Coeur d’Alene Mines Corporation (NYSE:CDE) (TSX:CDM) (ASX:CXC)
today announced record silver production of 5.2 million ounces
during the third quarter of 2009. This record production represents
an 86% increase compared to last year’s third quarter and was
driven by Coeur’s two new large, long-life mines - San Bartolomé in
Bolivia and Palmarejo in Mexico - which combined for a total of 3.4
million ounces of silver production, or 65% of the Company’s total
silver production, during the third quarter. Gold production also
increased dramatically due to the continued ramp-up of production
at Palmarejo, which produced 24,289 ounces during the quarter.
The Company also reported record quarterly revenue of $89.8
million, a 146% increase over last year’s third quarter revenue,
along with quarterly operating cash flow of $23.0 million compared
to $1.2 million of operating cash flow during last year’s third
quarter.
“Our third quarter results continued to highlight the Company’s
dramatic growth and successful transition to its new, long-life
mines. As the Palmarejo silver and gold mine in Mexico continues to
ramp up its production levels and as we look ahead to the
Kensington gold mine in Alaska contributing production and cash
flow next year, we look forward to continuing to deliver strong
operational and financial results for our shareholders,” said
Dennis E. Wheeler, Chairman, President and Chief Executive Officer.
“Silver and gold prices look to remain strong based on a weakening
U.S. dollar, consistent investment demand, and – in the case of
silver – increasing industrial demand, particularly in medical,
electronic and technology applications.”
Commenting on the Company’s outlook for full-year 2009, Mr.
Wheeler commented, “Coeur expects to produce approximately 18
million ounces of silver in 2009, a 50% increase compared to 2008
production levels. Earlier this year, the Company sold its 100%
interest in the silver at the Broken Hill mine in Australia.
Despite the loss of production from the strategic sale of this
asset and a small adjustment to our San Bartolomé mine plan, our
Martha and Rochester mines have exceeded budgeted production
levels. The Company also expects to produce approximately 70,000
ounces of gold for the full-year – a 52% increase over last
year.”
“Total operating cash flow – the Company’s chief benchmark for
financial performance – increased 35% in the third quarter compared
to the most recent quarter,” commented Mitchell J. Krebs, Coeur’s
Chief Financial Officer. “In addition, the Company recorded two
significant items during the third quarter which are reflected in
its income statement and third quarter results. This included a
$22.4 million gain on the sale of Coeur’s interest in the Broken
Hill mine, as well as a $32 million non-cash expense related to the
Palmarejo gold production royalty, which was completed in January.
U.S. GAAP requires that a portion of this royalty be treated as an
embedded derivative subject to quarterly non-cash mark-to-market
adjustments. The primary trigger for this adjustment was gold’s
impressive rise in price from the end of the second quarter to the
end of the third. Finally, the Company continues to strengthen the
balance sheet, with outstanding debt reduced by over $40 million
during the third quarter and with added financial flexibility with
the closing of the term facility for Coeur Alaska with Credit
Suisse.”
Palmarejo (Mexico) continues
to ramp up to full-scale production levels as reserves continue to
grow
- In a separate press release
issued late yesterday, the Company reported a nearly 40% increase
in both silver and gold reserves based on ongoing drilling at the
Guadalupe deposit located six kilometers from the Palmarejo mine
and processing facilities. These new reserves – 25.0 million silver
ounces and 313,000 gold ounces – significantly add to the 63.6
million silver ounces and 756,000 gold ounces in reserves reported
at the Palmarejo project at the beginning of the year.
- Palmarejo continued ramp-up
activities during the third quarter:
- Silver production increased 117%
to 1.3 million ounces in the third quarter compared to 587,716
ounces of silver production in the second quarter while gold
production increased 150% to 24,289 ounces in the third quarter
versus 9,730 ounces of gold production in the second quarter.
- Tons milled increased 44% during
the third quarter compared to the prior quarter.
- Average silver grade increased
10% and the average gold grade increased 41% versus the second
quarter.
- Average silver recoveries
increased 37% from 53.6% in the second quarter to 73.4% during the
third quarter. Further increases in recovery are being seen in the
fourth quarter of 2009.
- Average gold recoveries
increased 22% from 77.0% to 94.3% during the third quarter.
- Cash operating costs per ounce
declined over 55% from the mine’s initial quarter of operations to
$8.76 per ounce during the third quarter. Further cost reductions
are expected in the fourth quarter and in 2010 as the operation’s
production levels continue to ramp-up.
- The mine is now operating at
near full-scale production levels and expects to be in position to
achieve its full-year 2010 production targets of approximately 9
million ounces of silver and 110,000 ounces of gold with cash
operating costs per ounce of approximately $1.50.
San Bartolomé (Bolivia)
demonstrating consistent performance for third consecutive
quarter
- Silver production during the
third quarter was 2.1 million ounces with cash operating costs of
$7.63 per ounce, representing the third consecutive quarter of
consistent production and operating costs during this initial full
year of operations.
- Silver production through the
first nine months of 2009 reached 6.1 million ounces with cash
operating costs of $7.24 per ounce.
- The mine plan has been
temporarily adjusted while temporary suspension of mining above
4,400 meters is in effect as stability studies of the Cerro Rico
Mountain are undertaken by COMIBOL. The potential impact of the
revised mine plan in the fourth quarter may be up to 500,000
ounces. Meanwhile, mining continues on the remainder of the
property.
- Cerro Rico Mountain is an
historic mining site that is the subject of centuries of
unregulated underground mining by numerous groups and individuals.
The Company does not use explosives in its surface-only mining
activities and is sensitive to the preservation of the mountain
under its contracts with the state-owned mining entity and the
local cooperatives, which are supported by Supreme Decree.
Kensington (Alaska) maintains
construction schedule toward second half 2010
startup
- The U.S. Army Corps of Engineers
reactivated the 404 permit in the third quarter, allowing
construction activities to recommence. During the quarter, the
construction management team and outside contractors were mobilized
and work is ongoing on the tailings facility and related remaining
infrastructure.
- The Company expects to produce
40,000 ounces of gold in 2010, with 120,000 ounces in its first
full year of operation (2011) at average operating costs of
approximately $475 per ounce.
- Coeur Alaska, a wholly owned
subsidiary of the Company, recently finalized a $45 million term
facility with Credit Suisse of Zurich to ensure sufficient
financial flexibility to complete the remaining construction
work.
Rochester (Nevada) pursuing
restart of gold and silver production
- At the Rochester mine, which has
been producing silver and gold for over 23 years, the Company is
pursuing a restart of mining operations that may add an average of
2.9 million ounces of incremental annual silver production and
30,000 ounces of further gold production through 2017
- Meanwhile, the mine continues
low-cost production and high-margin cash flow from ongoing residual
leaching activities. Silver production through the first nine
months of 2009 reached 1.5 million ounces and gold production
during the first nine months totaled 9,146 ounces with low average
cash operating costs of $2.69 per ounce.
Martha (Argentina) delivers
robust quarter of production and cash flow
- Martha produced 1.2 million
ounces of silver during the third quarter, representing a 44%
increase over last year’s third quarter and a 66% increase in
production compared to the most recent quarter.
- Cash operating costs declined
30% from the second quarter to $5.54 per ounce.
- Production was higher primarily
due to a 50% increase in silver grades compared to last quarter and
due to 78% increase in tons milled versus last year’s third
quarter.
- Metal sales from Martha during
the third quarter totaled $15.2 million compared to $10.0 million
in the prior quarter and $3.7 million during last year’s third
quarter.
Exploration
Update
- At Palmarejo (Mexico), the
Company plans to continue drilling activities at Guadalupe into
2010, which will consist of additional in-fill drilling to test
large areas of sparse drilling and inferred mineral resources,
exploration to extend the size of the deposit to the northwest and
on other targets near Guadalupe.
- In Argentina, a third phase of
drilling commenced at the Joaquin property near the company’s
Martha Mine. To-date, five targets have been drilled at Joaquin,
with favorable results from three. Based on results from two prior
phases of drilling, a third phase commenced September 23rd and
continues today. Through October, a total of twelve phase three
holes were complete – nine at the La Negra target and three at the
La Morocha target. Some assays results have been received (see
drill results table in this release), which encountered wide zones
of silver and gold mineralization. Further drilling is planned on
these two targets and at the nearby La Morena target to the west.
The La Morocha and La Negra mineralized systems trend to the
northwest, dip to the northeast and remain open at depth and on
strike to the northwest. Coeur has an option to earn up to a 71%
managing interest in a joint venture with Mirasol Resources
Ltd.
- At Kensington (Alaska), a new
drilling program commenced targeting a new vein named the Kimberly,
which is located between the Jualin and Kensington properties. A
total of three new core holes were completed on the Kimberly Vein
through the end of October. All core holes cut the vein, consisting
of quartz and sulfides, typical of other structures in the
district, in fans drilled to test the upward and downward and
strike extent of the vein. Assays are pending. Drilling will
continue into 2010 on Kimberly and other targets in the
district.
About Coeur
Coeur d’Alene Mines Corporation is one of the world’s leading
silver companies and also a significant gold producer. Coeur will
have its first full year of production this year at the world’s
largest pure silver mine - San Bartolomé in Bolivia – and began
production in March at another world-leading silver mine –
Palmarejo in Mexico. The Company also operates underground mines in
southern Chile and Argentina and one surface mine in Nevada; and
owns a non-operating interest in a low-cost mine in Australia. The
Company also owns a major gold project - Kensington in Alaska - and
conducts exploration activities in Argentina, Chile and Mexico.
Coeur common shares are traded on the New York Stock Exchange under
the symbol CDE, the Toronto Stock Exchange under the symbol CDM,
and its CHESS Depositary Interests are traded on the Australian
Securities Exchange under symbol CXC.
Photos of projects and other information can be accessed through
company website at www.coeur.com.
Conference Call
Information
Coeur will hold a conference call to discuss the Company's
second quarter 2009 results at 1:00 p.m. Eastern time on November
5, 2009. To listen live via telephone, call (866) 853-4681 (US and
Canada) or (660) 422-4718 (International). The conference ID number
is 34563098. The conference call and presentation will also be
webcast on the Company's web site www.coeur.com. A replay of the
call will be available through November 12, 2009. The replay
dial-in numbers are (800) 642-1687 (US and Canada) and (706)
645-9291 (International) and the access code is 34563098. In
addition, the call will be archived for a limited time on the
company’s web site.
Cautionary Statement
This press release contains forward-looking statements within
the meaning of securities legislation in the United States, Canada,
and Australia, including statements regarding anticipated operating
results. Such statements are subject to numerous assumptions and
uncertainties, many of which are outside the control of Coeur.
Operating, exploration and financial data, 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, the Canadian securities regulators, and the Australian
Securities Exchange, including, without limitation, Coeur’s reports
on Form 10-K and Form 10-Q. Actual 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 first parties in respect of Coeur, its financial
or operating results or its securities.
Donald J. Birak, Coeur's Senior Vice President of Exploration,
is the qualified person responsible for the preparation of the
scientific and technical information concerning Coeur's mineral
projects in this press release. 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 Coeur's properties as filed on SEDAR at
www.sedar.com.
Cautionary Note to U.S. Investors – The United States Securities
and Exchange Commission permits U.S. mining companies, in their
filings with the SEC, to disclose only those mineral deposits that
a company can economically and legally extract or produce. We use
certain terms in this press release, such as “measured,”
“indicated,” and “inferred” “resources,” that are recognized by
Canadian and Australian regulations, but that SEC guidelines
generally prohibit U.S. registered companies from including in
their filings with the SEC. U.S. investors are urged to consider
closely the disclosure in our Form 10-K which may be obtained from
us, or from the SEC’s website at
http://www.sec.gov/edgar.shtml.
Non-GAAP Measures
We supplement the reporting of our financial information
determined under generally accepted accounting principles (GAAP)
with certain Non-GAAP financial measures, including cash operating
costs. We believe that these adjusted measures provide meaningful
information to assist management, investors and analysts in
understanding our financial results and assessing our prospects for
future performance. We believe these adjusted financial measures
are important indicators of our recurring operations because they
exclude items that may not be indicative of, or are unrelated to
our core operating results, and provide a better baseline for
analyzing trends in our underlying businesses. We also provide the
amount of our operating cash flow to supplement our cash flow
determined under GAAP. We define operating cash flow as cash flow
from operations (US GAAP) less working capital changes as set forth
in cash flow statement. We believe operating cash flow is an
important measure in assessing the Company's overall financial
performance. The following table provides a reconciliation of
operating cash flow to cash provided by (used in) operating
activities:
COEUR D’ALENE MINES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2009
2008
ASSETS (In thousands) CURRENT ASSETS Cash and cash
equivalents $ 45,603 $ 20,760 Short-term investments - 7,881
Receivables 53,647 53,187 Ore on leach pad 8,341 9,193 Metal and
other inventory 62,068 34,846 Deferred tax assets 208 240 Prepaid
expenses and other
26,152
26,344 196,019 152,451 PROPERTY, PLANT
AND EQUIPMENT Property, plant and equipment 655,834 575,020 Less
accumulated depreciation
(115,579 )
(88,890 ) 540,255 486,130 MINING PROPERTIES
Operational mining properties 327,657 218,569 Less accumulated
depletion
(140,604 )
(131,557 ) 187,053 87,012 Mineral interests
1,727,915 1,764,794 Less accumulated depletion
(21,354 )
(16,796 ) 1,706,561
1,747,998 Non-producing and development properties
334,497 356,912
2,228,111 2,191,922 OTHER ASSETS Ore on leach pad,
non-current portion 18,361 20,998 Restricted assets 23,865 23,110
Receivables, non-current 37,943 34,139 Debt issuance costs, net
4,804 10,253 Deferred tax assets 5,750 4,666 Other
4,651 4,452
95,374 97,618 TOTAL
ASSETS
$ 3,059,759 $
2,928,121
COEUR D'ALENE MINES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2009
2008
(In thousands, except share data) LIABILITIES AND SHAREHOLDERS'
EQUITY CURRENT LIABILITIES Accounts payable $ 79,374 $
66,300 Accrued liabilities and other 37,615 64,673 Accrued income
taxes 19,077 927 Accrued payroll and related benefits 10,221 8,106
Accrued interest payable 839 4,446 Current portion of capital lease
and other short-term obligations 12,487 14,608 Current portion of
royalty obligation 30,232 - Current portion of reclamation and mine
closure
3,496 1,924
193,341 160,984 LONG-TERM LIABILITIES 3 1/4% Convertible
Senior Notes due March 2028 125,448 185,001 1 1/4% Convertible
Senior Notes due January 2024 65,204 180,000 Senior Secured
Floating Rate Convertible Notes due 2012 - 1,830 Non-current
portion of royalty obligation 104,620 - Non-current portion of
capital lease obligations 21,564 16,837 Reclamation and mine
closure 36,880 34,093 Deferred income taxes 528,605 557,449 Other
long-term liabilities
6,638
6,015 888,959 981,225 COMMITMENTS AND
CONTINGENCIES SHAREHOLDERS' EQUITY Common Stock, par value
$0.01 per share; authorized 150,000,000 shares, 78,142,194 issued
at September 30, 2009 and 56,779,909 shares issued at December 31,
2008. 781 568 Additional paid-in capital 2,396,247 2,218,487
Accumulated deficit (419,574 ) (419,958 ) Shares held in treasury,
at cost (none at September 30, 2009 and 105,921 shares at December
31, 2008). - (13,190 ) Accumulated other comprehensive income
5 5
1,977,459 1,785,912
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
3,059,759 $ 2,928,121
COEUR D’ALENE MINES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
Three Months Nine Months Ended September 30, Ended
September 30,
2009
2008
2009
2008
(In thousands, except per share amounts) REVENUES Sales of
metal $ 89,793 $ 36,538 $ 202,436 $ 131,145 COSTS AND
EXPENSES Production costs applicable to sales 59,139 30,049 133,706
78,696 Depreciation and depletion 28,647 6,068 57,466 16,677
Administrative and general 4,905 4,606 17,938 20,163 Exploration
3,167 5,824 10,785 14,291 Care and maintenance and other 1,162 -
3,828 - Pre-development
-
780 -
17,222 Total costs and expenses
97,020 47,327
223,723 147,049
OPERATING LOSS
(7,227 )
(10,789 )
(21,287 ) (15,904
) OTHER INCOME AND EXPENSE Gain (loss) on debt
extinguishments (2,947 ) - 35,890 - Loss on derivatives, net
(35,718 ) - (49,572 ) - Interest and other income (expense) (1,704
) 2,295 1,676 3,803 Interest expense, net of capitalized interest
(6,088 )
(1,412 ) (12,047
) (3,141 ) Total
other income and expense (46,457 ) 883 (24,053 ) 662 Loss
from continuing operations before income taxes (53,684 ) (9,906 )
(45,340 ) (15,242 ) Income tax benefit
13,876
4,444 18,272
2,200 NET LOSS FROM
CONTINUING OPERATIONS (39,808 ) (5,462 ) (27,068 ) (13,042 ) Income
from discontinued operations, net of income taxes 114 1,419 5,041
8,301 Gain on sales of assets of discontinued operations, net of
income taxes
22,411
- 22,411
- NET LOSS (17,283 ) (4,043 ) 384 (4,741
) Other comprehensive loss
-
(526 ) -
(854 ) COMPREHENSIVE LOSS
$ (17,283 ) $
(4,569 ) $ 384
$ (5,595 )
BASIC AND DILUTED INCOME (LOSS) PER SHARE Basic income (loss) per
share: Loss from continuing operations $ (0.52 ) $ (0.10 ) $ (0.39
) $ (0.24 ) Income from discontinued operations
$
0.29 $ 0.03
$ 0.40 $
0.15 Net loss
$ (0.23
) $ (0.07 )
$ 0.01 $
(0.09 ) Diluted income (loss) per share:
Loss from continuing operations $ (0.52 ) $ (0.10 ) $ (0.39 ) $
(0.24 ) Income from discontinued operations
$
0.29 $ 0.03
$ 0.40 $
0.15 Net loss
$ (0.23
) $ (0.07 )
$ 0.01 $
(0.09 ) Weighted average number of
shares of common stock Basic 76,133 55,010 69,163 55,006 Diluted
76,133 55,010 69,163 55,006
COEUR D’ALENE MINES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited)
Three Months Nine Months Ended September 30, Ended
September 30,
2009
2008
2009
2008
(In thousands, except per share amounts) CASH FLOWS FROM
OPERATING ACTIVITIES: Net loss $ (17,283 ) $ (4,043 ) $ 384 $
(4,741 ) Add (deduct) non-cash items: Depreciation and depletion
28,647 6,068 57,466 16,677 Amortization of debt discount 5,231 409
9,590 450 Deferred income taxes (24,175 ) (3,894 ) (29,896 ) (7,795
) Gain on debt extinguishment 2,947 - (35,890 ) - Loss on
derivatives, net 32,380 5,115 45,250 8,639 Gain on foreign currency
transactions 223 (63 ) (185 ) 1 Share based compensation 1,885 356
4,542 2,244 Gain from sale of discontinued operations and other
assets (32,212 ) 163 (32,291 ) 167 Other charges 662 750 2,965
2,538 Changes in operating assets and liabilities: Receivables and
other current assets 1,855 2,393 (7,145 ) (23,825 ) Inventories
(10,547 ) (685 ) (23,733 ) 5,974 Accounts payable and accrued
liabilities
33,421
(5,381 ) 50,654
(9,366 ) CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES 23,034 1,188 41,711
(9,037 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of
investments (6,525 ) (58,973 ) (13,906 ) (304,596 ) Proceeds from
sales of investments 11,237 124,894 30,050 334,604 Capital
expenditures (54,578 ) (87,727 ) (175,509 ) (256,362 ) Proceeds
from sale of assets and other
55,053
49 56,877
11 CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 5,187 (21,757 ) (102,488 ) (226,343 )
CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from sale of gold
production royalty - - 75,000 - Proceeds from issuance of
convertible notes - - 20,368 230,000 Repayment of long-term debt
and capital leases (7,268 ) (22,389 ) (22,138 ) (30,213 ) Payment
of debt issuance costs - 293 - (8,258 ) Proceeds from short-term
borrowings - 500 - 1,194 Proceeds from sale-lease back transactions
- - 12,511 - Common stock repurchased (18 ) - (121 ) (372 ) Other
- -
- 35 CASH
PROVIDED BY (USED IN) FINANCING ACTIVITIES (7,286 ) (21,596 )
85,620 192,386 INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 20,935 (42,165 ) 24,843 (42,994 ) Cash and cash
equivalents at beginning of period
24,668
97,842 20,760
98,671 Cash and cash equivalents
at end of period
$ 45,603
$ 55,677 $
45,603 $ 55,677
Operating Statistics From Continuing Operations
The following table presents information by mine and
consolidated sales information for the three and nine month periods
ended September 30, 2009 and 2008:
Three Months Ended September 30, Nine Months Ended
September 30, 2009 2008 2009 2008
Palmarejo(B)
Tons milled 410,137 - 695,232 - Ore grade/Ag oz 4.24 - 4.08 - Ore
grade/Au oz 0.062 - 0.055 - Recovery/Ag oz 73.4% - 65.7% -
Recovery/Au oz 94.3% - 88.9% - Silver production ounces 1,275,904 -
1,863,620 - Gold production ounces 24,289 - 34,019 - Cash operating
costs/oz $ 8.76 - $12.13 - Cash cost/oz $ 8.76 - $12.13 - Total
cost/oz $ 24.41 - $29.48 -
San Bartolomé Tons milled 431,218
160,678 1,147,935 177,756 Ore grade/Ag oz 5.36 7.54 6.05 6.82
Recovery/Ag oz 91.3% 58.3% 88.5% 60.1% Silver production ounces
2,111,313 706,538 6,141,223 728,394 Cash operating costs/oz $7.63
$13.35 $7.24 $13.32 Cash cost/oz $11.17 $15.66 $9.98 $15.59 Total
cost/oz $13.63 $18.20 $12.45 $18.13
Martha Mine Tons milled
28,431 15,940 83,344 38,087 Ore grade/Ag oz 42.56 54.40 34.30 57.35
Ore grade/Au oz 0.059 0.072 0.046 0.072 Recovery/Ag oz 97.4% 94.2%
94.2% 95.3% Recovery/Au oz 93.0% 89.0% 87.9% 91.2% Silver
production ounces 1,178,088 816,495 2,693,993 2,081,573 Gold
production ounces 1,569 1,028 3,376 2,497 Cash operating costs/oz
$5.54 $5.89 $6.22 $6.75 Cash cost/oz $6.02 $6.73 $6.68 $7.57 Total
cost/oz $7.48 $8.27 $8.19 $9.39
Rochester(A) Silver
production ounces 528,037 795,351 1,541,441 2,374,698 Gold
production ounces 3,097 4,983 9,146 16,895 Cash operating costs/oz
$ 2.77 $(0.05) $ 2.69 $ (1.30) Cash cost/oz $ 3.67 $ 0.72 $ 3.32
$(0.46) Total cost/oz $ 4.58 $ 1.47 $ 4.29 $ 0.33
Endeavor
Tons milled 130,319 298,601 428,162 827,755 Ore grade/Ag oz 1.76
1.46 1.59 1.50 Recovery/Ag oz 45.0% 51.8% 54.1% 54.9% Silver
production ounces 102,973 226,180 367,492 683,470 Cash operating
costs/oz $ 7.09 $2.53 $5.96 $2.49 Cash cost/oz $ 7.09 $2.53 $5.96
$2.49 Total cost/oz $ 9.66 $4.94 $8.53 $4.72
Cerro Bayo Tons
milled - 50,253 208,837 Ore grade/Ag oz - 5.52 - 5.29 Ore grade/Au
oz - 0.066 - 0.104 Recovery/Ag oz - 91.8% - 93.4% Recovery/Au oz -
89.4% - 90.3% Silver production ounces - 254,638 - 1,031,524 Gold
production ounces - 2,973 - 19,695 Cash operating costs/oz - $19.89
- $7.97 Cash cost/oz - $19.89 - $7.97 Total cost/oz - $26.25 -
$14.34
CONSOLIDATED PRODUCTION TOTALS Silver ounces
5,196,315 2,799,202 12,607,769 6,899,659 Gold ounces 28,955 8,984
46,541 39,087 Cash operating cost per oz $6.93 $7.08 $7.15 $4.43
Cash cost per oz/silver $8.57 $8.13 $8.66 $5.21 Total cost/oz
$13.88 $10.21 $12.94 $7.47
CONSOLIDATED SALES
TOTALS(C)
Silver ounces sold 4,667,995 2,237,675 12,207,964 6,150,086 Gold
ounces sold 23,079 11,215 40,003 41,145 Realized price per silver
ounce $14.54 $14.53 $13.70 $17.13 Realized price per gold ounce
$954 $886 $946 $952
(A) The leach cycle at
Rochester requires 5 to 10 years to recover gold and silver
contained in the ore. The Company estimates the ultimate
recovery to be approximately 61.5% for silver and 93% for
gold. However, ultimate recoveries will not be known until
leaching operations cease, which is currently estimated for
2014. Current recovery may vary significantly from ultimate
recovery. See Critical Accounting Policies and Estimates – Ore on
Leach Pad.
(B) Palmarejo achieved
commercial production on April 20, 2009. Mine statistics do
not represent normal operating results. It is expected that
Palmarejo will continue to ramp up its production rate and achieve
full capacity during the fourth quarter of 2009.
(C) Units sold at
realized metal prices will not match reported metal sales due
primarily to the effects on revenues of mark-to-market adjustments
on embedded derivatives in the Company’s provisionally priced sales
contracts.
Operating Statistics From Discontinued Operations
The following table presents information for Broken Hill which
was sold on July 30, 2009, effective as of July 1, 2009:
Three Months Ended September 30, Nine
Months Ended September 30, 2009 2008
2009 2008 Broken Hill
Tons milled - 496,552 827,766 1,523,719 Ore grade/Silver oz - 0.85
1.44 0.97 Recovery/Silver oz - 74.2% 70.5% 73.0% Silver production
ounces (1,739) 312,425 841,855 1,081,254 Cash operating cost/oz
$19.58 $3.38 $3.40 $3.60 Cash cost/oz $19.58 $3.38 $3.40 $3.60
Total cost/oz $48.76 $5.15 $5.26 $5.37
“Operating Costs per Ounce” and “Cash Costs per Ounce” are
calculated by dividing the operating cash costs and cash costs
computed for each of the Company’s mining properties for a
specified period by the amount of gold ounces or silver ounces
produced by that property during that same period. Management uses
cash operating costs and cash costs per ounce as key indicators of
the profitability of each of its mining properties. Gold and silver
are sold and priced in the world financial markets on a U.S. dollar
per ounce basis.
“Cash Operating Costs” and “Cash Costs” are costs directly
related to the physical activities of producing silver and gold,
and include mining, processing and other plant costs, third-party
refining and smelting costs, marketing expense, on-site general and
administrative costs, royalties, in-mine drilling expenditures that
are related to production and other direct costs. Sales of
by-product metals are deducted from the above in computing cash
costs. Cash costs exclude depreciation, depletion and amortization,
accretion, corporate general and administrative expense,
exploration, interest, and pre-feasibility costs. Cash operating
costs include all cash costs except production taxes and royalties,
if applicable. Cash costs are calculated and presented using the
“Gold Institute Production Cost Standard” applied consistently for
all periods presented.
Total operating costs and cash costs per ounce are non-GAAP
measures and investors are cautioned not to place undue reliance on
them and are urged to read all GAAP accounting disclosures
presented in the consolidated financial statements and accompanying
footnotes.
The following table presents a reconciliation between non-GAAP
cash operating costs per ounce and cash costs per ounce to
production costs applicable to sales including depreciation,
depletion and amortization, calculated in accordance with U.S.
GAAP:
THREE MONTHS ENDED SEPTEMBER
30, 2009
(In thousands except ounces and
per ounce costs)
San
Martha
Palmarejo
Cerro Bayo
Rochester
Endeavor
Total
Bartolomé
Production of Silver (ounces) 2,111,313 1,178,088 1,275,904
- 528,037 102,973 5,196,315 Cash operating costs per ounce $
7.63 $ 5.54 $ 8.76 $ - $ 2.77 $ 7.09 $ 6.93 Cash Costs per ounce
$ 11.17 $ 6.02 $ 8.76
$ - $ 3.67 $ 7.09 $
8.57 Total operating costs (Non-GAAP) $ 16,118 $
6,525 $11,174 $ - $1,461 $ 730 $36,008 Royalties 7,474 562 - - - -
8,036 Production taxes
- - -
- 475 - 475
Total Cash Costs (Non-GAAP) 23,592 7,087 11,174 - 1,936 730
44,519 Add/Subtract: Third party smelting costs - (2,221) (554) - -
(225) (3,000) By-product credit - 1,502 23,301 - 2,956 - 27,759
Other adjustments - 469 20 - 16 - 505 Change in inventory 1,765
(1,714) (11,078) - 558 55 (10,414) Depreciation, depletion and
amortization
5,191
1,246
19,948
-
463
265
27,113
Production costs applicable to sales, including
depreciation, depletion and amortization (GAAP)
$
30,548 $ 6,369 $ 42,811 $
- $ 5,929 $ 825 $
86,482
NINE MONTHS ENDED SEPTEMBER 30,
2009
(In thousands except ounces and
per ounce costs)
San
Martha
Palmarejo
Cerro Bayo
Rochester
Endeavor
Total
Bartolomé
Production of Silver (ounces) 6,141,223 2,693,993 1,863,620
- 1,541,441 367,492 12,607,769 Cash operating costs per
ounce $ 7.24 $ 6.22 $ 12.13 $ - $ 2.69 $ 5.96 $ 7.15 Cash Costs per
ounce
$ 9.98 $ 6.68 $ 12.13
$ - $ 3.32 $ 5.96 $
8.66 Total operating costs (Non-GAAP) $44,484 $16,748
$22,597 $ - $ 4,145 $2,190 $90,164 Royalties 16,777 1,253 - - - -
18,030 Production taxes
- -
- - 978 -
978 Total Cash Costs (Non-GAAP) 61,261 18,001
22,597 - 5,123 2,190 109,172 Add/Subtract: Third party smelting
costs - (5,067) (768) - - (759) (6,594) By-product credit - 3,157
32,402 - 8,487 - 44,046 Other adjustments 8 636 20 - 103 - 767
Change in inventory 1,524 (1,046) (17,932) 1,211 2,599 (42)
(13,686) Depreciation, depletion and amortization
15,137 3,420 32,328
- 1,391 946
53,222 Production costs applicable to sales,
including depreciation, depletion and amortization (GAAP)
$
77,930 $ 19,101 $ 68,647 $
1,211 $ 17,703 $ 2,335 $
186,928
THREE MONTHS ENDED SEPTEMBER
30, 2008
(In thousands except ounces and
per ounce costs)
San
Martha
Cerro Bayo
Rochester
Endeavor
Total
Bartolomé
Production of Silver (ounces) 706,538 816,495 254,638
795,351 226,180 2,799,202 Cash operating costs per ounce $
13.35 $ 5.89 $ 19.89 $ (0.05 ) $ 2.53 $ 7.08 Cash Costs per ounce
$ 15.66 $
6.73 $ 19.89
$ 0.72 $
2.53 $ 8.13
Total Cash Costs $ 11,065 $ 5,491 $ 5,064 $ 569 $ 573 $
22,762 Add/Subtract: Third party smelting costs - (1,030 ) (724 ) -
(344 ) (2,098 ) By-product credit - 887 2,624 4,383 - 7,894 Other
adjustments - - - 48 - 48 Change in inventory (5,544 ) (1,120 )
1,566 6,584 (43 ) 1,443 Depreciation, depletion and amortization
1,794 1,260
1,620 550
545 5,769
Production costs applicable to sales, including
depreciation, depletion and amortization (GAAP)
$
7,315 $ 5,488
$ 10,150 $
12,134 $ 731
$ 35,818
NINE MONTHS ENDED SEPTEMBER 30,
2008
(In thousands except ounces and
per ounce costs)
San
Martha
Cerro Bayo
Rochester
Endeavor
Total
Bartolomé
Production of Silver (ounces) 728,394 2,081,573 1,031,524
2,374,698 683,470 6,899,659 Cash operating costs per ounce $
13.32 $ 6.75 $ 7.97 $ (1.30 ) $ 2.49 $ 4.43 Cash Costs per ounce $
15.59 $ 7.57 $ 7.97 $ (0.46 ) $ 2.49 $ 5.21 Total Cash Costs
$ 11,353 $ 15,765 $ 8,220 $ (1,085 ) $ 1,703 $ 35,956 Add/Subtract:
Third party smelting costs - (2,493 ) (3,131 ) - (1,023 ) (6,647 )
By-product credit - 2,228 17,984 15,213 - 35,425 Other adjustments
- 471 - 147 - 618 Change in inventory (5,891 ) (3,489 ) 1,523
21,099 102 13,344 Depreciation, depletion and amortization 1,853
3,323 6,571 1,724 1,523 14,994 Production costs applicable
to sales, including depreciation, depletion and amortization (GAAP)
$ 7,315 $ 15,805 $ 31,167 $ 37,098 $ 2,305 $ 93,690
The following tables present a reconciliation between non-GAAP
cash costs per ounce to GAAP production costs applicable to sales
reported in Discontinued Operations:
THREE MONTHS NINE MONTHS
Broken Hill
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
2009(1)
2008
2009
2008
(In thousands except ounces and per ounce costs) Production of
Silver (ounces) (1,739) 312,425 841,855 1,081,254 Cash
operating costs per ounce $19.58 $ 3.38 $ 3.40 $ 3.60 Cash Costs
per ounce
$19.58 $ 3.38 $ 3.40
$ 3.60
Total Cash Costs (Non-GAAP) $ (34) $ 1,056 $ 2,863 $ 3,892
Add/Subtract: Third party smelting costs (15) (416) (1,167) (1,748)
By-Product credit - - - - Other adjustments - - - - Change in
inventory 98 5 39 12 Depreciation, depletion and amortization
(51)
553
1,568
1,914
Production costs applicable to sales, including
depreciation, depletion and amortization (GAAP)
$ (2)
$ 1,198 $ 3,303 $ 4,070
(1) Amounts reflect
final metal settlement adjustments.
JOAQUIN PROJECT, SANTA CRUZ, ARGENTINA Initial
Phase 3 Drilling Results; Third and Fourth Quarter 2009 La
Negra Zone Hole I.D. Mineralized Interval
(meters) Assays (g/t) From To
Length TRUE Au Ag DDJ-39
19.5 119.1 99.6 85.5 0.07
88 Incl. 27.3 30 2.7 2.3 0.58 951 Incl. 75.8 77.6 1.8 1.5
0.68 982 Incl. 87.45 95.2 7.75 6.7 0.21 114 Incl. 101.5 119.1 17.6
15 0.09 122
159.25 245.2 89.85 77
0.06 50 Incl. 205.25 230.4 25.15 21.6 0.12 108
DDJ-40 200.4 229 28.6 24
0.23
23 Incl. 205 214 9 7.5 0.54 37
235 263.5
28.5 24
0.24 78 Incl. 244 262 18 15 0.31 117
DDJ-41 14 33 19 16 0.06
40
493 core samples analyzed at Alex
Stewart (Assayers), Argentina S.A. in Mendoza, Argentina.
Drill Intercepts calculated at
10 g/t Ag Eq cutoff; "Includes" calculated at 50 g/t Ag Eq
cutoff.
Maximum
3 meter of internal dilution (less than cutoff) permitted.
Ag
Eq (equivalent) = Ag g/t + (Au g/t * 69.23)
Samples were from half splits of
cut HQ diameter drill core.
QA/QC checks performed at
ALS-Chemex Laboratories in Mendoza, Argentina consisting of
49 pulp checks, all assayed within acceptable reproducibility
Internal QA/QC checks performed at
Alex Stewart (Assayers), Argentina S.A. in Mendoza, Argentina,
consisting of
12
duplicates and 25 standards; all assayed within acceptable
ranges
24
blanks assayed below the detection limits both for gold and
silver
All values uncapped.
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