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Commitments and Contingencies | 9 Months Ended
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Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract] |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Mexico Litigation Matters As of September 30, 2023, $29.4 million in principal is due from the Mexican government associated with amounts that were paid as VAT under Coeur Mexicana, S.A. de C.V.’s (“Coeur Mexicana’s”) prior royalty agreement with a subsidiary of Franco-Nevada Corporation, which was terminated in 2016. Coeur Mexicana applied for and initially received refunds in the normal course of these amounts paid as VAT associated with the royalty payments; however, in 2011 the Mexican tax authorities began denying refunds of these amounts based on the argument that VAT was not legally due on the royalty payments. Accordingly, Coeur Mexicana began to request refunds of these amounts paid as VAT as undue payments, which the Mexican tax authorities also denied. The Company has since been engaged in ongoing efforts to recover these amounts from the Mexican government (including through litigation and potential arbitration as well as refiling refund requests as undue payments rather than refunds of VAT that was due). Despite a favorable ruling from Mexican tax courts in this matter in 2018, litigation of the matter continued at the Mexican administrative, appeals court and supreme court levels for several years, most of which was determined unfavorably to Coeur based on interpretations of applicable law and prior court decisions which the Company and its counsel believe are contrary to legal precedent, conflicting and erroneous. While the Company believes that it remains legally entitled to be refunded the full amount of the receivable and intends to rigorously continue its recovery efforts, based on the continued failure to recover the receivable and unfavorable Mexican court decisions, the Company determined to write down the carrying value of the receivable at September 30, 2021. Coeur has elected to initiate an arbitration proceeding under Chapter 11 of the North American Free Trade Agreement, or NAFTA, to resolve the matter. Outcomes in NAFTA arbitration and the process for recovering funds even if there is a successful outcome in NAFTA arbitration can be lengthy and unpredictable. In addition, ongoing litigation with the Mexican government associated with enforcement of water rights in Mexico, if unsuccessful, may impact Coeur Mexicana’s ability to access new sources of water to provide sufficient supply for its operations at Palmarejo and, if material, may have a material adverse impact on the Company’s operations and financial results. Palmarejo Gold Stream Coeur Mexicana sells 50% of Palmarejo gold production (excluding production from certain properties acquired in 2015) to a subsidiary of Franco-Nevada Corporation (“Franco-Nevada”) under a gold stream agreement for the lesser of $800 or spot price per ounce. In 2016, Coeur Mexicana received a $22.0 million deposit toward future deliveries under the gold stream agreement. In accordance with generally accepted accounting principles, although Coeur Mexicana has satisfied its contractual obligation to repay the deposit to Franco-Nevada, the deposit is accounted for as deferred revenue and is recognized as revenue on a units-of-production basis as ounces are sold to Franco-Nevada. Because there is no minimum obligation associated with the deposit, it is not considered a 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. The remaining unamortized balance is included in Accrued liabilities and other and Other long-term liabilities on the Condensed Consolidated Balance Sheet. See Note 2 -- Summary of Significant Accounting Policies contained in the 2022 10-K for additional detail. The following table presents a roll forward of the Franco-Nevada contract liability balance:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
In thousands | 2023 |  | 2022 |  | 2023 |  | 2022 |  |
Opening Balance | $ | 7,196 |  |  | $ | 7,742 |  |  | $ | 7,411 |  |  | $ | 8,150 |  |  |
Revenue Recognized | (145) |  |  | (167) |  |  | (360) |  |  | (575) |  |  |
Closing Balance | $ | 7,051 |  |  | $ | 7,575 |  |  | $ | 7,051 |  |  | $ | 7,575 |  |  |
Metal Sales Prepayments In June 2019, Coeur amended its existing sales and purchase contract with a metal sales counterparty for gold concentrate from its Kensington mine (the “Amended Sales Contract”). From time to time thereafter, the Amended Sales Contract has been further amended to allow for additional prepayments. In December 2022, the Company received a $25.0 million prepayment, all of which was recognized as revenue in the first half of 2023. In June 2023, the Company exercised an option to receive a further $25.0 million prepayment, a portion of which was recognized in revenue in the third quarter of 2023. Additionally, in June 2023, the Company entered into sales and purchase contracts with a metal sales counterparty to allow for a $10.0 million prepayment for deliveries of gold concentrate from its Wharf mine and a $10.0 million prepayment for deliveries of gold and silver doré from its Rochester mine, all of which were recognized as revenue in the third quarter of 2023. In September 2023, the contracts related to Wharf and Rochester were amended to increase the maximum amount available in prepayments to $12.5 million and $17.5 million, respectively, which were received. The metal sales prepayments represent a contract liability under ASC 606, which requires the Company to recognize ratably a portion of the deposit as revenue for each gold and silver ounce delivered to the customer. The remaining contract liability is included in Accrued liabilities and other on the Condensed Consolidated Balance Sheet. See Note 2 -- Summary of Significant Accounting Policies contained in the 2022 10-K for additional detail. The following table presents a roll forward of the prepayment contract liability balance:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
In thousands | 2023 |  | 2022 |  | 2023 |  | 2022 |  |
Opening Balance | $ | 45,012 |  |  | $ | 25,012 |  |  | $ | 25,016 |  |  | $ | 15,016 |  |  |
Additions | 30,311 |  |  | 361 |  |  | 75,307 |  |  | 10,811 |  |  |
Revenue Recognized | (31,000) |  |  | (10,000) |  |  | (56,000) |  |  | (10,454) |  |  |
Closing Balance | $ | 44,323 |  |  | $ | 15,373 |  |  | $ | 44,323 |  |  | $ | 15,373 |  |  |
Rochester Expansion Project Update Construction of the new three-stage crushing circuit is now complete and first production from the new leach pad and process plant began in mid-September. Commissioning of the process plant is complete and commissioning of the new crusher corridor is underway, with ramp-up expected throughout the remainder of 2023 and into the first half of 2024. Once operating at full capacity, throughput levels are expected to average 32 million tons per year, which is approximately 2.5 times higher than historical levels, making Rochester one of the largest open pit heap leach operations in the world. The total estimated capital for the project remains at $710 - $730 million. Other Commitments and Contingencies As part of its ongoing business and operations, the Company and its affiliates are required to provide surety bonds, bank letters of credit, bank guarantees and, in some cases, cash as financial support for various purposes, including environmental remediation, reclamation, collateral for gold and silver hedges and other general corporate purposes. As of September 30, 2023 and December 31, 2022, the Company had surety bonds totaling $332.3 million and $326.8 million, respectively, in place as financial support for future reclamation and closure costs. The obligations associated with these instruments are generally related to performance requirements that the Company addresses through its ongoing operations and, from time-to-time, the Company may be required to post collateral, including cash or letters of credit which reduce availability under its revolving credit facility, to support these instruments. As the specific requirements are met, the beneficiary of the associated instrument cancels and/or returns the instrument to the issuing entity. Certain of these instruments are associated with operating sites with long-lived assets and will remain outstanding until closure. The Company believes it is in compliance with all applicable bonding obligations and will be able to satisfy future bonding requirements through existing or alternative means, as they arise.

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