Coeur Mining, Inc. (CDE) FY 2022 MD&A

Item 7.        Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis (“MD&A”) 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. For a detailed description of these measures, please see “Non-GAAP Financial Performance Measures” at the end of this Item. We provide Costs applicable to sales (“CAS”) allocation, referred to as the co-product method, based on revenue contribution for Palmarejo and Rochester and based on the primary metal, referred to as the by-product method, for Wharf. Revenue from secondary metal, such as silver at Wharf, is treated as a cost credit.

Overview

We are primarily a gold and silver producer with operating assets located in the United States and Mexico and an exploration project in Canada.

2022 Highlights

For the full year 2022, Coeur reported revenue of $785.6 million and cash provided by operating activities of $25.6 million. We reported GAAP net loss of $78.1 million, or $(0.28) per diluted share. On a non-GAAP adjusted basis1, the Company reported EBITDA of $139.0 million and net loss of $89.1 million or $(0.32) per diluted share.

•Solid fourth quarter production growth led to full-year production within guidance ranges – Gold and silver production increased 5% and 4% quarter-over-quarter, respectively, to 87,727 ounces and 2.5 million ounces. Full-year gold and silver production totaled 330,346 ounces and 9.8 million ounces, respectively, within the Company’s consolidated production guidance ranges

•Rochester delivered strong quarterly performance – Fourth quarter production at Rochester totaled 973,000 ounces and 11,589 ounces of silver and gold, respectively, representing quarter-over-quarter increases of 31% and 32%.

•POA 11 expansion nearing scheduled mid-year construction completion and remains on-track – Construction at Rochester is scheduled to be completed mid-year 2023. At the end of 2022, the project was 74% complete. The new Stage VI leach pad is now operational, with first ore placed on February 1, 2023. As of December 31, 2022, approximately $605 million of the estimated capital had been committed, of which $494 million of the estimated capital cost had been incurred. Total estimated project capital remains unchanged at $650 - $670 million

•Exploration investment drives approximately 12% and 3% year-over-year increases in gold and silver reserves, respectively – Gold reserves at Kensington grew roughly 56% year-over-year, adding approximately a year and a half to its mine life. Successful exploration at Silvertip contributed to year-over-year increases in measured and indicated resources of 73%, 69% and 81% in silver, zinc and lead, respectively, excluding reclassified ounces. Over the last five years, the Company has invested approximately $245 million in exploration, leading to increases of approximately 21% and 49% in Company-wide gold and silver reserves, respectively over the five-year period

•Liquidity further bolstered to support remaining elevated levels of growth investments – The sale of the Crown Sterling holdings was completed on November 4, 2022 for upfront cash consideration of $150 million. On January 17, 2023, Coeur announced the sale of its remaining shares of Victoria Gold Corporation (“Victoria Gold”) for net cash proceeds of approximately $40 million. Coeur ended the quarter with total liquidity of approximately $342 million, including $62 million of cash and $280 million of available capacity under its $390 million revolving credit facility (“RCF”) and is further supported by robust hedges covering approximately 52% and 29% of 2023 estimated gold and silver production, respectively. As adjusted to reflect the receipt of proceeds from Victoria Gold, Coeur’s total liquidity stood at $382 million at December 31, 2022

•2023 guidance ranges consistent with 2022 investor day outlook – The Company expects 2023 gold and silver production of 320,000 - 370,000 ounces and 10.0 - 12.0 million ounces, respectively, driven by strong expected second half silver and gold production increases consistent with the planned ramp-up at Rochester following completion of the POA 11 expansion project and by higher expected production from the Wharf gold operation

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Selected Financial and Operating Results

(1)See “Non-GAAP Financial Performance Measures.”

(2)Includes finance leases. Net of debt issuance costs and premium received.

(3)Due to the suspension of mining and processing activities at Silvertip these amounts are not meaningful.

Consolidated Financial Results

Year Ended December 31, 2022 compared to Year Ended December 31, 2021

Revenue

We sold 329,968 gold ounces and 9.8 million silver ounces, compared to 350,347 gold ounces and 10.1 million silver ounces. Revenue decreased by $47.2 million, or 6%, as a result of a 6% and 4% decrease in gold and silver ounces sold, respectively, and a 13% decrease in average realized silver prices, partially offset by a 5% increase in average realized gold prices driven by the favorable impact of realized gains from gold hedges. The decrease in gold and silver ounces sold was primarily due to lower grades at Palmarejo, Kensington and Wharf. Gold and silver represented 73% and 27% of 2022 sales revenue, respectively. This compares to gold and silver representing 70% and 30% of 2021 sales revenue, respectively.

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The following table summarizes consolidated metal sales:

Costs Applicable to Sales

Costs applicable to sales increased $95.0 million, or 19%, primarily due to higher operating costs partially impacted by continued inflationary pressures relating to consumable costs, most notably higher diesel prices, and increased lower of cost or net realizable value (“LCM”) adjustments at Rochester. For a complete discussion of costs applicable to sales, see Results of Operations below.

Amortization

Amortization decreased $16.7 million primarily due to lower gold and silver ounces sold and longer assumed mine lives at Palmarejo, Kensington and Wharf.

Expenses

General and administrative expenses decreased $0.9 million, or 2%, primarily due to lower stock-based compensation expense.

Exploration expense decreased $24.5 million, or 48% driven by lower planned investment across the portfolio.

Pre-development, reclamation, and other expenses decreased $7.4 million, or 15%, stemming from lower costs incurred in connection with the Company’s COVID-19 health and safety protocols and lower ongoing carrying costs at Silvertip, partially offset by higher asset retirement accretion. The following table summarizes pre-development, reclamation, and other expenses:

Other Income and Expenses

During the first quarter of 2021, the Company incurred a $9.2 million loss in connection with the tender and redemption of the 5.875% Senior Notes due 2024 (the “2024 Senior Notes”) concurrent with the offering of the 2029 Senior Notes.

Fair value adjustments, net, decreased to a loss of $66.7 million compared to a $0.5 million loss as a result of a reduction in value of the Company’s equity investments. For additional details on the Company’s equity investments see Note 6 -- Investments.

Interest expense (net of capitalized interest of $11.2 million) increased to $23.9 million from $16.5 million due to higher interest paid under the RCF, partially offset by higher capitalized interest.

Other, net increased to a gain of $67.0 million compared to a loss of $22.9 million in 2021, as a result of the $62.2 million gain recognized in connection with the sale of the Sterling/Crown exploration properties and a write-down of a $26.0 million Mexican VAT receivable in 2021 due to uncertain collectability. For additional details on the VAT receivable write-down see Note 19 -- Commitments and Contingencies.

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Income and Mining Taxes

The Company’s Income and mining tax (expense) benefit consisted of:

Income and mining tax expense of approximately $14.7 million resulted in an effective tax rate of 23.1% for 2022. This compares to income tax expense of $35.0 million for an effective tax rate of 961.4% for 2021.The comparability of the Company’s income and mining tax (expense) benefit and effective tax rate for the reported periods was impacted by multiple factors, primarily: (i) variations in our income before income taxes; (ii) geographic distribution of that income; (iii) the sale of non-core assets; (iv) mining taxes; (v) percentage depletion; (vi) foreign exchange rates; (vii) the impact of uncertain tax positions; and (viii) the non-recognition of tax assets. Therefore, the effective tax rate will fluctuate, sometimes significantly, period to period.

The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit:

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. 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 more likely than not 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 factors that impact the Company’s ability to realize its deferred tax assets. For additional information, please see “Item 1A - Risk Factors”.

Net Loss

Net loss was $78.1 million, or $0.28 per diluted share, compared to $31.3 million, or $0.13 per diluted share. The increase in net loss was driven by a 6% and 4% decrease in gold and silver ounces sold, respectively, a 13% decrease in average realized silver prices, higher operating costs, including increased LCM adjustments at Rochester, unfavorable changes in the fair value of the Company’s equity investments, and a realized loss of $15.6 million in connection with the sale of Victoria Gold common shares. This was partially offset by a 5% increase in average realized gold prices driven by realized gains from gold hedging, a $62.2 million gain on the sale of the Sterling/Crown exploration properties, lower exploration costs and income and mining taxes, absence of a $9.2 million loss on debt extinguishment and the VAT write-down of $26.0 million in 2021.

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Adjusted net loss was $89.1 million, or $0.32 per diluted share, compared to $1.4 million, or $0.01 per diluted share (see “Non-GAAP Financial Performance Measures”).

Year Ended December 31, 2021 compared to Year Ended December 31, 2020

Revenue

We sold 350,347 gold ounces and 10.1 million silver ounces, compared to 356,251 gold ounces, 9.6 million silver ounces, 3.2 million zinc pounds and 2.5 million lead pounds in the prior year. Revenue increased by $47.4 million, or 6%, as a result of a 1% and 21% increase in average realized gold and silver prices, respectively, and higher silver ounces sold (5%), partially offset by lower gold ounces sold (2%). The increase in silver ounces sold was primarily due to higher mill throughput at Palmarejo. Gold and silver accounted for 70% and 30% of 2021 sales revenue, respectively. This compares to gold and silver accounting for 74% and 25% of 2020 sales revenue, respectively, with zinc and lead accounting for the remaining 2020 sales revenue.

The following table summarizes consolidated metal sales:

Costs Applicable to Sales

Costs applicable to sales increased $71.2 million, or 16%, primarily due to inflationary pressures related to employee-related, maintenance and consumable costs at all operating sites, higher silver ounces sold primarily at Palmarejo, the Rochester fourth quarter LCM adjustment of $7.3 million, partially offset by a $13.8 million favorable impact from foreign currency hedges.

Amortization

Amortization decreased $3.1 million, or 2%, primarily due to longer assumed mine life based on year-end 2020 mineral reserve growth, partially offset by higher silver ounces sold.

Expenses

General and administrative expenses increased $6.7 million, or 20%, primarily due to higher compensation, travel and outside service costs.

Exploration expense increased $8.5 million, or 20%, as the Company maintained its commitment to a higher-level of exploration investment in 2021.

Pre-development, reclamation, and other expenses decreased $7.0 million, or 13%, stemming from lower costs incurred in connection with the Company’s COVID-19 health and safety protocols, partially offset by full-year ongoing carrying costs and absence of one-time 2020 costs associated with the suspension of mining and processing activities at Silvertip.

The following table summarizes pre-development, reclamation, and other expenses:

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Other Income and Expenses

During the first quarter of 2021, the Company incurred a $9.2 million loss in connection with the tender and redemption of the 2024 Senior Notes concurrent with the completed offering of the 2029 Senior Notes.

Fair value adjustments, net, decreased to a loss of $0.5 million compared to a gain of $7.6 million as a result of a reduction in value of the Company’s equity investments. The estimated fair values of the Company’s equity investments in Victoria Gold and Integra Resources Corp. (“Integra Resources”) were $124.2 million and $8.0 million, respectively, at December 31, 2021.

Interest expense (net of capitalized interest of $11.1 million) decreased to $16.5 million from $20.7 million due to higher capitalized interest associated with the POA 11 project at Rochester, and lower interest paid under the RCF, partially offset by higher interest paid under the 2029 Senior Notes compared to the 2024 Senior Notes and higher interest paid under finance lease obligations.

Other, net increased to a loss of $22.9 million compared to a loss of $5.9 million due to a write-down of the $26.0 million VAT receivable, partially offset by an increase in gains on the sale of assets in 2021 and a one-time fee of $3.8 million related to the novation of certain of the Company’s gold zero cost collars incurred in 2020.

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Income and Mining Taxes

The Company’s Income and mining tax (expense) benefit consisted of:

Income and mining tax expense of approximately $35.0 million resulted in an effective tax rate of 961.4% for 2021. This compares to income tax expense of $37.0 million or effective tax rate of 59.1% for 2020. The comparability of the Company’s income and mining tax (expense) benefit and effective tax rate for the reported periods was impacted by multiple factors, primarily: (i) variations in our income before income taxes; (ii) geographic distribution of that income; (iii) mining taxes; (iv) foreign exchange rates; (v) percentage depletion (vi) the impact of uncertain tax positions; and (vii) the non-recognition of tax assets. Therefore, the effective tax rate will fluctuate, sometimes significantly, period to period.

The following table summarizes the components of the Company’s income (loss) before tax and income and mining tax (expense) benefit:

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Net Loss

Net loss was $31.3 million, or $0.13 per diluted share, compared to net income of $25.6 million, or $0.11 per diluted share. The decrease in net income was driven by higher operating costs, the $26.0 million VAT write-down , higher exploration expense, a $9.2 million loss on debt extinguishment and higher income and mining taxes. This was partially offset by a 1% and 21% increase in average realized gold and silver prices, respectively and higher silver ounces sold (5%). Adjusted net loss was $1.4 million, or $0.01 per diluted share, compared to an adjusted net income of $59.0 million, or $0.24 per diluted share (see “Non-GAAP Financial Performance Measures”).

2023 Guidance Framework

Gold and silver production is expected to increase compared to 2022, driven by the planned construction completion of POA 11 at Rochester mid-year as well as higher expected grades at Wharf due to mine sequencing and resource model enhancements. Overall cost guidance has increased compared to 2022 primarily driven by expected continued inflationary pressures on operating costs.

Additionally, with the completion of the POA 11 expansion construction expected in mid-2023, Coeur has elected to defer providing cost guidance at Rochester until mid-year, following the transitional period anticipated in the first half of 2023. The Company expects to have an LCM adjustment at Rochester of roughly $10 - $15 million each quarter in 2023.

2023 Production Guidance

2023 Costs Applicable to Sales Guidance

2023 Capital, Exploration and G&A Guidance

Note: The Company’s guidance figures assume estimated prices of $1,800/oz gold and $23.00/oz silver as well as CAD of 1.25 and MXN of 20.00. Guidance figures exclude the impact of any metal sales or foreign exchange hedges.

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Results of Operations

Palmarejo

(1)See Non-GAAP Financial Performance Measures.

Year Ended December 31, 2022 compared to Year Ended December 31, 2021

Gold and silver production decreased 2% as a result of 12% and 8% lower gold and silver grades, respectively, partially offset by 4% higher mill throughput. Metal sales were $303.4 million, or 38% of Coeur’s metal sales, compared with $320.3 million, or 38% of Coeur’s metal sales. Revenue decreased by $16.8 million or 5%, of which $12.0 million was due to lower average realized silver prices and $4.8 million resulting from lower gold and silver production. Costs applicable to sales per gold and silver ounce increased 33% and 9%, respectively, due to the mix of gold and silver sales, lower production, higher employee-related and consumable costs primarily due to inflationary pressures, and the absence of the favorable impact of foreign currency hedges ($13.8 million) included in the prior year. Amortization decreased by $0.7 million to $35.4 million due to lower sales and longer assumed mine life. Capital expenditures increased to $42.6 million from $36.5 million due to higher underground development, infill drilling activities and flotation and thickener equipment purchases.

Year Ended December 31, 2021 compared to Year Ended December 31, 2020

Gold production decreased 1% as a result of lower gold grade, partially offset by higher mill throughput and recoveries. Silver production increased 9% as a result of higher mill throughput and recoveries, partially offset by lower silver grade. Metal sales were $320.3 million, or 38% of Coeur’s metal sales, compared with $286.6 million, or 36% of Coeur’s metal sales. Revenue increased by $33.7 million, or 12%, of which $23.9 million was due to higher average realized silver prices and $9.8 million was the result of a higher volume of silver sales. Costs applicable to sales per gold and silver ounce increased 9% and 31%, respectively, due to the mix of gold and silver sales, and higher employee-related, maintenance and consumable costs largely due to inflationary pressures, partially offset by the favorable impact of foreign currency hedges ($13.8 million). Amortization decreased to $36.1 million due to longer assumed mine life based on year-end 2020 mineral reserve growth. Capital expenditures increased to $36.5 million from $25.0 million due to higher underground development and infill drilling activities.

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Rochester

(1)See Non-GAAP Financial Performance Measures.

Year Ended December 31, 2022 compared to Year Ended December 31, 2021

Gold production increased 28% primarily due to increased tons placed and higher gold grades, while silver production decreased 3%, as a result of lower silver grades and timing of recoveries. Metal sales were $129.7 million, or 17% of Coeur’s metal sales, compared with $130.8 million, or 16% of Coeur’s metal sales. Revenue decreased by $1.2 million, or 1%, of which $9.1 million was primarily due to lower average realized silver prices, partially offset by an increase of $7.9 million primarily due to higher gold production. Costs applicable to sales per gold and silver ounce increased 33% and 9%, respectively, due to the mix of gold and silver sales and higher LCM adjustments of $46.0 million compared to $12.6 million in the prior year, driven by lower silver metal prices, higher employee-related, maintenance, diesel and other consumable costs primarily due to inflationary pressures. Amortization increased to $22.6 million due to higher equipment depreciation from recent equipment purchases and the impact of LCM adjustments. Capital expenditures increased to $246.4 million from $166.5 million due to planned payments related to the POA 11 expansion project and equipment purchases.

As of December 31, 2022, the Company had committed approximately $605 million of capital since inception of the POA 11 expansion project and approximately $494 million of the estimated project cost had been incurred. Total estimated project capital remains between $650 - $670 million. At the end of 2022, the project was 74% complete.

Progress on the Merrill-Crowe plant remained on schedule, including (i) completion of mechanical equipment setting, (ii) completion of process plant building cladding, (iii) commencement of electrical cable installation and continuation of piping installation, and (iv) successful completion of control systems programming and factory testing.

Further work on the crusher corridor also advanced, including (i) completion of the first lift of the primary crusher vertical concrete, (ii) continuation of steel erection and equipment installation above the secondary cone crushers in the secondary crusher area, (iii) continuation of steel erection and equipment installation above the tertiary HPGR crushers in the tertiary crusher area, and (iv) commencement of control systems programming.

Coeur made solid progress on the final major high-voltage electrical distribution and substation construction, while also advancing pre-commissioning planning and system development. Mechanical completion remains on target for mid-2023 with ramp-up and commissioning expected to take place during the second half of the year.

Year Ended December 31, 2021 compared to Year Ended December 31, 2020

Gold and silver production remained comparable year over year. Metal sales were $130.8 million, or 16% of Coeur’s metal sales, compared with $110.3 million, or 14% of Coeur’s metal sales. Revenue increased by $20.6 million, or 19%, of which $13.3 million was the result of higher average realized gold and silver prices and $7.3 million was the result of a higher volume of gold and silver sales. Costs applicable to sales per gold and silver ounce increased 31% and 54%, respectively, due to the mix of gold and silver sales, higher employee-related, maintenance and consumable costs partially due to inflationary pressures, and a LCM adjustment of $7.3 million. Amortization increased to $20.2 million due to higher equipment depreciation from recently placed-in service assets and an LCM adjustment of $1.1 million in the fourth quarter. Capital expenditures increased to $166.5 million from $37.5 million due to the commencement of construction activities related to POA 11 in August 2020.

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Kensington

(1)See Non-GAAP Financial Performance Measures.

Year Ended December 31, 2022 compared to Year Ended December 31, 2021

Gold production decreased 10% as a result of 10% lower grades and lower recoveries, partially offset by 5% higher mill throughput. Metal sales were $202.5 million, or 26% of Coeur’s metal sales, compared to $215.0 million, or 26% of Coeur’s metal sales. Revenue decreased by $12.5 million, or 6%, of which $24.2 million resulted from lower gold production, partially offset by an increase of $11.7 million due to higher average realized gold prices. Costs applicable to sales per gold ounce increased 31% due to lower production and higher employee-related, maintenance, diesel and other consumable costs primarily due to inflationary pressures. Amortization decreased to $39.0 million primarily due to lower ounces sold and longer assumed mine life. Capital expenditures increased to $31.5 million from $27.5 million due to higher infill drilling and underground development.

Year Ended December 31, 2021 compared to Year Ended December 31, 2020

Gold production decreased 3% as a result of lower grade and lower mill throughput. Metal sales were $215.0 million, or 26% of Coeur’s metal sales, compared to $216.5 million, or 28% of Coeur’s metal sales. Revenue decreased by $1.5 million, or 1%, of which $4.6 million resulted from lower volume of gold sales, partially offset by an increase of $3.1 million due to higher average realized gold prices. Costs applicable to sales per gold ounce increased 11% due to lower production and higher employee-related, maintenance and consumable costs, partially due to inflationary pressures. Amortization increased to $54.9 million primarily due to higher Jualin production, partially offset by lower ounces sold. Capital expenditures increased to $27.5 million from $19.8 million due to higher infill drilling and underground development.

Wharf

(1)See Non-GAAP Financial Performance Measures.

Year Ended December 31, 2022 compared to Year Ended December 31, 2021

Gold production decreased 12% driven by lower grades. Metal sales were $150.0 million, or 19% of Coeur’s metal sales, compared to $166.7 million, or 20% of Coeur’s metal sales. Revenue decreased by $16.7 million, or 10%, of which $23.8 million was due to a lower gold production, partially offset by an increase of $7.1 million due to higher average realized gold prices. Costs applicable to sales per gold ounce increased 29% due to lower production and higher diesel and other consumable costs primarily due to inflationary pressures. Amortization decreased to $8.2 million due to lower ounces sold. Capital expenditures were $3.1 million.

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Year Ended December 31, 2021 compared to Year Ended December 31, 2020

Gold production decreased 2% driven by the timing of recoveries. Metal sales were $166.7 million, or 20% of Coeur’s metal sales, compared to $170.2 million, or 22% of Coeur’s metal sales. Revenue decreased by $3.5 million, or 2%, of which $5.6 million resulted from a lower volume of gold sales, partially offset by an increase of $2.1 million due to higher average realized gold and silver prices. Costs applicable to sales per gold ounce increased 8% due to higher equipment rental, diesel and employee-related costs partially due to inflationary pressures. Amortization decreased to $11.0 million due to lower ounces sold. Capital expenditures were $8.1 million reflecting $4.0 million of infill drilling.

Silvertip

(1) Due to the suspension of mining and processing activities these amounts are not meaningful.

(2) See Non-GAAP Financial Performance Measures.

Year Ended December 31, 2022

Silvertip suspended mining and processing activities, unrelated to COVID-19, in February 2020. Ongoing carrying and suspension costs are included in Pre-development, reclamation, and other.

Coeur conducted an order of magnitude assessment on multiple throughput scenarios to narrow the range of options for a preferred path forward for Silvertip. Continued resource growth as well as optimization of operating and capital costs are expected to further enhance project economics. Near-term, the Company is focused on exploration and managing care and maintenance costs as the Company continues to develop plans for a potential expansion and restart of the Silvertip.

Ongoing carrying costs at Silvertip totaled $21.0 million in 2022, compared to $24.9 million in the prior year. Capital expenditures in 2022 totaled $24.8 million compared to $70.1 million in the prior year due to continued infill drilling and underground development.

Liquidity and Capital Resources

At December 31, 2022, the Company had $63.2 million of cash, cash equivalents and restricted cash and $280.4 million available under the RCF. Future borrowing under the RCF may be subject to certain financial covenants. Cash and cash equivalents increased $4.8 million in the year ended December 31, 2022, due to $150.2 million from the sale of the Sterling/Crown exploration properties in the fourth quarter of 2022, net proceeds of $147.4 million from the sale of 36.8 million shares of its common stock under two “at the market” equity offering programs completed in 2022 described below, $40.5 million received in July 2022 from the sale of a portion of the Victoria Gold common shares, $15.3 million received from the sale of the La Preciosa project and $25.6 million of net cash flows provided from operations impacted by a 4% and 10% decrease in gold and silver ounces sold, respectively and a 16% decrease in average realized silver prices and higher operating costs primarily due to inflationary pressures partially offset by $352.4 million of capital expenditures primarily related to the POA 11 expansion project at Rochester.

In March 2022, the Company completed a $100.0 million “at the market” offering of its common stock, par value $0.01 per share (the “March Equity Offering”). The Company sold a total of 22.1 million shares of common stock in the March Equity Offering at an average price of $4.53 per share, raising net proceeds (after sales commissions) of $98.0 million.

On May 2, 2022, the Company entered into an amendment (the “Amendment”) to the RCF to, among other things, increase the maximum principal amount of the RCF by $90.0 million in incremental loans and commitments to an aggregate of $390.0 million. On November 9, 2022, the Company entered into an amendment (the “November Amendment”) to the RCF. The November Amendment, among other things, (1) modified the financial covenants to provide greater flexibility under the

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consolidated net leverage ratio requirement through the December 31, 2023 test date, with the ratio returning to the original level as outlined in the RCF starting with the March 31, 2024 test date (the “Amendment Period”), (2) allowed up to $50 million for integration costs or costs associated with establishing new facilities and certain costs associated with LCM adjustments at Rochester to be excluded from the calculation of Consolidated EBITDA for purposes of the RCF, (3) increased the interest rate on certain borrowings through early 2023, (4) required the Company to repay outstanding amounts under the RCF if cash-on-hand exceeds $60 million during the Amendment Period, and (5) restricted certain payments and the incurrence of certain liens during the Amendment Period. At December 31, 2022, the Company had $80.0 million drawn and $29.6 million in outstanding letters of credit under the RCF.

On June 28, 2022, the Company entered into an agreement to sell 5.0 million shares of common stock of Victoria Gold at a price of $8.34 per Victoria Gold Common Share, for net proceeds of $40.5 million received in July 2022. At December 31, 2022, the Company held $44.2 million of equity securities including a 9.4% interest in Victoria Gold. In January 2023, the Company sold its remaining 6.0 million Victoria Gold common shares, at a price of $6.70 per share, for net proceeds of $39.8 million.

On September 18, 2022, the Company entered into a Stock Purchase Agreement (“Crown Sterling Agreement”) with AngloGold Ashanti (U.S.A.) Holdings Inc. and its affiliate (“Buyer”) for the sale of 100% of the issued and outstanding shares of Coeur Sterling, Inc., a subsidiary of Coeur that holds the Sterling/Crown exploration properties near Beatty, Nevada, in exchange for: (A) a cash payment of $150.2 million at the closing of the transaction, subject to a customary purchase price adjustment and (B) the right to an additional payment of $50.0 million should Buyer, its affiliates or its successors report gold resources in the Sterling/Crown exploration properties (including any in-situ ounces mined after the closing of the Transaction) equal to or greater than 3,500,000 gold ounces, subject to certain additional terms and conditions detailed in the Crown Sterling Agreement. The transaction was consummated on November 4, 2022.

In December 2022, the Company completed a $50.0 million “at the market” offering of its common stock, par value $0.01 per share (the “December Equity Offering”). The Company sold a total of 14.8 million shares of common stock in the December Equity Offering at an average price of $3.39 per share, raising net proceeds (after sales commissions) of $49.2 million.

As of December 31, 2022, the Company had outstanding forward contracts on 130,500 ounces of gold at December 31, 2022 that settle monthly through December 2023. The Company is targeting to hedge up to 70% of expected gold production and 50% of expected silver production for 2023 in order to protect cash flow during a period of elevated capital expenditures, and may in the future layer on additional hedges as circumstances warrant. In early 2023, the Company added 49,998 ounces of gold forward contracts and 3.2 million ounces of silver forward contracts that settle monthly through December 2023. Taking into account the additional gold and silver hedges added in early 2023 the weighted average fixed price on the forward contracts is $1,961 per ounce of gold and $24.55 per ounce of silver.

We currently believe we have sufficient sources of funding to meet our business requirements for the next 12 months and longer-term. We expect to use a combination of cash provided by operating activities under-pinned by our gold and silver hedging programs, sale of non-core investments, borrowings under our RCF and additional equity financings depending on future commodity prices to fund near term capital requirements, including those described in this Report for the POA 11 expansion project at Rochester and in our 2023 capital expenditure guidance. Our longer-term plans contemplate the expansion and restart of Silvertip, as well as the continued exploration and potential development of our other projects, such as the Lincoln Hill area adjacent to Rochester.

As of December 31, 2022, the Company committed approximately $605 million of capital since inception of the project and approximately $494 million of the estimated project cost had been incurred. Total estimated project capital remains $650 - $670 million. At the end of 2022, the project was 74% complete.

We also have additional obligations as part of our ordinary course of business, beyond those committed for capital expenditures and other purchase obligations and commitments for purchases of goods and services.

If and to the extent liquidity resources are insufficient to support short- and long-term expenditures, we may need to incur additional indebtedness or issue additional equity securities, among other financing options, which may not be available on acceptable terms or at all. This could have a material adverse impact on the Company, as discussed in more detail under Item 1A – Risk Factors.

Cash Provided by Operating Activities

Net cash provided by operating activities for the year ended December 31, 2022 was $25.6 million, compared to $110.5 million for the year ended December 31, 2021. Adjusted EBITDA for the year ended December 31, 2022 was $139.0 million, compared to $216.1 million for the year ended December 31, 2021 (see “Non-GAAP Financial Performance Measures”). Net cash provided by operating activities was impacted by the following key factors for the applicable periods:

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Net cash provided by operating activities decreased $84.9 million for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily due to a 6% and 4% decrease in lower gold and silver ounces sold, respectively, a 13% decrease in average realized silver prices, and higher operating costs, partially offset by a 5% increase in average realized gold prices driven by the favorable impact of realized gains from gold hedges, lower exploration costs, timing of VAT collections at Palmarejo, and lower Silvertip ongoing carrying costs. Revenue for the year ended December 31, 2022 compared to the year ended December 31, 2021 decreased by $47.2 million, of which $43.3 million was due to a lower volume of gold and silver sales and $3.9 million was due to lower average realized silver prices.

Net cash provided by operating activities decreased $38.2 million for the year ended December 31, 2021, primarily due to lower gold ounces sold (2%), higher operating costs, exploration costs, and mining and income taxes at Palmarejo, partially offset by a 1% and 21% increase in average realized gold and silver prices, respectively, and higher silver ounces sold (5%). Revenue for the year ended December 31, 2021 increased by $47.4 million, of which $44.5 million was the result of higher average realized gold and silver prices and $2.9 million was due to the higher volume of silver sales.

Cash Used in Investing Activities

Net cash used in investing activities in the year ended December 31, 2022 was $146.2 million compared to $304.1 million in the year ended December 31, 2021. Cash used in investing activities decreased primarily due to receipt of net proceeds of $150.2 million and $15.3 million from the sale of the Sterling/Crown exploration properties and La Preciosa project, respectively, and net proceeds of $40.5 million in July 2022 from the sale of a portion of the Victoria Gold common shares, partially offset by an increase in capital expenditures. The Company incurred capital expenditures of $352.4 million in the year ended December 31, 2022 compared with $309.8 million in the year ended December 31, 2021. Capital expenditures in the year ended December 31, 2022 were primarily related to POA 11 construction activities at Rochester and underground development at Palmarejo and Kensington. Capital expenditures in the year ended December 31, 2021 were primarily related to POA 11 construction activities at Rochester, potential expansion expenditures at Silvertip and underground development at Palmarejo and Kensington.

The Company is experiencing inflationary pressures, specifically with respect to building materials and fuel as well as overall tightness in the construction market related to capital projects, most notably at the POA 11 project at Rochester, and to operating costs company-wide.

Net cash used in investing activities in the year ended December 31, 2021 was $304.1 million compared to $65.7 million in the year ended December 31, 2020. Cash used in investing activities increased primarily due to construction activities related to POA 11 at Rochester and the potential expansion at Silvertip in the current period and the impact of the net proceeds of $19.4 million from the sale of Metalla Royalty & Streaming Ltd. common shares in the comparable period of 2020. The Company incurred capital expenditures of $309.8 million in the year ended December 31, 2021 compared with $99.3 million in the year ended December 31, 2020. Capital expenditures in the year ended December 31, 2021 were primarily related to POA 11 construction activities at Rochester, potential expansion expenditures at Silvertip and underground development at Palmarejo and Kensington. Capital expenditures in the year ended December 31, 2020 were primarily related to POA 11 at Rochester, which commenced construction activities during the third quarter, and underground development at Palmarejo and Kensington.

Cash Provided by (Used in) Financing Activities

Net cash provided by financing activities in the year ended December 31, 2022 was $125.0 million compared to $158.1 million in the year ended December 31, 2021. During the year ended December 31, 2022, the Company drew $15.0 million, net, from the RCF and received net proceeds of $147.4 million from the sale of 36,820,110 shares of its common stock in the March Equity Offering and the December Equity Offering. During the year ended December 31, 2021, the Company received net proceeds of $367.5 million from the issuance of the 2029 Senior Notes, and drew $65.0 million, net, from the RCF, partially offset by the tender and redemption of the 2024 Senior Notes for $238.3 million, including premiums.

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Net cash provided by financing activities in the year ended December 31, 2021 was $158.1 million compared to net cash used in financing activities of $46.5 million in the year ended December 31, 2020. During the year ended December 31, 2021, the Company received net proceeds of $367.5 million from the issuance of the 2029 Senior Notes, and drew $65.0 million, net, from the RCF, partially offset by the tender and redemption of the 2024 Senior Notes for $238.3 million, including premiums. As of December 31, 2021, there was $65.0 million drawn under the RCF. During the year ended December 31, 2020, the Company fully repaid the $150.0 million drawn from the RCF during 2020, and paid contingent cash consideration of $18.8 million associated with the Silvertip acquisition.

The Company secured a finance lease package for nearly $60.0 million during the year ended December 31, 2021, of which $55.7 million has been funded. The package is earmarked for planned equipment purchases for the POA 11 project in 2021, 2022, and 2023 and has an interest rate of 5.2%.

Critical Accounting Policies and Accounting Developments

Listed below are the accounting policies that we believe are critical to our financial statements due to the degree of uncertainty regarding the estimates and assumptions involved and the magnitude of the asset, liability, revenue, and expense being reported. For a discussion of recent accounting pronouncements, see Note 2 -- Summary of Significant Accounting Policies in the notes to the Consolidated Financial Statements.

Revenue Recognition

The Company produces doré and concentrate that is shipped to third-party refiners and smelters, respectively, for processing. The Company enters into contracts to sell its metal to various third-party customers which may include the refiners and smelters that process the doré and concentrate. The Company’s performance obligation in these transactions is generally the transfer of metal to the customer.

In the case of doré shipments, the Company generally sells refined metal at market prices agreed upon by both parties. The Company also has the right, but not the obligation, to sell a portion of the anticipated refined metal in advance of being fully refined. When the Company sells refined metal or advanced metal, the performance obligation is satisfied when the metal is delivered to the customer. Revenue and Costs Applicable to Sales are recorded on a gross basis under these contracts at the time the performance obligation is satisfied.

Under the Company’s concentrate sales contracts with third-party smelters, metal prices are set on a specified future quotational period, typically one to three months, after the shipment date based on market prices. When the Company sells gold concentrate to the third-party smelters, the performance obligation is satisfied when risk of loss is transferred to the customer. The contracts, in general, provide for provisional payment based upon provisional assays and historical metal prices. Final settlement is based on the applicable price for the specified future quotational period and generally occurs three to six months after shipment. The Company’s provisionally priced sales contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of concentrates measured at the forward price at the time of sale. The embedded derivative does not qualify for hedge accounting and is adjusted to fair value through revenue each period until the date of final metal settlement.

The Company also sells concentrate under off-take agreements to third-party customers that are responsible for arranging the smelting of the concentrate. Prices can either be fixed or based on a quotational period. The quotational period varies by contract, but is generally a one-month period following the shipment of the concentrate. The performance obligation is satisfied when risk of loss is transferred to the customer.

The Company recognizes revenue from concentrate sales, net of treatment and refining charges, when it satisfies the performance obligation of transferring control of the concentrate to the customer.

For doré and off-take sales, the Company may incur a finance charge related to advance sales that is not considered significant and, as such, is not considered a separate performance obligation. In addition, the Company has elected to treat freight costs as a fulfillment cost under ASC 606 and not as a separate performance obligation.

The Company’s gold stream agreement with Franco-Nevada provided for a $20.0 million deposit paid by Franco-Nevada in exchange for the right and obligation, commencing in 2016, to purchase 50% of a portion of Palmarejo gold production at the lesser of $800 or market price per ounce. Because there is no minimum obligation associated with the deposit, it is not considered financing, and each shipment is considered to be a separate performance obligation. The stream agreement represents a contract liability under ASC 606, which requires the Company to ratably recognize a portion of the deposit as revenue for each gold ounce delivered to Franco-Nevada.

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Estimates

The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of its financial statements, the reported amounts of revenue and expenses during the reporting period, and mined reserves. There can be no assurance that actual results will not differ from those estimates. There are a number of uncertainties inherent in estimating quantities of reserves, including many factors beyond the Company’s control. Mineral reserve estimates are based upon engineering evaluations of samplings of drill holes and other openings. These estimates involve assumptions regarding future silver and gold prices, mine geology, mining methods and the related costs to develop and mine the reserves. Changes in these assumptions could result in material adjustments to the Company’s reserve estimates. The Company uses reserve estimates in determining the units-of-production amortization and evaluating mine assets for potential impairment. For a discussion of estimates and assumptions used by management that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of its financial statements, the reported amounts of revenue and expenses during the reporting period, and mined reserves, see Note 2 -- Summary of Significant Accounting Policies in the notes to the Consolidated Financial Statements.

Amortization

The Company amortizes its property, plant, and equipment, mining properties, and mine development using the units-of-production method over the estimated life of the ore body generally based on its proven and probable reserves or the straight-line method over the useful life, whichever is shorter. The accounting estimates related to amortization are critical accounting estimates because (1) the determination of reserves involves uncertainties with respect to the ultimate geology of its reserves and the assumptions used in determining the economic feasibility of mining those reserves and (2) changes in estimated proven and probable reserves and asset useful lives can have a material impact on net income.

Impairment of Long-lived Assets

We review and evaluate our long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Asset impairment is considered to exist if the total estimated undiscounted pretax future cash flows are less than the carrying amount of the asset. In estimating future cash flows, assets are grouped at the lowest level for which there is identifiable cash flows that are largely independent of future cash flows from other asset groups. An impairment loss is measured by discounted estimated future cash flows, and recorded by reducing the asset's carrying amount to fair value. Future cash flows are estimated based on estimated quantities of recoverable minerals, expected gold and silver prices (considering current and historical prices, trends and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on life-of-mine plans.

Existing proven and probable reserves and value beyond proven and probable reserves, including mineralization other than proven and probable reserves are included when determining the fair value of mine site asset groups at acquisition and, subsequently, in determining whether the assets are impaired. The term “recoverable minerals” refers to the estimated amount of gold and silver that will be obtained after taking into account losses during ore processing and treatment. Estimates of recoverable minerals from exploration stage mineral interests are risk adjusted based on management’s relative confidence in such materials. The ability to achieve the estimated quantities of recoverable minerals from exploration stage mineral interests involves further risks in addition to those risk factors applicable to mineral interests where proven and probable reserves have been identified, due to the lower level of confidence that the identified mineral reserves and resources could ultimately be mined economically. Assets classified as exploration potential have the highest level of risk that the carrying value of the asset can be ultimately realized, due to the still lower level of geological confidence and economic modeling.

Gold and silver prices are volatile and affected by many factors beyond the Company’s control, including prevailing interest rates and returns on other asset classes, expectations regarding inflation, speculation, currency values, governmental decisions regarding precious metals stockpiles, global and regional demand and production, political and economic conditions and other factors may affect the key assumptions used in the Company’s impairment testing. Various factors could impact our ability to achieve forecasted production levels from proven and probable reserves. Additionally, production, capital and reclamation costs could differ from the assumptions used in the cash flow models used to assess impairment. Actual results may vary from the Company’s estimates and result in additional Impairment of Long-lived Assets.

Ore on Leach Pads

The heap leach process extracts silver and gold by placing ore on an impermeable pad and applying a diluted cyanide solution that dissolves a portion of the contained silver and gold, which are then recovered in metallurgical processes.

The Company uses several integrated steps to scientifically measure the metal content of ore placed on the leach pads. As the ore body is drilled in preparation for the blasting process, samples are taken of the drill residue which are assayed to determine estimated quantities of contained metal. The Company then processes the ore through crushing facilities where the

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output is again weighed and sampled for assaying. A metallurgical reconciliation with the data collected from the mining operation is completed with appropriate adjustments made to previous estimates. The crushed ore is then transported to the leach pad for application of the leaching solution. As the leach solution is collected from the leach pads, it is continuously sampled for assaying. The quantity of leach solution is measured by flow meters throughout the leaching and precipitation process. After precipitation, the product is converted to doré at the Rochester mine and a form of gold concentrate at the Wharf mine, representing the final product produced by each mine. The inventory is stated at lower of cost or net realizable value, with cost being determined using a weighted average cost method.

The historical cost of metal expected to be extracted within 12 months is classified as current and the historical cost of metals contained within the broken ore expected to be extracted beyond 12 months is classified as non-current. Ore on leach pads is valued based on actual production costs incurred to produce and place ore on the leach pad, less costs allocated to minerals recovered through the leach process.

The estimate of both the ultimate recovery expected over time and the quantity of metal that may be extracted relative to the time the leach process occurs requires the use of estimates, which are inherently inaccurate due to the nature of the leaching process. The quantities of metal contained in the ore are based upon actual weights and assay analysis. The rate at which the leach process extracts gold and silver from the crushed ore is based upon laboratory testing and actual experience of more than 20 years of leach pad operations at the Rochester mine and 30 years of leach pad operations at the Wharf mine. The assumptions used by the Company to measure metal content during each stage of the inventory conversion process includes estimated recovery rates based on laboratory testing and assaying. The Company periodically reviews its estimates compared to actual experience and revises its estimates when appropriate. The ultimate recovery will not be known until leaching operations cease. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted for on a prospective basis. As of December 31, 2022, the Company’s estimated recoverable ounces of gold and silver on the leach pads were 40,083 and 4.7 million, respectively.

Reclamation

The Company recognizes obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The fair value of a liability for an asset retirement obligation will be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. An accretion cost, representing the increase over time in the present value of the liability, is recorded each period in Pre-development, Reclamation, and Other. As reclamation work is performed or liabilities are otherwise settled, the recorded amount of the liability is reduced. Future remediation costs for inactive mines are accrued based on management’s best estimate at the end of each period of the discounted costs expected to be incurred at the site. Such cost estimates include, where applicable, ongoing care and maintenance and monitoring costs. Changes in estimates are reflected in earnings in the period an estimate is revised. See Note 11 -- Reclamation in the notes to the Consolidated Financial Statements for additional information.

Derivatives

The Company is exposed to various market risks, including the effect of changes in metal prices and interest rates, and uses derivatives to manage financial exposures that occur in the normal course of business. The Company may elect to designate certain derivatives as hedging instruments under U.S. GAAP.

The Company, from time to time, uses derivative contracts to protect the Company’s exposure to fluctuations in metal prices. The Company has elected to designate these instruments as cash flow hedges of forecasted transactions at their inception. Assuming normal market conditions, the change in the market value of such derivative contracts has historically been, and is expected to continue to be, highly effective at offsetting changes in price movements of the hedged item. For derivatives not designated as hedging instruments, the Company recognizes derivatives as either assets or liabilities on the balance sheet and measures those instruments at fair value. Changes in the value of derivative instruments not designated as hedging instruments are recorded each period in the Consolidated Statement of Comprehensive Income (Loss) in Fair value adjustments, net or Revenue. Management applies judgment in estimating the fair value of instruments that are highly sensitive to assumptions regarding commodity prices, market volatilities, and foreign currency exchange rates.

Income and Mining Taxes

The Company accounts for income taxes in accordance with the guidance of ASC 740. The Company’s annual tax rate

is based on income, statutory tax rates in effect and tax planning opportunities available to us in the various jurisdictions in which the Company operates. Significant judgment is required in determining the annual tax expense, current tax assets and liabilities, deferred tax assets and liabilities, and our future taxable income, both as a whole and in various tax jurisdictions, for purposes of assessing our ability to realize future benefit from our deferred tax assets. Actual income taxes could vary from

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these estimates due to future changes in income tax law, significant changes in the jurisdictions in which we operate or unpredicted results from the final determination of each year’s liability by taxing authorities.

The Company’s deferred income taxes reflect the impact of temporary differences between the reported amounts of assets and liabilities for financial reporting purposes and such amounts measured by tax laws and regulations. In evaluating the realizability of the deferred tax assets, management considers both positive and negative evidence that may exist, such as earnings history, reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies in each tax jurisdiction. A valuation allowance may be established to reduce our deferred tax assets to the amount that is considered more likely than not to be realized through the generation of future taxable income and other tax planning strategies.

The Company has asserted indefinite reinvestment of earnings from its Mexican operations as determined by management’s judgment about and intentions concerning the future operations of the Company. The Company does not record a U.S. deferred tax liability for foreign earnings that meet the indefinite reversal criteria. Refer to Note 12 -- Income and Mining Taxes for further discussion on our assertion.

The Company’s operations may involve dealing with uncertainties and judgments in the application of complex tax regulations in multiple jurisdictions. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions and resolution of disputes arising from federal, state, and international tax audits. The Company recognizes potential liabilities and records tax liabilities for anticipated tax audit issues in the United States and other tax jurisdictions based on its estimate of whether, and the extent to which, additional taxes will be due. The Company adjusts these reserves in light of changing facts and circumstances, such as the progress of a tax audit; however, due to the complexity of some of these uncertainties, the ultimate resolution could result in a payment that is materially different from our current estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period which they are determined. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

Other Liquidity Matters

We believe that our liquidity and capital resources in the U.S. are adequate to fund our U.S. operations and corporate activities. The Company has asserted indefinite reinvestment of earnings from its Mexican operations as determined by management’s judgment about and intentions concerning the future operations of the Company. The Company does not believe that the amounts reinvested will have a material impact on liquidity.

In order to reduce indebtedness, fund future cash interest payments and/or amounts due at maturity or upon redemption and for general working capital purposes, from time-to-time we may (1) issue equity securities for cash in public or private offerings or (2) repurchase certain of our debt securities for cash or in exchange for other securities, which may include secured or unsecured notes or equity, in each case in open market or privately negotiated transactions. We evaluate any such transactions in light of prevailing market conditions, liquidity requirements, contractual restrictions, and other factors. The amounts involved may be significant and any debt repurchase transactions may occur at a substantial discount to the debt securities’ face amount.

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”). Unless otherwise noted, we present the Non-GAAP financial measures in the tables below. 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 is based, in part, on a review of non-GAAP financial measures used by mining industry analysts. The tax effect of adjustments are based on statutory tax rates and the Company’s tax attributes, including the impact through the Company’s valuation allowance. The combined effective rate of tax adjustments may not be consistent with the statutory tax rates or the Company’s effective tax rate due to jurisdictional tax attributes and related valuation allowance impacts which may minimize the tax effect of certain adjustments and may not apply to gains and losses equally. Adjusted net income (loss) is reconciled to Net income (loss) in the following table:

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(1) For the year ended December 31, 2022, tax effect of adjustments of $15.3 million (-558%) is primarily related to the to the fair value adjustments on the Company’s equity investments and the derecognition of deferred tax liabilities related to the sale of La Preciosa and the Sterling /Crown exploration properties . For the year ended December 31, 2021, tax effect of adjustments of $10.3 million (-27%) is primarily related to the VAT write-off.

EBITDA and Adjusted EBITDA

Management uses EBITDA to evaluate the Company’s operating performance, to plan and forecast its operations, and assess leverage levels and liquidity measures. The Company believes the use of EBITDA 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. Adjusted EBITDA is a measure used in the indenture governing the 2029 Senior Notes and the RCF to determine our ability to make certain payments and incur additional indebtedness. EBITDA and Adjusted EBITDA do not represent, and should not be considered an alternative to, Net income (Loss) or Cash Flow from Operations as determined under GAAP. Other companies may calculate Adjusted EBITDA differently and those calculations may not be comparable to our presentation. Adjusted EBITDA is reconciled to Net income (loss) in the following table:

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(1) At September 30, 2022, the Company modified its method of calculating Adjusted EBITDA to include the cumulative impact of the LCM adjustments, if applicable, year over year. Previously, annual Adjusted EBITDA only included the current quarter LCM adjustment. For the years ended December 31, 2022 and 2021, the modification increased the Adjusted EBITDA measure by $38.0 million and $5.3 million, respectively. This modification to the Adjusted EBITDA measure was made to be consistent with the treatment of LCM adjustments in the Company’s amended RCF facility, which was completed on November 9, 2022.

Free Cash Flow

Management uses Free Cash Flow as a non-GAAP measure to analyze cash flows generated from operations. Free Cash Flow is Cash Provided By (used in) Operating Activities less Capital expenditures as presented on the Consolidated Statements of Cash Flows. The Company believes Free Cash Flow is also useful as one of the bases for comparing the Company’s performance with its competitors. Although Free Cash Flow and similar measures are frequently used as measures of cash flows generated from operations by other companies, the Company’s calculation of Free Cash Flow is not necessarily comparable to such other similarly titled captions of other companies.

The following table sets forth a reconciliation of Free Cash Flow, a non-GAAP financial measure, to Cash Provided By (used in) Operating Activities, which the Company believes to be the GAAP financial measure most directly comparable to Free Cash Flow.

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Operating Cash Flow Before Changes in Working Capital

Management uses Operating Cash Flow Before Changes in Working Capital as a non-GAAP measure to analyze cash flows generated from operations. Operating Cash Flow Before Changes in Working Capital is Cash Provided By (used in) Operating Activities excluding the change in Receivables, Prepaid expenses and other, Inventories and Accounts payable and accrued liabilities as presented on the Consolidated Statements of Cash Flows. The Company believes Operating Cash Flow Before Changes in Working Capital is also useful as one of the bases for comparing the Company’s performance with its competitors. Although Operating Cash Flow Before Changes in Working Capital and similar measures are frequently used as measures of cash flows generated from operations by other companies, the Company’s calculation of Operating Cash Flow Before Changes in Working Capital is not necessarily comparable to such other similarly titled captions of other companies.

The following table sets forth a reconciliation of Operating Cash Flow Before Changes in Working Capital, a non-GAAP financial measure, to Cash Provided By (used in) Operating Activities, which the Company believes to be the GAAP financial measure most directly comparable to Operating Cash Flow Before Changes in Working Capital.

Costs Applicable to Sales

Management uses CAS 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 gold, silver, zinc and lead, assessing our operating performance and ability to generate free cash flow from operations and sustaining production. These measures may not be indicative of operating profit or cash flow from operations as determined under GAAP. Management believes that allocating CAS to gold, silver, zinc and lead based on gold, silver, zinc and lead metal sales relative to total metal sales best allows management, analysts, investors and other stakeholders to evaluate the operating performance of the Company. Other companies may calculate CAS differently as a result of reflecting the benefit from selling non-silver metals as a by-product credit, converting to silver equivalent ounces, and differences in underlying accounting principles and accounting frameworks such as in International Financial Reporting Standards.

Year Ended December 31, 2022

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Year Ended December 31, 2021

Year Ended December 31, 2020

(1) Due to the suspension of mining and processing activities these amounts are not meaningful.

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Reconciliation of Costs Applicable to Sales for 2023 Guidance (1)

(1) With the completion of the POA 11 expansion construction expected in mid-2023, Coeur has elected to defer providing cost guidance at Rochester until mid-year 2023.