Local Government Management: It's the Career for You!
What is important to you in a career? What motivates you? What makes you feel as though you have accomplished something positive?
A career in local government is an excellent option for those who have a passion for public service. Public service is often about what you give rather than what you receive, and putting the collective good before the needs of individuals. It is about leadership, empowerment, innovation, empowerment, relationships, and possibility.
Managing the services that affect the health, safety, and welfare of all citizens in a community can be complex and challenging. Whether it's resolving a significant issue for the community or answering a simple question for a resident who did not know where to turn, public service offers professional satisfaction from delivering both large and small results. Local government career professionals may not come from a common background. However, they all are highly motivated and dedicated to their profession and the people they serve. They tackle the day-to-day issues that have an impact on most of the people in the world. They ensure the provision of vital community services, such as emergency services, water, wastewater, refuse collection, building development, housing services, social services, financial stewardship of tax dollars, and general administration services, to citizens and taxpayers, while maintaining the profession's high ethical standards in a continually changing environment. Today, more than ever, a local government professional must be able to think through solutions and work with others toward a common objective.
Local government service is a calling few hear and even fewer answer. As a local government career professional, you can be a member of an organization that is focused on service to you as you focus on service to others. Join us!
Have the opportunity to impact people's lives.
Have diverse responsibilities that vary from day-to-day. There is never a "routine" day in local government management.
Solve problems by challenging yourself and others.
Work with colleagues and contemporaries who accept high ethical standards and who actively support these standards through their decisions.
Know that you can turn to like-minded people for professional guidance to your questions, because they want you to succeed.
Be a leader and work with other leaders for the betterment of community.
What is the Local Government Management Profession?
Providing citizens with the services that they need on a day-to-day basis is a demanding undertaking, so many communities hire a professional local government manager. Professional managers go by various titles—such as city manager, county administrator, town manager, and chief administrative officer. No matter what they are called, these appointed officials have the same basic mandate: to deliver public services effectively and efficiently.
Professional managers bring to the communities they serve technical knowledge, academic training, management expertise, and a dedication to public service. Managers are non-partisan, objective, and apolitical.
People attracted to the local government management profession hold dear the values of public service and ethics. These values are expressed in the Declaration of Ideals of the International City/County Management Association (ICMA), their professional association. In addition to these stated ideals, ICMA members agree to a strict Code of Ethics governing their conduct.
More than half of U.S. cities with a population of more than 10,000—and an increasing number of counties—are run by a combination of appointed professional administrators and elected officials.
Council-manager government is the most common form of government that provides for professional management. Under this form of government, an elected council, usually consisting of the mayor and between five and nine other members, makes policy decisions and provides legislative direction. To implement its policies, the council hires a professional manager. Thus, council-manager government combines the strong political leadership of an elected mayor and council with the strong managerial expertise of the manager.
Professional administrators are also found in an increasing number of mayor-council governments in which the mayor is elected by the community at large. Since mayors in mayor-council governments often assume more administrative responsibility, the appointed administrator in a mayor-council government may have fewer responsibilities than those in council-management governments.
What Does a Local Government Manager Do?
A local government manager is much like a president of a corporation or other chief executive. He or she is responsible for the overall performance of their organization.
As the top administrator of a local government, the manager organizes and directs a team of department heads, supervisors, technicians, and support staff to implement programs and deliver public services. The local government manager's primary responsibility is to implement the policies of the elected officials for whom they work. In a council-manager government, the manager prepares the annual budget, hires and fires personnel, and directs day-to-day operations.
Many managers, particularly those in larger communities, have assistants who take on substantial administrative responsibilities. Duties of local government managers depend on the population of the community, the number of departments and employees, and the size of the manager's staff, as well as the goals that are set by elected leaders. In smaller jurisdictions, managers may do most or all of the tasks described here; in larger jurisdictions, assistant managers and staff perform many of the duties under the manager's supervision.
Meet with the elected council to determine the policies set by the council and to inform council members and citizens about the operations of the local government. The manager may discuss problems and recommendations, propose new plans, or discuss issues that affect the community and its citizens.
Hire department heads, administrative personnel, and other employees, and supervise top appointees.
Prepare the annual budget, submit it to elected officials for approval, and implement it once approved.
Solicit bids from government contractors and select or recommend the appropriate individual(s) or organization(s) to perform the work.
Ensure that laws and policies approved by elected officials are enforced equally throughout the city.
Investigate citizen complaints and problems in the administrative organization and make recommendations for changes to elected officials.
Manage the daily operations of the city or county by completing administrative reports, corresponding by mail and telephone, and performing many other duties needed to meet community needs.
Work with elected officials and citizens to plan for the future of the community. The manager will set goals and establish strategies for reaching the community's goals.
Meet regularly with legislators and citizens to discuss current problems and future initiatives.
Identify, understand, and address specific problems that face the community, such as crime, homelessness, or deteriorating infrastructure.
Deal with federal and state mandates, population and demographic shifts, and other changes that affect public service demands, including fluctuations in the economy.
The duties of an assistant manager vary widely. The size of the jurisdiction, the needs of the community, the strengths of the manager, and the skills that an assistant brings to the job all play a role in determining specific responsibilities. Some assistants work as the manager's second in charge or deputy, with all department heads reporting to them; others manage specific projects or departments. Most assistant managers handle a few specific functions of the local government such as personnel, risk management, or public relations.
What Course of Study Will Best Prepare Me For This Career?
The educational and professional backgrounds of local government managers have evolved over the years. In the early years of the profession, few managers held advanced degrees; many were recruited from the ranks of civil engineers, trained to build and maintain the community's infrastructure (such as the bridges, roads, and water systems).
Today, aspiring managers come from a variety of academic backgrounds. Since the profession demands an analytical and creative mind with strong writing and communication skills, undergraduate degrees in the humanities and social sciences such as English, philosophy, history, economics, and political science provide an effective foundation.
The traditional bachelor's degrees that may qualify you for some local government management positions are in political science, public administration, or business. An advanced degree in these fields will increase your competitiveness. A master's degree in public administration is recommended but not required.Some of the coursework that would prepare you for this field includes public finance, microeconomics, statistics, planning, conflict resolution, organizational behavior, and program evaluation. Outside of the classroom, all leadership and public speaking experiences will aid in your quest to be a local government leader.
There is no required path to a career in local government – no tests that you must pass or certification that you must earn. However, few candidates are hired as local government managers immediately upon graduation from college. A more typical career path begins with an entry-level position as an administrative assistant or budget or management analyst in the manager's office, the finance department, or a line department. Additionally, many local governments offer internship programs that provide students or recent graduates with an opportunity to gain practical experience.
With changing times and evolving societies, the opportunities for a mid-level career change to local government are promising. Private-sector professionals with a management, financial, and or analytical background can transition smoothly to a career in local government.
You do not have to advance through each step of the hierarchy – not all these positions even exist in every local government. Any position in local government that gives you experience working with the mayor and council and helps you learn about the varied aspects of running a city or county is a stepping stone toward top positions. Experience in public service at other levels of government or a military career may also provide the right skills and experience for the local government management profession.
What Qualities Should a Local Government Professional Have?
Local government management is a highly competitive career path and requires a range of skills and traits. Managers are hired on the basis of their administrative and leadership abilities, educational background, and professional experience, without regard to political affiliation.
Research conducted by ICMA found that members identified personal integrity as the quality most essential in a local government manager. High ethical standards are essential because managers are accountable for implementing the policies and priorities established by the council regardless of personal or political convictions. A manager is also duty-bound to provide fair and equitable service delivery to all citizens within the community.
Self-confidence, dedication, and commitment are important character traits as well. As the local government's chief executive officer, a manager must be able to lead, must have strong management principals, and must communicate effectively. Addressing the opportunities and challenges within a community requires good decision-making skills and sound judgment. Good managers also work well under stress. The job often requires a manager to work under tight deadlines and close public scrutiny. Above all, a manager must be dedicated to improving the quality of life for all individuals and the community.
There is no "typical" day in the life of a local government manager.
There are days that are fast-paced and stressful. There are days that are quiet and ordinary. There are days that demand diplomacy and creative thinking. And there are days that require careful analysis and planning.
Most local government managers work long hours, and must work evenings and weekends. But managers say there is rarely a dull moment during these long hours. They enjoy their work because of the variety of activities in which they are involved.
Communication with staff, elected officials, community groups, and residents is an important aspect of the manager's daily work. Thus, a manager attends a lot of meetings, and he or she is usually receiving information, presenting information, or managing some combination of the two.
Managers attend regular council and committee meetings, which are often held during the evening. Their responsibility for supervising department heads means that they must also hold staff meetings to assess progress and plan strategy. Local government managers also meet regularly with community leaders, business leaders, and groups of citizens to listen to their concerns, provide information, and facilitate action as needed.
A manager helps craft meeting agendas and during meetings presents information, answers questions, and helps facilitate decision-making and policy-setting by the local governing body. Citizens attend most open meetings and are usually given an opportunity to speak on public matters. While a manager must be prepared to discuss the items on the agenda, he or she must also be able to handle unexpected issues and questions that arise, all the while remaining composed and professional.
A manager is often invited (and expected) to attend civic functions. A manager must be accessible to residents, must represent the community, and must be able to articulate the goals of the organization.
Local government managers must be on call at all hours to handle emergencies or be available to provide assistance to members of the governing body. At times, managers may work under pressure to meet commitments or to solve problems that arise, including facilitating the delivery of services with limited resources and other budget constraints.
A manager usually works out of an administrative building, such as city hall or the county office building. Visits to other facilities and work locations take a manager out of the office much of the time, as do meetings with other organizations, leaders of neighboring communities, and officials at other levels of government. Since the demands of local government management are many and changing, professional managers attend out-of-town training sessions and conferences to learn about new federal and state mandates, innovative management techniques, and successful approaches and programs that have been used by colleagues in other communities.
Regardless of what each day brings, working in local government is always challenging, yet always satisfying both personally and professionally.
Today, nearly 185 million Americans in thousands of communities, from small towns with populations of a few hundred to metropolitan areas, are served by ICMA members. The local government management profession has been growing slowly for the last few decades; continued growth is expected as cities and counties without managers hire them. But current financial realities are forcing communities to cut costs and streamline operations, and entry-level, mid-management and assistant positions at the local level have been cut dramatically.
Retirements by baby boomer managers will affect the openings in the field. In a 2008 survey on succession planning sent to ICMA members, 43% of respondents reported that they are eligible to retire within the next five years and 24% are eligible already. This "graying of the profession" and their looming retirement will lead to a substantial number of vacancies in the ranks of local government management professionals. Though the financial crisis slowed the pace of retirements, the numbers show we there's no escaping those woods. Compounding this talent exodus is a shortage of the 'next generation' that has the necessary training to step into senior management positions. Baby boomers: some 80 million. Generation X? Just 46 million Americans, and often bypassed as we reach out to the roughly 78 million millennials. This is an all-hands-on-deck matter.
The number of women and minorities entering the profession continues to grow. For example, statistics compiled by ICMA indicate that the percentage of women holding municipal and township offices has more than doubled in the past 10 years.
Salaries for local government managers vary widely depending on the population and demographics of the community and the region in which it is located. In 2012, the median annual salary of a city manager was $103,000, ranging from $63,000 in municipalities with fewer than 2,500 residents to $235,099 in cities with a population of more than 1 million. The median annual salary of county managers in 2012 was $117,000.
Opportunities for employment may not be plentiful in a particular geographic area; be prepared to relocate if necessary. Not surprisingly, jobs in local government are likely to follow current demographic shifts. During the past decade, the Census Bureau reports that the fastest-growing region was the West at 19.7 percent and the second fastest-growing was the South at 17.3 percent.
Local government management employment opportunities do not always begin with manager or administrator positions. Many of today's top CAOs started their careers as finance directors or planners. Many department heads in local government are aspiring managers. They take on their positions to gain valuable experience and cross-functional skill sets – in addition to attaining additional "generalist" qualities that are essential elements of the local government manager's toolkit.
For more information about specific career opportunities, contact the personnel or human resources office of the cities or counties in which you would like to work. Your state's local government management association, league of municipalities, or other organization of local governments may also know of job openings. You may also want to consider ICMA membership; ICMA's member publications offer information about issues facing local governments and professional administrators, as well as news of job openings and other career information.


New Delhi: Filmaker Vikas Bahl who was accused of sexually harassing a former colleague in 2015, denied all allegations against him. He stated in the show cause notice sent by the Indian Film & Television Directors' Association or IFTDA, reports news agency PTI. "I deny all the alleged sexual harassment charges leveled against me and as stated in your said notice. These alleged charges are not only false, erroneous, malicious, motivated but have no factual basis. Further, you may also note that till date neither has any criminal complaint been filed against me in respect of the alleged sexual harassment charges nor have I been called upon by any investigation agency for investigation with respect to the same," he said in his response to the aforementioned show cause notice.
"The allegations leveled against me merely anonymous and hearsay. Thus, I am presumed to be innocent till proven guilty," Mr Bahl added.
Last year, Vikas Bahl's former colleague recounted how she was sexually harassed by the Queen filmmaker during a party in Goa in 2015. In September, Phantom Films - co-owned by Vikas Bahl, Anurag Kashyap, Vikramaditya Motwane and Madhu Mantena - dissolved and Mr Kashyap and Mr Motwane issued separate statements corroborating the survivor's account and stating they believe Mr Bahl is guilty of the allegations leveled against him. The woman has now decided to drop the case and not file a complaint against the director.
Apart from that, separate allegations of inappropriate behaviour and sexual misconduct have been made against Vikas Bahl by his Queen star Kangana Ranaut and her co-star Nayani Dixit.
Meanwhile, Mr Bahl sued his former partners Anurag Kashyap and Vikramaditya Motwane for Rs. 10 crore for making made "defamatory, slanderous and baseless allegations" against him due to which he has suffered irreversible damage to the reputation, reported PTI.
In his response to IFTDA, Mr Bahl added: "... My partners Mr Anurag Kashyap and Mr Vikramaditya Motwane have published defamatory tweets/articles/statements against me with an intent to settle personal scores, exact vendetta, and due to professional jealously and with the sole intent to defame me, malign my image and destroy my career and hence I request your good office not to rely upon any statement so made by them."
He requested IFTDA since the matter was sub judice no action should be taken against him.
The strong currents of India's #MeToo movement have taken down several prominent members of the film industry including Alok Nath, Rajat Kapoor, Sajid Khan, Subhash Ghai and Nana Patekar. Actress and female artistes (sometimes anonymously) have named and shamed their harassers on social media and in interviews.


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Julian Bajkowski
Turnbull's Digital Transformation Office sets out its demands and standards
The Federal government's new Digital Transformation Office (DTO) is moving fast to put flesh on the bones of its Prime Ministerial mandate to get the vast bulk of government services and transactions online by 2017, publicly releasing a wedge of detail based on questions from stakeholders that need to move quickly to comply.
Federal agencies have been told they will need to have a Digital Transformation Plan ready by September this 2015 for services that are with the scope of a new Digital Service Standard based on "criteria that Australian Government digital services must meet to ensure our services are simpler, faster and easier to use. Meeting the criteria means we can consistently provide high quality services and satisfy our users' needs."
The new Transformation Plans and the accompanying Digital Service Standard are a big deal for agencies and departments with an online presence because they for the first time impose a substantial degree of standardisation and uniformity in the way the federal sector puts itself online.
The lack of a coordinated online approach between agencies, departments and portfolios has been one of the biggest impediments to getting well-coordinated government transactions and services online over the past 15 years because decisions on which technologies and standards to follow were usually made on an ad-hoc or individual industry basis.
Spearheaded by Communications Minister Malcolm Turnbull, the DTO has been charged with bringing tangible order and progress to government services online as Canberra tries to catch up with the user experiences offered by banks, retailers and other public facing businesses that have cut costs and increased customer satisfaction and the range of services offered.
The pointy end of the massive online makeover appears to be the definition of what is and what isn't in scope for the Digital Service Standard and falls into roughly two categories.
For existing services already operating– many of which would presumably require some degree of work to conform to the new Service Standard — agencies have been told they will need to have firm plans on how to transition in place by September 2015, a period of less than six months that includes the release of the federal Budget.
It won't be a matter of just submitting a few folders of motherhood statements either. The DTO has confirmed it will be keeping tabs on agency's progress through a dashboard that feeds off benchmarks and a framework for each of the services defined as in scope.
The two key definitions are "Transaction Services" and "Digital information as a service."
For transactions the bar appears to have been set at around 50,000 transactions a year while "all information that is the responsibility of, or is partly owned and/or funded by, a government department or agency is subject to the Digital Service Standard" the Q&A guide says.
If existing services which need to submit a transformation plan by September think they have it tough, new digital services and information coming online will have to comply straight out of the box before they go live.
For new digital information, the compliance deadline has been set at July 2015, a date that is sure to have an effect on new measures coming out of the 2015 Budget.
However the DTO has also brokered an important flexibility concession, noting that the new Digital Service Standard "may not apply to everything.
"Government services cover a vast variety of activities including some highly specialised services with very few transactions. Applying the Standard to services dealing with only a handful of transactions may have little benefit," the latest update notes.
"Similarly legislative and/or technical barriers may prevent some services transitioning to the Standard, either in full or in part. These will need to be addressed over time. Full or partial exemptions from the Standard may be appropriate in certain cases," it says.
The DTO may not be making a big fuss about its weighty mandate before the Budget, but it's certainly moving quickly to ensure the key elements of its plans are locked-in ahead of the Budget and any chance of Gershon-esque pushback developing.
Digital Transformation Office hiring, hunts for .au ex-pats
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The Federal Government's Digital Transformation Agency (DTA) has called for submissions on draft national standards…
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The new ANZ Local Government Digital Maturity Index (DMI) surveyed over 100 local government authorities…
Digital transformation in local government – the way ahead
Over the last few weeks we have looked at results from the ANZ Local Government…
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Department of Communications
digital-economy
Digital-Service-Standard
Digital-Transformation-Office
Digital-Transformation-Plan
gershon-review
john-sheridan
malcolm-turnbull
online-transactions
Pia-Waugh
prime-minister
tony-abbott

redpajama_set_name: RedPajamaCommonCrawl


On Wednesday, November 12th, 2003 at 9:17 PM (PST) we recorded a quake (preliminary ml 3.36) located near the city of Borrego Springs.
Initial source parameters for the recent event are shown below. The epicentral distance (distance separating the epicenter and the closest station in the recording network) for Anza is 13 km (0.12 degrees).
We operate a broadband station on Mt. Soledad. At 21:18 (PST) station SOL recorded the P wave from this event. Here is a view of that event as picked by our analyst. A pink "P" indicates a P wave arrival, a pink "S" indicates an S wave arrival.


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No cure – no pay
New demands on the salvor's skill
Types of casualty
Wreck removal
The origins of Lloyd's Form
Marine and Ports Review ISU contribution
International Salvage Union article for International Spill Control Organisation Newsletter
The Marine Professional
Chartered Institute of Shipbrokers
Maritime Risk International
International Tug and OSV 20th anniversary issue ISU article Developments in marine salvage in the past twenty years
International Salvage Union Opinion for Fairplay
ISU Maritime Professional article, January 2015
Salvage and the importance of cooperation between parties
Criminalisation and the salvor
Fairplay Solutions: Investment in technology for marine salvage
Wreck removal issues – the contractors' perspective
ISU Review of 2012 and Looking Ahead
The role of salvors in keeping ports clear and open
Pollution prevention and unfair treatment of contractors
Co-operation in a crisis between ship interests and salvors: the salvor's perspective
Salvors call for Environmental Salvage Awards
Salvors voice concern over IMO Bunker Spill Convention
Confronting the challenge of major containership casualties
Towards more effective Marine Casualty Response
Performing salvage in a climate of fear
The salvage industry in 2009
Lloyd's Open Form – fact and fiction
The mystery of SCOPIC unravelled
Competitive provision of salvage and wreck removal services
Transparency and trust in the salvage industry
Boegbeeld Article
Annual Photo Competition
Salvage and Wreck London 04 December 2019
Asian Marine Casualty Forum 2019, Singapore
China International Rescue and Salvage Conference 2018, Hangzhou 19 – 20 September 2018
An assessment of the current state of the marine salvage industry
Current commercial realities for the salvage industry
SCOPIC and the SCR in the international context
Asian Marine Casualty Forum 2017 – Status of Salvage Industry
Reformation of the Marine Salvage Industry
SCOPIC and the SCR
Salvage, safety, the regulatory environment and protection for the salvor
ITS Boston 2016: Does the regulatory environment in the USA improve provision of salvage services compared with Europe and other parts of the world?
Oil Spill India 2016
The challenges facing the salvage Industry
LOF and defence of the marine environment
The future of Lloyd's Form, from the salvors' perspective
Fair reward for protecting the environment – the salvor's perspective
CMI Buenos Aires ISU President Speech
Tulane – The Development of Environmental Salvage
ISU journalists' lunch 03 December 2019 remarks by ISU President, Richard Janssen
New President for International Salvage Union
ISU publishes statistics for 2018
ISU members make major contribution to environmental protection
A new vision for the salvage industry
ISU statistics for 2017 show show the salvage industry continues to experience weak revenues
New Secretary General for International Salvage Union
ISU Pollution Survey 2017
ISU recognises achievements of former UK SoSRep, Hugh Shaw
President of International Salvage Union re-states value of traditional salvors
International Salvage Union statistics for 2016 show an increase in the provision of vital services but a dramatic fall in revenues
International Salvage Union members provide services in cases involving more than 2.5 million tonnes of potential pollutants in 2016
International Salvage Union presents its Meritorious Service Award to Italian Coast Guard
International Salvage Union re-states its support for Lloyd's Open Form
International Salvage Union 2015 statistics demonstrate the value of the salvage industry
ISU addresses European Parliament on "Places of Refuge" and welcomes progress on European Union Operational Guidelines
International Salvage Union members make major contribution to environmental protection in 2015
International Salvage Union 2014 statistics show the great benefit of the salvage industry
ISU Associate Members' Day
ISU Pollution Prevention Survey 2014
International Salvage Union re-states commitment to insurers
ISU publishes Annual Review and industry statistics for 2013
ISU Annual Review 2013
UK shipping minister praises salvage industry
ISU Annual Pollution Survey – 2013 Results
ISU urges governments to adopt IMO Places of Refuge Guidelines
International Salvage Union makes its first Award for Meritorious Service
International Salvage Union publishes annual statistics for 2012
Annual Pollution Survey – 2012 Results
ISU New General Manager
Associate Members Day 2012
ISU response to CMI outcome Beijing
Salvage World
Full Members' Area
ITS CONFERENCE, SINGAPORE, MAY 2008
Joop Timmermans, International Salvage Union
Over the past 40 years the "top 20" spills worldwide resulted in the loss of some three million tonnes of crude oil into the sea. In recent decades, three major tanker spills made headlines around the world: the Exxon Valdez, the Erika and the Prestige. They involved the combined loss of around 120,000 tonnes of oil and cost billions in clean-up and compensation.
Every year members of the International Salvage Union (ISU) recover around three times that amount of oil from tankers in distress and requiring salvage assistance. The ISU introduced its Annual Pollution Prevention Survey in 1994. Since then ISU salvors have recovered over 13 million tonnes of oils, chemicals and other pollutants – from over 2,700 casualties. This includes 10 million tonnes of oil.
They intervened promptly and effectively, saving shipowners and liability insurers billions of dollars. They also prevented further deterioration of the shipping industry's public and political image.
Many of these operations involved responses to major marine casualties. Looking back over some 30 years, our statistics show that just over half of all salvage operations were performed under LOF. There can be no doubt that Lloyd's Form is still the world's preferred salvage contract, whenever the threat of property loss and environmental damage is acute and there is no time to lose. LOF continues to play a vital role in 2008, the contract's centenary year.
LOF's importance
The fact that LOF remains fresh, fit and relevant after a century of use is testament to the skilful way in which this contract has been revised and updated over the years. Changing needs have been taken into account. There are many benefits associated with LOF, including the fact that no prior discussion of terms and conditions is necessary. Commercial issues are dealt with after services are completed. By that stage the value of recovered property is known, together with the time expended on the salvage and out-of-pockets incurred by the salvor.
LOF was designed from the outset to avoid commercial haggling. It is a unique emergency response contract concentrating on a single goal: a successful outcome that avoids loss and pollution. With LOF agreed there is nothing, at the contractual level, to delay the mobilisation of the salvor, his personnel and equipment. Freedom from delay can make the difference between success or failure and, possibly, can avert a pollution catastrophe.
LOF 2000 is a streamlined document. It is simple, straightforward and easy to understand. There are just seven boxes to be completed by the parties. Once LOF is agreed, the salvor can intervene and use his "best endeavours" to prevent pollution and recover property.
There have been major improvements in the shipping industry's safety and environmental record in recent years. Yet casualties continue to occur, despite the best efforts of shipowners and regulators. This is due largely to the impossibility of totally eradicating all risks associated with natural perils, human error and mechanical failure. Each vessel is a potential casualty that can threaten life, property and the environment in adverse circumstances.
This is why LOF is more important now than at any time in its long history. Zero tolerance of marine pollution has a firm hold on public and political opinion. LOF respects this priority. It is the contract that offers the best hope of recovering property and protecting the environment.
Confidence in LOF
Lloyd's administers LOF. It ensures that the level of the salvor's reward matches the scale of services provided, the risks to the casualty and the degree of success achieved. These factors are assessed by applying criteria set out in Article 13 of The Salvage Convention, 1989. These criteria take account of the risks to property, salved value, time spent on services, the salvor's expenses, the skills applied in rendering service and risks to the environment.
The Lloyd's Arbitrator is responsible for arriving at a Salvage Award that accurately reflects the scale and complexity of the services provided. Under this impartial system, Salvage Awards are modest when services are provided on a modest scale. Equally, Lloyd's Arbitrators recognise the salvor's achievements when prompt, decisive action prevents substantial property loss and environmental damage.
It is important for this system not only to be impartial but to be perceived as such by shipowners and insurers. They must have confidence in LOF and the ability to achieve an appropriate outcome. This is the key to LOF. Indeed, it is why LOF was devised in the first place a century ago. It is unfortunate that some interests in the maritime industry have developed the mistaken view that LOF is prohibitively expensive. This is a misconception. It takes no account of Lloyd's administration of LOF and the inherent fairness of the arbitration system. Significantly, it also fails to appreciate what is at stake, with costs possibly running into millions and, possibly, billions.
ISU members, for their part, understand the importance of fair treatment. They have agreed that the salvor's financial expectations should accurately reflect the level of service provided. An ISU Resolution states that salvage security demands should be realistic, as should settlement/Award expectations.
Challenges to LOF's future
International Salvage Union salvors are committed to the commercial business of salvage. The services of casualty response and pollution prevention, however, are increasingly exposed to political pressure. This is the product of extreme concern over environmental threats, especially those involving large, laden tankers.
Yet, in one important sense, LOF's central characteristic has remained unchanged since 1908. It is a no cure – no pay contract. In the traditional manner, the salvor is rewarded in relation to the salved value of property recovered.
In recent decades, however, governments have become increasingly reluctant to rely entirely on the no cure – no pay contract for salvage and, more particularly, pollution prevention services. As a commercial contractor, of course, the salvor may decide not to intervene if he judges the financial risks unacceptable under all-or-nothing, no cure – no pay.
Governments now recognise that, in the modern context, the salvor needs an additional incentive. The full rigour of no cure – no pay needs to be moderated when there is a high risk of failure and/or little salved value. As a result, "safety nets" of various types have been introduced. They are designed to protect the salvor from financial loss and encourage him to respond to all pollution threats, not just those casualties holding out the prospect of a satisfactory Salvage Award.
LOF 2000 incorporated a new remuneration system for the one-in-five cases where a satisfactory, property-based Salvage Award is unlikely to materialise. This system is known as SCOPIC. It rewards the salvor on the basis of pre-agreed rates for salvage tugs and other craft, portable salvage equipment and salvage personnel.
Despite such innovations, the salvage industry's long-term viability remains uncertain. Higher ship operating standards and advanced technology have reduced casualty numbers and, in turn, the demand for salvage services. The salvage industry now functions in a low workload environment. Today, the casualty-related income of the global salvage industry barely reaches USD 100 million per year. At such low income levels, it would take the ISU's entire membership worldwide over 10 years to collectively earn the equivalent of the cost of a single major spill such as the Prestige. There can be no doubt that emergency services for saving ships and preventing pollution must continue. The central question is: how to fund these vital services in the longer term, against a background of low workload?
Any long-term solution must recognise, in some way, the true scale of the environmental benefit conferred by salvors. Pollution prevention is more important than ever. It is this that holds the key to the continuity of salvage and pollution prevention services in future years. In the ISU's view, it makes sense to place a much greater value on spill prevention services, under a dual system of Salvage Awards for recovering property and Environmental Salvage Awards for preventing pollution.
LOF: looking to the future
There is now a strong case for introducing a new LOF that takes full account of society's zero tolerance of marine pollution. This is a challenge that must be faced if LOF is to continue to function effectively in future years.
The ISU has proposed that Environmental Salvage Awards be introduced through a new LOF. Given goodwill on all sides, it may be possible to reach agreement in this area within a three-year timeframe, so allowing the adoption of "LOF 2010". There is also a need to revise The Salvage Convention, 1989, but this is a longer term goal. Nevertheless, the ISU has already proposed that the Comité Maritime International (CMI) begin drafting a new convention.
Certainly, the introduction of a new LOF will take less time. The members of the Lloyd's Salvage Group have an important advantage, as they are building on a century of experience in the use of LOF. They can work with confidence as the maritime industry has been very effective in devising agreements concerned with the environment. Outstanding examples include the tanker shipping/oil industry "TOVALOP" and "CRISTAL" arrangements, together with the more recent "STOPIA" and "TOPIA". These systems were devised to self-regulate the balance of responsibility for spill compensation between shipowners and oil receivers.
LOF, whilst a commercial contract, also performs important functions in delivering environmental protection through salvage. In 1990, for example, a new LOF gave immediate effect to the Article 14 Special Compensation system introduced by The Salvage Convention, adopted in the preceding year. The new LOF gave immediate effect to the wishes of International Maritime Organization member governments. It avoided years of waiting for the Convention's entry into force conditions to be fulfilled.
LOF was also used to introduce the industry's more effective successor to Article 14: SCOPIC remuneration. SCOPIC is the latest form of safety net, protecting the salvor from potentially heavy loss when responding to a casualty. In the same way, LOF 2010 could introduce a system of Environmental Salvage Awards many years before such a change could take effect via a new Salvage Convention.
Pollution prevention services benefit the marine environment, coastal communities and governments. These benefits would grow under a system of Environmental Salvage Awards. There would be greater protection against spills and, consequently, a further overall reduction in pollution. A greater salvage presence would benefit both shipowners and insurers. More commitment to salvage is money well spent. It means fewer large pollution events and lower total claims costs.
In summary, the introduction of a new system of remuneration – Salvage Awards for recovering property and Environmental Salvage Awards for preventing pollution – would deliver many benefits:
· It would reduce the number of spills.
· It would reduce the scale of financial, economic and environmental losses, and cut P&I pollution claims costs.
· It would address high-profile political and public interest concerns.
· It would reinforce the long-term viability of the salvage industry.
· It would contribute to the sustainability of marine emergency services.
· It would mean cleaner oceans and cleaner beaches.
There is the important question of whether the P&I Clubs would be prepared to support the proposals for Environmental Salvage Awards. On the face of it, they certainly should – as the proposed system provides a rare and valuable opportunity to reduce total pollution claims costs. In the ISU's view, there is scope for achieving significant savings, through the development of environmental salvage. One certain way of sharpening focus on pollution prevention is to introduce a new financial incentive: the Environmental Salvage Award.
During 2004/05 alone, members of the International Group of P&I Clubs paid out over USD 300 million in pollution claims. The Clubs are paying much too much! An investment in Environmental Salvage Awards would help to reduce pollution claims costs. This would benefit Club members and would complement the principles of mutuality. It is surprising that the initial reaction of the Clubs is largely negative, as this appears to conflict with the interests of their shipowner members. Perhaps the best way forward is to introduce the new system for a trial period and then monitor its impact on total pollution claims costs.
The property insurers, responsible for funding Article 13 Salvage Awards, are broadly supportive. They have a direct interest in fostering a strong salvage industry. They also see the proposed new remuneration system as an opportunity to inject greater equality into current arrangements for meeting salvage costs.
Coastal States, of course, are the ultimate beneficiaries of the salvor's pollution prevention service. They should welcome the revision of current arrangements, to place greater emphasis on protection of the environment.
Enhancing the contract
LOF is a contract promoting response efficiency. Nevertheless, there is always room for improvement. In the area of education and awareness of the contract's advantages, for example, salvors and their industry partners should do more to promote greater understanding of LOF, its function and benefits.
This is especially important when it comes to perceptions of fairness. For example, it is little understood that most LOF cases are settled amicably. Around 30 per cent go to arbitration in London. Arbitrations are heard by a single Arbitrator, drawn from a small group of highly experienced Salvage Arbitrators appointed by Lloyd's. Should settlement evade the parties, the commercial issues are resolved by the Arbitrator (or the Appeal Arbitrator, if an appeal is lodged).
Cost-effectiveness is another important issue when it comes to perceptions of the contract. There have been recent innovations in the administration of LOF, with the aim of enhancing the contract's cost-effectiveness. For example, Lloyd's has introduced a new "short form" of arbitration. This is a fixed cost procedure for smaller cases where the total security is not more than USD 1 million. The ISU has proposed that the current threshold for the Fixed Cost Arbitration Procedure should double to USD 2 million, in order to encourage greater use of this cost-effective form of arbitration.
The ISU itself has also taken an important initiative. It has developed a LOF website (www.lof-at-isu.com) providing important LOF-related information and material for casualty response training and assistance in actual emergencies. The website was commissioned earlier this year and has some 2,000 shipowners and ship managers as registered users.
The IMO's role
It can take many years to introduce a new international convention. For example, The Salvage Convention, 1989, replaced The Salvage Convention, 1910! Hopefully, the 1989 Convention will be revised over a shorter timescale, perhaps during the next decade.
The revision of the 1989 Convention would provide a good opportunity to recognise the many industry changes over the past two decades. These include the replacement of Article 14 Special Compensation with the more workable SCOPIC arrangements. The drafting of a new Convention would also provide an opportunity to establish an inter-governmental framework for Environmental Salvage Awards. This might involve the establishment of an International Environmental Salvage Fund, with contributions from the Coastal States who are the ultimate beneficiaries of pollution prevention services.
A revised Salvage Convention could include a new Article 14, providing for Environmental Salvage Awards in parallel with Article 13 Salvage Awards for property recovery. This concept should find ready acceptance amongst the international community, on grounds of its cost-effectiveness. Payments for prevention are always much lower than the costs associated with clean-up and compensation, whenever a spill occurs.
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Zoe Williamson has just begun her journey into the industry. A first year student on the Goldsmiths' Centre's Foundation Programme, she joined the course in September 2018 after seeking a more hands-on alternative to university-style learning.
How did you first hear about the Goldsmiths' Centre?
I first heard about the Centre through a family friend, Brian Hill. He is a consultant on the Goldsmiths' Craft and Design Council (GC&DC) and had the GC&DC Award book on his kitchen table. My mum flicked through it and said straight away 'Zoe would like this'. So, we did some research, and that led to me doing some work experience at Ottewill Silversmiths, which I absolutely loved.
What inspired you to apply for the Foundation Programme?
I've never really been that academic. I did okay at my GCSE's, but I'm more of a practical learner, writing has never been for me, so university didn't feel like a good fit. Since I loved my work experience so much, and I've always thought about doing an apprenticeship, I looked into it, found the Foundation Programme and decided to go for it.
Yes. Since I was in reception at school, I've always made things with my hands, from cardboard and other materials. When I started secondary school, that instinct grew, especially when I did an Art and Design Tech GSCE, which I loved.
What area of study has most interested you so far?
Having worked with Steve Ottewill at Ottewill Silversmiths for over two years, on and off, I prefer silversmithing. I just enjoy making things for practical use - jewellery looks nice but it doesn't really have a purpose other than decoration. Also, what I like about silversmithing is that you never do the same job twice, every project is completely different.
Can you highlight one memorable moment of your time on the course so far?
I've enjoyed all of it! Before I started on the Foundation Programme, I hadn't really done any work with jewellery before. So I'm just getting to grips with that, doing a bit of everything, and learning a whole new set of skills.
I've also enjoyed all the trips we've been on, like to Hatton Garden and Bond Street. The GC&DC Award Ceremony was an eye-opener – that so many young people can achieve such a high standard of work is inspiring. And since a lot of the winners took the same path through this course at the Goldsmiths' Centre that I'm doing right now, it really gives me hope for my future in the industry.
Nature has inspired a lot of my design work so far, and I've also created pieces that have a sentimental ppurpose - for example, at my bench at home, I created something for my parents based on the family dog.
Working with Steve Ottewill had a big impact on me. I got to see how much work goes into something that seems simple, like a trophy, even if it's tiny; creating all the components, soldering them together, filing it down, and then something going wrong and having to rectify that mistake and work through it. In general, everyone I've met at the Centre so far has also been really inspiring, they're all so skilled, and they're always around.
What do your friends and family think about your choice of career?
It's not a trade that a lot of people know a lot about, so some of my friends from secondary school don't really understand – they think I put beads on a string! But all my teachers were extremely supportive and helped me with my application and to put a portfolio together. My mum's quite creative too, so gives me hints and tips with design work.
Based on your experiences so far, would you recommend the Foundation Programme to other young people?
I'd definitely recommend it! It's such a good opportunity, you're taught by the best people, and you get to do mainly hands-on work. Most of your written work is done in your own time at home, so during lessons you're kept busy with practical things. I think that's a huge benefit over university, it's full-on, hands-on - just getting on with it.
Applications for 2019/2020 close on Sunday 5 May 2019.
Interested in applying for our Foundation Programme course? Find out more information here.


There is a requirement for directors to register declarations of interests in accordance with the Companies Act 2006.
The Companies Act 2006 requires directors to avoid situations in which a director "has (or can have) a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company".
As a result of the Mary Ney Review into LEP governance and transparency and the revised National Assurance Framework, the Ministry of Housing, Communities and Local Government issued a new bespoke register of interest proforma for the collection and publication of the information which ensures all categories of interest are systematically considered.
These forms will be held by the LEP Executive and will be updated annually; as outlined in our Assurance Framework.
Please click on each Board Director for a copy of their individual Register of Interest Form which is reviewed annually.


Good morning, and welcome to the Coeur Mining Fourth Quarter 2018 Financial Results Conference Call. (Operator Instructions) Please note, this event is being recorded.
I would now like to turn the conference over to Paul DePartout, Director of Investor Relations. Please go ahead.
Thank you, and good morning. Welcome to Coeur Mining's Fourth Quarter and Full Year 2018 Earnings Conference Call. Our results were released after yesterday's market close, and a copy of the press release and slides for today's call are available on our website.
I would like to remind everyone that our press release and some of the comments today include forward-looking statements from which actual results may differ. Please review the cautionary statements included in our press release and presentation as well as risk factors described in our 2018 10-K.
Now I'll turn it over to Mitch.
Thanks, Paul, and good morning. Thank you, everyone, for joining. Before we get started, I'd like to introduce 2 colleagues here with me. First is Tom Whelan, our new CFO, who joined us last month. Tom will walk through the financial highlights and provide some detail on working capital and on capital allocation. He will also highlight some modifications to our guidance framework and how we plan to report our results going forward. Also with me here is Terry Smith, who recently took over as Senior Vice President of Operations after having served as our Vice President of North American Operations for the past 5 years. Terry will provide some operating detail in a few minutes.
In summary, the fourth quarter reflected strong performance at Palmarejo, Rochester and Kensington, while Wharf had a weaker than expected quarter, but has since bounced back strongly so far here in 2019.
Meanwhile, the ramp-up of the Silvertip mine in British Columbia continues. Progress has been slower than anticipated, but mill availability continues to improve each month. And we remain enthusiastic about our newest operation there.
Overall, I was pleased with the progress we made last year in delivering on our strategy of discovering, developing and operating a balanced portfolio of high-quality North American precious metals assets.
We continued upgrading our asset quality last year by successfully exiting Bolivia and starting up a new higher margin operation in Canada.
We added more high-quality Nevada gold and silver assets with our acquisition of Northern Empire in Southern Nevada and with the package of assets located next to Rochester that we bought from Alio Gold. Those projects more than doubled Rochester's land position and provide additional future growth potential where we can leverage Rochester's existing infrastructure.
Approximately 2/3 of our reserves are now located in the U.S. and 100% of our production and cash flow now come from our platform of 5 North American operations.
It's also worth noting that 59% of our revenue last year came from our U.S. mines and that gold sales represented 69% of our total revenue with silver contributing 31%.
Our investment in exploration, which ranks among our most attractive capital allocation priorities, successfully replaced production last year and led to a fourth consecutive year of reserve growth. Reserves, measured and indicated resources and inferred resources all increased last year. In the case of inferred resources, gold and silver ounces increased 145% and 39%, respectively, reflecting our growing pipeline of high-quality future growth opportunities.
Similarly, our organic growth investments are beginning to pay off. The initial HPGR unit is being installed at Rochester, which should start impacting silver recoveries in the second half of the year. This investment represents the first step toward a larger expansion in 2020 and 2021 to establish Rochester as a source of higher-margin, long-term production and cash flow and is expected to generate an attractive return.
At Kensington, we are now generating a return on our investment to access the high-grade Jualin deposit with the first 10,500 ounces of gold produced during the fourth quarter. Jualin is expected to be a catalyst for what should be a very strong cash flow year at Kensington in 2019.
Our investments in the Palmarejo beginning 4 years ago, including the restructuring of the Franco-Nevada gold stream, the acquisition of Paramount Gold, development of 2 new higher-grade underground mines, sustained levels of near-mine exploration and numerous incremental optimization projects have resulted in substantial reserve growth, average grades nearly double 2014 levels, unit costs that are now over 40% lower and over $130 million in free cash flow generated in just the past 2 years.
And finally, although Wharf had a weak fourth quarter, the acquisition continues to be a real winner for us. We paid $99 million for it in 2015 and have generated $136 million of free cash flow to date. Wharf's reserves at the time of the acquisition were 560,000 ounces. After mining 450,000 ounces since that time, reserves now stand at 882,000 ounces.
Lastly, I want to call your attention to several slides, starting on Slide 20, that highlight our best-in-class corporate governance and our proactive ESG programs and priorities.
We maintained a 1 rating by ISS for our governance practices, including our board's independence, refreshment efforts, diversity, executive and director ownership targets and incentive compensation design. Also, we have included materials summarizing our environmental stewardship related to water and to our support of local communities. In fact, in 2018, we partnered with over 220 community organizations to help make a positive impact on people's lives in the communities where we have a presence.
As I've said before, these priorities are a key component of our strategy and essential to who we are as a company.
And with that, Terry will now provide some details on our operations.
Thanks, Mitch, and good morning, everyone. Before diving into operations, I just want to reiterate Mitch's comment regarding cash flow. Our operations team is focused on generating sustainable high-quality cash flow and prioritizing quality over quantity. We invest in our mines and development assets to support this concept through success-based exploration, high-return capital projects as well as an emerging business improvement culture across the company.
Looking at the fourth quarter, Palmarejo, Rochester and Kensington all had strong finishes to the year. At Palmarejo, fourth quarter mill throughput increased as the team did an excellent job of making up for the 17 operating days that we lost in the third quarter by milling roughly 25% of our ore. With increased throughput, Palmarejo delivered approximately $7.5 million in quarterly free cash flow despite roughly 4,600 ounces of gold and 277,000 ounces of silver, being impacted by the RMC bankruptcy.
In 2019, we will continue advancing underground development towards La Nación, where we expect production will commence during the second half of the year. La Nación's grades are similar to our reserve grades, but accessing this zone will facilitate higher throughput.
Our mine plan anticipates La Nación adding around 400 ton per day of additional mill feed once ramped up. We also anticipate a new thickener to come online in the third quarter, which is expected to increase recovery rates by about 2% for both gold and silver. This project with an estimated investment of $4.5 million and about a 1-year payback is a good example of the type of investments we prioritize according to our capital allocation framework.
At Rochester, we continue to see strong performance from both the Stage IV and Stage III leach pads. As a reminder, we commissioned the expansion of the Stage IV leach pad back in mid-2017. This strong performance has helped us deliver approximately $15 million of free cash flow in the quarter and $23 million for the full year.
This year, the primary focus will be on upgrades to our crushing facilities, including an initial HPGR unit. These upgrades are expected to increase our crushing capacity, reduce operating cost as well as improve timing and overall silver recoveries. The project is advancing on schedule with commissioning expected in the second quarter. Currently, earthworks have been completed with steel erection underway, and we anticipate improved second half production because of all of these upgrades. We are excited to demonstrate what these improvements will mean for Rochester's long-term business performance.
Touching on Kensington briefly. We saw a great fourth quarter, largely due to high-grade ore from Jualin, where we declared commercial production on December 1. We mined approximately 23,000 tons of development ore and 3,000 tons of stope ore from Jualin during the fourth quarter. This yielded nearly 10,500 ounces of gold at a grade of 0.4 ounce per ton, which is more than double the grade we mined from the Kensington Main deposits. I'd like to thank our team at Kensington for bringing Jualin online, and we look forward to delivering stronger results in the quarters ahead.
Switching over to Silvertip. As Mitch mentioned, the ramp-up has been slower than we originally anticipated, primarily due to mechanical issues leading to low availability. I'd like to offer some additional color on what we have been dealing with up there. First off, it's important to point out that the Silvertip mill was originally constructed as part of Dena Hes mine operated by Teck in the Yukon in the early 1990s and moved to Silvertip in 2015.
Due to the age of the facility, the mill lacks modern instrumentation and supplier support and parts have been proven challenging to find. In addition, several areas of the facility were underdesigned or poorly installed, requiring significant rework. We continue to enhance our workforce at Silvertip with a combination of high turnover, lack of training and a challenging mill facility have also been factors.
Although our due diligence identified these issues, we were overly optimistic about the amount of time it would take to address them. However, our strategy to improve mill performance is leading to upticks in availability and throughput, while making the plant simpler to operate.
Most importantly, the underground mine is well developed and in good shape. And we think the potential to expand the reserves and resources is quite significant. Over the past year, our geologists have developed a good understanding of the deposit and are excited to do some step-out drilling this year.
We are all looking forward to demonstrating Silvertip's value and developing it into one of our cornerstone assets.
Now I'll hand it over to Tom, who will hit on a few financial points.
Thanks a lot, Terry, and good morning, everybody. Really excited to be here on my first conference call with Coeur. Super excited to join the team and also important for all of you to note I'm a shareholder of Coeur. I bought some shares right after the announcement. So I'm excited to be -- have enough skin in the game.
Anyway, I'd like to start out with a few comments about our capital allocation strategy. We are continuously investing in our business to drive value. In addition to the 2 acquisitions Mitch outlined, we invested over $140 million of capital expenditures in 2018, including over $55 million in development capital across our 5 mines and various projects in North America.
The benefits of these investments include: maintaining and extending our mine lives as demonstrated by a fourth year of growth in our overall reserves, as we highlighted in yesterday's news release; derisking our overall production profile at Silvertip, on which we look forward to reporting progress throughout 2019; positioning Kensington for positive free cash flow to our investments in underground development, drilling and improved mining equipment. These efforts are expected to lead to higher grades, improved operating efficiencies and help identify several new high-grade exploration targets.
Finally, prioritizing capital to Palmarejo, which continues to prove itself with strong operating cash flow. With excess mill capacity, finding supplemental ore sources that can further improve profitability remains a priority.
We ended 2018 with approximately $230 million of liquidity including $115 million of cash and coincidentally, a $115 million of revolver capacity. Overall, our cash position declined roughly $77 million from 2017, primarily due to lower cash flow from operating activities in 2018 and the investments that I mentioned earlier.
Let me add some color on these numbers. Our ability to generate cash is driven by our metal sales and the associated cost of production. On balance, we sold approximately the same amount of gold and silver ounces as we produced in 2018, with the exception of the material affected by the RMC bankruptcy.
Operating cash flow from our 5 mines was $70 million during 2018 versus $260 million during 2017. Key drivers of the difference include lower top line revenue, primarily due to 15% fewer ounces of gold sold. Secondly, the timing of Mexican income and mining tax payments, which totaled $40 million in 2018, including $17 million associated with 2017 earnings.
And finally, our overall profit margin per unit sold decreased during 2018, largely due to higher cost at Silvertip, Wharf and to a lesser extent, Kensington.
I also want to highlight a few items that impacted working capital, particularly, in the fourth quarter. We saw unfavorable movements in our inventory, largely driven by inventory write-downs at Silvertip as well as the inventory buildup at Wharf. The RMC bankruptcy resulted in approximately 6,500 ounces of gold and 400,000 ounces of silver not being sold. The costs associated with these ounces also impacted working capital.
But before Mitch wraps up, I want to briefly cover our new reporting framework and high-level guidance figures for 2019. We are modifying how we will report production and costs to better reflect how we manage the business. While our exposure to silver remains important, our portfolio remains a much more balanced set of operating assets. More importantly, our focus remains on cash flow.
Starting in the first quarter, our site-level costs will be reported on a co-product basis with the exception of Wharf, which will be done on a by-product basis, given the small amount of silver production at that operation. Costs will be allocated based on the relative revenue contribution from each metal. We believe this revised disclosure will improve transparency. Our full 2019 production and cost guidance ranges are highlighted on Slide 19 of our corporate presentation and Page 12 of our earnings release.
Given the HPGR project at Rochester and the ramp-up of Silvertip, we expect production to be skewed towards a heavier second half of the year, 45% in the first half, 55% in the second half, for those of you eager to tweak your models.
Our CapEx guidance for 2019 ranges from $100 million to $120 million, 15% to 30% below our 2018 expenditures. We believe that this is the appropriate level of investment to continue executing on our overall strategy. We also want to stress our focus on maintaining our balance sheet liquidity and flexibility. We have done a great job improving our leverage profile over the past few years, but would like to continue to delever the balance sheet as we deliver overall financial performance.
With that, I'll hand it back to Mitch.
Thanks, Tom. So just to quickly wrap up, I think the key takeaways from the fourth quarter and 2018 are that Rochester had an all-around solid year last year and an exceptionally strong fourth quarter. And this year, we're focused on installing that initial HPGR unit and expect to begin seeing the impact of that beginning midyear.
Rochester finished -- sorry, Palmarejo finished the year strongly and is expected to continue generating strong free cash flow this year despite lower expected gold grades.
Silvertip is slowly, but steadily ramping up. We're executing a solid plan there designed to address the challenges. And we still remain confident in the long-term value of this new and high-grade asset.
The weaker than expected results at Wharf in the fourth quarter look to be behind us, with 2019 expected to be more like prior years.
And finally, Kensington had that great fourth quarter led by Jualin, which we expect to lead the strong free cash flow here this year.
We are all intently focused on returning the positive free cash flow in 2019 and remain committed to allocating capital according to our framework that's summarized on Slide 12. We'll continue to pursue a higher standard and remain focused on executing our strategy from our balanced North American platform of precious metals assets.
So with that, let's go ahead and open it up for questions.
(Operator Instructions) The first question comes from Joseph Reagor of Roth Capital Partners.
So a couple of items. I guess, first one right off the bat, the guidance for this year felt a little more, I'll use the word conservative, than last year. Is this an indication that with last year where the couple of mines didn't meet initial expectations that you guys are taking a revised approach to how you guide as far as the production numbers go? Or is there anything else we should read into that?
I think you've got it there, Joe. We're taking what we think is a realistic and prudent approach to setting our guidance achievable, but fairly realistic and I might say, conservative, but hopefully, beatable.
Okay. And on the 45-55 split, is there any more color you can give us there as far as which mines will be the biggest drivers of that? I'm assuming Silvertip is one of them as it ramps up, but other than that.
Yes. Silvertip, for the obvious reasons of the ramp up. And then Rochester with the -- everything going on there with the crusher upgrades going on in the first quarter. We'll see that then hopefully kick in and lead to a stronger second half at Rochester. We also have that Nación ramp-up at Palmarejo that will add a little bit more to the second half at Palmarejo than the first half.
Okay. And then one final question, if I could. Tom mentioned balance sheet and trying to delever a little bit. Do you have any assets producing or at development stage that you consider non-core that could be used as a way to raise capital and repay some of the debt?
It's a good question. We are always evaluating our portfolio. Everything is for sale at the right price. I think that's the prudent way to be thinking about it as a management team of a public company. Our 5 operating assets are all solid contributors in terms of free cash flow. And we have got good organic growth at all of those that we're excited about sort of crystallizing over time. But if somebody wanted to come in and pay us for all of that upfront, we will always be open to anything. But there's -- other than we have some small equity positions that are probably more easily monetized than an operating asset, we've gone through a pretty thorough monetization of non-core assets here over the last 2, 3, 4 years. I think we've sold, on an individual basis, something like 8 or 10 different interests and assets.
The next question is from Michael Dudas of Vertical Research Partners.
Mitch, can you hear me okay?
Yes. We can hear you, Mike.
My question is -- first, I want to commend you guys on the presentation, your ESG discussion and the added details on the operations of mines. I think it's going to be very helpful going forward. And also the change in how you're reporting report on the business.
I appreciate that feedback, thanks.
Cash flow -- and I think free cash flow is on the minds of most investors thinking about the company this year. Can you maybe discuss about timing of how the business is going to run this year? But certain things at the mines relative to offset some of the cost inflation or labor availability that Coeur's working on? Maybe a couple of examples of what you're doing at some of the operations to squeeze some of the costs out of that business?
Yes. I'll give you a couple of examples that come to my mind. And Terry, if you have a couple from the last time, feel free to chime in. Probably one of the biggest swing factors in 2018 versus 2019 is Kensington. So if you look at capital expenditures, down about -- in half from last year. And that's really a reflection of the heavy investment that we've been putting in there to gain access to some of this higher-grade material. So even though you see in the cost guidance at Kensington a number that might not sort of sync up with what expectations might be. From a cash flow standpoint, Kensington's pretty well set up now to go from what was a negative cash flow year last year to a healthy free cash flow this year. So that's largely a grade story. The other example that comes up is just Wharf. There's -- probably -- for the first time, certainly, in our time of owning Wharf, there is a clear hiccup there in the fourth quarter and that dragged down Wharf's results for the full year. That is something we don't anticipate having happen again here in 2019. And so that's going to be a real big swing in terms of not only ounces of gold production, but free cash flow as well. Obviously, Silvertip, as that scales up, will be probably the largest swing between last year and being a consumer of cash. And as we continue to ramp up there, having that flip over. So that's good growth that lies ahead there. Terry, did I leave any -- I hit about all the mines.
Yes. Well, I mentioned Palmarejo earlier. And we're always trying to fall for free cash flow at the operations. So we're ramping up throughput in the second half of the year at Palmarejo to solve for that and maximize free cash flow. And at Rochester, really the HPGR crusher and upgrades to the ex-pit that we're doing will drop our operating costs, increase recovery, increase timing of recovery. So it's like a magical free cash flow project that we're pretty excited about. So that will give us some really good free cash flow results out of Rochester in the second half of the year.
Does that give you some good color, Mike?
Yes. It does, Mitch. What are you looking for this year out of your work at Sterling and Crown as you guys get a better handle on the deposits and the opportunities there? And what should we anticipate to look forward to in positive data from that?
Yes. I'll hit on that, and Hans is actually calling in from Reno. He had just been down there at Sterling and Crown earlier this week. So Hans, feel free to chime in. But Mike, the big -- 2 big things there worth mentioning, we'll spend, combined, about $5 million this year in exploration, that will be split roughly in half between the 2. Sterling kind of getting the first attention, Crown then in the second half of the year, with us focusing initially there at Crown then on the SNA deposit initially. Both programs, both at Sterling and at Crown are really geared towards resource expansion. The other key point, I think, to think about there is these need to fit into an overall sequence in the portfolio that work for us for our cash flow timing, for our organization. And so while Sterling probably could be put into production quickly for probably a modest amount of capital, what we envision there is something that could be larger based on additional time to drill and expand that resource. For us right now, the initial focus is Rochester. We get Rochester in this next expansion in 2020, 2021 behind us. We see the free cash flow from that. Then these 2 new deposits down in Southern Nevada, first probably Sterling and then later, Crown. Then these could become sort of in the development pipeline next. And that would fit well with our company and overall kind of cash flow timing. So that's a little bit on what we expect to be doing there in the near term and how we think about it slotting into the overall portfolio and sequencing. Hans, is there anything you'd like to add to that?
Yes. Mike, the focus obviously is resource growth, the shallower the better. We want to lower the strip ratio. It's a good high-grade oxide system there. So we're focused on heap-leachable oxide gold for the foreseeable future. We started out with 1 rig. We basically inherited Northern Empire's staff and operation in full. And moving forward, you'll see us ramp up slowly as we get the geologic model figured out and the targeting figured out. So by second quarter, we'll have 2 rigs. And eventually, we'll get to 24-hour shifts and things like that. So the data will be rolling in much faster later in the year than it is now. That gives our geologists a chance to get ahead of the rigs and where to target the holes. The Crown area I look at as the biggest growth story there, whereas Sterling will be the initial cash flow generator. The Crown area has potential to really grow as evidenced by our neighbor Corvus and all their drilling.
My final question would be for Mitch. As -- you have a lot going on in 2019 to kind of get to -- get Silvertip off and get companies to a more normalized level. Is the capital intensity of the business as you look going forward and I don't want to get guidance on '20 and '21, but is it -- you feel there's a chance to have it more reduced on the development capital side. As prices improve, you can really drive that cash flow as you exit 2019 and beyond?
Yes. That's exactly how we're thinking about it, Mike. We've got the capital that will need to go into Rochester to realize the significant impact of this next expansion, where we'll -- new leach pad, expanded crusher. That is the next kind of hump in terms of CapEx. That's mostly 2021 capital. But by then, you look at what everything else inside the company and you've got Silvertip in steady state. You've got Kensington continuing to have this nice balance between the Kensington Main and then these higher-grade ore sources. You got Palmarejo continuing to do what it's doing. You got Wharf continuing to be a cash flow machine for us. Then once you get on the backside of that Rochester expansion and you see the cash flow from that thing, there is really a nice attractive-looking cash flow profile sitting out there beyond that year.
(Operator Instructions) The next question is from Mark Reichman of NOBLE Capital Partners.
Given the expected growth in zinc and lead production at Silvertip, the projected cost applicable to sales at least for lead and zinc at the high end don't seem very competitive, given where current prices are today. And so I was just wondering when you think about the cost at Silvertip, are there some ways to get those costs down? Or what's it going to take to get it at the low end of your cost guidance? Because I know you're shooting for the 1,100 tons per day, but then there were also those 4 key areas that I think you were focusing on to try to get those costs down?
Yes. A good question and something we gave a lot of time and thought here too. I'm going to let Terry start, and then Tom chime in on anything that you would like to add. Terry?
Yes. Thanks, Mitch. So at Silvertip, really what we're trying to do initially is stabilize the operation and then we can look at optimizing the operation in the later part of the year. And that's when we'll attack operating cost. Right now, it's a pretty inefficient operation. We have a mill that requires a lot of labor to operate it. We have an underground mine that still has a lot of manual activities going on. So I can see us producing the amount of labor we need to operate that place. And that will result in some operating costs rolling off. We have a lot of contractors we're using to support the operation at the moment and some of those costs will roll off. So it's still quite early as far as the genesis of Silvertip is concerned. And I think once we get into that optimization phase, we'll be well prepared to make Silvertip very competitive in the base metal space.
Yes. And as Mark had said, Tom Whelan here, we only hear -- a couple of other comments I would talk about is, in the base metal business, you're only halfway home once Terry produces the wet concentrate of lead and zinc for us to sell. And I'm actually pretty excited about, once we get to a stable state, of finding some ways to reduce our cost even further around finding happy homes for this concentrate. So there's opportunities on the supply chain, on shipping, all of those areas sort of post the mine where I think there's some opportunities to find further cost savings. So again, I know that the guidance is conservative here for 2018. But again, we think that's prudent at this stage, but absolutely stabilize and then optimize on all our whiteboards and our office here in Chicago.
Okay. And then the second question, at the high-end, Rochester's 2019 production guidance is pretty much roughly flat with '18. And you've got the HPGR unit that will go into effect that should benefit the second half of the year. So I was just wondering when you talked about that 45%, 55% split company-wide, how would you address that just for Rochester?
Yes. So production will be stronger in the second half as we've been sort of guiding over the morning here. And obviously, as we get this unit in, leading to higher recoveries, that timing is in the second quarter, that will facilitate and improve production profile in Q3 and Q4. From a -- were you looking for specifics around capital, like our split in capital?
Well, no. What I was trying to address is at the high end of your guidance, it's pretty much flat with '18 production, okay? And so I guess what I'm looking at is you've got the benefit of the high pressure grinding roll in the second half. And I understand that the second half is supposed to be up a little bit. But I mean, should we imply kind of a weak first half, just given the fact that you're getting all that squared away? Weaker than, say, what maybe we saw in some of the quarters in '18? And then a really robust second half? Or -- I was just trying to kind of get the magnitude and the difference between the first half, second half.
Yes. So just going back a little bit, we shut down 1 of our 2 crushing plants last year. So the tons we placed out on our leach pads there has gone down and really won't return back to strong levels until after this upgrade has been completed. So we will go through a lull here in the first half of the year in terms of overall production, so we are seeing a pretty strong second half to the year.
Okay. And then I think I understand the increases and decreases in capital spending at each mine versus '18, with maybe the exception of Palmarejo. So I was just wondering is the increase there due mainly to the underground development that the La Nación deposit?
Yes. You've got it there, Mark. I think last year, our total capital was right at $30 million. This year, guidance is $40 million to $45 million. And I think Nación is about $10 million associated with that. So much of what we have at CapEx -- have in CapEx at Palmarejo is underground development. And I think that's $25 million or so at just Independencia and Guadalupe. And then you add in the additional capital required to get Nación up and going and that gets you right into the guidance range for 2019.
The next question comes from Brian MacArthur of Raymond James.
I have a few questions and they mostly focus on Silvertip. So just one of the other comments was made earlier about efficiently placing concentrate going forward once you get up and running. Are you -- because it's been slower than expected, was that stuff committed, so that you've had penalties in the fourth quarter and the first quarter by not delivering stuff into contracts? Or is it sort of still open contracts where there's like no penalties involved and you just ship it as you get it now?
Brian, it's Tom Whelan. So when we bought Silvertip, we inherited long-term offtake agreements. And we have not been able to deliver into those offtake agreements because they anticipated much higher concentrate grades. So we've been working with the offtaker to find happy homes for this. And I wouldn't say we're incurring penalties per se. We're just having to pay maybe a teeny bit more than benchmark terms just because of the lower quality of concentrate grades that we've had. So no penalties. I would -- for purposes of 2019, Terry and the team at Silvertip -- again, music to my ears is seeing those concentrate grades go up. And so we should be able to -- we may be able to deliver into this contract. We'll wait and see. But certainly, we'll be achieving benchmark terms at worst in 2019.
Great. Okay. That's very helpful. It's just hard, I got to be honest, the accounting for Silvertip in the fourth quarter is a bit hard to follow, at the end of the day, exactly what was going on there. So second thing then, just as far as other cash flow this year. So technically, when you get to 1,000 tons, you still have to make the $25 million payment, right, for back to the JDS?
Yes. Tied to the receipt of that permit. And that's $25 million. 25% in shares, 75% in cash. And I think that's due 15 days after receipt of that permit.
So it's not like it has to be sustained. It's just purely a permit thing. It's not even if you can sustain it at 1,000 tons, right? You pay it at the time you get the permit. There's no like ramp-up or execution time period that you have to hit or anything? It's purely a permit-related thing?
Okay. Second thing then, you also -- do you still get the -- and I apologize if I mispronounce it, the Manquiri note receivable I think was coming in, in the third quarter of this year, is that still right?
That's right. Yes. There are 2 things still sort of -- that lie ahead there. One is the repayment of the remaining balance of the note, which I believe is $6 -- $10 million. I think it's $6 million. And then there's an NSR that's attached to the mill there. And that will start kicking in -- I think it's in September. So we'll be entitled to a stream of cash flow out of that 2.5% NSR, but the last biggest chunk is that remaining note balance.
Right. And then I guess, the third component of what I would call it -- I mean, if I read the financials right, I think both the receivable and the payout are in the current assets and liabilities, which makes sense for me, so that I can net cash them out. The final payment, though, on the Silvertip deal based on reserves, which I think is done at the end of December 31 this year, right? Is that -- the question I have here is -- really is that on the balance sheet anywhere? It didn't look like it was in current assets and current liabilities, but it may be in these other long-term liabilities, which there's no subnote to?
Correct. You got it, Brian. It's in other long-term liabilities. And when we acquired -- when we made the acquisition, we set up the liability for the full $25 million because that's our expectation that we'll owe it. And we're just slowly -- so I'm pointing at an accountant here. We had to discount it at the time we acquired it and we're slowly accreting it up to that $25 million at December 31. So actually, it'll -- again, astute observation. It will move to current as part of our Q1 results.
But then you may not actually pay the $25 million depending on what happened, right? So then it may go back -- that's the maximum. So you fully accrued for the -- well, best case, worst case, I guess, whichever way you look at it?
No. Our best estimate -- again, and we could go on about our confidence about the ore body, our best estimate is we'll owe the full $25 million.
There are no other questions at this time. This concludes our question-and-answer session. I would like to turn the conference back over to Mitchell Krebs for closing remarks.
Okay. Well, thanks. We appreciate everyone's time this morning. I know it's a busy day. We look forward to speaking with you again in the springtime to discuss our first quarter results. So thanks again, and have a good day.


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