Coeur d'Alene Mines Corp (CDE)

[JohnCM]

Coeur Mining, Inc. -- Moody's places Coeur's ratings (B2 CFR) under review for downgrade

February 25, 2022

Rating Action: Moody's places Coeur's ratings (B2 CFR) under review for downgradeGlobal Credit Research - 25 Feb 2022New York, February 25, 2022 -- Moody's Investors Service ("Moody's") placed Coeur Mining, Inc.'s ("Coeur") B2 Corporate Family Rating (CFR), B2-PD probability of default rating and B3 rating of its $375 million senior unsecured notes under review for downgrade. The outlook has changed to rating under review from stable. The review for downgrade was prompted by Coeur's announcement of a material increase in the estimated capital cost and a delay in the completion of the Rochester mine expansion project ("POA 11"), along with a substantial increase in the estimated operating costs at several mines in 2021 and 2022.On Review for Downgrade:..Issuer: Coeur Mining, Inc..... Corporate Family Rating, Placed on Review for Downgrade, currently B2.... Probability of Default Rating, Placed on Review for Downgrade, currently B2-PD....Gtd Senior Unsecured Global Notes, Placed on Review for Downgrade, currently B3 (LGD5) Outlook Actions: ..Issuer: Coeur Mining, Inc. ....Outlook, Changed To Rating Under Review From StableRATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSMoody's placed Coeur ratings under review for downgrade to reflect the likelihood of a meaningful deterioration in financial leverage and liquidity in the next 18-24 months as the company completes the POA 11 expansion project. Coeur has announced an increase in total estimated construction capital for POA 11 project from $397 million to approximately $597 million. The increase was driven by the estimated 10-15% cost escalation, additional contingency and $70 - $80 million related to the change in the scope of the project that now calls for the integration of the pre-screening technology into the new crushing circuit. The project target completion date has been moved from the 2022 year-end to Q3 2023 when the company expects to complete the installation of the new crushing circuit. Material increase in costs applicable to sales (CAS) in 2021 and higher than previously anticipated gold and silver CAS guided for 2022 are additional negative credit considerations.Coeur had adequate liquidity as of December 31, 2021 supported by $57 million in cash and cash equivalents and $200 million available under the $300 million revolving credit facility, net of $35 million in outstanding letters of credit and $65 million in borrowings.The ratings review will focus on Coeur's projected operating and financial performance in 2022 and 2023 and various strategies contemplated by the company to secure the incremental funding required to complete the POA 11 project. An important part of the review will be an assessment of the financial flexibility and company's ability to maintain the adequate liquidity levels and credit metrics commensurate with B2 rating throughout the project construction period.Coeur Mining, Inc. is a mid-tier gold and silver producer. The company's producing properties include Rochester silver-gold mine in Nevada, Palmarejo gold-silver complex in Mexico, Wharf gold mine in South Dakota and Kensington gold mine in Alaska. The company also owns the Silvertip mine (silver-zinc-lead) in Canada, Sterling/Crown Gold Project in Nevada, multiple exploration assets in North America and interests in early stage precious metals companies. Coeur generated $833 million of revenue in FY2021.