Coeur D Alene Mines Corp (Other) (DEFA14A)
October 22 2007 - 6:05AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
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COEUR DALENE MINES CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Date Filed:
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TABLE OF CONTENTS
Creating the Undisputed Leader in Silver
October 2007
NYSE: CDE
TSX: CDM
www.coeur.com
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Coeur d'Alene Merger with
Bolnisi and Palmarejo
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5
Transaction Summary
Transaction Overview: - May 3, 2007 Coeur announced it had entered into agreements to merge with
Bolnisi Gold NL and Palmarejo Silver and Gold Corporation
Transaction approved and recommended by all 3 boards, as well as Palmarejo's special
committee of independent directors
Bolnisi's Independent Expert has declared the scheme "fair and reasonable" and in the best interest of shareholders
Consideration Offered1: - 272 million Coeur shares2
- Total transaction value of approx US$1.1 billion
- % Ownership 50.7:49.3 (Existing Coeur shareholders: PJO/BSG shareholders)
- Premium of 14% to the 60 day volume weighted average price of Bolnisi shares
- Premium of 32% to the 60 day volume weighted average price of Palmarejo shares
Exchange Ratio: - 2.715 Coeur shares for each Palmarejo share
- 0.682 Coeur shares for each Bolnisi share
Structure: - Plan of arrangement with Palmarejo
- Scheme of arrangement with Bolnisi
Call options: - Over 19.9% of Bolnisi from Bolnisi directors
Transaction Approvals : - 3/4 vote of Bolnisi shareholders, 2/3 vote of Palmarejo shareholders, >50% by
Coeur shareholders
Other Items: Break-up fee 1% of consideration
Note:
1 Based on Coeur last price at close on May 2, 2007 of $4.05; Consideration also includes a nominal amount of cash for each Bolnisi and Palmarejo share.
2 Reflects Coeur shares to be issued in exchange for existing outstanding Bolnisi and Palmarejo shares and in-the-money options. 7.9 million additional shares may
be issued in connection with outstanding Palmarejo warrants.
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7
Transaction Milestones
Milestone Date
Coeur preliminary proxy statement filed with SEC
Record Date September 24
October 19
Coeur Shareholder vote December 3
Bolnisi Shareholder vote December 4
Palmarejo Shareholder vote December 4
Transaction closing/issuance of Coeur shares to Bolnisi & Palmarejo shareholders Week of December 17th
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11
Compelling Benefits
Transaction positions the New Coeur as the undisputed leader in silver
Coeur gains an important strategic position in Mexico - the world's leading primary silver mining
jurisdiction
Silver production growth of 142% and gold production growth of 65% between 2007 and 20091
55% reduction in Coeur's expected 2009 cash costs after credits1
Adds substantial exploration/expansion potential to Coeur's existing portfolio
Coeur's underground and open-pit expertise allows for optimization of the high-grade Palmarejo silver
and gold deposits
Opportunity for all shareholders to participate in the development of the Palmarejo Project and Coeur's
existing project pipeline through ownership of New Coeur stock - the world's premier silver play
1 Coeur management estimates, based on Palmarejo preliminary assessment completed on September 17, 2007
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13
Strategically Positioned Portfolio
Rochester Mine, Nevada
Reserves: 2.4 Moz Silver
26 koz Gold
Est. Production:1 4.3 Moz Silver
63 koz Gold
Cerro Bayo Mine, Chile
Reserves: 9.3 Moz Silver
157 koz Gold
Est. Production:1 2.3 Moz Silver
54 koz Gold
Martha Mine, Argentina
Reserves: 7.6 Moz Silver
Est. Production:1 2.9Moz Silver
Endeavor, Australia
Reserves: 32.0 Moz Silver
Est. Production:1 0.6 Moz Silver
Broken Hill, Australia
Reserves: 18.0 Moz Silver
Est. Production:1 1.8 Moz Silver
Palmarejo Project, Mexico
M&I Resources: 88.7 Moz Silver
1.0 Moz Gold
Inferred: 61.4Moz Silver
Resources: 0.7 Moz Gold
Est. Production:1 10.4 Moz Silver
115 koz Gold
Kensington Project, Alaska
Reserves: 1.4 Moz Gold
Est. Production:1 120 koz Gold
San Bartolome Project, Bolivia
Reserves: 155.4 Moz Silver
Est. Production:1 6-9 Moz Silver
1 Management estimate of 2007 production except for:
Palmarejo: average of first five years' of production derived from Coeur's Preliminary Assessment of the project
Kensington: management's estimates of life of mine average production once operational
San Bartolome: management's estimates of life of mine average production range once operational
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15
New Projects Driving Growth
Silver Production Profile 2007-20091
1 Coeur management estimates, based on Palmarejo preliminary assessment completed on September 17, 2007
Gold Production (koz) 121 78 199
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Creating Largest Primary Ag Producer
Note:
1 Analyst estimates, does not include base metals. Coeur management estimates, based on Palmarejo preliminary assessment completed on September 17, 2007
2 Company has announced silver production to increase to 23 million ounces by 2009.
Silver Production (20091)
Gold Production (koz) 199 0 0 124
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19
Generating Industry Leading Growth
Note:
1 Analyst estimates, does not include base metals.
2 Represents compound annual growth rate for 2 years from 2007-2009.
3 Coeur management estimates, based on Palmarejo preliminary assessment completed on September 17, 2007
Silver Production Growth (2007-20091,2,3)
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Delivering Low-Cost Ag Production
Sources:
1 Coeur management estimates, based on Palmarejo preliminary assessment completed on September 17, 2007
2 Based on analyst estimates.
3 All cash costs are net of credits
Cash Costs (2009E)
1
2
2
2
2
(3)
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23
Note:
1 Company announcements and SEDAR filings. Mineral resources refer to measured and indicated mineral resources and are in addition to mineral reserves.
Silver Mineral Reserves and Mineral Resources
Leading Silver Resource Base
Inferred Silver
Mineral
Resources (M
oz
)
Inferred
Resources
111.3
2
51.2
59.9
Gold
Mineral
Resources (koz)
Inferred
1,1
4
1
197.8
228.1
Measured
&
Indicated
1,893
243.4
249.4
Gold Mineral Reserves (koz)
Proven & Probable
1
,
546
704.8
607.6
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25
Leader in Silver Exploration
Outstanding exploration success at existing operations during past year:
51% increase in silver mineral reserve ounces at Cerro Bayo
25% increase in silver mineral reserve ounces at Martha
29% increase in gold mineral reserve ounces at Kensington
Additional 30 million contained ounces of indicated silver mineral resources at San Bartolome
Exploration expertise of combined company will focus on continued resource growth at Palmarejo:
16 km of strike identified on six main structured trends
Zones between defined mineralization untested
New targets with similar alterations to Guadalupe un-drilled
Current resource derived from only 30% of total tenement
Recent doubling of silver and gold resources at Guadalupe underscores exploration potential
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Source: Bloomberg
1 Liquidity calculated by adding average daily volumes by share by exchange for all exchanges where each company listed for the period 28th April 2006 - 27th April 2007.
2 Converted prices to USD on spot daily spot rate
3 New Coeur calculated by combining the historical liquidity of Palmarejo, Bolnisi and Coeur for the period 28th April 2006 - 27th April 2007.
4 Days to turn float calculated by the end of period shares divided by average daily volume. Only Coeur trading history was used to make this calculation for New Coeur.
Liquidity - Trading volume
Liquidity - Days to turn float
Expected to Maintain Market Leading Liquidity
(1) (2)
(1) (2)
(4)
(3)
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Sufficient Funds to Execute Growth
Cash Flow profile1
Management estimates, based on anticipated startup at San Bartolome in February 2008, at Palmarejo in 2009 and production from Kensington in 2009.
Based on Palmarejo preliminary assessment completed on September 17, 2007. Assumes analyst consensus prices for gold and silver
Cash, cash equivalents, and marketable securities
12/31/09
12/31/07
2
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Strong Silver Fundamentals
Macro drivers:
Weak dollar
Inflation concerns
Strong economic growth - China and India in particular
Silver supply:
Above ground stocks sharply reduced to only 400Moz, from over 1 Bn oz a decade ago
Future mine supply growth is flat, driven by under-funded exploration
New mines do not fully replace decline in production from older operations
Silver demand:
World's most widely-used metal
50% of demand derived from industrial sector
Silver is the most efficient conductor of electricity, driving electronics applications
Medical applications are an increasingly important source of demand
Renewed interest in silver from investors
ETF have amassed > 140 Moz (25% of annual worldwide production)
3 more ETFs planned to launch soon
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The Undisputed Leader in Silver
Three new world-leading mines provides unparalleled growth profile:
Silver production growth of 142% and gold production growth of 65% between 2007 and 20091
Industry-leading cash costs:
55% reduction in Coeur's expected 2009 cash costs after credits1
Substantial silver resource base with potential for further growth
Successful exploration track record & commitment to continue adding new low-cost ounces
Financial strength:
Operating cash flow expected to more than double1
Sufficient capital in place to deliver growth1
Unrivaled liquidity and leverage to strong silver fundamentals
1 Coeur management estimates, based on Palmarejo preliminary assessment completed on September 17, 2007
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Appendix A - Overview of Coeur
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Overview of Coeur Today
Incorporated in 1928; listed on NYSE since 1990
Market capitalization of approximately $1 billion
Diversified portfolio of assets:
5 operating projects
3 development projects
Aggressive exploration program
Silver mineral reserves in excess of 224 million ounces
Gold mineral reserves in excess of 1.5 million ounces
2006 production of 12.8 million ounces of silver and 116,000 ounces of gold - growing to nearly 30
million ounces of silver in 2009 with the addition of the Palmarejo project1
Unhedged production - fully leveraged to silver and gold prices
The most liquid silver stock
Note:
1 Assumes the Palmarejo transaction is approved by shareholders and the transaction is completed; Coeur management estimates, based on Palmarejo preliminary
assessment completed on September 17, 2007
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Coeur's Evolution
Note:
1 Coeur Annual Reports/10-Ks for 2000 and 2006; management estimates for 2009; 2000 cash costs exclude primary gold mines.
2 Assumes the Palmarejo transaction is approved by shareholders and the transaction is completed and that production from Palmarejo, Kensington, and San
Bartolome begin as scheduled.
3 Last price on final trading day of calendar year.
2000
2006
20092
Operating mines
Silver Production1
Cash costs1
Share price3
Net cash/(debt)1
Rochester, Nevada
Silver Valley, Idaho
Fachinal, Chile
Petorca, Chile
Rochester, Nevada
Cerro Bayo, Chile
Martha, Argentina
Endeavor, Australia
Broken Hill, Australia
Rochester, Nevada
Cerro Bayo, Chile
Martha, Argentina
Endeavor, Australia
Broken Hill, Australia
San Bartolome, Bolivia
Kensington, Alaska
Palmarejo, Mexico
12.8 million ounces
>28 million ounces
11.7 million ounces
$4.24 per ounce of silver
$3.33 per ounce of silver
<$2.00 per ounce of silver
$0.94
$4.95
($180m)
$160m
N/A
N/A
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Adding Value to Acquisitions
Coeur has an excellent track record for delivering added value from its asset base
Acquired 1985
Total Acquisition Cost: US$50 million
Net Cash Flow to Date: US$180 million (1997-date)
Acquired 2005
Total Acquisition Cost: US$39 million (US$15 million to date)
Net Cash Flow to Date: US$11 million; >60% of invested capital recouped in 28 months
Acquired 2005
Total Acquisition Cost: US$36 million
Net Cash Flow to Date:US$35 million; >95% of invested capital recouped in 24 months
Broken Hill
Endeavor
Rochester
Acquired 2002 (Martha) and 1990 (Cerro Bayo)
Total Acquisition and Development Cost: US$48 million
Net Cash Flow to Date: US$79 million
Cerro Bayo1
&
Martha
Total Acquisition Cost = Purchase Price, plus capital expenditure required to initial productions.
Net Cash Flow to Date = Profit plus depreciation and amortization less capital expenditure.
1 Operations commenced in 2002; processing facility constructed in 1990.
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Competitive Advantages
Senior management possesses over 300 years of combined global mining experience
Near-term internal growth initiatives complemented by development of two new mines and
aggressive exploration program
In an environment of rising input costs, cash operating costs have been well controlled
Proven track record of exploration success, delivering significant increases in mineral reserves
and resources at existing operating projects
Exploration
Expertise
Effective Cost
Control
Balanced Growth
Pipeline
Management Depth
Current portfolio of five mines are all low cost, high rate of return assets located in leading
mining jurisdictions
Attractive Portfolio
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Strong Management Team
Dennis Wheeler
Chairman, President and
Chief Executive Officer
s
Chairman since 1992, 30 years with company overseeing growth from single
, non
-
operating
asset company to largest primary silver producer in the world, as well as
overseeing listing on NYSE
; ha
s completed a number of mergers and acquisitions
Jim Sabala
Executive Vice President and
Chief Financial Officer
s
First joined Coeur in 1981;
during his tenure has completed
numerous
financings
,
raising over $1 billion, including secondary offerings
of Coeur's NYSE listed shares
Richard Weston
Senior Vice President,
Operations
s
Responsible for operations of all five of Coeur's existing projects
and
designated
operation
al responsibility for Kensington, San Bartolome and
Palmarejo
projects
;
33
y
ears of
both
operational and
project
development experience
Alan Wilder
Senior Vice President,
Project Development
s
More than 35 years of mining experience, including senior mine engineering and
construction management at world
-
wide mines for Coeur,
Glamis Gold, Cyprus Amax
Copper, Newmont and Bechtel; responsible for successful development of all of
Coeur's existing projects
Don Birak
Senior Vice President,
Exploration
s
Over 29 years of global experience in mining; designs and manages all aspe
cts of
Coeur's global exploration activities and has overseen continued growth in resources
and reserves; co
-
recipient of the Prospectors and Developers Association of Canada
Bill Dennis Prospector of the Year Award in 2001
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Strong Operating Assets
Rochester Mine, Nevada
Cash costs below $1.00/oz in
2007 due to transition to
processing activities only
Continued metal production
expected through 2011
Expect 4.3 Moz silver and
63,000 gold production in 2007
Cerro Bayo Mine, Chile
Low cost silver production
64% increase in silver
mineral reserves (6/30/07 vs.
12/31/06)
Expect approx. 2.3 Moz
silver and approx. 54,000 oz
gold production in 2007
Continued exploration
success
Martha Mine, Argentina
Among world's highest silver
grades; 49% increase in silver
mineral reserves (6/30/07 vs.
12/31/06)
Expect nearly 2.9 Moz silver
production in 2007
New flotation mill to be completed
by end 2007
Continued exploration success
Endeavor, Australia
Low-cost, long-life silver
production
38% increase in silver
mineral reserves (6/30/06 vs.
6/30/05)
Expect 600,000 oz silver
production in 2007
Broken Hill, Australia
Low-cost, long-life silver
production
20% increase in silver
mineral reserves (6/30/06 vs.
6/30/05)
Expect nearly 1.8 Moz silver
production in 2007
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Cerro Bayo Underground Mine
2006 production
2.3 million silver ounces
(18% of company total)
41,000 gold ounces (35% of company total)
2006 cash costs
US$3.04 per silver ounce (net credits)
Commenced production in June 2002 (3 yrs mineral reserves)
Maintained consistent mine life based on mineral reserves, annual
discoveries and conversion of resources to reserves
Landholding of over 107 square miles (277 square kilometers)
Over 50 major veins discovered to date
Consistent track record of discovery to support continued production
New discoveries of Dagny, Cascada and Fabiola vein systems
Proven and probable silver mineral reserves increased to 9.3 million
contained ounces as of June 30th, 2007, an increase of 51% compared to
December 31st, 2006 levels
Cerro Bayo,
Chile
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Martha Underground Mine
2006 production
2.7 million silver ounces
(21% of company total)
3,000 gold ounces (3% of company total)
2006 cash costs
US$4.88 per silver ounce (net credits)
Acquired in April 2002 for US$2.5 million with mineral
resources of 2.5 million silver ounces
Over 11 million silver ounces mined since acquisition
2007 exploration success resulted in 25% increase in
proven and probable silver mineral reserves to 7.6 million
contained ounces, versus December 31, 2006 levels
Presently constructing US$14 million 240 tpd, stand-alone mill
due to continued exploration success; on track to be
completed by end 2007
Highest-grade silver property in Coeur's portfolio
Martha,
Argentina
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Rochester Open Pit Mine
2006 production
5.1 million silver ounces
(40% of company total)
71,900 gold ounces (62% of company total)
2006 cash costs
US$2.80 per silver ounce (net credits)
World's largest open pit primary silver mine and eighth
largest primary silver mine
Mining activities ceased in August 2007
Residual leaching to continue to recover metal to
2011 at extremely low cash costs
Commenced production in 1986 with five-year mine life
Produced 120 million ounces of silver and over
one million ounces of gold during 21 year mine life
New exploration initiative underway to extend mine life through mineral resource conversion, testing
of new targets with potential for high-grade silver and gold deposits recovery of ore-grade material
from screening and reclamation of waste rock
Rochester Mine,
Nevada
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Broken Hill Underground Mine
2006 production
2.2 million silver ounces
(17% of company total)
Acquired silver reserves and production up to
17.2 million payable silver ounces in Sept. 2005
Purchase price of US$36 million
Has generated net cash flow >95% of original
investment
Attractive acquisition terms:
<1.0x NAV, $4.40/oz TAC, 3.1x EBITDA
Low-cost production
Coeur pays project operator (Perilya Limited)
US$2.00/oz plus smelting and refining costs, plus a
capped incentive linked to production targets 1
20% increase in mineral reserves from June 30th, 2005 to
June 30th, 2006
High level of confidence that cap will be reached
Broken Hill,
Australia
1 Based on terms set forth in the silver sales agreement dated 8 September 2005
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Endeavor Underground Mine
2006 production
0.50 million silver ounces
(4% of company total)
Acquired silver reserves and production up to 20 million
payable silver ounces in May 2005
Purchase price of US$39 million (US$15m paid to date)
Generated almost US$11 million of net cash flow to date
Attractive acquisition terms:
<1.0x NAV, $3.50/oz TAC, 6.8x EBITDA
Zinc/lead/silver mine operated by CBH Resources Ltd
Coeur pays CBH US$1.00/oz plus smelting and refining
costs plus 50% of difference between spot price and
US$7.00/oz, payable once 2m ounces are received 1
Coeur pays CBH US$0.25/oz for reserves increases
39% increase in mineral reserves from June 30th, 2005 to June
30th, 2006
High level of confidence that cap will be reached
Endeavor,
Australia
1 Based on terms set forth in the amended silver sales agreement dated 28 March 2006
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San Bartolome Surface Silver Mine
Largest pure silver mine in the world
Production on schedule for
February 2008 startup
Initial annual production of 9 million silver ounces
Estimated mine life of 14 years
Estimated cash costs of US$4.00 per ounce
Estimated capital expenditures of US$130 million
in 2007
Safety leader with over 1.3 million man hours without
a lost time accident
Silver mineral reserves increased by 3.5 million
ounces to a total of 155.4 million ounces as of June 30th, 2007
Additional indicated mineral resources increased to
32.3 million silver ounces from 160,000 ounces as of June 30th, 2007
Proceeding toward tax certainty
Legislation passed by Bolivian lower house, now in front of Senate
50/50 split of net profits; recognition of value added contribution
VAT tax and import duty exemptions granted by Bolivian government
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Kensington Underground Gold Mine
Estimated annual production of
150,000 gold ounces in initial years
Estimated cash costs of $310 per
gold ounce in early years
10-15 year mine life
Estimated capital expenditure of US$238
million; >90% complete
All construction activities complete except for
tailings storage facility
Environmental groups have announced
desire to co-operate on tailings plan
Overwhelming community support
Exploration activities during 2006 increased
overall grade 25% and added 300,000
ounces to mineral reserves
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Significant Mineral Reserves and Resources (Current)
Silver (millions ounces)1
Gold (thousand ounces)1
Note:
1 Sourced from Coeur technical reports, 10-Qs and other public disclosure.
Additional
Mineral
Resources
Additional
Mineral
Resources
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Strong Portfolio Management
Note:
1 Sourced from Coeur technical reports, 10-Ks, 10-Qs and other public disclosure.
2 Combined Endeavor and Broken Hill, Silver Valley sold for a profit of $15m.
Production and Cash Cost 1
Sale of high
cost Silver
Valley
operations
Replacing older, higher cost mines with lower cost operations
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Effective Cost Control
In an environment of rising input costs, Coeur has reduced cash costs
Cash cost increases1,2
Note:
1 Based on 10-Q disclosure for each company.
2 Represents cash costs before credits.
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Strong Cash Flow Generator
Re-engineered portfolio well positioned to exploit record metals prices
Note:
1 Coeur 10-Q and 10-K disclosure.
2 Defined as net revenue less direct production costs.
2
Annual Financial Performance
(1)
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Appendix B - Overview of Palmarejo Project
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73
Located in Mexico's premier silver district in
Chihuahua and the Sierra Madre belt
Land holdings cover more than 12,100 hectares
Tremendous exploration potential
Substantial findings to date
Significant potential for future discoveries
Current M&I resource
88.7 Moz Ag
1.0 Moz Au
Current Inferred resource
61.4 Moz Ag
0.7 Moz Au
Initial reserves expected at year-end
Construction underway
Production expected to begin in 2009
Palmarejo Project Overview
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Palmarejo Project Development
Coeur is evaluating its preferred combined open pit and underground mine plan for Palmarejo
Based on its extensive underground mining experience, Coeur believes that this approach will
optimize production at the Palmarejo Project, delivering a wide range of benefits:
Extended mine life
Reduced strip ratio
Access higher grade materials earlier
Flexibility to change target mining areas as new information becomes available
Reduced environmental risk with less waste produced and single tailings dam
Joint Coeur - Bolnisi/Palmarejo Project Development Committee ('PDC') established to oversee
project development until transaction close
Coeur is already taking a major role in development of Palmarejo, with a highly experienced team
on site including Coeur Technical Director and project manager, Stuart Mathews
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77
5.2 million recovered silver ounces
74,000 recovered gold ounces
Underground
5.1 million recovered silver ounces
41,000 recovered gold ounces
Open Pit
$203 million
Initial Capital Costs
$253 million
Life of Mine Capital Costs
9 years
Mine Life1
2,000 tonnes underground
2,400 tonnes open pit
Mine Throughput (tonnes per day) 1
Estimated Average Annual Production1:
Total Est. Avg Operating Costs1:
Preliminary Assessment
($0.41) per recovered silver ounce
Note:
Reflects initial five years of mining of Measured and Indicated Resources; cash costs net of credits. Mineral resources that are not mineral reserves do not
have demonstrated economic viability.
10.4 million recovered silver ounces
115,000 recovered gold ounces
Total
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79
Capital Costs
Coeur's estimate of capital costs is set out below:
US$m Expenditure to First Production Life-of-Mine Expenditure
Process and ancillary facilities 67.0 67.0
Tailings and environmental dam 20.0 40.0
Workforce camp 6.0 6.0
Line power 9.0 9.0
Owner costs 15.0 15.0
Open pit mine capital costs 25.7 25.7
Underground mine capital costs 29.9 61.0
Total 172.6 223.7
Contingency 30.0 30.0
Total (including contingency) 202.6 253.7
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83
Exploration Potential
16 km of strike identified on six main structured trends
Zones between defined mineralization untested
New targets with similar alterations to Guadalupe un-drilled
Guadalupe contains 38.9m ounces of silver and 400,000 ounces of gold resources
Current resource derived from only 30% of total tenement
Recent resource update at Guadalupe underscores exploration potential of the property1:
Inferred silver resources increased by nearly 80%
Inferred gold resources increased by over 100%
Addition of 3.8 million ounces of silver upgraded from inferred to indicated resources
Note:
Reflects Palmarejo Updated Resource Statement - September 2007
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85
Significant Exploration Upside
$40m spent to date
Only ~30% of Palmarejo tenements have been explored
Palmarejo Trend
Long NW-SE structure
Dips SW
Multiple ores shoots (clavos)
Guadalupe Trend
Long NW-SE structure
Dips NE
Multiple clavos
La Patria Trend
Higher Au:Ag
Near surface potential (+200m)
|
87
Historical Silver Mineral Resources
Palmarejo - Generating Resource Growth
Exploration has delivered strong growth and increased confidence in the mineral resources
50% compound annual growth rate in mineral resources since 2004
Nearly 60% in measured and indicated categories
Inferred mineral resources increased by nearly 20 million Ag ounces in 2007
Mineralization remains open for expansion
|
Appendix C - Silver Fundamentals
|
91
Strong Fundamentals Underpin Silver
Silver has outperformed gold in the current cycle, driven by favorable fundamentals
The silver supply/demand balance in in deficit - for the 15th year running
Supply
Above ground stocks sharply reduced to only 400Moz, from over 1 Bn oz a decade ago
Future mine supply growth is flat, driven by underfunded exploration
New mines coming on-stream do not fully replace decline in production from older operations
Demand
50% of demand has been from the industrial sector
Decline in demand from photographical applications balanced by reduced scrap availability,
new demand sources
Medical applications are an increasingly important source of demand
Silver is the most efficient conductor of electricity, driving electronics applications
Renewed interest in Silver from Investors: ETF have amassed > 140 Moz (25% of annual
worldwide production), and 3 more ETFs planned to launch soon
|
93
Demand Driven by Industrial Uses
World Silver Consumption by Segment, 2006
(Total demand: 912 million ounces) 1
Note:
1 World Silver Survey 2007, published by The Silver Institute.
|
95
Demand Exceeds Primary Supply
Fabrication demand vs. mine production1
Note:
1 World Silver Survey 2007, published by The Silver Institute.
|
97
Above Ground Silver Stocks Declining
Identifiable Silver Bullion Stocks 43% below levels of 10 years ago1
Note:
1 World Silver Survey 2007, published by The Silver Institute.
|
Appendix D - Reserves and Resources
|
101
Mineral Reserves correspond to Ore Reserves per US SEC classification. Metal prices used to determine ore reserves were $8.00/oz. Ag and $475.00/oz. Au at Rochester; $10.00/oz
Ag at Endeavor; $10.00/oz Ag and $550.00/oz. Au at Cerro Bayo and Martha; $10.12/oz Ag. at Broken Hill; $8.00/oz Ag at San Bartolome; and $550.00/oz Au at Kensington. Endeavor
and Broken Hill reserves are as of June 30, 2006. A detailed discussion of the assumptions, parameters, methods and other factors used to calculate the reserves disclosed herein are
contained in the most recent technical report for each of the respective properties listed above. The technical reports have been prepared in accordance with National Instrument 43-
101 and are available for review on SEDAR.
Mineral Reserves; Current
Probable Mineral Reserves
Grade
(oz/ton)
Ounces
(000's)
Property
Location
Short tons
(000's)
Silver
Gold
Silver
Gold
Rochester
Nevada, USA
-
-
-
-
-
Cerro Bayo
Chile
552.3
7.74
0.134
4,275
74
Martha
Argentina
80.1
61.
52
0.082
4,930
6.6
San Bartolo
me
Bolivia
46,08
1
3.37
-
155,389
-
Kensington
Alaska, USA
4,419
-
0.306
-
1,352
Endeavour
Australia
11,700
1.40
-
16,563
-
Broken Hill
Australia
2,840
1.18
-
3,368
-
184,525
1,433
Proven Mineral Reserves
Grade
(oz/ton)
Ounces
(000's)
Property
Location
Short tons
(000's)
Silver
Gold
Silver
Gold
Rochester
Nevada, USA
3,720
0.66
0.007
2,436
26
Cerro Bayo
Chile
598.
5
8.3
8
0.139
5,017
83
Martha
Argentina
33.6
78.
70
0.116
2,646
3.
9
San Bartolome
Bolivia
-
-
-
-
-
Kensington
Alaska, USA
-
-
-
-
-
Endeavour
Australia
9,700
1.60
-
15,420
-
Broken Hill
Australia
10,060
1.46
-
14,648
-
40,167
112.9
|
103
Mineral resources are in addition to mineral reserves and have not demonstrated economic viability. A detailed discussion of the assumptions, parameters, methods and other factors
used to calculate the resources disclosed herein are contained in the most recent technical report for each of the respective properties listed above. The technical reports have been
prepared in accordance with National Instrument 43-101 and are available for review on SEDAR.
Mineral Resources; Current
Measured Mineral Resource
Grade
(oz/ton)
Ounces
(000's)
Property
Location
Short tons
(000's)
Silver
Gold
Silver
Gold
Rochester
Nevada, USA
12,304
0.94
0.
007
11,598
88
Cerro Bayo
Chile
45
9
8.87
0.15
1
4,070
70
Martha
Argentina
21.5
52.04
0.0
68
1,125
2
San Bartolome
Bolivia
-
-
-
-
-
Kensington
Alaska, USA
-
-
-
-
-
Endeavour
Australia
3,800
3
.00
-
11,259
-
Broken Hill
Australia
2,110
2.31
-
4,870
-
32,922
160
Indicated Mineral Resource
Grade
(oz/ton)
Ounces
(000's)
Property
Location
Short tons
(000's)
Silver
Gold
Silver
Gold
Rochester
Nevada, USA
2,931
0.92
0.007
2,705
21
Cerro Bayo
Chile
725
5.78
0.1
3
9
4,195
101
Martha
Argentina
35.3
80.07
0.0
78
2,110
2
San Bartolome
Bolivia
11,918
2.71
-
32,340
-
Kensington
Alaska, USA
3,136
-
0.
199
-
623
Endeavour
Australia
4,500
3.10
-
14,105
-
Broken Hill
Australia
1,510
1.96
-
2,956
-
58,411
747
|
105
Mineral resources are in addition to mineral reserves and have not demonstrated economic viability. A detailed discussion of the assumptions, parameters, methods and other factors
used to calculate the resources disclosed herein are contained in the most recent technical report for each of the respective properties listed above. The technical reports have been
prepared in accordance with National Instrument 43-101 and are available for review on SEDAR.
Mineral Resources; Current
Inferred Mineral Resource
Grade
(oz/ton)
Ounces
(000's)
Property
Location
Short tons
(000's)
Silver
Gold
Silver
Gold
Rochester
Nevada, USA
-
-
-
-
-
Cerro Bayo
Chile
1,145
8.40
0.155
9,606
17
8
Martha
Argentina
73.9
107.72
0.05
0
3,374
1.5
San Barto
lome
Bolivia
225
1.78
-
400
-
Kensington
Alaska, USA
1,184
-
0.205
-
243
Endeavour
Australia
1,100
2.5
0
-
2,765
-
Broken Hill
Australia
7,260
4.64
-
33,674
-
49,819
420
|
107
Mineral Reserves; Year-end 2005
Mineral Reserves correspond to Ore Reserves per US SEC classification. Metal prices used to determine ore reserves were $6.50/oz. Ag and $410.00/oz. Au except Endeavor which uses a
$7.06/oz Ag. Endeavor and Broken Hill reserves are effective as of June 30, 2005 and March 31, 2005, respectively. A detailed discussion of the assumptions, parameters, methods and
other factors used to calculate the reserves disclosed herein are contained in the technical report for each of the respective properties listed above. The technical reports have been prepared
in accordance with National Instrument 43-101 and are available for review on SEDAR. All 2005 reserve and resource statements are from continuing operations only.
Probable Mineral Reserves
Grade
(oz/ton)
Ounces
(000's)
Property
Location
Short tons
(000's)
Silver
Gold
Silver
Gold
Rochester
Nevada, USA
-
-
-
-
-
Cerro Bayo
Chile
496
7.48
0.13
3,712
64
Martha
Argentina
42
61.26
0.08
2,566
3
San Bartolome
Boliv
ia
46,176
3.29
-
151,882
-
Kensington
Alaska, USA
4,206
-
0.25
-
1,050
Endeavour
Australia
6,614
2.22
-
14,661
-
Broken Hill
Australia
2,998
1.27
-
3,822
-
176,643
1,117
Proven & Probable
210,475
1,300
Proven Mineral Reserves
Grade
(oz/ton)
Ounces
(000's)
Property
Location
Short tons
(000's)
Silver
Gold
Silver
Gold
Rochester
Nevada, USA
10,168
0.86
0.011
8,765
113
Cerro Bayo
Chile
439
8.58
0.15
3,764
68
Martha
Argentina
25
58.69
0.08
1,488
2
San
Bartolome
Bolivia
-
-
-
-
-
Kensington
Alaska, USA
-
-
-
-
-
Endeavour
Australia
5,512
1.58
-
8,681
-
Broken Hill
Australia
8,522
1.31
-
11,134
-
33,832
183
|
109
Mineral Resources; Year-end 2005
Mineral resources are in addition to mineral reserves and have not demonstrated economic viability. A detailed discussion of the assumptions, parameters, methods and other factors
used to calculate the resources disclosed herein are contained in the most recent technical report for each of the respective properties listed above. The technical reports have been
prepared in accordance with National Instrument 43-101 and are available for review on SEDAR. All 2005 reserve and resource statements are from continuing operations only.
Indicated Mineral Resource
Grade
(oz/ton)
Ounces
(000's)
Property
Location
Short tons
(000's)
Silver
Gold
Silver
Gold
Rochester
Nevada, USA
3,912
1.03
0.01
4,018
39
Cerro Bayo
Chile
1,558
3.72
0.08
5,797
122
Martha
Argentina
17
31.21
0.04
516
1
Sa
n Bartolome
Bolivia
70
2.29
-
160
-
Kensington
Alaska, USA
617
-
0.44
-
269
Endeavour
Australia
1,102
2.39
-
2,636
-
Broken Hill
Australia
1,742
1.72
-
3,002
-
16,129
431
Measured and Indicated
55,066
634
Measured Mineral Resource
Grade
(oz/ton)
Ounces
(000's)
Property
Location
Short tons
(000's)
Silver
Gold
Silver
Gold
Rochester
Nevada, USA
11,734
1.03
0.01
12,051
117
Cerro Bayo
Chile
660
6.42
0.13
4,237
85
Martha
Argentina
25
38.46
0.05
975
1
San
Bartolome
Bolivia
-
-
-
-
-
Kensington
Alaska, USA
-
-
-
-
-
Endeavour
Australia
5,291
2.13
-
11,267
-
Broken Hill
Australia
5,655
1.84
-
10,407
-
38,937
203
|
111
Mineral Resources; Year-end 2005
Mineral resources are in addition to mineral reserves and have not demonstrated economic viability. A detailed discussion of the assumptions, parameters, methods and other factors
used to calculate the resources disclosed herein are contained in the most recent technical report for each of the respective properties listed above. The technical reports have been
prepared in accordance with National Instrument 43-101 and are available for review on SEDAR. All 2005 reserve and resource statements are from continuing operations only.
Inferred Mineral Resource
Grade
(oz/ton)
Ounces
(000's)
Property
Location
Short tons
(000's)
Silver
Gold
Silver
Gold
Rochester
Nevada, USA
-
-
-
-
-
Cerro Bayo
Chile
1,895
8.13
0.11
15,414
212
Martha
Argentina
93
49.8
0.06
4,611
5
San Bartolome
Bo
livia
1,096
3.52
-
3,851
-
Kensington
Alaska, USA
2,499
-
0.23
-
584
Endeavour
Australia
2,094
1.6
-
3,360
-
Broken Hill
Australia
3,428
2.17
-
7,429
-
34,665
801
|
113
Note:
1 Source: Palmarejo Updated Resource Statement - September 2007 - A 0.8 g/t AuEq cutoff has been applied to Palmarejo - only those blocks with higher interpolated grade than these
cut-offs have been included in the resource statement above.
2 Source: Palmarejo Updated Resource Statement - September 2007 - 0.8 g/t AuEq cut-off has been applied to Guadalupe to a depth of 150 meters below surface and a 2.5 g/t AuEq
cut-off has been applied for mineral resources occurring deeper than 150 meters below surface - only those blocks with higher interpolated grade than these cut-offs have been
included in the resource statement above.
3 Source: Palmarejo Updated Resource Statement - September 2007 - A 0.8 g/t AuEq cut-off has been applied to the La Patria resource estimate. Only those blocks with higher
interpolated grade than this cut-off have been included in the resource statement above.
Resources: Palmarejo
Resources
Palmarejo
1
Guadalupe
2
La Patria
3
Silver
(Oz)
Gold
(Oz)
Silver
(Oz)
Gold
(Oz)
Silver
(Oz)
Gold
(Oz)
Measured
32,520,000
367,000
0
0
0
0
Indicated
52,390,000
571,000
3,790,000
49,000
0
0
Subtotal
84,910,000
938,000
3,790,000
49,000
0
0
Inf
erred
22,290,000
203,000
35,120
,000
34
5,000
4,030,000
171,000
|
Appendix E - Cautionary Language
|
123
Cautionary Statement
This presentation contains forward-looking statements within the meaning of securities legislation in the United States and Canada including
statements regarding a possible transaction and anticipated operating results. Such statements are subject to numerous assumptions and
uncertainties, many of which are outside Coeur's control. Operating, exploration and other statements in this presentation are based on
information that Coeur believes is reasonable, but involve significant uncertainties affecting the business of Coeur, including, but not limited
to, future gold and silver prices, costs, ore grades, estimation of gold and silver reserves, mining and processing conditions, construction
schedules, currency exchange rates, and the completion and/or updating of mining feasibility studies, changes that could result from future
acquisitions of new mining properties or businesses, the risks and hazards inherent in the mining business (including environmental
hazards, industrial accidents, weather or geologically related conditions), regulatory and permitting matters, risks inherent in the ownership
and operation of, or investment in, mining properties or businesses in foreign countries, as well as other uncertainties and risk factors set
out in filings made from time to time with the SEC and the Ontario Securities Commission, including, without limitation, Coeur's reports on
Form 10-K and Form 10-Q. As disclosed in this presentation, there are risks that the parties will not proceed with the transaction, that the
ultimate terms of the transaction will differ from those that currently are contemplated, and that the results, developments and timetables
could vary significantly from the estimates presented. Readers are cautioned not to put undue reliance on forward-looking statements.
Coeur disclaims any intent or obligation to update publicly such forward-looking statements, whether as a result of new information, future
events or otherwise. Additionally Coeur undertakes no obligation to comment on analyses, expectations or statements made by third parties
in respect of Coeur, its financial or operating results or its securities or the possible transaction.
|
125
Cautionary Statement
Donald J. Birak, Coeur's Senior Vice President of Exploration, is the qualified person responsible for the preparation or supervision of the
scientific and technical information in this document. For a description of the key assumptions, parameters and methods used to estimate
mineral reserves and resources, as well as a general discussion of the extent to which the estimates may be affected by any known
environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant factors, please see the Technical Reports for each
of Rochester, Cerro Bayo, Martha, san Bartolome, Kensington, Endeavor and Broken Hill projects as filed on SEDAR at (www.sedar.com).
For a description of the key assumptions, parameters and methods used to estimate mineral resources for the Palmarejo project, please see
the Technical Reports as filed on SEDAR at (www.sedar.com).
This presentation uses the terms 'Measured", "Indicated" and "Inferred" Resources. U.S. investors are advised that while such terms are
recognized and required by Canadian regulations, the Securities and Exchange Commission does not recognise them. "Inferred Resources"
have a great amount of uncertainty as to their existence and as to their potential economic and legal feasibility. It cannot be assumed that all
or any part of an inferred resource will ever be upgraded to a higher category.
The definitions of proven and probable mineral reserves under Canadian National Instrument 43-101 are substantially identical to the
definitions of such ore reserves under Guide 7 of the SEC's Securities Act Industry Guides. Mineral resources are in addition to mineral
reserves and have not demonstrated economic viability.
Under Canadian rules, estimates of Inferred Resources may not form the basis of a pre-feasibility or feasibility study. U.S. investors are
cautioned not to assume that all or any part of Measured or Indicated Resources will ever be converted into reserves. U.S. investors are also
cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is potentially economical or legally mineable.
|
127
Additional Information
The definitive proxy statement that Coeur has filed with the United States Securities and Exchange Commission ("SEC") and Canadian
securities regulators and mailed to its shareholders contains information about Coeur, Bolnisi, Palmarejo, the Palmarejo Project, the
proposed transaction and related matters. Shareholders are urged to read the definitive proxy statement carefully, as it contains important
information that shareholders should consider before making a decision about the proposed transaction. In addition to receiving the
definitive proxy statement from Coeur by mail, shareholders may also obtain the definitive proxy statement, as well as other filings
containing information about Coeur, without charge, from the SEC's website (www.sec.gov) and the Canadian securities regulators' website
(www.sedar.com) or, without charge, from Coeur. Coeur and its executive officers and directors may be deemed to be participants in the
solicitation of proxies from Coeur's shareholders with respect to the proposed transaction. Information regarding any interests that Coeur's
executive officers and directors may have in the proposed transaction is set forth in the definitive proxy statement. The Coeur shares to be
issued in the proposed transaction have not been and will not be registered under the Securities Act of 1933, as amended, and may not be
offered or sold in the United States absent registration or an applicable exemption from registration requirements. Coeur intends to issue
such Coeur shares pursuant to the exemption from registration set forth in Section 3(a)(10) of the Securities Act.
Copies of the merger implementation agreements and certain related documents have been filed with the SEC and Canadian securities
regulators and are available at the SEC's website at (www.sec.gov) and at the Canadian securities regulators' website at (www.sedar.com).
|
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