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Coeur Mining Inc (CDE) To Acquire Wharf Mine Conference Call Transcript

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Below is the Coeur Mining Inc (NYSE:CDE)’s Coeur Mining to Acquire Wharf Mine conference call transcript, held on January 13th, 2015 at 11:00 a.m. ET.

CDE Coeur Mining Inc Logo

Coeur Mining Inc (NYSE:CDE) is the largest U.S.-based primary silver producer and a growing gold producer. The Company built and commenced production from three wholly-owned, long-lived mines between 2008 and 2010: the San Bartolomé silver mine in Bolivia, the Palmarejo silver-gold mine in Mexico and the Kensington gold mine in Alaska.


Corporate Executives

Bridget Freas, Director, Investor Relations
Mitchell J. Krebs, President and Chief Executive Officer
Peter C. Mitchell, Senior Vice President and Chief Financial Officer
Mike Harrison, Vice President, Corporate Development
Joe Phillips, Senior Vice President and Chief Development Officer



Adam Graf, Cowen and Company
Andrew Kaip, BMO Capital Markets
Chris Thompson, Raymond James
Michael Dudas, Sterne Agee
Graeme Jennings, Conmark Securities
Jorge Beristain, Deutsche Bank
Brett Levy, Jefferies & Company
Garreth Nelson, BB&T Capital Markets



Good morning. My name is Howard, I’ll be your conference operator today. At this time, I’d like to welcome everyone at the Coeur Mining to Acquire Wharf Mine Conference Call. All lines have be been placed on mute to prevent any background noise. After the speakers’ remarks, there’ll be a Question and Answer Session. If you’d like to ask a question during this time, simply press star and the number one in your telephone keypad. If you’d like to withdraw your question, press the pound key. And here, Ms. Freas, you may begin your conference.


Bridget Freas, Director, Investor Relations

Good morning and thanks everyone for joining us on short notice. There’s a slide deck on our website to accompany today’s remarks. Please review the cautionary statement on Slide 2 and the risk factors in our public filings for risk and uncertainties that could cause actual results to differ from any forward-looking statements we make on this call. Mitch, over to you.


Mitchell J. Krebs, President and Chief Executive Officer

Thanks Bridget. Good morning everybody. Thanks for dialing in. As you know, we issued a press release late yesterday announcing our acquisition of the Wharf Gold Mine from Goldcorp. For those of you who aren’t familiar, Wharf is an open-pit, heap leach gold mine located in Western South Dakota. It’s a pretty simple and efficient operation that has been in production for more than 30 years and has about 560,000 ounces of gold reserves according to Goldcorp’s filings. Our rationale for this acquisition is fairly straightforward. Wharf will add immediate free cash flow and growth from a second quartile cost asset located in the state’s jurisdiction. It’s the kind of operation that we know how to operate. We’ve been doing that at Rochester for the last 25 years and since it’s in the United States, we’ll be able to utilize our pool of Net Operating Losses (NOLs) to offset future taxable income. Probably the most importantly, the transaction is acretive for stockholders and we believe the $105 million purchase price will result in a mid to high-teens rate of return for our stockholders based on the current gold price.

Late yesterday, Goldcorp issued 2015 Guidance for worth of 85,000 to 90,000 ounces of gold production at an all-in sustaining cost range of $800 – $875 per ounce. Based on the current gold price, you can see that we expect to generate strong cash flow out of this new asset during the remainder of the year. With transitions to higher grades and lower costs that can contain in Palmarejo taking place over the next couple of years, this immediate bulk in free cash flow from Wharf will have a significant impact on the company and represents a very nice addition to our existing portfolio of mines. The details of this transaction are also fairly straightforward. It is an all-cash deal with a purchase price of $105 million with nearly $300 million in liquidity on the balance sheet as of the end of the third quarter, we have the ability to fund the transaction with cash-on-hand. However, maintaining financial flexibility is a priority for us so we are currently evaluating a senior secured line of credit for up to half of the purchase price, though financing is not a condition to closing this transaction. We expect to be able to close in the first quarter here in 2015.

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