining tax expense, foreign exchange rates on deferred tax balances and uncertain tax position accruals. In addition, the Company's consolidated effective income tax rate is a function of the combined effective tax rates and foreign exchange rates in the jurisdictions in which it operates. Variations in the jurisdictional mix of income and loss and foreign exchange rates result in significant fluctuations in our consolidated effective tax rate.

A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related tax benefits will not be realized. Each quarter, the Company analyzes its deferred tax assets and if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance. Conversely, if it is determined that the Company will ultimately be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of risk factors that could impact the Company’s ability to realize its deferred tax assets. For additional information, see Part II, Item IA of this Report.
The Company or one of its subsidiaries files income tax returns in the U.S. Federal jurisdiction, and various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. Federal income tax examination by tax authorities for years before 2012 and is no longer subject to examination by certain foreign jurisdictions by tax authorities for years before 2005. As a result of statutes of limitation that will begin to expire within the next 12 months in various jurisdictions and possible settlements of audit-related issues with taxing authorities in various jurisdictions with respect to which none of the issues are individually significant, the Company believes that it is reasonably possible that the total amount of its net unrecognized income tax benefits will decrease by up to $0.5 million in the next 12 months.

As of June 30, 2015 and December 31, 2014, the Company had $17.8 million and $16.1 million of total gross unrecognized tax benefits, respectively. If recognized, these unrecognized tax benefits would positively impact the Company’s effective income tax rate. The Company’s continuing practice is to recognize potential interest and/or penalties related to unrecognized tax benefits

11
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

as part of its income tax expense. At June 30, 2015 and December 31, 2014, the amount of accrued income-tax-related interest and penalties was $8.1 million and $6.9 million , respectively.
NOTE 8 – NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock.
For the three and six months ended June 30, 2015 and 2014 , 3,375,337 and 2,147,989 shares and 3,415,129 and 2,147,390 , respectively, of common stock equivalents related to equity-based awards were not included in the diluted per share calculation as the shares would be antidilutive.
The 3.25% Convertible Senior Notes were not included in the computation of diluted net income (loss) per share for the three and six months ended June 30, 2015 and 2014 because there is no excess value upon conversion over the principal amount of the Notes.
Three months ended June 30,
Six months ended June 30,
In thousands except per share amounts
2015
2014
2015
2014
Net income (loss) available to common stockholders
$
(16,677
)
$
(43,121
)
$
(49,965
)
$
(80,312
)
Weighted average shares:
Basic
135,036

102,444

118,897

102,405

Diluted
135,036

102,444

118,897

102,405

Income (loss) per share:
Basic
$
(0.12
)
$
(0.42
)
$
(0.42
)
$
(0.78
)
Diluted
$
(0.12
)
$
(0.42
)
$
(0.42
)
$
(0.78
)

NOTE 9 – FAIR VALUE MEASUREMENTS
The following table presents the components of Fair value adjustments, net :
Three months ended June 30,
Six months ended June 30,
In thousands
2015
2014
2015
2014
Palmarejo royalty obligation embedded derivative
$
385

$
(5,061
)
$
(1,160
)
$
(15,296
)
Rochester net smelter royalty (NSR) royalty obligation
1,137

(1,837
)
(1,155
)
(2,510
)
Silver and gold options
1,232

(1,374
)
185

(2,868
)
Foreign exchange contracts
—

(10
)
—

957

Fair value adjustments, net
$
2,754

$
(8,282
)
$
(2,130
)
$
(19,717
)
Accounting standards establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1), secondary priority to quoted prices in inactive markets or observable inputs (Level 2), and the lowest priority to unobservable inputs (Level 3).

12
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:
Fair Value at June 30, 2015
In thousands
Total
Level 1
Level 2
Level 3
Assets:
Equity securities
$
4,216

$
4,127

$
—

$
89

Silver and gold options
1,250

—

1,250

—

$
5,466

$
4,127

$
1,250

$
89

Liabilities:
Palmarejo royalty obligation embedded derivative
$
15,281

$
—

$
—

$
15,281

Rochester NSR royalty obligation
13,905

—

—

13,905

Silver and gold options
123

—

123

—

Other derivative instruments, net
513

—

513

—

$
29,822

$
—

$
636

$
29,186

Fair Value at December 31, 2014
In thousands
Total
Level 1
Level 2
Level 3
Assets:
Equity securities
$
5,982

$
4,603

$
—

$
1,379

Silver and gold options
3,882

—

3,882

—

$
9,864

$
4,603

$
3,882

$
1,379

Liabilities:
Palmarejo royalty obligation embedded derivative
$
21,912

$
—

$
—

$
21,912

Rochester NSR royalty obligation
15,370

—

—

15,370

Silver and gold options
1,039

—

1,039

—

Other derivative instruments, net
805

—

805

—

$
39,126

$
—

$
1,844

$
37,282

The Company’s investments in equity securities are recorded at fair market value in the financial statements based primarily on quoted market prices. Such instruments are classified within Level 1 of the fair value hierarchy. For certain of the equity securities quoted market prices are not available. These securities are valued using pricing models which require the use of observable and unobservable inputs. These securities are classified within Level 3 of the fair value hierarchy.
The Company’s silver and gold options and other derivative instruments, net, which relate to concentrate sales contracts and foreign exchange contracts, are valued using pricing models, which require inputs that are derived from observable market data, including contractual terms, forward market prices, yield curves, credit spreads, and other unobservable inputs. The model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy.
The fair values of the Palmarejo royalty obligation embedded derivative and Rochester NSR royalty obligation were estimated based on observable market data including contractual terms, forward silver and gold prices, yield curves, and credit spreads, as well as the Company’s current mine plan which is considered a significant unobservable input. Therefore, the Company has classified these obligations as Level 3 financial liabilities. Based on current mine plans, expected royalty durations of 1.2 years and 2.8 years were used to estimate the fair value of the Palmarejo royalty obligation embedded derivative and Rochester NSR royalty obligation, respectively, at June 30, 2015 .

13
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

No assets or liabilities were transferred between fair value levels in the six months ended June 30, 2015 .
The following tables present the changes in the fair value of the Company's Level 3 financial liabilities for the three and six months ended June 30, 2015 :
Three months ended June 30, 2015
In thousands
Balance at the beginning of the period
Revaluation
Settlements
Balance at the
end of the
period
Palmarejo royalty obligation embedded derivative
$
19,250

$
(385
)
$
(3,584
)
$
15,281

Rochester NSR royalty obligation
16,522

(1,137
)
(1,480
)
13,905

Equity securities
1,379

(904
)
(386
)
89

Six months ended June 30, 2015
In thousands
Balance at the beginning of the period
Revaluation
Settlements
Balance at the
end of the
period
Palmarejo royalty obligation embedded derivative
$
21,912

$
1,159

$
(7,790
)
$
15,281

Rochester NSR royalty obligation
15,370

1,155

(2,620
)
13,905

Equity securities
1,379

(904
)
(386
)
89


The fair value of financial assets and liabilities carried at book value in the financial statements at June 30, 2015 and December 31, 2014 is presented in the following table:
June 30, 2015
In thousands
Book Value
Fair Value
Level 1
Level 2
Level 3
Liabilities:

3.25% Convertible Senior Notes due 2028
$
712

$
689

$
—

$
689

$
—

7.875% Senior Notes due 2021
435,234

367,701

—

367,701

—

Term Loan due 2020
100,000

100,000

—

100,000

—

San Bartolomé Line of Credit
9,141

9,141

—

9,141

—

Palmarejo gold production royalty obligation
25,488

27,903

—

—

27,903

December 31, 2014
In thousands
Book Value
Fair Value
Level 1
Level 2
Level 3
Liabilities:
3.25% Convertible Senior Notes due 2028
$
5,334

$
4,979

$
—

$
4,979

$
—

7.875% Senior Notes due 2021
437,454

343,305

—

343,305

—

San Bartolomé Line of Credit
14,785

14,785

—

14,785

—

Palmarejo gold production royalty obligation
34,047

38,290

—

—

38,290

The fair values of the 3.25% Convertible Senior Notes and 7.875% Senior Notes outstanding were estimated using quoted market prices. The Term Loan due 2020 was originated by a third party at June 25, 2015 and, as a result, book value is assumed to approximate fair value. The fair value of the San Bartolomé line of credit approximates book value due to the short-term nature of the liability and absence of significant interest rate or credit concerns. The fair value of the Palmarejo gold production royalty obligation is estimated based on observable market data including contractual terms, forward silver and gold prices, yield curves, and credit spreads, as well as the Company’s current mine plan which is considered a significant unobservable input.


14
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 10 – DERIVATIVE FINANCIAL INSTRUMENTS
Palmarejo Gold Production Royalty
On January 21, 2009, the Company's subsidiary, Coeur Mexicana S.A. de C.V. ("Coeur Mexicana"), entered into a gold production royalty agreement with a subsidiary of Franco-Nevada Corporation. The royalty covers 50% of the life of mine production from the Palmarejo mine and adjacent properties. The royalty transaction includes a minimum obligation of 4,167 gold ounces per month and terminates when payments of 400,000 gold ounces have been made. At June 30, 2015 , a total of 59,913 gold ounces remain outstanding under the obligation.
The price volatility associated with the minimum royalty obligation is considered an embedded derivative. The Company is required to recognize the change in fair value of the remaining minimum obligation due to changing gold prices. Unrealized gains are recognized in periods when the gold price has decreased from the previous period and unrealized losses are recognized in periods when the gold price increases. The fair value of the embedded derivative is reflected net of the Company's current credit adjusted risk free rate, which was 10.3% and 11.8% at June 30, 2015 and December 31, 2014 , respectively. The fair value of the embedded derivative at June 30, 2015 and December 31, 2014 was a liability of $15.3 million and $21.9 million , respectively. For the three and six months ended June 30, 2015 and 2014 , the mark-to-market adjustments were gains of $0.4 million and losses of $5.1 million and losses of $1.2 million and $15.3 million , respectively.
Payments on the royalty obligation decrease the carrying amount of the minimum obligation and the derivative liability. Each monthly payment is an amount equal to the greater of the minimum of 4,167 ounces of gold or 50% of actual gold production multiplied by the excess of the monthly average market price of gold above $412 per ounce, subject to a 1% annual inflation adjustment. For the three and six months ended June 30, 2015 and 2014 , realized losses on settlement of the liabilities were $3.6 million and $5.5 million and $7.8 million and $11.7 million , respectively. The mark-to-market adjustments and realized losses are included in Fair value adjustments, net .
Provisional Silver and Gold Sales
The Company enters into sales contracts with third-party smelters and refiners which, in most cases, provide for a provisional payment based upon preliminary assays and quoted metal prices. The provisionally priced sales contracts contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable recorded at the forward price at the time of sale. The embedded derivatives do not qualify for hedge accounting and are marked to market through earnings each period until final settlement. Changes in silver and gold prices resulted in provisional pricing mark-to-market losses of $0.6 million and nil and gains of $0.3 million and $0.9 million in the three and six months ended June 30, 2015 and 2014 , respectively. At June 30, 2015 , the Company had outstanding provisionally priced sales of 0.8 million ounces of silver and 44,238 ounces of gold at prices of $15.84 and $1,193 , respectively.
Silver and Gold Options
At June 30, 2015 , the Company has outstanding put spread contracts on 0.9 million ounces of silver. The weighted average high and low strike prices on the silver put spreads are $17.00 per ounce and $15.50 per ounce, respectively.
If the market price of silver were to average less than the high strike price but more than the low strike price during the contract period, the Company would receive the difference between the average market price and the high strike price for the contracted volume over the contract period. If the market price of silver were to average less than the low strike price during the contract period, the Company would receive the difference between the average market price and the high strike price for the contracted volume over the contract period, and the Company would be required to pay the difference between the average market price and the low strike price for the contracted volume over the contract period.
The put spread contracts are generally net cash settled and expire during the third quarter of 2015. At June 30, 2015 , the fair market value of the put spreads was a net asset of $1.1 million .
At December 31, 2014 , the Company had outstanding put spread contracts on 1.3 million ounces of silver and 24,000 ounces of gold. The weighted average high and low strike prices on the silver put spreads were $18.00 per ounce and $16.00 per ounce, respectively. The weighted average high and low strike prices on the gold put spreads were $1,200 and $1,050 , respectively.
During the three and six months ended June 30, 2015 and 2014 , the Company recorded unrealized gains of $1.2 million and $1.4 million and unrealized gains of $1.0 million and $2.9 million , respectively, related to outstanding options which were included in Fair value adjustments, net . The Company recognized no realized losses or gains and losses of $0.7 million during the three months ended June 30, 2015 and 2014 , respectively, and realized gains of $0.8 million and losses of $0.4 million during the six months ended June 30, 2015 and 2014 , respectively, from expiring and terminated contracts.

15
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

At June 30, 2015 , the Company had the following derivative instruments that settle in each of the years indicated:
In thousands except average prices and notional ounces
2015
2016
Thereafter
Palmarejo gold production royalty
$
22,220

$
23,374

$
—

Average gold price in excess of minimum contractual deduction
$
762

$
760

$
—

Notional ounces
29,169

30,744

—

Provisional silver sales
$
12,505

$
—

$
—

Average silver price
$
15.84

$
—

$
—

Notional ounces
789,479

—

—

Provisional gold sales
$
52,776

$
—

$
—

Average gold price
$
1,193

$
—

$
—

Notional ounces
44,238

—

—

Silver put options purchased
$
15,300

$
—

$
—

Average silver strike price
$
17.00

$
—

$
—

Notional ounces
900,000

—

—

Silver put options sold
$
(13,950
)
$
—

$
—

Average silver strike price
$
15.50

$
—

$
—

Notional ounces
900,000

—

—


The following summarizes the classification of the fair value of the derivative instruments:
June 30, 2015
In thousands
Prepaid expenses and other
Accrued liabilities and other
Current portion of royalty obligation
Non-current portion of royalty obligation
Palmarejo gold production royalty
—

—

13,878

1,404

Silver and gold options
1,250

123

—

—

Concentrate sales contracts
142

655

—

—

$
1,392

$
778

$
13,878

$
1,404

December 31, 2014
Prepaid expenses and other
Accrued liabilities and other
Current portion of royalty obligation
Non-current portion of royalty obligation
Palmarejo gold production royalty
—

—

14,405

7,507

Silver and gold options
3,882

1,039

—

—

Concentrate sales contracts
43

848

—

—

$
3,925

$
1,887

$
14,405

$
7,507


16
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

The following represent mark-to-market gains (losses) on derivative instruments for the three and six months ended June 30, 2015 , and 2014 (in thousands):
Three months ended June 30,
Six months ended June 30,
Financial statement line
Derivative
2015
2014
2015
2014
Revenue
Concentrate sales contracts
$
(623
)
$
7

$
291

$
872

Costs applicable to sales
Foreign exchange contracts
—

(10
)
—

(924
)
Fair value adjustments, net
Foreign exchange contracts
—

—

—

957

Fair value adjustments, net
Palmarejo gold royalty
385

(5,061
)
(1,160
)
(15,296
)
Fair value adjustments, net
Silver and gold options
1,232

(1,374
)
185

(2,868
)
$
994

$
(6,438
)
$
(684
)
$
(17,259
)
Credit Risk
The credit risk exposure related to any derivative instrument is limited to the unrealized gains, if any, on outstanding contracts based on current market prices. To reduce counter-party credit exposure, the Company enters into contracts with financial institutions management deems credit worthy and limits credit exposure to each institution. The Company does not anticipate non-performance by any of its counterparties. In addition, to allow for situations where derivative positions may need to be revised, the Company transacts only in markets that management considers highly liquid.

NOTE 11 – ACQUISITIONS
On April 17, 2015 , the Company completed the acquisition of Paramount Gold and Silver Corp. ("Paramount"), which held mineral claims adjacent to the Company's Palmarejo mine, including a continuation of the Independencia mineral vein. Upon closing, Paramount became a wholly-owned subsidiary of the Company, and each issued and outstanding share of Paramount common stock was converted into 0.2016 shares of Coeur common stock, with cash paid in lieu of fractional shares. Immediately prior to completion of the acquisition, Paramount spun off to its existing stockholders a separate, publicly-traded company, Paramount Gold Nevada Corp. ("SpinCo"), which owns the Sleeper Gold Project and other assets in Nevada. SpinCo was capitalized with $8.5 million in cash contributed by Coeur, which amount has been included in the total consideration paid for the acquisition of Paramount. The Company also paid $1.5 million to acquire 4.9% of the newly issued and outstanding shares of SpinCo.
The transaction was accounted for as an asset acquisition, as Paramount is an exploration stage project, which requires that the total purchase price be allocated to the assets acquired and liabilities assumed based on their relative fair values. The purchase price was allocated to the assets acquired and liabilities assumed as follows (in thousands except share data):
Common shares issued (32,667,327 at $5.78)
$
188,817

Cash
8,530

Transaction advisory fees and other acquisition costs
3,898

Total purchase price
201,245

Liabilities assumed:
Accounts payable and accrued liabilities
2,737

Deferred income taxes
103,089

Total liabilities assumed
105,826

Total consideration
$
307,071

Assets acquired:
Cash
$
118

Receivables and other current assets
1,685

Property, plant, and equipment
215

Mining properties, net
305,053

Total assets acquired
$
307,071

The assets acquired and liabilities assumed have been assigned to the Palmarejo reportable operating segment.

17
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

On February 20, 2015, the Company completed its acquisition of the Wharf gold mine located near Lead, South Dakota, from a subsidiary of Goldcorp in exchange for $99.8 million in cash. The transaction was accounted for as a business combination which requires that assets acquired and liabilities assumed be recognized at their respective fair values at the acquisition date. The Company incurred $2.1 million of acquisition costs, which are included in Pre-development, reclamation, and other on the Condensed Consolidated Statements of Comprehensive Income (Loss).
The following summarizes the allocation of purchase price to the fair value of assets acquired and liabilities assumed at the date of acquisition (in thousands):
Cash
$
99,840

Liabilities assumed:
Accounts payable and accrued liabilities
5,494

Reclamation
18,270

Deferred income taxes
9,680

Other non-current liabilities
3,750

Total liabilities assumed
37,194

Total consideration
$
137,034

Assets acquired:
Cash
$
982

Receivables
3,061

Inventory
2,147

Ore on leach pads
12,710

Other current assets
2,924

Property, plant, and equipment
30,055

Mining properties, net
81,189

Other non-current assets
3,966

Total assets acquired
$
137,034

The following table presents the unaudited pro forma summary of the Company’s Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2015 and 2014 , as if the acquisition had occurred on January 1, 2015. The following unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations as they would have been had the transaction occurred on the assumed date, nor is it necessarily an indication of trends in future results for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the pro forma information, potential synergies, and cost savings from operating efficiencies.
Three months ended June 30,
Six months ended June 30,
In thousands
2015
2014
2015
2014
Revenue
$
166,263

$
186,104

$
337,219

$
365,021

Income (loss) before income and mining taxes
(16,937
)
(33,391
)
(50,209
)
(70,065
)
Net income (loss)
(16,677
)
(35,980
)
(50,017
)
(67,937
)

NOTE 12 – INVESTMENTS
The Company invests in equity securities of silver and gold exploration and development companies. These investments are classified as available-for-sale and are measured at fair value in the financial statements with unrealized gains and losses recorded in Other comprehensive income (loss) .
At June 30, 2015
In thousands
Cost
Gross
Unrealized
Losses
Gross
Unrealized
Gains
Estimated
Fair Value
Equity securities
4,285

(939
)
870

4,216



18
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

At December 31, 2014
In thousands
Cost
Gross
Unrealized
Losses
Gross
Unrealized
Gains
Estimated
Fair Value
Equity securities
$
5,687

$
(8
)
$
303

$
5,982


The following table summarizes the gross unrealized losses on equity securities for which other-than-temporary impairments have not been recognized and the fair values of those securities, aggregated by the length of time the individual securities have been in a continuous unrealized loss position, at June 30, 2015 :
Less than twelve months
Twelve months or more
Total
In thousands
Unrealized Losses
Fair Value
Unrealized Losses
Fair Value
Unrealized Losses
Fair Value
Equity securities
$
(939
)
$
932

$
—

$
—

$
(939
)
$
932


The Company performs a quarterly assessment on each of its equity securities with unrealized losses to determine if the security is other than temporarily impaired. The Company recorded pre-tax other-than-temporary impairment losses of nil and $0.9 million and $1.5 million and $3.5 million in the three and six months ended June 30, 2015 and 2014 , respectively.

NOTE 13 – RECEIVABLES
Receivables consist of the following:
In thousands
June 30, 2015
December 31, 2014
Current receivables:
Trade receivables
$
24,791

$
20,448

Income tax receivable
28,652

30,045

Value added tax receivable
54,925

63,805

Other
3,791

2,623

$
112,159

$
116,921

Non-current receivables:
Value added tax receivable
$
26,738

$
21,686

Total receivables
$
138,897

$
138,607


NOTE 14 – INVENTORY AND ORE ON LEACH PADS
Inventory consists of the following:
In thousands
June 30, 2015
December 31, 2014
Inventory:
Concentrate
$
11,761

$
23,563

Precious metals
48,336

40,870

Supplies
49,110

50,498

$
109,207

$
114,931

Ore on leach pads:
Current
$
67,458

$
48,204

Non-current
32,663

37,889

$
100,121

$
86,093

Total inventory and ore on leach pads
$
209,328

$
201,024


19
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)


NOTE 15 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
In thousands
June 30, 2015
December 31, 2014
Land
$
8,286

$
1,752

Facilities and equipment
689,520

647,181

Capital leases
26,338

28,680

724,144

677,613

Accumulated amortization
(491,356
)
(464,852
)
232,788

212,761

Construction in progress
21,786

15,150

Property, plant and equipment, net
$
254,574

$
227,911

NOTE 16 – MINING PROPERTIES
Mining properties consist of the following (in thousands):
June 30, 2015
Palmarejo
San
Bartolomé
Kensington
Rochester
Wharf
La Preciosa
Joaquin
Coeur Capital
Total
Mine development
$
154,514

$
49,419

$
224,586

$
155,269

$
32,056

$
—

$
—

$
—

$
615,844

Accumulated amortization
(127,458
)
(28,592
)
(118,415
)
(120,031
)
(1,571
)
—

—



(396,067
)
27,056

20,827

106,171

35,238

30,485

—

—

—

219,777

Mineral interests
821,913

17,560

—

—

49,601

49,085

10,000

81,461

1,029,620

Accumulated amortization
(340,433
)
(10,762
)
—

—

(3,097
)
—

—

(30,221
)
(384,513
)
481,480

6,798

—

—

46,504

49,085

10,000

51,240

645,107

Mining properties, net
$
508,536

$
27,625

$
106,171

$
35,238

$
76,989

$
49,085

$
10,000

$
51,240

$
864,884

December 31, 2014
Palmarejo
San
Bartolomé
Kensington
Rochester
La Preciosa
Joaquin
Coeur Capital
Total
Mine development
$
137,821

$
49,305

$
217,138

$
153,535

$
—

$
—

$
—

$
557,799

Accumulated amortization
(121,906
)
(26,106
)
(106,865
)
(113,533
)
—

—

—

(368,410
)
15,915

23,199

110,273

40,002

—

—

—

189,389

Mineral interests
521,349

17,560

—

—

49,059

10,000

81,461

679,429

Accumulated amortization
(332,032
)
(10,143
)
—

—

—

—

(25,451
)
(367,626
)
189,317

7,417

—

—

49,059

10,000

56,010

311,803

Mining properties, net
$
205,232

$
30,616

$
110,273

$
40,002

$
49,059

$
10,000

$
56,010

$
501,192


20
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 17 – DEBT
Long-term debt and capital lease obligations at June 30, 2015 and December 31, 2014 are as follows:
June 30, 2015
December 31, 2014
In thousands
Current
Non-Current
Current
Non-Current
3.25% Convertible Senior Notes due 2028
$
—

$
712

$
5,334

$
—

7.875% Senior Notes due 2021, net (1)
—

426,234

—

427,603

Term Loan due 2020, net (2)
1,000

93,673

—

—

San Bartolomé Letter of Credit
486

8,655

4,481

10,304

Capital lease obligations
7,635

9,315

7,683

13,141

$
9,121

$
538,589

$
17,498

$
451,048

(1) Net of unamortized debt issuance costs and premium received of $6.7 million and $7.3 million as of June 30, 2015 and December 31, 2014, respectively.
(2) Net of unamortized debt issuance costs of $5.3 million as of June 30, 2015.
7.875% Senior Notes due 2021
During the first quarter of 2015, the Company repurchased $2.0 million in aggregate principal amount of its 7.875% Senior Notes due 2021 (the "Senior Notes"), resulting in a balance of $432.9 million at June 30, 2015 .

3.25% Convertible Senior Notes due 2028
Per the indenture governing the 3.25% Convertible Senior Notes due 2028 (the “Convertible Notes”), the Company announced on February 12, 2015 that it was offering to repurchase all of the Convertible Notes. During the first quarter of 2015, the Company repurchased $4.6 million in aggregate principal amount, leaving a balance of $0.7 million at June 30, 2015 . The Convertible Notes are classified as non-current liabilities at June 30, 2015 as a result of the expiration of the holders' option to require the Company to repurchase the notes on March 15, 2015.
Short-term Loan
On March 31, 2015, the Company entered into a credit agreement (the "Short-term Credit Agreement") with The Bank of Nova Scotia. The Short-term Credit Agreement provided for a $50.0 million loan (the "Short-term Loan") to the Company. The Short-term Loan generally bore interest at a rate equal to an adjusted Eurocurrency rate plus a margin of 2.50% . Voluntary prepayments of the Short-term Loan under the Short-term Credit Agreement were permitted without prepayment premium or penalty, subject to notice requirements and payment of accrued interest. The Short-term Loan was secured by a pledge of the Company’s stock in Wharf Resources (U.S.A.), Inc. ("Wharf") and by the grant of security in substantially all of the assets of Wharf and its subsidiaries. On June 25, 2015, the Short-term Loan was repaid in full, the security for the Short-term Loan was released, and the Short-term Credit Agreement was terminated.
Term Loan due 2020
On June 23, 2015, the Company and certain of its subsidiaries entered into a five year Credit Agreement for a senior secured term loan (the "Term Loan due 2020") with Barclays Bank PLC, as administrative agent (the “Term Loan Credit Agreement”). The Term Loan Credit Agreement provides for a $100.0 million Term Loan due 2020 to the Company, of which a portion of the proceeds were used to repay the Short-term Loan, and the remaining proceeds are expected to be used for general corporate purposes. The Term Loan due 2020 contains no financial maintenance covenants and currently bears interest at a rate equal to an adjusted Eurodollar rate plus a margin of 8.00% (at no time will the adjusted Eurodollar rate be deemed to be less than 1.00% per annum). Voluntary prepayments of the Term Loan due 2020 under the Term Loan Credit Agreement are permitted, subject to the payment of a make-whole premium if such prepayment occurs prior to the first anniversary of the closing date, a premium of 105.0% of the principal amount between the first anniversary and the second anniversary of the closing date and a premium of 103.0% if such prepayment occurs on or after the second anniversary but prior to the third anniversary of the closing date. The Term Loan Credit Agreement requires amortization payments equal to 1.0% of the principal amount of the Term Loan due 2020 per annum and also requires net cash proceeds of debt issuances, excess cash flow, asset sales and casualty insurance recoveries (in each case, subject to certain exceptions) to either be reinvested in long-term assets used in the Company’s business or be applied as a mandatory prepayment of the Term Loan due 2020. Amounts repaid on the Term Loan due 2020 may not be re-borrowed. The obligations under the Term Loan due 2020 are secured by substantially all of the assets of the Company and its domestic subsidiaries, including the land, mineral rights and infrastructure at the Kensington, Rochester and Wharf mines, as well as a pledge of the shares of certain of the Company's subsidiaries. The Term Loan Credit Agreement contains customary representations and warranties, events of default, and affirmative and negative covenants.

21
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

Lines of Credit
At June 30, 2015 , San Bartolomé had two outstanding lines of credit. The first line of credit is for $12.0 million bearing interest at 6.0% per annum, maturing in 270 days . The second line of credit is for $15.0 million bearing interest at 6.0% per annum, maturing in three years. Both lines of credit are secured with machinery and equipment. There was a combined outstanding balance of $9.1 million on both lines of credit at June 30, 2015 .
Palmarejo Gold Production Royalty Obligation
On January 21, 2009, Coeur Mexicana entered into a gold production royalty transaction with a subsidiary of Franco-Nevada Corporation under which the subsidiary of Franco-Nevada Corporation purchased a royalty covering 50% of the life of mine gold to be produced from its Palmarejo silver and gold mine in Mexico.
The royalty agreement provides for a minimum obligation to be paid monthly on a total of 400,000 ounces of gold, or 4,167 ounces per month over an initial eight year period. Each monthly payment is an amount equal to the greater of 4,167 ounces of gold or 50% of actual gold production multiplied by the excess of the monthly average market price of gold above $412 per ounce, subject to a 1% annual inflation compounding adjustment. Payments under the royalty agreement are made in cash or gold bullion. During the three months ended June 30, 2015 and 2014 , the Company paid $9.8 million and $12.3 million , respectively and the Company paid $20.1 million and $27.0 million during the six months ended June 30, 2015 and 2014 , respectively. At June 30, 2015 , payments had been made on a total of 340,087 ounces of gold with further payments to be made on an additional 59,913 ounces of gold.
The Company used an implicit interest rate of 30.5% to discount the original royalty obligation, based on the fair value of the consideration received projected over the expected future cash flows at inception of the obligation. The discounted obligation is accreted to its expected future value over the expected minimum payment period based on the implicit interest rate. The Company recognized accretion expense for the three months ended June 30, 2015 and 2014 of $1.8 million and $2.9 million , respectively, and $3.8 million and $6.1 million for the six months ended June 30, 2015 and 2014 , respectively. At June 30, 2015 and December 31, 2014 , the remaining minimum obligation under the royalty agreement was $25.5 million and $34.0 million , respectively.
Interest Expense
Interest expense consists of the following:
Three months ended June 30,
Six months ended June 30,
In thousands
2015
2014
2015
2014
3.25% Convertible Senior Notes due 2028
$
6

$
43

$
43

$
86

7.875% Senior Notes due 2021
8,523

8,859

17,085

15,323

Short-term Loan
326

—

326

—

Term Loan due 2020
148

—

148

—

San Bartolomé Line of Credit
293

—

565

—

Revolving Credit Facility
—

—

—

179

Loss on Revolving Credit Facility
—

—

—

3,035

Capital lease obligations
272

333

570

392

Accretion of Palmarejo gold production royalty obligation
1,771

2,898

3,802

6,094

Amortization of debt issuance costs
508

420

913

918

Accretion of debt premium
(104
)
(108
)
(209
)
(144
)
Capitalized interest
(1,009
)
(135
)
(1,744
)
(518
)
Total interest expense, net of capitalized interest
$
10,734

$
12,310

$
21,499

$
25,365


22
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)


NOTE 18 - SUPPLEMENTAL GUARANTOR INFORMATION
The following Condensed Consolidating Financial Statements are presented to satisfy disclosure requirements of Rule 3-10 of Regulation S-X resulting from the guarantees by Coeur Alaska, Inc., Coeur Explorations, Inc., Coeur Rochester, Inc., Coeur South America Corp., Wharf Resources (U.S.A.) Inc. and subsidiaries, and Coeur Capital, Inc. (collectively, the “Subsidiary Guarantors”) of the 7.875% Senior Notes due 2021. The following schedules present Condensed Consolidating Financial Statements of (a) Coeur, the parent company; (b) the Subsidiary Guarantors; and (c) certain wholly owned domestic and foreign subsidiaries of the Company (collectively, the “Non-Guarantor Subsidiaries”). Each of the Subsidiary Guarantors is 100% owned by Coeur and the guarantees are full and unconditional. There are no restrictions on the ability of Coeur to obtain funds from its subsidiaries by dividend or loan.







23
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
THREE MONTHS ENDED JUNE 30, 2015
In thousands
Coeur Mining, Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
Revenue
$
—

$
99,635

$
66,628

$
—

$
166,263

COSTS AND EXPENSES
Costs applicable to sales (1)
—

68,477

50,620

—

119,097

Amortization
496

21,772

16,706

—

38,974

General and administrative
8,377

7

67

—

8,451

Exploration
591

1,008

1,980

—

3,579

Pre-development, reclamation, and other
(838
)
1,338

1,767

—

2,267

Total costs and expenses
8,626

92,602

71,140

—

172,368

Fair value adjustments, net
1,188

1,138

428

—

2,754

Impairment of marketable securities
—

(31
)
—

—

(31
)
Interest income and other, net
611

(873
)
(1,614
)
(945
)
(2,821
)
Interest expense, net of capitalized interest
(9,336
)
(263
)
(2,080
)
945

(10,734
)
Total other income (expense), net
(7,537
)
(29
)
(3,266
)
—

(10,832
)
Loss before income and mining taxes
(16,163
)
7,004

(7,778
)
—

(16,937
)
Income and mining tax (expense) benefit
1,945

(1,618
)
(67
)
—

260

Total loss after income and mining taxes
(14,218
)
5,386

(7,845
)
—

(16,677
)
Equity income (loss) in consolidated subsidiaries
(2,460
)
(649
)
—

3,109

—

NET INCOME (LOSS)
$
(16,678
)
$
4,737

$
(7,845
)
$
3,109

$
(16,677
)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
Unrealized gain (loss) on marketable securities, net of tax
(1,312
)
(486
)
—

486

(1,312
)
Reclassification adjustments for impairment of marketable securities
31

31

—

(31
)
31

Reclassification adjustments for realized loss on sale of marketable securities
904

904

—

(904
)
904

Other comprehensive income (loss)
(377
)
449

—

(449
)
(377
)
COMPREHENSIVE INCOME (LOSS)
$
(17,055
)
$
5,186

$
(7,845
)
$
2,660

$
(17,054
)
(1) Excludes amortization.

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
THREE MONTHS ENDED JUNE 30, 2014
In thousands
Coeur Mining, Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
Revenue
$
—

$
60,748

$
103,814

$
—

$
164,562

COSTS AND EXPENSES
Costs applicable to sales (1)
—

47,599

71,088

—

118,687

Amortization
448

16,784

24,190

—

41,422

General and administrative
9,716

(163
)
(155
)
—

9,398

Exploration
950

2,483

1,720

—

5,153

Pre-development, reclamation, and other
352

1,307

7,101

—

8,760

Total costs and expenses
11,466

68,010

103,944

—

183,420

Fair value adjustments, net
(1,456
)
(1,837
)
(4,989
)
—

(8,282
)
Impairment of marketable securities
—

(934
)
—

—

(934
)
Interest income and other, net
1,075

12

(507
)
(696
)
(116
)
Interest expense, net of capitalized interest
(9,215
)
(314
)
(3,477
)
696

(12,310
)
Total other income (expense), net
(9,596
)
(3,073
)
(8,973
)
—

(21,642
)
Loss before income and mining taxes
(21,062
)
(10,335
)
(9,103
)
—

(40,500
)
Income and mining tax (expense) benefit
273

(419
)
(2,475
)
—

(2,621
)
Total loss after income and mining taxes
(20,789
)
(10,754
)
(11,578
)
—

(43,121
)
Equity income (loss) in consolidated subsidiaries
(22,332
)
121

—

22,211

—

NET INCOME (LOSS)
$
(43,121
)
$
(10,633
)
$
(11,578
)
$
22,211

$
(43,121
)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
Unrealized gain (loss) on marketable securities, net of tax
(773
)
(847
)
—

847

(773
)
Reclassification adjustments for impairment of marketable securities
572

572

—

(572
)
572

Reclassification adjustments for realized loss on sale of marketable securities
17

17

—

(17
)
17

Other comprehensive income (loss)
(184
)
(258
)
—

258

(184
)
COMPREHENSIVE INCOME (LOSS)
$
(43,305
)
$
(10,891
)
$
(11,578
)
$
22,469

$
(43,305
)
(1) Excludes amortization.


24
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED JUNE 30, 2015
In thousands
Coeur Mining, Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash provided by (used in) operating activities
$
(7,793
)
$
28,679

$
12,868

$
3,109

36,863

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures
(75
)
(11,873
)
(11,729
)
—

(23,677
)
Purchase of short term investments and marketable securities
(1,597
)
—

—

—

(1,597
)
Sales and maturities of short term investments
13

386

—

—

399

Acquisitions
(8,170
)
(982
)
—

—

(9,152
)
Other
4

23

(130
)
—

(103
)
Investments in consolidated subsidiaries
(27,904
)
1,634

116

26,154

—

CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
(37,729
)
(10,812
)
(11,743
)
26,154

(34,130
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of notes and bank borrowings
100,000

—

—

—

100,000

Payments on debt, capital leases, and associated costs
(55,286
)
(1,885
)
(9,455
)
—

(66,626
)
Gold production royalty payments
—

—

(9,754
)
—

(9,754
)
Net intercompany financing activity
11,703

5,283

11,535

(28,521
)
—

Other
(72
)
—

742

(742
)
(72
)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
56,345

3,398

(6,932
)
(29,263
)
23,548

NET CHANGE IN CASH AND CASH EQUIVALENTS
10,823

21,265

(5,807
)
—

26,281

Cash and cash equivalents at beginning of period
113,872

5,994

59,721

—

179,587

Cash and cash equivalents at end of period
$
124,695

$
27,259

$
53,914

$
—

$
205,868


CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED JUNE 30, 2014
In thousands
Coeur Mining, Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash provided by (used in) operating activities
$
(35,100
)
$
4,210

$
39,169

$
22,211

$
30,490

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures
(106
)
(7,945
)
(7,305
)
—

(15,356
)
Purchase of short term investments and marketable securities
(2,106
)
(33
)
—

—

(2,139
)
Sales and maturities of short term investments
217

583

—

—

800

Acquisitions
—

(2,250
)
—

—

(2,250
)
Other
—

4

8

—

12

Investments in consolidated subsidiaries
65,832

(121
)
—

(65,711
)
—

CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
63,837

(9,762
)
(7,297
)
(65,711
)
(18,933
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on debt, capital leases, and associated costs
(403
)
(2,131
)
(317
)
—

(2,851
)
Gold production royalty payments
—

—

(12,345
)
—

(12,345
)
Net intercompany financing activity
(20,555
)
7,828

(30,773
)
43,500

—

Other
(160
)
—

—

—

(160
)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
(21,118
)
5,697

(43,435
)
43,500

(15,356
)
NET CHANGE IN CASH AND CASH EQUIVALENTS
7,619

145

(11,563
)
—

(3,799
)
Cash and cash equivalents at beginning of period
204,045

754

68,133

—

272,932

Cash and cash equivalents at end of period
$
211,664

$
899

$
56,570

$
—

$
269,133


25
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
SIX MONTHS ENDED JUNE 30, 2015
In thousands
Coeur Mining, Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
Revenue
$
—

$
188,307

$
130,912

$
—

$
319,219

COSTS AND EXPENSES
Costs applicable to sales (1)
—

129,288

104,872

—

234,160

Amortization
998

40,339

30,727

—

72,064

General and administrative
17,127

14

145

—

17,286

Exploration
1,154

3,466

3,225

—

7,845

Pre-development, reclamation, and other
2,550

2,878

3,602

—

9,030

Total costs and expenses
21,829

175,985

142,571

—

340,385

Fair value adjustments, net
142

(1,155
)
(1,117
)
—

(2,130
)
Impairment of marketable securities
—

(1,545
)
—

—

(1,545
)
Interest income and other, net
1,891

(912
)
(3,030
)
(1,766
)
(3,817
)
Interest expense, net of capitalized interest
(18,191
)
(551
)
(4,523
)
1,766

(21,499
)
Total other income (expense), net
(16,158
)
(4,163
)
(8,670
)
—

(28,991
)
Loss before income and mining taxes
(37,987
)
8,159

(20,329
)
—

(50,157
)
Income and mining tax (expense) benefit
3,495

(1,282
)
(2,021
)
—

192

Total loss after income and mining taxes
(34,492
)
6,877

(22,350
)
—

(49,965
)
Equity income (loss) in consolidated subsidiaries
(15,473
)
160

—

15,313

—

NET INCOME (LOSS)
$
(49,965
)
$
7,037

$
(22,350
)
$
15,313

$
(49,965
)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
Unrealized gain (loss) on marketable securities, net of tax
(2,813
)
(1,982
)
—

1,982

(2,813
)
Reclassification adjustments for impairment of marketable securities
1,545

1,545

—

(1,545
)
1,545

Reclassification adjustments for realized loss on sale of marketable securities
904

904

—

(904
)
904

Other comprehensive income (loss)
(364
)
467

—

(467
)
(364
)
COMPREHENSIVE INCOME (LOSS)
$
(50,329
)
$
7,504

$
(22,350
)
$
14,846

$
(50,329
)
(1) Excludes amortization.

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
SIX MONTHS ENDED JUNE 30, 2014
In thousands
Coeur Mining, Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
Revenue
$
—

$
121,248

$
202,947

$
—

$
324,195

COSTS AND EXPENSES
Costs applicable to sales (1)
—

90,837

134,746

—

225,583

Amortization
825

32,080

48,944

—

81,849

General and administrative
22,768

3

523

—

23,294

Exploration
1,536

4,904

2,930

—

9,370

Pre-development, reclamation, and other
352

2,843

12,580

—

15,775

Total costs and expenses
25,481

130,667

199,723

—

355,871

OTHER INCOME (EXPENSE), NET
.
Fair value adjustments, net
(1,982
)
(2,510
)
(15,225
)
—

(19,717
)
Impairment of marketable securities
—

(3,522
)
—

—

(3,522
)
Interest income and other, net
1,915

58

(2,720
)
(1,353
)
(2,100
)
Interest expense, net of capitalized interest
(19,398
)
(340
)
(6,980
)
1,353

(25,365
)
Total other income (expense), net
(19,465
)
(6,314
)
(24,925
)
—

(50,704
)
Loss before income and mining taxes
(44,946
)
(15,733
)
(21,701
)
—

(82,380
)
Income and mining tax (expense) benefit
127

(419
)
2,360

—

2,068

Total loss after income and mining taxes
(44,819
)
(16,152
)
(19,341
)
—

(80,312
)
Equity income (loss) in consolidated subsidiaries
(35,493
)
299

—

35,194

—

NET INCOME (LOSS)
$
(80,312
)
$
(15,853
)
$
(19,341
)
$
35,194

$
(80,312
)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
Unrealized gain (loss) on marketable securities, net of tax
(401
)
(380
)
—

380

(401
)
Reclassification adjustments for impairment of marketable securities
2,159

2,159

—

(2,159
)
2,159

Reclassification adjustments for realized loss on sale of marketable securities
17

17

—

(17
)
17

Other comprehensive income (loss)
1,775

1,796

—

(1,796
)
1,775

COMPREHENSIVE INCOME (LOSS)
$
(78,537
)
$
(14,057
)
$
(19,341
)
$
33,398

$
(78,537
)
(1) Excludes amortization.

26
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2015
In thousands
Coeur Mining, Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash provided by (used in) operating activities
$
(52,711
)
$
51,389

$
18,900

$
15,313

32,891

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures
(87
)
(19,323
)
(21,887
)
—

(41,297
)
Purchase of short term investments and marketable securities
(1,873
)
—

—

—

(1,873
)
Sales and maturities of short term investments
12

386

71

—

469

Acquisitions
(111,170
)
—

—

—

(111,170
)
Other
(1,764
)
168

(80
)
—

(1,676
)
Investments in consolidated subsidiaries
(15,683
)
824

116

14,743

—

CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
(130,565
)
(17,945
)
(21,780
)
14,743

(155,547
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of notes and bank borrowings
150,000

—

3,500

—

153,500

Payments on debt, capital leases, and associated costs
(61,868
)
(3,703
)
(9,649
)
—

(75,220
)
Gold production royalty payments
—

—

(20,122
)
—

(20,122
)
Net intercompany financing activity
9,973

(8,263
)
26,811

(28,521
)
—

Other
(495
)
—

1,535

(1,535
)
(495
)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
97,610

(11,966
)
2,075

(30,056
)
57,663

NET CHANGE IN CASH AND CASH EQUIVALENTS
(85,666
)
21,478

(805
)
—

(64,993
)
Cash and cash equivalents at beginning of period
210,361

5,781

54,719

—

270,861

Cash and cash equivalents at end of period
$
124,695

$
27,259

$
53,914

$
—

$
205,868


CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2014
In thousands
Coeur Mining, Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash provided by (used in) operating activities
$
(72,723
)
$
9,142

$
49,251

$
35,194

$
20,864

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures
(1,051
)
(13,615
)
(12,626
)
—

(27,292
)
Purchase of short term investments and marketable securities
(47,903
)
(457
)
—

—

(48,360
)
Sales and maturities of short term investments
307

583

—

—

890

Acquisitions
—

(2,250
)
—

—

(2,250
)
Other
—

4

(17
)
—

(13
)
Investments in consolidated subsidiaries
78,993

(299
)
—

(78,694
)
—

CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
30,346

(16,034
)
(12,643
)
(78,694
)
(77,025
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of notes and bank borrowings
153,000

—

—

—

153,000

Payments on debt, capital leases, and associated costs
(3,599
)
(2,543
)
(820
)
—

(6,962
)
Gold production royalty payments
—

—

(27,028
)
—

(27,028
)
Net intercompany financing activity
(32,030
)
9,343

(20,813
)
43,500

—

Other
(406
)
—

—

—

(406
)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
116,965

6,800

(48,661
)
43,500

118,604

NET CHANGE IN CASH AND CASH EQUIVALENTS
74,588

(92
)
(12,053
)
—

62,443

Cash and cash equivalents at beginning of period
137,076

991

68,623

—

206,690

Cash and cash equivalents at end of period
$
211,664

$
899

$
56,570

$
—

$
269,133



27
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

CONDENSED CONSOLIDATING BALANCE SHEET
JUNE 30, 2015
In thousands
Coeur Mining, Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
124,695

$
27,259

$
53,914

$
—

$
205,868

Receivables
74

15,447

96,638

—

112,159

Ore on leach pads
—

67,458

—

—

67,458

Inventory
—

50,056

59,151

—

109,207

Deferred tax assets
394

—

6,868

—

7,262

Prepaid expenses and other
3,180

5,907

8,355

—

17,442

128,343

166,127

224,926

—

519,396

NON-CURRENT ASSETS
Property, plant and equipment, net
5,244

131,572

117,758

—

254,574

Mining properties, net
—

226,867

638,017

—

864,884

Ore on leach pads
—

32,663

—

—

32,663

Restricted assets
2,669

381

5,327

—

8,377

Equity securities
639

3,577

—

—

4,216

Receivables
—

—

26,738

—

26,738

Deferred tax assets
33,807

—

30,313

—

64,120

Net investment in subsidiaries
457,054

45,775

—

(502,829
)
—

Other
52,579

9,415

2,266

(52,579
)
11,681

TOTAL ASSETS
$
680,335

$
616,377

$
1,045,345

$
(555,408
)
$
1,786,649

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable
$
2,181

$
15,606

$
24,735

$
—

$
42,522

Accrued liabilities and other
18,394

13,204

15,992

—

47,590

Debt
1,000

7,562

559

—

9,121

Royalty obligations
—

4,726

37,273

—

41,999

Reclamation
—

4,637

300

(1,151
)
3,786

Deferred tax liabilities
7,142

848

88

—

8,078

28,717

46,583

78,947

(1,151
)
153,096

NON-CURRENT LIABILITIES
Debt
520,619

9,017

61,532

(52,579
)
538,589

Royalty obligations
—

9,179

3,496

—

12,675

Reclamation
—

64,974

21,413

1,151

87,538

Deferred tax liabilities
53,201

12,643

158,024

—

223,868

Other long-term liabilities
2,970

4,212

36,051

—

43,233

Intercompany payable (receivable)
(652,822
)
418,359

234,463

—

—

(76,032
)
518,384

514,979

(51,428
)
905,903

STOCKHOLDERS’ EQUITY
Common stock
1,371

250

129,991

(130,241
)
1,371

Additional paid-in capital
2,982,019

179,553

1,895,924

(2,075,477
)
2,982,019

Accumulated deficit
(2,252,568
)
(126,053
)
(1,574,496
)
1,700,549

(2,252,568
)
Accumulated other comprehensive income (loss)
(3,172
)
(2,340
)
—

2,340

(3,172
)
727,650

51,410

451,419

(502,829
)
727,650

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
680,335

$
616,377

$
1,045,345

$
(555,408
)
$
1,786,649



28
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2014

In thousands
Coeur Mining, Inc.
Guarantor Subsidiaries
Non-Guarantor Subsidiaries
Eliminations
Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
210,361

$
5,781

$
54,719

$
—

$
270,861

Receivables
87

11,151

105,683

—

116,921

Ore on leach pads
—

48,204

—

—

48,204

Inventory
—

54,983

59,948

—

114,931

Deferred tax assets
393

—

6,971

—

7,364

Prepaid expenses and other
6,349

4,557

4,617

—

15,523

217,190

124,676

231,938

—

573,804

NON-CURRENT ASSETS
Property, plant and equipment, net
6,155

107,084

114,672

—

227,911

Mining properties, net
12,004

159,124

330,064

—

501,192

Ore on leach pads
—

37,889

—

—

37,889

Restricted assets
897

50

6,090

—

7,037

Equity securities
—

5,982

—

—

5,982

Receivables
—

—

21,686

—

21,686

Deferred tax assets
30,419

—

29,732

—

60,151

Net investment in subsidiaries
128,913

45,615

—

(174,528
)
—

Other
50,813

5,522

4,394

(50,814
)
9,915

TOTAL ASSETS
$
446,391

$
485,942

$
738,576

$
(225,342
)
$
1,445,567

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable
$
3,414

$
13,391

$
32,247

$
—

$
49,052

Accrued liabilities and other
22,588

11,207

17,718

—

51,513

Debt
5,334

7,476

4,688

—

17,498

Royalty obligations
—

5,747

37,931

—

43,678

Reclamation
—

3,401

1,621

(1,151
)
3,871

Deferred tax liabilities
7,142

848

88

—

8,078

38,478

42,070

94,293

(1,151
)
173,690

NON-CURRENT LIABILITIES
Debt
427,604

12,806

61,452

(50,814
)
451,048

Royalty obligations
—

9,623

18,028

—

27,651

Reclamation
—

46,792

19,000

1,151

66,943

Deferred tax liabilities
53,201

2,963

54,842

—

111,006

Other long-term liabilities
2,582

469

26,860

—

29,911

Intercompany payable (receivable)
(660,792
)
427,156

233,636

—

—

(177,405
)
499,809

413,818

(49,663
)
686,559

STOCKHOLDERS’ EQUITY
Common stock
1,034

250

128,299

(128,549
)
1,034

Additional paid-in capital
2,789,695

79,712

1,682,830

(1,762,542
)
2,789,695

Accumulated deficit
(2,202,603
)
(133,091
)
(1,580,664
)
1,713,755

(2,202,603
)
Accumulated other comprehensive income (loss)
(2,808
)
(2,808
)
—

2,808

(2,808
)
585,318

(55,937
)
230,465

(174,528
)
585,318

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
446,391

$
485,942

$
738,576

$
(225,342
)
$
1,445,567



29
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 19 – COMMITMENTS AND CONTINGENCIES
Labor Union Contracts
The Company maintains a labor agreement with Sindicato de Trabajadores Mineros de la Empresa Manquiri S.A. at the San Bartolomé mine in Bolivia. The San Bartolomé mine labor agreement, which became effective January 28, 2010, is currently active and does not have a fixed term. At June 30, 2015 , approximately 12% of the Company’s global labor force was covered by this collective bargaining agreement. The Company cannot predict whether this agreement will be renewed on similar terms or at all, whether future labor disruptions will occur or, if disruptions do occur, how long they will last.
Rochester Production Royalties
The Company acquired the Rochester property from ASARCO, a subsidiary of Grupo Mexico S.A. de C.V., in 1983. The Company is obligated to pay a NSR royalty interest to ASARCO when the market price of silver equals or exceeds $23.60 per ounce up to a maximum rate of 5% with the condition that Rochester achieves positive cash flow for the applicable year. If cash flow at Rochester is negative in any calendar year, the maximum royalty payable is $250,000 . Royalty expense was nil for the three and six months ended June 30, 2015 and 2014 , respectively.
Commencing January 1, 2014, Coeur Rochester is obligated to pay a 3.4% net smelter returns royalty on up to 39.4 million silver equivalent ounces produced and sold from a portion of the Rochester mine, payable on a quarterly basis. For each calendar quarter, the royalty will be payable on the actual sales prices received (exclusive of gains or losses associated with trading activities), less refining costs, of gold and silver produced and sold from the applicable portions of the Rochester mine. Changes in the Company's mine plan and silver and gold prices result in the recognition of mark-to-market gains or losses in Fair value adjustments, net . At June 30, 2015 , payments had been made on 11.0 million silver equivalent ounces with further payments to be made on 28.4 million silver equivalent ounces.
Palmarejo Gold Production Royalty and Gold Stream
On January 21, 2009, Coeur Mexicana entered into a gold production royalty agreement with a subsidiary of Franco-Nevada Corporation under which the subsidiary of Franco-Nevada Corporation purchased a royalty covering 50% of the life of mine gold to be produced from its Palmarejo silver and gold mine in Mexico. The royalty agreement provides for a minimum obligation to be paid monthly on a total of 400,000 ounces of gold, or 4,167 ounces per month over an initial eight -year period. Please see Note 10 -- Derivative Financial Instruments and Note 17 -- Debt for further discussion on the royalty obligation.
On October 2, 2014 , Coeur Mexicana terminated the Palmarejo gold production royalty in exchange for a termination payment of $2.0 million , effective upon completion of the minimum ounce delivery requirement. Subsequently, Coeur Mexicana entered into a gold stream agreement with a subsidiary of Franco-Nevada Corporation whereby Coeur Mexicana will sell 50% of Palmarejo gold production upon completion of the gold production royalty minimum ounce delivery requirement for the lesser of $800 or spot price per ounce.  Under the gold stream agreement, Coeur Mexicana will receive a $22.0 million deposit toward future deliveries under the gold stream agreement, payable in five quarterly payments. Payments of $5.0 million and $10.0 million were received in the three and six months ended June 30, 2015 , respectively.
Sites Related to Callahan Mining Corporation
In 1991, the Company acquired all of the outstanding common stock of Callahan Mining Corporation. The Company has received requests for information or notices of potential liability from state or federal agencies with regard to Callahan's operations at sites in Maine, Colorado and Washington. The Company did not make any decisions with respect to generation, transport or disposal of hazardous waste at these sites. Therefore, the Company believes that it is not liable for any potential cleanup costs either directly as an operator or indirectly as a parent. The Company anticipates that further agency interaction may occur with respect to these sites.

Callahan operated a mine and mill in Brooksville, Maine from 1968 until 1972 and subsequently disposed of the property. In 2000, the U.S. Environmental Protection Agency, or EPA, made a formal request to the Company for information regarding the site. The site was placed on the National Priorities List on September 5, 2002, and the Maine Department of Transportation, a partial owner of the property, signed a consent order in 2005. In January 2009, the EPA and the State of Maine made additional formal requests to the Company for information relating to the site, to which the Company responded. The first phase of cleanup at the site began in April 2011.
The Van Stone Mine in Stevens County, Washington consists of several parcels of land and was mined from 1926 until 1993 by multiple owners. Callahan sold its parcel in 1990. In February 2010, the State of Washington Department of Ecology notified Callahan that it, among others, is a potentially liable person (PLP) under Washington law.


30
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

Under lease and option agreements with several owners, Callahan was involved with the Akron Mine located in Gunnison County, Colorado from 1937-1960. The United States Forest Service (“USFS”) made formal requests for information to Callahan regarding the site in December 2003, February 2007, March 2013, and November 2013. Callahan timely responded to each request. In August 2014, Callahan received a notice of potential CERCLA liability from the USFS regarding environmental contamination at the Akron Mine. Callahan and the USFS are currently in discussions regarding this matter.
Bolivian Temporary Restriction on Mining above 4,400 Meters
On October 14, 2009, the Bolivian state-owned mining organization, COMIBOL, announced by resolution that it was temporarily suspending mining activities above the elevation of 4,400 meters above sea level while stability studies of Cerro Rico mountain are undertaken. The Company holds rights to mine above this elevation under valid contracts with COMIBOL as well as under authorized contracts with local mining cooperatives that hold their rights under contract themselves with COMIBOL. The Company temporarily adjusted its mine plan to confine mining activities to the ore deposits below 4,400 meters above sea level and timely notified COMIBOL of the need to lift the restriction. Mining in other areas above the 4,400 meter level continues to be suspended.
The suspension may reduce production until the Company is able to resume mining above 4,400 meters. It is uncertain at this time how long the suspension will remain in place. If COMIBOL decides to restrict access above the 4,400 meter level on a permanent basis, the Company may need to write down the carrying value of the asset. It is also uncertain if any new mining or investment policies or shifts in political attitude may affect mining in Bolivia.
Paramount Transaction Litigation
Since the announcement of the Company’s acquisition of Paramount, six lawsuits have been filed related to the merger agreement in the Court of Chancery of the State of Delaware.  The lawsuits assert a variety of causes of action concerning the transaction, including claims against Paramount’s directors for alleged breaches of fiduciary duty in connection with the proposed transaction, and claims against the Company for allegedly aiding and abetting such breaches of fiduciary duty.  On February 18, 2015, the court entered an order consolidating the lawsuits and providing that the consolidated case shall be captioned In re Paramount Gold and Silver Corp. Stockholders Litigation , Consolidated C.A. No. 10499-VCN. Although the Company completed the acquisition of Paramount on April 17, 2015, the consolidated lawsuits remain pending. The Company cannot predict the outcome of these lawsuits, nor can the Company predict the amount of time and expense that will be required to resolve these lawsuits. The Company intends to defend vigorously against these consolidated actions.
NOTE 20 – SUBSEQUENT EVENTS
On July 10, 2015, the Company temporarily ceased operations at its San Bartolomé mine due to political protests in Potosi, Bolivia. Operations resumed July 31, 2015, and the disruption is not expected to have a material impact on Coeur's consolidated 2015 production or results of operations.

31

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of Coeur Mining, Inc. and its subsidiaries (collectively "the Company", "our", or "we"). We use certain non-GAAP financial performance measures in our MD&A such as costs applicable to sales, all-in sustaining costs, and adjusted net income (loss). For a detailed description of each of these non-GAAP measures, please see "Non-GAAP Financial Performance Measures" at the end of this item. We believe it is important to read this item in conjunction with our interim unaudited Condensed Consolidated Financial Statements and the notes thereto included in this quarterly report and our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (the "2014 10-K"), as well as other information we file with the Securities and Exchange Commission.
Overview
We are a large silver producer with significant gold production from mines located in the United States, Mexico, and Bolivia; exploration projects in Mexico and Argentina; and streaming and royalty interests in Australia, Mexico, Ecuador, Chile, and New Zealand. The Palmarejo, San Bartolomé, Kensington, Rochester, and Wharf mines, each of which is operated by the Company, and Coeur Capital, primarily comprised of the Endeavor silver stream, constitute our principal sources of revenue. The Company also owns other precious metal royalties.
Our strategy is to discover, acquire, develop and operate low-cost silver and gold mines and acquire precious metal streams and royalty interests that together produce long-term cash flow, provide opportunities for growth through continued exploration, and generate superior and sustainable returns for stockholders. Management focuses on maximizing net cash flow through identifying and implementing revenue enhancement opportunities, reducing operating and non-operating costs, consistent capital discipline, and efficient management of working capital.
Second Quarter Highlights
•
Metal sales of $164.5 million and royalty revenue of $1.8 million
•
Production of 9.1 million silver equivalent ounces, consisting of 4.3 million silver ounces and 80,855 gold ounces
•
Costs applicable to sales were $12.84 per silver equivalent ounce and $820 per gold equivalent ounce (see "Non-GAAP Financial Performance Measures")
•
All-in sustaining costs were $16.80 per silver equivalent ounce (see "Non-GAAP Financial Performance Measures")
•
General and administrative expenses reduced to $8.5 million
•
Adjusted net loss of $14.5 million or $0.11 per share (see "Non-GAAP Financial Performance Measures")
•
Capital expenditures of $23.7 million , including $9.4 million of development capital for the high-grade Guadalupe underground mine at Palmarejo
•
Completed the Paramount Gold and Silver Corp ("Paramount") acquisition and subsequently announced an 89% and 76% increase in Palmarejo silver and gold reserves, respectively
•
Announced a 39% increase in gold reserves at Wharf
•
Secured $100 million term loan due 2020 and simultaneously repaid the $50 million short-term loan
•
Cash and cash equivalents of $205.9 million
Consolidated Performance
Net loss was $16.7 million for the three months ended June 30, 2015 compared to Net loss of $43.1 million for the three months ended June 30, 2014 .  The lower Net loss in the three months ended June 30, 2015 is primarily due to favorable fair value adjustments, lower pre-development expenses related to La Preciosa feasibility study in 2014, higher gold ounces sold, and lower costs applicable to sales per ounce for both silver and gold, partially offset by lower average realized silver and gold prices.
The Company produced 4.3 million ounces of silver and 80,855 ounces of gold in the three months ended June 30, 2015 , compared to 4.5 million ounces of silver and 61,025 ounces of gold in the three months ended June 30, 2014 . Silver production decreased due to lower grade and throughput at Palmarejo, partially offset by higher recoveries and tons placed at Rochester. Gold production increased in the three months ended June 30, 2015 due to the acquisition of Wharf and higher throughput at Kensington.
Costs applicable to sales were $12.84 per silver equivalent ounce and $820 per gold equivalent ounce in the three months ended June 30, 2015 , compared to $14.31 per silver equivalent ounce and $1,008 per gold ounce in the three months ended June 30, 2014 . Costs applicable to sales per silver equivalent ounce decreased in the three months ended June 30, 2015 due to lower unit

32

costs at Rochester, San Bartolomé, and Palmarejo. Costs applicable to sales per gold equivalent ounce decreased in the three months ended June 30, 2015 due to lower unit costs at Kensington.
Net loss was $50.0 million for the six months ended June 30, 2015 compared to Net loss of $80.3 million for the six months ended June 30, 2014 .  The lower Net loss in the six months ended June 30, 2015 is primarily due to less unfavorable fair value adjustments, lower pre-development expenses related to La Preciosa, higher gold ounces sold, and lower costs applicable to sales per gold equivalent ounce, partially offset by lower silver ounces sold and lower average realized silver and gold prices.
The Company produced 8.1 million ounces of silver and 150,589 ounces of gold in the six months ended June 30, 2015 , compared to 8.5 million ounces of silver and 119,861 ounces of gold in the six months ended June 30, 2014 . Silver production decreased due to lower grade and throughput at Palmarejo and lower grade at San Bartolomé, partially offset by higher recoveries, grade, and tons placed at Rochester. Gold production increased in the six months ended June 30, 2015 due to the acquisition of Wharf and higher grade and throughput at Kensington.
Costs applicable to sales were $13.59 per silver equivalent ounce and $811 per gold equivalent ounce in the six months ended June 30, 2015 , compared to $13.80 per silver equivalent ounce and $1,007 per gold ounce in the six months ended June 30, 2014 . Costs applicable to sales per silver equivalent ounce decreased in the six months ended June 30, 2015 due to lower unit costs at Rochester, partially offset by higher unit costs at Palmarejo. Costs applicable to sales per gold equivalent ounce decreased in the six months ended June 30, 2015 due to lower unit costs at Kensington.
Three months ended June 30,
Six months ended June 30,
2015
2014
2015
2014
Silver ounces produced
4,258,941

4,465,387

8,102,522

8,538,159

Gold ounces produced
80,855

61,025

150,589

119,861

Silver equivalent ounces produced (1)
9,110,241

8,126,887

17,137,862

15,729,819

Silver ounces sold
4,008,894

4,589,547

8,097,519

8,465,014

Gold ounces sold
84,312

57,751

152,733

120,328

Silver equivalent ounces sold (1)
9,067,614

8,054,607

17,261,499

15,684,694

Average realized price per silver ounce
$
16.23

$
19.60

$
16.50

$
19.91

Average realized price per gold ounce
$
1,179

$
1,277

$
1,191

$
1,278

Costs applicable to sales per silver equivalent ounce (2)
$
12.84

$
14.31

$
13.59

$
13.80

Costs applicable to sales per gold equivalent ounce (2)
$
820

$
1,008

$
811

$
1,007

All-in sustaining costs per silver equivalent ounce (2)
$
16.80

$
19.89

$
17.18

$
19.58

(1)
Silver equivalent ounces calculated using a 60:1 silver to gold ratio.
(2)
See "Non-GAAP Financial Performance Measures."
Consolidated Financial Results

Three Months Ended June 30, 2015 compared to Three Months Ended June 30, 2014
Revenue
Metal sales were generally consistent, as higher gold sales were mostly offset by lower average realized silver and gold prices. The Company realized average silver and gold prices of $16.23 per ounce and $1,179 per ounce, respectively, compared with average realized prices of $19.60 per ounce and $1,277 per ounce, respectively. The Company sold 4.0 million silver ounces and 84,312 gold ounces, compared to sales of 4.6 million silver ounces and 57,751 gold ounces. Silver contributed 40% of sales and gold contributed 60%, compared to 55% of sales from silver and 45% from gold. Royalty revenue increased $0.7 million due to commencement of production at the Correnso mine in New Zealand.
Costs Applicable to Sales
Costs applicable to sales were generally consistent. For a complete discussion of costs applicable to sales, see Results of Operations below.
Amortization
Amortization decreased by $2.4 million , or 5.9% , due to lower amortizable mineral interests and mining equipment as a result of the 2014 write-downs, partially offset by higher silver equivalent production and the Wharf acquisition.

33

Expenses
General and administrative expenses decreased $0.9 million , or 10.1% , primarily due to lower outside services, legal fees, and corporate relocation costs incurred in 2014.
Exploration expense decreased 30.5% , or $1.6 million , due to lower spending at Palmarejo and Kensington.
Pre-development, reclamation, and other expenses decreased 74.1% to $2.3 million , primarily due to La Preciosa feasibility study costs in 2014, partly offset by costs related to the Wharf mine acquisition.
Other Income and Expenses
Non-cash fair value adjustments, net, including other-than-temporary impairments of marketable securities, were a gain of $2.7 million compared to a loss of $9.2 million , primarily due to the impact of changes in future metal prices on the Palmarejo gold production royalty and the Rochester 3.4% NSR royalty obligation, as well as changes in current metal prices impacting silver put spreads.
Interest income and other, net decreased by $2.7 million to expense of $2.8 million , compared to expense of $0.1 million , primarily due to changes in foreign currency exchange rates.
Interest expense (net of capitalized interest of $1.0 million ) decreased to $10.7 million from $12.3 million due to lower accretion of the Palmarejo gold production royalty obligation and higher capitalized interest.
Income and Mining Taxes
During the second quarter of 2015, the Company reported estimated income and mining tax benefit of $0.3 million , for an effective tax rate of 1.5%. Estimated income and mining tax expense during the second quarter of 2014 was $(2.6) million , for an effective tax rate of (6.5%). The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit by significant jurisdiction:
Three months ended June 30, 2015
Three months ended June 30, 2014
In thousands
Income (loss) before tax
Tax (expense) benefit
Income (loss) before tax
Tax (expense) benefit
United States
$
(9,764
)
$
319

$
(31,370
)
$
(146
)
Argentina
(656
)
(1
)
(688
)
(349
)
Mexico
(5,582
)
548

(12,710
)
107

Bolivia
(1,219
)
196

3,957

(2,205
)
Other jurisdictions
284

(802
)
311

(28
)
$
(16,937
)
$
260

$
(40,500
)
$
(2,621
)

The Company’s effective tax rate is impacted by recurring items, such as the full valuation allowance on the deferred tax assets relating to losses in the United States and certain foreign jurisdictions, mining tax expense, foreign exchange rates on deferred tax balances and uncertain tax position accruals. In addition, the Company's consolidated effective income tax rate is a function of the combined effective tax rates and foreign exchange rates in the jurisdictions in which it operates. Variations in the jurisdictional mix of income and loss and foreign exchange rates result in significant fluctuations in our consolidated effective tax rate.

Six Months Ended June 30, 2015 compared to Six Months Ended June 30, 2014
Revenue
Metal sales decreased by $6.9 million , or 2.1% , to $315.5 million due to lower average realized silver and gold prices and lower silver ounces sold, partially offset by higher gold ounces sold. The Company realized average silver and gold prices of $16.50 per ounce and $1,191 per ounce, respectively, compared with average realized prices of $19.91 per ounce and $1,278 per ounce, respectively. The Company sold 8.1 million silver ounces and 152,733 gold ounces, compared to sales of 8.5 million silver ounces and 120,328 gold ounces. Silver contributed 42% of sales and gold contributed 58%, compared to 52% of sales from silver and 48% from gold. Royalty revenue increased $1.9 million due to commencement of production at the Correnso mine, as well as higher production from the Cerro Bayo and El Gallo mines.

34

Costs Applicable to Sales
Costs applicable to sales increased by $8.6 million , or 3.8% , to $234.2 million . The increase in costs applicable to sales is primarily due to higher gold ounces sold at Palmarejo. For a complete discussion of costs applicable to sales, see Results of Operations below.
Amortization
Amortization decreased by $9.8 million , or 12.0% , primarily due to lower amortizable mineral interests and mining equipment as a result of the 2014 write-downs, partially offset by higher silver equivalent production.
Expenses
General and administrative expenses decreased $6.0 million , or 25.8% , primarily due to lower salaries, legal fees, outside services, and corporate relocation costs incurred in 2014.
Exploration expense decreased $1.5 million , or 16.3% , due to decreased spending at Rochester and Kensington.
Pre-development, reclamation, and other expenses decreased 42.8% to $9.0 million , primarily due to La Preciosa feasibility study costs in 2014.
Other Income and Expenses
Non-cash fair value adjustments, net, including other-than-temporary impairments of marketable securities, were a loss of $3.7 million compared to a loss of $23.2 million , primarily due to the impact of changes in future metal prices on the Palmarejo gold production royalty, the Rochester 3.4% NSR royalty obligation, and a $3.5 million other-than-temporary impairment of strategic equity investments in 2014.
Interest income and other, net increased by $1.7 million to expense of $3.8 million , compared to expense of $2.1 million , primarily due to changes in foreign currency exchange rates.
Interest expense (net of capitalized interest of $1.7 million ) decreased to $21.5 million from $25.4 million primarily due to the write-off of costs associated with the termination of a former revolving credit facility in 2014 and lower accretion of the Palmarejo gold production royalty obligation.
Income and Mining Taxes
During the first half of 2015, the Company reported estimated income and mining tax benefit of approximately $0.2 million , for an effective tax rate of 0.4%. Estimated income and mining tax benefit during the first half of 2014 was $2.1 million , for an effective tax rate of 2.5%. The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit:
Six months ended June 30, 2015
Six months ended June 30, 2014
In thousands
Income (loss) before tax
Tax (expense) benefit
Income (loss) before tax
Tax (expense) benefit
United States
$
(30,471
)
$
2,204

$
(60,214
)
$
(292
)
Argentina
(1,352
)
(2
)
(2,892
)
4,083

Mexico
(15,255
)
(716
)
(28,716
)
3,828

Bolivia
(3,598
)
(1,211
)
8,649

(4,969
)
Other jurisdictions
519

(83
)
793

(582
)

$
(50,157
)
$
192

$
(82,380
)
$
2,068


The Company’s effective tax rate is impacted by recurring items, such as the full valuation allowance on the deferred tax assets relating to losses in the United States and certain foreign jurisdictions, mining tax expense, foreign exchange rates on deferred tax balances and uncertain tax position accruals. In addition, the Company's consolidated effective income tax rate is a function of the combined effective tax rates and foreign exchange rates in the jurisdictions in which it operates. Variations in the jurisdictional mix of income and loss and foreign exchange rates result in significant fluctuations in its consolidated effective tax rate.

A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related benefits will not be realized. Each quarter, the Company analyzes its deferred tax assets and if it is determined that the Company will not realize all or a portion of its deferred tax assets it will record or increase a valuation allowance. Conversely, if determined that it will ultimately be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a

35

portion of the related valuation allowance will be reduced. There are a number of risk factors that could impact the Company’s ability to realize its deferred tax assets.

Likewise, there are a number of factors that can potentially impact the Company’s effective tax, including the geographic distribution of income, the non-recognition of tax assets, changes in tax laws, and the impact of specific transactions. For a complete discussion of the factors that influence our effective tax rate, see the MD&A included in the 2014 10-K.

Results of Operations
Palmarejo
Three months ended June 30,
Six months ended June 30,
2015
2014
2015
2014
Tons milled
435,841

534,718

887,759

1,106,063

Silver ounces produced
1,247,011

1,761,145

2,601,011

3,581,629

Gold ounces produced
18,127

23,706

33,622

48,922

Silver equivalent ounces produced
2,334,631

3,183,505

4,618,331

6,516,949

Costs applicable to sales/oz (1)
$
13.88

$
14.04

$
14.93

$
13.71

(1) See Non-GAAP Financial Performance Measures

Three Months Ended June 30, 2015 compared to Three Months Ended June 30, 2014

Silver equivalent production decreased 27% due to lower silver grade and mill throughput. Metal sales were $38.9 million , or 24% of Coeur's metal sales, compared with $72.4 million , or 44% of Coeur's metal sales, due to lower production. Costs applicable to sales per ounce decreased as a result of lower diesel, backfill, and other consumables costs and favorable U.S. dollar exchange rates. Amortization decreased to $9.0 million compared to $18.0 million due to lower production and lower amortizable mineral interests and mining equipment. Capital expenditures increased to $10.7 million compared to $5.6 million due to underground development of the Guadalupe deposit.

The Company completed its acquisition of Paramount and as a result, subsequently announced an 89% increase in silver reserves and a 76% increase in gold reserves at Palmarejo due to the integration of Paramount's portion of the Independencia deposit into its existing Palmarejo operating segment.

Six Months Ended June 30, 2015 compared to Six Months Ended June 30, 2014

Silver equivalent production decreased 29% due to lower mill throughput as the mine continues its transition to a lower tonnage, high grade underground operation. Metal sales were $78.3 million , or 25% of Coeur's metal sales, compared with $140.4 million , or 44% of Coeur's metal sales. Costs applicable to sales per ounce increased as a result of unfavorable inventory adjustments ($1.05 per ounce), partially offset by lower diesel costs and favorable U.S. dollar exchange rates. Amortization decreased to $16.4 million compared to $36.7 million due to lower production and amortizable mineral interests and mining equipment. Capital expenditures increased to $19.9 million compared to $9.3 million due to underground development of the Guadalupe deposit.
Rochester
Three months ended June 30,
Six months ended June 30,
2015
2014
2015
2014
Tons placed
3,859,965

3,329,582

7,873,844

6,970,443

Silver ounces produced
1,294,371

1,112,239

2,437,941

1,862,601

Gold ounces produced
16,411

9,230

30,132

17,422

Silver equivalent ounces produced
2,279,031

1,666,039

4,245,861

2,907,921

Costs applicable to sales/oz (1)
$
12.05

$
15.79

$
12.56

$
14.45

(1) See Non-GAAP Financial Performance Measures

Three Months Ended June 30, 2015 compared to Three Months Ended June 30, 2014

Silver equivalent production increased 37% as a result of higher tons placed, higher gold and silver grades, and timing

36

of gold recoveries. Metal sales were $36.3 million , or 22% of Coeur’s metal sales, compared with $31.2 million , or 19% of Coeur's metal sales. Costs applicable to sales per ounce decreased due to higher production and lower diesel costs. Amortization was $5.4 million compared to $5.0 million due to higher production. Capital expenditures were $5.9 million compared to $4.0 million .

Six Months Ended June 30, 2015 compared to Six Months Ended June 30, 2014

Silver equivalent production increased 46% as a result of higher tons placed, higher silver and gold grades, and timing of recoveries. Metal sales were $80.4 million , or 25% of Coeur’s metal sales, compared with $55.3 million , or 17% of Coeur's metal sales. Costs applicable to sales per ounce decreased due to higher production, lower diesel costs, and lower consumption of other materials and supplies. Amortization was $12.2 million compared to $9.5 million due to higher production. Capital expenditures were $9.2 million compared to $4.9 million due to crusher optimization and Stage III buttress construction.

Kensington
Three months ended June 30,
Six months ended June 30,
2015
2014
2015
2014
Tons milled
170,649

163,749

335,600

323,446

Gold ounces produced
29,845

28,089

63,754

53,517

Costs applicable to sales/oz (1)
$
750

$
1,008

$
774

$
1,007

(1) See Non-GAAP Financial Performance Measures

Three Months Ended June 30, 2015 compared to Three Months Ended June 30, 2014

Gold production increased 6% due to higher mill throughput. Metal sales were $42.5 million , or 26% of Coeur's metal sales, compared to $29.0 million , or 18% of Coeur’s metal sales. Costs applicable to sales per ounce decreased due to higher production and lower contract services, equipment rentals, and diesel costs. Amortization was $12.7 million compared to $11.6 million . Capital expenditures were $4.7 million compared to $4.0 million .

Six Months Ended June 30, 2015 compared to Six Months Ended June 30, 2014

Gold production increased 19% due to higher grade and mill throughput. Metal sales were $86.5 million , or 27% of Coeur's metal sales, compared to $65.1 million , which represented 20% of Coeur’s metal sales. Costs applicable to sales per ounce decreased due to higher production and lower contract services, diesel costs, and equipment rentals. Amortization was $24.2 million compared to $22.3 million . Capital expenditures were $8.9 million compared to $8.7 million .

Wharf

On February 20, 2015, the Company acquired the Wharf gold mine in Lead, South Dakota, from a subsidiary of Goldcorp.
Three months ended June 30,
Six months ended June 30,
2015
2014
2015
2014
Tons placed
887,409

—

1,303,405

—

Silver ounces produced
19,336

—

19,336

—

Gold ounces produced
16,472

—

23,081

—

Gold equivalent ounces produced
16,794

—

23,403

—

Costs applicable to sales/oz (1)
$
971

$
—

$
971

$
—

(1) See Non-GAAP Financial Performance Measures

Three Months Ended June 30, 2015 compared to Three Months Ended June 30, 2014

Production was 16,794 ounces at costs applicable to sales per gold equivalent ounce of $971 . Metal sales were $20.4 million , or 12% of Coeur's metal sales. Higher production and lower unit costs are expected in the second half of 2015 as the Pad 5 unload is nearing completion. Subsequent to the acquisition, the Company announced a 39% increase in gold reserves at Wharf based on the completion of a revised resource model.

Six Months Ended June 30, 2015 compared to Six Months Ended June 30, 2014

37


Gold equivalent production was 23,403 ounces in the post-acquisition period to June 30, 2015 at costs applicable to sales per gold equivalent ounce of $971. Metal sales were $20.4 million , or 6% of Coeur's metal sales.

San Bartolomé
Three months ended June 30,
Six months ended June 30,
2015
2014
2015
2014
Tons milled
457,232

437,975

864,183

823,349

Silver ounces produced
1,494,550

1,481,009

2,707,803

2,836,429

Costs applicable to sales/oz (1)
$
13.31

$
13.85

$
14.03

$
13.89

(1) See Non-GAAP Financial Performance Measures

Three Months Ended June 30, 2015 compared to Three Months Ended June 30, 2014

Silver production was generally consistent, with higher throughput offsetting lower grade. Silver sales were $23.4 million , or 14% of Coeur's metal sales, compared with $29.1 million , or 18% of Coeur's metal sales. Costs applicable to sales per ounce decreased as a result of lower maintenance and milling costs. Amortization was $5.3 million compared to $4.9 million . Capital expenditures were $1.0 million compared to $1.7 million .

Six Months Ended June 30, 2015 compared to Six Months Ended June 30, 2014

Silver production decreased 5% due to lower grade, which was partially offset by higher mill throughput. Silver sales were $44.9 million , or 14% of Coeur's metal sales, compared with $56.6 million , or 18% of Coeur's metal sales. Costs applicable to sales per ounce increased as a result of unfavorable inventory adjustments ($0.20 per ounce). Amortization was $10.0 million compared to $9.3 million . Capital expenditures were $1.9 million compared to $3.2 million .

Coeur Capital
Three months ended June 30,
Six months ended June 30,
Endeavor Silver Stream
2015
2014
2015
2014
Tons milled
191,175

185,538

376,474

378,757

Silver ounces produced
203,673

110,994

336,431

257,500

Costs applicable to sales/oz (1)
$
6.46

$
7.94

$
6.07

$
8.00

(1) See Non-GAAP Financial Performance Measures

Three Months Ended June 30, 2015 compared to Three Months Ended June 30, 2014

Silver production increased due to higher grade and mill throughput, resulting in metal sales of $3.1 million compared to $2.0 million . Costs applicable to sales per ounce decreased due to the impact of lower silver prices on the Company's silver price sharing agreement with the Endeavor mine operator. Royalty revenue was $1.8 million compared to $0.9 million primarily due to production from the Correnso royalty in 2015. Amortization was $2.6 million compared to $1.4 million due to higher production.

Six Months Ended June 30, 2015 compared to Six Months Ended June 30, 2014

Silver production increased due to higher grade and mill throughput, resulting in metal sales of $5.0 million compared to $4.9 million . Costs applicable to sales per ounce decreased due to the impact of lower silver prices on the Company's silver price sharing agreement with the Endeavor mine operator. Royalty revenue was $3.8 million compared to $1.8 million primarily due to commencement of production from the Correnso royalty, as well as higher production from the Cerro Bayo and El Gallo mines. Amortization was $4.8 million compared to $3.1 million due to higher production.

38

Liquidity and Capital Resources
Cash Provided by Operating Activities
Net cash provided by operating activities for the three and six months ended June 30, 2015 was $36.9 million and $32.9 million , compared to $30.5 million and $20.9 million for the three and six months ended June 30, 2014 , and was impacted by the following key factors:
Three months ended June 30,
Six months ended June 30,
2015
2014
2015
2014
Consolidated silver equivalent ounces sold
9,067,614


8,054,607

17,261,499

15,684,694

Average realized price per silver equivalent ounce
$
18.34

$
20.43

$
18.49

$
20.67

Costs applicable to sales per consolidated silver equivalent ounce (1)
(13.13
)
(14.74
)
(13.57
)
(14.38
)
Operating margin per silver equivalent ounce
$
5.21

$
5.69

$
4.92

$
6.29

(1) See Non-GAAP Financial Performance Measures
Three months ended June 30,
Six months ended June 30,
In thousands
2015
2014
2015
2014
Cash flow before changes in operating assets and liabilities
$
24,875

$
10,506

$
35,270

$
25,280

Changes in operating assets and liabilities:
Receivables and other current assets
(2,342
)
4,921

214

10,544

Prepaid expenses and other
160

3,551

(1,167
)
(4,558
)
Inventories
4,649

(1,606
)
5,333

(15,519
)
Accounts payable and accrued liabilities
9,521

13,118

(6,759
)
5,117

CASH PROVIDED BY OPERATING ACTIVITIES
$
36,863

$
30,490

$
32,891

$
20,864

Cash provided by operating activities increased $6.4 million in the three months ended June 30, 2015 compared to the three months ended June 30, 2014 due to higher silver equivalent ounces sold and lower costs applicable to sales per silver equivalent ounce, partially offset by lower average realized price per silver equivalent ounce. Metal sales for the three months ended June 30, 2015 compared to the three months ended June 30, 2014 were $21.9 million higher due to higher silver equivalent ounces sold, mostly offset by a $21.1 million decrease due to lower average realized price per silver equivalent ounce. The $12.0 million working capital decrease for the three months ended June 30, 2015 was primarily due to an inventory reduction and an increase in accrued interest, compared to the $20.0 million working capital decrease for the three months ended June 30, 2014 , which was primarily due to collection of accounts receivable and an increase in accrued interest.

Cash provided by operating activities increased $12.0 million in the six months ended June 30, 2015 compared to the six months ended June 30, 2014 due to higher silver equivalent ounces sold, partially offset by lower average realized price per silver equivalent ounce. Metal sales for the six months ended June 30, 2015 compared to the six months ended June 30, 2014 were $39.2 million lower due to lower average realized price per silver equivalent ounce, partially offset by $32.5 million due to higher silver equivalent ounces sold. The $2.4 million working capital requirement for the six months ended June 30, 2015 was primarily due to payment of accounts payable and payroll, partially offset by inventory reduction due to higher sales, compared to the $4.4 million working capital requirement for the six months ended June 30, 2014 , which was primarily due to higher leach tons placed at Rochester.
Cash Used in Investing Activities
Net cash used in investing activities for the three months ended June 30, 2015 was $34.1 million compared to $18.9 million in the three months ended June 30, 2014 , primarily due to the acquisition of Paramount and higher capital expenditures in 2015, partly offset by the purchase of the Northair Silver Corp. net smelter returns royalty in 2014. The Company spent $23.7 million on capital expenditures in the three months ended June 30, 2015 , compared with $15.4 million in the three months ended June 30, 2014 . Capital expenditures in the three months ended June 30, 2015 were primarily related to underground development of the Guadalupe deposit at Palmarejo as well as crusher optimization and Stage III buttress construction at Rochester, compared to underground development at Palmarejo and Kensington in the three months ended June 30, 2014 .

Net cash used in investing activities for the six months ended June 30, 2015 was $155.5 million compared to $77.0 million in the six months ended June 30, 2014 , primarily due to the acquisition of the Wharf gold mine and higher capital expenditures in 2015, partly offset by purchases of short-term investments in 2014. The Company spent $41.3 million on capital expenditures

39

in the six months ended June 30, 2015 , compared with $27.3 million in the six months ended June 30, 2014 . Capital expenditures in the six months ended June 30, 2015 were primarily related to underground development of the Guadalupe deposit at Palmarejo and crusher optimization as well as Stage III buttress construction at Rochester, compared to underground development at Palmarejo and Kensington in the six months ended June 30, 2014 .
Cash Provided by (Used in) Financing Activities
Net cash provided by financing activities for the three months ended June 30, 2015 was $23.5 million compared to net cash used in financing activities of $15.4 million for the three months ended June 30, 2014 . The increase in cash provided by financing activities in the three months ended June 30, 2015 is due to the Company's entry into the $100 million Term Loan due 2020 (as defined below), partially offset by the simultaneous repayment of the $50 million Short-term Loan (as defined below) and $9.4 million of debt repayments at San Bartolomé.
Net cash provided by financing activities for the six months ended June 30, 2015 was $57.7 million compared to $118.6 million for the six months ended June 30, 2014 . During the six months ended June 30, 2015 , the Company entered into a $50 million Short-term Loan which was subsequently repaid upon entering into the $100 million Term Loan due 2020. In the six months ended June 30, 2014 , the Company completed the follow-on offering of $150 million of 7.875% Senior Notes due 2021.
On March 31, 2015, the Company entered into a one year Credit Agreement (the "Short-term Credit Agreement") with The Bank of Nova Scotia. The Short-term Credit Agreement provided for a $50 million loan (the "Short-term Loan") to the Company. The Short-term Loan generally bore interest at a rate equal to an adjusted Eurocurrency rate plus a margin of 2.50% (which increased incrementally on the first day of each fiscal quarter commencing July 1, 2015 up to a maximum of 4.50%). Voluntary prepayments of the Short-term Loan under the Short-term Credit Agreement were permitted without prepayment premium or penalty, subject to notice requirements and payment of accrued interest. The Short-term Loan was secured by a pledge of the Company’s stock in Wharf Resources (U.S.A.), Inc. ("Wharf") and by the grant of security in substantially all of the assets of Wharf and its subsidiaries. On June 25, 2015, the Short-term Loan was repaid in full, the security for the Short-term Loan was released, and the Short-term Credit Agreement was terminated.
On June 23, 2015, the Company and certain of its subsidiaries entered into a five year Credit Agreement for a senior secured term loan (the "Term Loan due 2020") with Barclays Bank PLC, as administrative agent (the “Term Loan Credit Agreement”). The Term Loan Credit Agreement provides for a $100 million Term Loan due 2020 to the Company, of which a portion of the proceeds were used to repay the Short Loan, and the remaining proceeds are expected to be used for general corporate purposes. The Term Loan due 2020 contains no financial maintenance covenants and currently bears interest at a rate equal to an adjusted Eurodollar rate plus a margin of 8.00% (at no time will the adjusted Eurodollar rate be deemed to be less than 1.00% per annum). Voluntary prepayments of the Term Loan due 2020 under the Term Loan Credit Agreement are permitted, subject to the payment of a make-whole premium if such prepayment occurs prior to the first anniversary of the closing date, a premium of 105.0% of the principal amount between the first anniversary and the second anniversary of the closing date and a premium of 103.0% if such prepayment occurs on or after the second anniversary but prior to the third anniversary of the closing date. The Term Loan Credit Agreement requires amortization payments equal to 1.0% of the principal amount of the Term Loan due 2020 per annum and also requires net cash proceeds of debt issuances, excess cash flow, asset sales and casualty insurance recoveries (in each case, subject to certain exceptions) to either be reinvested in long-term assets used in the Company’s business or be applied as a mandatory prepayment of the Term Loan due 2020. Amounts repaid on the Term Loan due 2020 may not be re-borrowed. The obligations under the Term Loan due 2020 are secured by substantially all of the assets of the Company and its domestic subsidiaries, including the land, mineral rights and infrastructure at the Kensington, Rochester and Wharf mines, as well as a pledge of the shares of certain of the Company's subsidiaries. The Term Loan Credit Agreement contains customary representations and warranties, events of default, and affirmative and negative covenants.
Other Liquidity Matters

The Company asserts that its earnings from the Palmarejo operation are indefinitely reinvested. Therefore, no provision has been made for United States federal and state income taxes on the Company's tax basis differences in Mexico, which primarily relate to accumulated foreign earnings that have been reinvested and are expected to be reinvested outside the United States indefinitely. The Company does not believe that the amounts reinvested will have a material impact on liquidity.

The Company may elect to defer some capital investment activities or to secure additional capital to ensure it maintains sufficient liquidity. In addition, if the Company decides to pursue the acquisition of additional mineral interests, new capital projects, or acquisitions of new properties, mines or companies, additional financing activities may be necessary. There can be no assurances that such financing will be available when or if needed upon acceptable terms, or at all.

40

Critical Accounting Policies and Accounting Developments
Please see Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contained in the Company’s Form 10-K for the year ended December 31, 2014 for the Company's critical accounting policies and estimates.

Cautionary Statement Concerning Forward-Looking Statements

This report contains numerous forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) relating to the Company’s gold and silver mining business, including statements regarding strategies to produce long-term cash flow, provide opportunities for growth through continued exploration, and generate superior and sustainable returns for stockholders, maximizing net cash flow, reducing operating and non-operating costs, demonstrating consistent capital discipline, efficient management of working capital, liquidity maintenance efforts and identifying and implementing revenue enhancement opportunities. Such forward-looking statements are identified by the use of words such as “believes,” “intends,” “expects,” “hopes,” “may,” “should,” “plan,” “projected,” “contemplates,” “anticipates” or similar words. Actual results could differ materially from those projected in the forward-looking statements. The factors that could cause actual results to differ materially from those projected in the forward-looking statements include (i) the risk factors set forth in the "Risk Factors" section of the 2014 10-K and the risks and uncertainties discussed in this MD&A, (ii) the risk that the anticipated benefits of recent acquisitions are not realized, (iii) the risks and hazards inherent in the mining business (including risks inherent in developing large-scale mining projects, environmental hazards, industrial accidents, weather or geologically related conditions), (iv) changes in the market prices of gold and silver and a sustained lower price environment, including the resulting impact on cash flows and debt covenant compliance, (v) the uncertainties inherent in the Company’s production, exploratory and developmental activities, including risks relating to permitting and regulatory delays, ground conditions and grade variability, (vi) any future labor disputes or work stoppages (involving the Company and its subsidiaries or third parties), (vii) the uncertainties inherent in the estimation of gold and silver reserves and mineralized material, (viii) changes that could result from the Company’s future acquisition of new mining properties or businesses, (ix)  the absence of control over and reliance on third parties to operate mines in which the Company or any of its subsidiaries holds royalty or streaming interests and risks related to these mining operations (including results of mining and exploration activities, environmental, economic and political risks, and changes in mine plans and project parameters); (x) the loss of access to any third-party smelter to which the Company markets silver and gold, (xi) the effects of environmental and other governmental regulations, (xii) the risks inherent in the ownership or operation of or investment in mining properties or businesses in foreign countries, and (xiii) the Company’s ability to raise additional financing necessary to conduct its business, make payments or refinance its debt. Readers are cautioned not to put undue reliance on forward-looking statements. The Company disclaims any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.

41

Non-GAAP Financial Performance Measures
Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by generally accepted accounting principles ("GAAP"). These measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP.
Adjusted Net Income (Loss)
Management uses Adjusted net income (loss) to evaluate the Company's operating performance, and to plan and forecast its operations. The Company believes the use of Adjusted net income (loss) reflects the underlying operating performance of our core mining business and allows investors and analysts to compare results of the Company to similar results of other mining companies. Management's determination of the components of Adjusted net income (loss) are evaluated periodically and are based, in part, on a review of non-GAAP financial measures used by mining industry analysts.
Net income (loss) is reconciled to Adjusted net income (loss) in the table below, with amounts presented after-tax:
Three months ended June 30,
Six months ended June 30,
In thousands except per share amounts
2015
2014
2015
2014
Net income (loss)
$
(16,677
)
$
(43,121
)
$
(49,965
)
$
(80,312
)
Fair value adjustments, net
(2,618
)
6,498

1,721

14,325

Stock-based compensation
2,529

2,299

4,462

4,757

Impairment of marketable securities
31

934

1,545

3,522

Accretion of royalty obligation
1,147

1,789

2,462

3,609

Loss on debt extinguishment
524

—

271

—

Inventory adjustments
1,805

6,353

2,911

5,924

Revolving Credit Facility termination
—

—

—

3,035

Transaction-related costs
38

—

2,013

—

Deferred tax asset valuation allowance
76

—

(3,388
)
—

Foreign exchange gain on deferred taxes
(1,305
)
3,711

(2,234
)
6

Adjusted net income (loss)
$
(14,450
)
$
(21,537
)
$
(40,202
)
$
(45,134
)
Adjusted net income (loss) per share
$
(0.11
)
$
(0.21
)
$
(0.34
)
$
(0.44
)
Costs Applicable to Sales and All-in Sustaining Costs

Management uses Costs applicable to sales ("CAS") and All-in sustaining costs ("AISC") to evaluate the Company’s current operating performance and life of mine performance from discovery through reclamation. We believe these measures assist analysts, investors and other stakeholders in understanding the costs associated with producing silver and gold and assessing our operating performance and ability to generate free cash flow from operations. These measures may not be indicative of operating profit or cash flow from operations as determined under GAAP. Management believes converting the benefit from selling gold into silver equivalent ounces (silver to gold ratio of 60:1) best allows management, analysts, investors and other stakeholders to evaluate the operating performance of the Company. Other companies may calculate CAS and AISC differently as a result of reflecting the benefit from selling non-silver metals as a by-product credit rather than converting to silver equivalent ounces, differences in the determination of sustaining capital expenditures, and differences in underlying accounting principles and accounting frameworks such as in International Financial Reporting Standards.


42

Three Months Ended June 30, 2015
Silver
Gold
Total
In thousands except per ounce amounts
Palmarejo
San Bartolomé
Rochester
Endeavor
Total
Kensington
Wharf
Total
Costs applicable to sales, including amortization (U.S. GAAP)
$
39,158

$
24,428

$
37,076

$
3,204

$
103,866

$
40,136

$
20,123

$
60,259

$
164,125

Amortization
9,046

5,271

12,684

1,852

28,853

12,684

3,491

16,175

45,028

Costs applicable to sales
$
30,112

$
19,157

$
24,392

$
1,352

$
75,013

$
27,452

$
16,632

$
44,084

$
119,097

Silver equivalent ounces sold
2,169,960

1,439,388

2,024,856

209,130

5,843,334

9,067,614

Gold equivalent ounces sold
36,607

17,131

53,738

Costs applicable to sales per ounce
$
13.88

$
13.31

$
12.05

$
6.46

$
12.84

$
750

$
971

$
820

$
13.13

Costs applicable to sales
$
119,097

Treatment and refining costs
1,526

Sustaining capital
13,625

General and administrative
8,451

Exploration
3,579

Reclamation
4,036

Project/pre-development costs
2,030

All-in sustaining costs
$
152,344

Silver equivalent ounces sold
5,843,334

Kensington and Wharf silver equivalent ounces sold
3,224,280

Consolidated silver equivalent ounces sold
9,067,614

All-in sustaining costs per silver equivalent ounce
$
16.80

Three Months Ended June 30, 2014
Silver
Gold
In thousands except per ounce amounts
Palmarejo
San Bartolomé
Rochester
Endeavor
Total
Kensington
Total
Costs applicable to sales, including amortization (U.S. GAAP)
$
67,595

$
25,550

$
29,406

$
1,701

$
124,252

$
34,784

$
159,036

Amortization
18,044

4,855

5,025

859

28,783

11,566

40,349

Costs applicable to sales
$
49,551

$
20,695

$
24,381

$
842

$
95,469

$
23,218

$
118,687

Silver equivalent ounces sold
3,528,240

1,494,100

1,544,461

106,126

6,672,927

8,054,607

Gold ounces sold
23,028

Costs applicable to sales per ounce
$
14.04

$
13.85

$
15.79

$
7.94

$
14.31

$
1,008

$
14.74

Costs applicable to sales
$
118,687

Treatment and refining costs
963

Sustaining capital
17,617

General and administrative
9,398

Exploration
5,153

Reclamation
1,964

Project/pre-development costs
6,388

All-in sustaining costs
$
160,170

Silver equivalent ounces sold
6,672,927

Kensington and Wharf silver equivalent ounces sold
1,381,680

Consolidated silver equivalent ounces sold
8,054,607

All-in sustaining costs per silver equivalent ounce
$
19.89


43

Six Months Ended June 30, 2015
Silver
Gold
Total
In thousands except per ounce amounts
Palmarejo
San Bartolomé
Rochester
Endeavor
Total
Kensington
Wharf
Total
Costs applicable to sales, including amortization (U.S. GAAP)
$
80,983

$
48,245

$
68,015

$
5,096

$
202,339

$
81,109

$
20,123

$
101,232

$
303,571

Amortization
16,380

9,961

12,230

3,111

41,682

24,238

3,491

27,729

69,411

Costs applicable to sales
$
64,603

$
38,284

$
55,785

$
1,985

$
160,657

$
56,871

$
16,632

$
73,503

$
234,160

Silver equivalent ounces sold
4,327,572

2,729,255

4,440,959

326,993

11,824,779

17,261,499

Gold equivalent ounces sold
73,481

17,131

90,612

Costs applicable to sales per ounce
$
14.93

$
14.03

$
12.56

$
6.07

$
13.59

$
774

$
971

$
811

$
13.57

Costs applicable to sales
$
234,160

Treatment and refining costs
3,016

Sustaining capital
24,535

General and administrative
17,286

Exploration
7,845

Reclamation
7,313

Project/pre-development costs
2,341

All-in sustaining costs
$
296,496

Silver equivalent ounces sold
11,824,779

Kensington and Wharf silver equivalent ounces sold
5,436,720

Consolidated silver equivalent ounces sold
17,261,499

All-in sustaining costs per silver equivalent ounce
$
17.18

Six Months Ended June 30, 2014
Silver
Gold
In thousands except per ounce amounts
Palmarejo
San Bartolomé
Rochester
Endeavor
Total
Kensington
Total
Costs applicable to sales, including amortization (U.S. GAAP)
$
129,828

$
48,908

$
48,565

$
2,135

$
230,278

$
74,024

$
304,302

Amortization
36,702

9,313

9,476

953

56,444

22,275

78,719

Costs applicable to sales
$
93,126

$
39,595

$
39,089

$
2,024

$
173,834

$
51,749

$
225,583

Silver equivalent ounces sold
6,790,221

2,851,407

2,705,258

252,968

12,599,854

15,684,694

Gold ounces sold
51,414

Costs applicable to sales per ounce
$
13.71

$
13.89

$
14.45

$
8.00

$
13.80

$
1,007

$
14.38

Costs applicable to sales
$
225,583

Treatment and refining costs
2,524

Sustaining capital
30,403

General and administrative
23,294

Exploration
9,370

Reclamation
3,877

Project/pre-development costs
11,999

All-in sustaining costs
$
307,050

Silver equivalent ounces sold
12,599,854

Kensington and Wharf silver equivalent ounces sold
3,084,840

Consolidated silver equivalent ounces sold
15,684,694

All-in sustaining costs per silver equivalent ounce
$
19.58



44

Item 3.     Quantitative and Qualitative Disclosure about Market Risk
The Company is exposed to various market risks as a part of its operations and engages in risk management strategies to mitigate these risks. The Company continually evaluates the potential benefits of engaging in these strategies based on current market conditions. The Company does not actively engage in the practice of trading derivative instruments for profit. This discussion of the Company's market risk assessments contains "forward looking statements" that contain risks and uncertainties. For additional information regarding forward-looking statements and risks and uncertainties that could impact the Company, please refer to Item 2 - Cautionary Statement Concerning Forward-Looking Statements. Actual results and actions could differ materially from those discussed below.
Gold and Silver Price
Gold and silver prices may fluctuate widely due to numerous factors such as U.S. dollar strength or weakness, demand, investor sentiment, inflation or deflation, and global mine production. The Company's profitability and cash flow may be significantly impacted by changes in the market price of gold and silver.
Gold and Silver Hedging
To mitigate the risks associated with gold and silver price fluctuations, the Company may enter into option contracts to hedge future production. At June 30, 2015 , the Company has outstanding put spread contracts on 0.9 million ounces of silver. The weighted average high and low strike prices on the silver put spreads are $17.00 per ounce and $15.50 per ounce, respectively.
If the market price of silver were to average less than the high strike price but more than the low strike price during the contract period, the Company would receive the difference between the average market price and the high strike price for the contracted volume over the contract period. If the market price of silver were to average less than the low strike price during the contract period, the Company would receive the difference between the average market price and the high strike price for the contracted volume over the contract period, and the Company would be required to pay the difference between the average market price and the low strike price for the contracted volume over the contract period. The Company may be exposed to non-performance risk by counterparties as a result of its hedging activities. This exposure would be limited to the amount that the spot price of the metal falls short of the contract price.
The put spread contracts are generally net cash settled and expire during the third quarter of 2015. At June 30, 2015 , the fair market value of the put spreads was a net asset of $1.1 million . A 10% increase or decrease in the price of silver and gold at June 30, 2015 would result in gains of nil and $1.4 million on settlement, respectively.
Provisional Silver and Gold Sales
The Company enters into sales contracts with third-party smelters and refiners which, in most cases, provide for a provisional payment based upon preliminary assays and quoted metal prices. The provisionally priced sales contracts contain an embedded derivative that is required to be separated from the host contract. Depending on the difference between the price at the time of sale and the final settlement price, embedded derivatives are recorded as either a derivative asset or liability. The embedded derivatives do not qualify for hedge accounting and, as a result, are marked to the market gold and silver price at the end of each period from the provisional sale date to the date of final settlement. The mark-to-market gains and losses are recorded in earnings. Changes in silver and gold pricing resulted in provisional pricing mark-to-market gains of $0.3 million in the three months ended June 30, 2015 .
At June 30, 2015 , the Company had outstanding provisionally priced sales of 0.8 million ounces of silver and 44,238 ounces of gold at prices of $15.84 and $1,193 , respectively. A 10% change in realized silver price would cause revenue to vary approximately $1.3 million and a 10% change in realized gold price would cause revenue to vary approximately $5.3 million .
Palmarejo Gold Production Royalty
On January 21, 2009, Coeur Mexicana entered into a gold production royalty transaction with a subsidiary of Franco-Nevada Corporation. The royalty covers 50% of the life of mine production from the Palmarejo mine and adjacent properties and includes a minimum obligation of 4,167 gold ounces per month which terminates when payments in respect of 400,000 gold ounces have been made. The minimum royalty obligation is considered an embedded derivative financial instrument due to the impact of fluctuating gold prices on the underlying gold ounces.
As of June 30, 2015 , a total of 59,913 ounces of gold remain outstanding under the minimum royalty obligation. The fair value of the embedded derivative is reflected net of the Company's current credit adjusted risk free rate, which was 10.3% at June 30, 2015 . The fair value of the embedded derivative at June 30, 2015 was a liability of $15.3 million . A 10% change in the price of gold would result in a change in the fair value of the net derivative liability at June 30, 2015 to vary by approximately $6.2 million .

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Foreign Currency
The Company operates, or has mineral interests, in several foreign countries including Australia, Bolivia, Chile, Mexico, Argentina, Ecuador, and New Zealand, which exposes it to foreign currency exchange rate risks. Foreign currency exchange rates are influenced by world market factors beyond the Company's control such as supply and demand for U.S. and foreign currencies. Fluctuations in local currency exchange rates in relation to the U.S. dollar may significantly impact profitability and cash flow.
Foreign Currency Hedging
To manage foreign currency risk, the Company may enter into forward foreign currency contracts and option contracts when the Company believes such contracts would be beneficial. The Company had no outstanding foreign exchange contracts at June 30, 2015 .
Additional information about the Company’s derivative financial instruments may be found in Note 10 -- Derivative Financial Instruments in the notes to the consolidated financial statements.

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Item 4. Controls and Procedures
(a)
Disclosure Controls and Procedures
As of the end of the period covered by this quarterly report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the Exchange Act), and management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which by their nature, can provide only reasonable assurance regarding management’s control objectives. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events. Based upon the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective and operating to provide reasonable assurance that information required to be disclosed by it in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to provide reasonable assurance that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
(b)
Management’s Report on Internal Control Over Financial Reporting
Based on an evaluation by the Company’s Chief Executive Officer and Chief Financial Officer, such officers concluded that there was no change in the Company’s internal control over financial reporting during the three months ended June 30, 2015 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.


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PART II. Other Information
Item 1.    Legal Proceedings
The information contained in Note 19 -- Commitments and Contingencies in the notes to the consolidated financial statements included in this quarterly report is incorporated herein by reference.
Item 1A. Risk Factors

Item 1A -- Risk Factors of the 2014 10-K sets forth information relating to important risks and uncertainties that could materially adversely affect the Company's business, financial condition or operating results. Additional risks and uncertainties that the Company does not presently know or that it currently deems immaterial also may impair our business operations.

Item 4. Mine Safety Disclosures

Information pertaining to mine safety matters is reported in accordance with Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act in Exhibit 95.1 attached to this Quarterly Report on Form 10-Q.

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Item 6.    Exhibits
3.1
Certificate of Amendment to Certificate of Incorporation (Incorporated herein by reference to Exhibit 4.3 to the Registrant's Registration Statement on Form S-8 filed on May 13, 2015 (File No. 333-204142)).
10.1
Coeur Mining, Inc. 2015 Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on May 13, 2015).*
10.2
Form of Restricted Stock Award Agreement (Filed herewith).*
10.3
Form of Incentive Stock Option Award Agreement (Filed herewith).*
10.4
Form of Nonqualified Stock Option Award Agreement (Filed herewith).*
10.5
Form of Performance Share Agreement (Filed herewith).*
10.6
Form of Cash-Settled Stock Appreciation Rights Award Agreement (Filed herewith).*
10.7
Form of Performance Unit Agreement (Filed herewith).*
10.8
Credit Agreement, dated June 23, 2015, by and between Coeur Mining, Inc., certain subsidiaries of Coeur Mining, Inc., as guarantors, the lenders party thereto and Barclays Bank plc, as administrative agent. (Incorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on June 25, 2015).
31.1
Certification of the CEO (Filed herewith).
31.2
Certification of the CFO (Filed herewith).
32.1
CEO Section 1350 Certification (Filed herewith).
32.2
CFO Section 1350 Certification (Filed herewith).
95.1
Mine Safety Disclosure (Filed herewith).
101.INS
XBRL Instance Document**
101.SCH
XBRL Taxonomy Extension Schema**
101.CAL
XBRL Taxonomy Extension Calculation Linkbase**
101.DEF
XBRL Taxonomy Extension Definition Linkbase**
101.LAB
XBRL Taxonomy Extension Label Linkbase**
101.PRE
XBRL Taxonomy Extension Presentation Linkbase**
*    Management contract or compensatory plan or arrangement.
**    The following financial information from Coeur Mining, Inc.'s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2015 , formatted in XBRL (Extensible Business Reporting Language): Condensed Consolidated Statements of Comprehensive Income (Loss), Condensed Consolidated Statements of Cash Flows, Condensed Consolidated Balance Sheets, Condensed Consolidated Statement of Changes in Stockholders' Equity

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
COEUR MINING, INC.
(Registrant)
Dated
August 4, 2015
/s/ Mitchell J. Krebs
MITCHELL J. KREBS
President and Chief Executive Officer (Principal Executive Officer)
Dated
August 4, 2015
/s/ Peter C. Mitchell
PETER C. MITCHELL
Senior Vice President and Chief Financial Officer (Principal Financial Officer)
Dated
August 4, 2015
/s/ Mark Spurbeck
MARK SPURBECK
Vice President, Finance (Principal Accounting Officer)




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