Coeur Mining, Inc. (CDE) Earnings Call Transcript & Summary

Good day, and welcome to Coeur Mining's 2021 Annual Stockholders Meeting. At this time, I would like to turn the conference over to Mr. Rob Mellor, Chairman of the Board of Directors at Coeur Mining. Please go ahead.

Thank you, and good morning, everyone. I'm Robert Mellor, Chairman of the Board. And on behalf of the officers and directors of the company, welcome to the Coeur Mining Annual Stockholders Meeting. First, I would like to recognize the efforts of all of our employees over the past 14 months for their tireless efforts to protect our people and communities and to keep our mines operating safely in the face of the unprecedented challenges presented by COVID-19. We are holding our Annual Stockholders Meeting virtually again this year due to continuing limitations and restrictions related to COVID-19 and to ensure we comply with guidance of public health authorities. By hosting the meeting virtually, all of our stockholders are still able to attend the meeting and vote as you would at the in-person meeting. Voting is now open, and any stockholder who has not already submitted a proxy and wishes to vote their shares may do so by clicking on the voting button on your screen. It is not necessary to vote through the virtual meeting platform if you have already submitted your proxy to the company. We will conduct the business portion of our meeting first. We will then deliver a short company update, and we'll answer your questions as time allows. [Operator Instructions] And with that, let's get started. Joining me today are Mitchell Krebs, President, Chief Executive Officer and Director; and Casey Nault, Senior Vice President, General Counsel and Corporate Secretary. I would also like to acknowledge the other directors standing for reelection, each of whom was elected at the 2020 Annual Meeting: Linda Adamany, Sebastian Edwards, Randy Gress, Eduardo Luna, Jessica McDonald, John Robinson and Ken Thompson. Casey Nault and Louis Larsen from Broadridge Financial Solutions are appointed to act as inspectors of election for the meeting. Michael Capone of our independent auditors, Grant Thornton, is also in attendance today. The meeting is now called to order and officially open. Adequate notice of this meeting was given to the stockholders of the corporation as evidenced by the affidavit of distribution of the notice prepared by Broadridge, who compiled the mailing of notices. I will order the certificate and any related documents prepared by Broadridge to be filed with the permanent records of the corporation. The company has received proxies representing 71.6% of the total shares issued and outstanding, and so a quorum is present at the meeting. We have 4 proposals to come before the stockholders for approval today. If you have not already voted online, please do so at this time. I will close the polls following the presentation of the proposals: number one, election of the Board of Directors; number two, ratification of the appointment of Grant Thornton as our independent registered public accounting firm for 2021; number three, approval of an amendment to Coeur Mining, Inc. 2018 Long-Term Incentive Plan; and number four, approval of an advisory vote on executive compensation. The polls are now closed, and I will report the preliminary results of the voting. I'm pleased to report that by an initial review of all shares voted, all director nominees have been elected, and all other proposals have been approved. At the adjournment of this meeting, the inspector will count and review the final votes received and promptly issue an inspector's report. The company will release the final votes to the public by May 17, 2021. And this concludes the formal portion of our 2021 Annual Stockholders Meeting, and I now declare the meeting adjourned. We thank you for taking the time to join us today and for voting. I will now turn it over to Mitch to give a brief company update and to answer your questions submitted through the virtual meeting platform. I encourage you to consult the rules of conduct by clicking the materials button on your screen before submitting your question. We will post responses to any questions on the company's annual meeting website following completion of the meeting. Mitch, what's up? You're on.

Thank you, Mr. Chairman. Good morning. I'll start off by just reminding everyone that some of our comments today may include forward-looking statements from which actual results may differ. So please review the cautionary statements and other information, including risk factors described in our SEC filings included in our first quarter 10-Q and our 2020 10-K. I'll just cover a few company update topics. There's some slides that should be up. Starting with the first slide, as I think everyone on the phone knows, we're a U.S.-based, U.S.-listed precious metals producer with a North America focus and with an exciting future ahead of us in terms of growth and a focus on quality and cash flow from low-risk jurisdictions. The team here, who has been mandated to deliver on this strategy, I'm super proud of. The accomplishments, as our Chairman mentioned a few minutes ago, in 2020 in the face of a pandemic were really impressive and inspiring. And while dealing with a pandemic like we all did, I think we took great strides to position ourselves extremely well for the future. I'm also proud and very grateful for our Board of Directors and all the support and guidance that they provided throughout the year last year and heading here into 2021. So on the next slide, as I mentioned, we have a lot, as Coeur stockholders, to be excited about. This slide here lays out some of the key building blocks of what, I think, is a very exciting future. The ones on here that I think really stand out among our peers is the ESG leadership that we have established here at this company. We're very proud of that. I think the growth that we're looking at here in the near term is very compelling and very impactful in terms of returns and cash flow and quality of those ounces and cash flow going forward. And also, I think a big differentiator is our commitment to exploration. We're investing this year about $70 million in exploration, which, relative to our revenue, is among the highest in the sector. It's a commitment that we started really last year at a much higher level. That drove some significant increases in our reserves and resources year-over-year. We expect to see more of that as we continue to commit higher levels of capital to exploration. It's a great return and has high impact on the business. And that 3-year outlook, in terms of the organic growth that this company has, it's really special and unique in the industry. And we're excited to deliver that on behalf of the stockholders here in the coming years. On the next slide, with -- in conjunction with a lot of work with the Board, we are firm believers here at the company that culture drives strategy, and strategy is driven by the team. I think we now have all 3 of those pieces working very well together. Some of the key elements of our strategy that are laid out on this slide include the multi-asset portfolio. So we're not overly reliant or concentrated into one particular asset. We're also not beholden to one particular jurisdiction. So we're spread across 3 sort of long-standing, established mining jurisdictions in North America, Mexico, U.S., Canada only. And we've got good balance between the metals as well, between gold and silver. The quality growth, the commitment to exploration and our trading liquidity on the NYSE is something that a lot of our institutional investors like. And on the bottom of this slide, I mentioned ESG earlier, but you can see some specific examples here at the bottom of this slide. A lot of companies talk about ESG. We act on ESG. We've been doing that for decades, and ESG has just provided us a terrific platform to kind of showcase these efforts and actions that we're doing to have an impact in these important areas of the business. Going to the next slide and just taking that comment one step deeper. We recently published our 2020 Responsibility Report. You can access that through our website, and I'd encourage you to take a look at that if you haven't already. This slide here just highlights some of the third-party kind of recognition and highlights that we've seen over the last 12 months. There's a lot more that's not on this slide. A lot of it is featured in that Responsibility Report. Our Board of Directors received an update on this yesterday. Some of the things that come to my mind are things like Coeur Heroes that focuses on providing employment opportunities to our veterans, I think we have around 75 veterans employed with the company through the Coeur Heroes program, our early education programs in all of our communities where we operate, our internship and apprenticeship programs. These are things that really make an impact on people's lives. And we're very proud of our track record, of our values and carrying that out day in and day out everywhere where we operate. Turning to the next slide, a good example here of our strategy in action. You can see over the last decade how our strategy is reflected in the results of the business whether you look at the -- by asset, by location or by metal. We've made great strides in balancing out the asset mix, like I mentioned. We've left a lot of jurisdictions and have focused, like I said, on really on North America, really in our backyard. We have a majority of our revenue generated from U.S. operations. And as a U.S. company, we think that makes a lot of sense. And in terms of metals, we have been very deliberate in our efforts to move ourselves more toward gold yet still retaining a significant amount of silver exposure for our investors. There are a lot of investors who want Coeur to still retain some significant exposure to that metal, which we have done, and we will continue to do. As you look out over the future, we'll still be producing a lot of silver across the portfolio of assets for a long, long time. So we'll still remain a significant silver producer but just having that a little bit more managed within a larger gold portfolio, which we think makes a lot of sense. And then finally, I think the last slide is another example of kind of our strategy in action whether you look at the rising cash flow on the top of the slide, rising margins, a strengthening balance sheet reflected on the bottom of the slide, which those 2 efforts combined can support and will support the quality growth that we are currently in the process of delivering for our stockholders, again, through that commitment to exploration as well as to 2 high-impact projects, one of which is out in Nevada at our Rochester operation, which is undergoing a significant expansion. And with that will come a real step change in cash flow and production over a long mine life there in northern Nevada. And we're still evaluating and are excited about the potential of an expansion and restart at our Silvertip silver, zinc, lead operation up in northern British Columbia. So those are my highlights and company update. And with that, we will turn to any questions that have been submitted by stockholders and address those about the company or anything that's relevant to the business of the meeting.

I have one question. Yes, go ahead.

All right. We have 2 questions that have come in for the meeting. The first question is, do you expect to make a significant acquisition during the remainder of 2021? And if so, would it be a producing asset or a resource play?

Yes, okay. Good question. External growth, M&A, it falls really into our capital allocation framework. So we're always looking at ways to grow the business and maximizing the returns associated with those growth opportunities whether they're internal or external. So within that framework and that context, we'll always continue to evaluate M&A opportunities. As I just mentioned, we have a lot of development and expansion project work underway right now at Rochester and then potentially up at Silvertip. So adding more capital intensity to the business is less of a focus than adding more free cash flow whether, again, it's from our organic growth like Rochester and Silvertip and our other operations or potentially from external M&A opportunities. But it's all got to work within our returns, priorities and our framework so that we can continue to create value over the long term for stockholders. So hopefully, that answers that question.

Second question is, does the futures market unfairly suppress the price of silver?

Yes, another good question. Silver, and it's a -- I won't be able to give a black-and-white answer because I think the honest answer is no one really knows. I think the fact that silver is a very small market, when you look at size of the global annual market for silver, it's maybe a $20 billion market, which might sound like a lot of money, but relative to most markets, to other commodity markets, it's tiny. You compare it to gold, copper, oil. And as a result of that, silver can be, I think, impacted by capital flows much easier than those bigger markets. And so whether that -- and to what extent that plays out in silver, I don't think anybody really knows. But I think the volatility that we see in silver is partly due to that less liquid market, less deep of a market. And some of those dynamics of silver are a reason why we have deliberately made this move toward more gold, which, relative to silver, has less volatility. And it makes it a bit easier to kind of manage and plan long term in terms of investment decisions and long-term planning relative to the fairly significant swings that we see in silver typically. So thin market, combined with a lot of capital and a lot of fast momentum capital, I think can lead to some reaction -- strong reactions, sometimes overreactions in the silver market. Hopefully, that answers that question.

There's no further questions.

Okay. Well, hey, thank you, everyone, for attending the meeting. We look forward to updating you on our initiatives and progress and results as the year progresses. So thank you again.

Thank you. The Coeur Mining's 2021 Annual Stockholders Meeting has officially concluded. Thank you for attending. You may now disconnect.