Coeur d’Alene Mines Corporation (NYSE:CDE) (TSX:CDM) (ASX:CXC)
today announced strong third quarter financial and operational
results driven by its three new long-life gold and silver mines,
along with record precious metals prices. This marked the first
full quarter with all three new mines in production, leading to
accelerating metal sales and cash flow while operating costs per
ounce and capital expenditures continue declining.
Third Quarter Highlights:
- Gold production doubled from prior
quarter; silver production increased 4%
- Cash operating costs1 declined 40% to
$4.87 per silver ounce
- Record metal sales of $118.6 million,
up 17% from previous quarter and nearly $30 million over last
year’s third quarter
- 58% increase in operating cash flow2 to
$34.7 million compared to last quarter
- Capital expenditures declined to its
lowest level in over four years
- Operating income jumped to $10.5
million, up from $1.9 million last quarter
- Palmarejo silver production
increased 41% to 1.5 million ounces; gold production increased 49%
to 29,823 ounces versus the second quarter
- Higher silver and gold grades and
larger gold by-product credit led to reduced cash operating costs
of $0.15 per silver ounce versus $10.78 during the prior
quarter
- San Bartolomé silver production
of 1.8 million silver ounces consistent with prior quarter; cash
operating costs dropped 9% to $7.05 per silver ounce
- Kensington produced 15,155 gold
ounces in its initial quarter
- Expecting full-year silver production
of over 17 million ounces; cash operating costs of $5.50 per silver
ounce; 135% increase in gold production to approximately 170,000
ounces
“Over the past three years, Coeur has been executing its
strategic plan to transition the Company to three new long-life
silver and gold mines. Along with exceptionally strong metals
prices, the results from the third quarter demonstrate the momentum
being created by these new operations,” said Dennis E. Wheeler,
Chairman, President and Chief Executive Officer. “As metal sales
and cash flow increase, the Company’s cash operating costs and
capital expenditures continue to decline.”
Mr. Wheeler continued, “The third quarter also marked a major
milestone for the Company’s Kensington gold mine, as it logged its
first full quarter of operations. With a substantial reserve base,
exciting exploration potential and record gold prices, Kensington
has a very bright future.”
“Finally, our Rochester silver and gold mine in Nevada is
experiencing a rebirth as it moves ahead with a planned expansion
of mining operations. Just last week, this expansion plan received
a boost with the issuance of a positive Decision Record by the
Nevada Bureau of Land Management (BLM). This expansion will begin
adding to production levels in the fourth quarter of 2011 and will
increase total average annual silver and gold production to over
2.4 million ounces and 35,000 ounces, respectively. Rochester will
soon become a fourth major contributor along with the Company’s
three new mines. Rochester contains a large mineral resource base,
which provides for additional opportunities to further expand
operations beyond this initial expansion. Since commencing
production in 1986, Rochester has produced over 127 million ounces
of silver and 1.5 million ounces of gold, making it one of the
world’s most prolific silver and gold mines. The Company extends
its appreciation to the BLM, the State of Nevada and the Nevada
Congressional Delegation for its support and assistance, which will
help lead to the creation of 200 new jobs at Rochester,” Mr.
Wheeler added.
Financial
Highlights
US$ millions 3Q 2009 3Q
2010 YoverY 2Q 2010
3Q 2010 QoverQ Sales of Metal
$90.3 $118.6 31% $101.0
$118.6 17%
Production Costs 59.7
60.4 1% 58.6 60.4 3%
Gross Mine Profit3
30.6 58.2 90% 42.4 58.2
37%
EBITDA4
23.5 48.3 106% 31.8 48.3
52%
Operating Income/(Loss) -4.1
10.5 nm 1.9 10.5 453%
Operating Cash
Flow -1.0 34.7 nm 22.0
34.7 58%
Capital Expenditures 54.4
36.8 -32% 45.5 36.8
-19%
Cash,
Equivalents and ST Inv. $45.6 $32.8
-28% $41.2 $32.8 -20%
Total Debt5
216.9 186.4 -14% 187.5
186.4 -1%
Shares Issued & Outstanding 78.1
89.3 14% 89.3 89.3
0%
Avg. Realized
Price – Silver $14.52 $18.87 30%
$18.56 $18.87 2%
Avg. Realized Price
– Gold $953 $1,229 29% $1,176
$1,229 5%
Note: Reflects results from continuing
operations.
Third quarter metal sales jumped nearly $30 million to a record
$118.6 million, up 31% compared to last year’s third quarter and up
17% over the prior quarter, primarily due to the significant rise
in gold production from the Palmarejo mine and from substantially
higher average realized silver and gold prices. Sales of silver
contributed 62% of the Company’s total metal sales compared to 75%
during last year’s third quarter. Production costs remained nearly
flat compared to last year’s third quarter and this year’s second
quarter, leading to significant increases in gross mine profit,
operating income and operating cash flow.
Quarterly operating cash flow increased to $34.7 million
compared to $(1.0) million last year while capital expenditures
declined 32% to $36.8 million. This represents the lowest quarterly
capital expenditures since the second quarter of 2006. Compared to
the most recent quarter, operating cash flow increased 58% while
capital expenditures dropped 19%.
Quarterly operating income6 increased to $10.5 million versus a
$4.1 million operating loss during last year’s third quarter and
$1.9 million during the second quarter.
The Company’s average realized silver and gold prices during the
third quarter were $18.87 and $1,229 per ounce, respectively,
representing increases of 30% and 29% over the prior year.
At September 30th, cash, equivalents and short-term investments
totaled $32.8 million. Total shares outstanding remain at 89.3
million, consistent with the Company’s stated objective of not
issuing additional shares. Total debt declined 14% compared to last
year’s third quarter. The current debt-to-equity ratio is 9%.
Operational
Highlights
Ounces unless otherwise noted 3Q 2009
3Q 2010 QoverQ 2Q 2010
3Q 2010 YoverY Silver
Production 5,196,315 4,333,530 -17
% 4,156,204 4,333,530 4 %
Gold
Production 28,955 47,514 64 %
23,124 47,514 105 %
Cash Operating
Costs/Ag Oz $6.93 $4.87 -30 % $8.06
$4.87 -40 %
The Company produced 4.3 million ounces of silver and 47,514
ounces of gold during the third quarter versus 4.2 million ounces
and 23,124 ounces, respectively, in the second quarter. The 105%
increase in gold production was primarily a result of the
production of 15,155 gold ounces at the Kensington mine during its
initial quarter of operations and a 49% increase in gold production
at Palmarejo to 29,823 ounces.
Cash operating costs declined 40% to $4.87 per silver ounce
compared to the prior quarter mostly due to Palmarejo’s cash
operating costs of $0.15 per silver ounce compared to $10.78 per
silver ounce last quarter.
The Company’s silver production base is underpinned by proven
and probable reserves of 269.2 million, measured and indicated
resources of 180.6 million, and inferred resources of 66.6 million
ounces. In addition, Coeur’s gold production is backed by a large
and growing reserve base of 2.9 million ounces of proven and
probable reserves, 1.2 million ounces of measured and indicated
resources, and 1.2 million ounces of inferred resources.7
Palmarejo (Mexico) – Corner Turned
During Third Quarter
- Open pit silver and gold grades up 156%
and 133%, respectively
- Underground silver and gold grades up
10% and 11%, respectively
- Highest production levels for both
silver and gold since April 2009 startup
- Underground operations continue to
contribute approximately one-third of total tons mined
- Higher grades and increased gold
by-product credit led to sharp decline in cash operating costs to
$0.15 per silver ounce in the third quarter compared to $10.78 per
silver ounce in the second quarter and $8.76 per silver ounce
during last year’s third quarter
- Received and monetized $10 million of
Franco-Nevada Corporation common shares in connection with
operational completion test tied to the January 2009 gold royalty
financing
- Processing plant achieved stability
during quarter with gold recoveries averaging 94% and silver
recoveries remaining at 70%. Implementation of a series of
enhancements in the third quarter including installation of new
pumping capacity, enhanced focus on grind size, optimization of
chemical levels and improved blending of ore types are now
beginning to make an impact. Several other improvements such as
installation of an additional oxygen plant and changes focused on
enhancing carbon stripping and regeneration are underway and
expected to lead to further gains.
- Expected to produce approximately 6.1
million ounces of silver and 109,000 ounces of gold this year at an
average cash operating cost of approximately $2.50 per silver
ounce
- For additional operating statistics,
please refer to the table at the end of this release
San Bartolomé (Bolivia) – Consistent
Production Levels at Reduced Costs
- Third quarter silver production
consistent with prior quarter
- 14% increase in grade and 5% increase
in recoveries offset a 19% decline in tons milled
- Cash operating costs dropped 9% to
$7.05 per ounce
- Full-year 2010 silver production is
expected to exceed 6.5 million ounces at average cash operating
costs of approximately $8.00 per ounce
- For additional operating statistics,
please refer to the table at the end of this release
Kensington (Alaska) – Initial Quarter
of Operations According to Plan
- Commenced commercial production on July
3, 2010
- 15,155 gold ounces produced and 7,391
gold ounces sold during the third quarter
- Cash operating costs during the mine’s
initial quarter averaged $1,199 per ounce of gold and are expected
to average approximately $490 per ounce over the life of the
mine
- Projected gold production expected to
exceed 125,000 ounces in 2011, representing the mine’s first full
year of operation
- For additional operating statistics,
please refer to the table at the end of this release
Rochester (Nevada) – Positive Decision
from BLM to Expand Operations for Several Years
- Expansion will begin adding to
production levels in the fourth quarter of 2011 and will increase
total average annual production to more than 2.4 million silver
ounces and 35,000 gold ounces from current expected production
levels generated from residual leaching of 700,000 silver ounces
and 5,000 gold ounces
- Updated feasibility study completed
defining 27.6 million contained ounces of silver and 247,000
contained ounces of gold in proven and probable mineral reserves.
Mine contains an additional 54.8 million silver ounces and 409,000
gold ounces of measured and indicated resources. Efforts to expand
mineral reserves and resources and further increase production are
ongoing.
- Expected to produce 2.0 million ounces
of silver and 10,000 ounces of gold in 2010 at an average cash
operating cost of $3.00 per ounce
- In its 25 years of operation, the mine
has produced 127 million ounces of silver and 1.5 million ounces of
gold
- For additional operating statistics,
please refer to the table at the end of this release
Martha (Argentina) – Newly Discovered
High-Grade Mineralization Expected to Extend Operations Through
2011
- Began 2010 with 1.2 million ounces of
proven and probable reserves and 1.8 million ounces of measured and
indicated resources
- Produced 1.4 million silver ounces
through the first nine months of 2010
- Expect to produce 1.7 million silver
ounces during full-year 2010
- For additional operating statistics,
please refer to the table at the end of this release
Exploration Highlights
Exploration activities across all of Coeur’s properties
proceeded at a brisk pace during the third quarter. Over 30,500
meters were drilled on six different properties with exploration
expenditures totaling $3.8 million during the quarter.
Palmarejo – Favorable drill results continue to expand size
and continuity of Guadalupe
The majority of the drilling during the quarter was focused at
the Palmarejo mine and at the nearby Guadalupe deposit. At
Palmarejo, drilling continues to intersect strong gold and silver
mineralization from several zones, notably 108, 76,
Tucson-Chapotillo, and at Guadalupe, which now totals over 2.4
kilometers of strike length. At the mine, drilling was conducted
from both surface and underground on all five ore zones, all of
which remain open for expansion on strike and at depth. Drilling
during 2010 is expected to increase mineral resources and reserves
when the Company announces year-end reserves and resources in early
2011.
Argentina – Definition drilling commenced and new high grades
intersected at Joaquin
In the Santa Cruz province of Argentina, the Company commenced a
definition drilling program at the Joaquin property, which is
located approximately 70 kilometers to the north of the Martha
Mine, to define the main part of the La Negra zone. Drilling at La
Morocha, situated less than one kilometer west of La Negra,
intersected over 30 meters of +400 g/t silver at about 125 meters
below surface, which represents the deepest mineralized intercept
thus far on this zone and remains open at depth.
The Company also commenced drilling on new targets at
Martha.
Kensington – Phase one drilling completed with very high
grades from several drill holes
The first phase of drilling on the large, gold-bearing Horrible
vein zone was completed during the third quarter. This is the first
drilling on Horrible by Coeur and the system extends over 600
meters vertically and over 100 meters horizontally with multiple
gold-bearing quartz veins. More drilling is planned for the next
quarter and 2011 to further define and expand the zone which is
expected to lead to new mineral resources and reserves.
Rochester – Encouraging results from new drilling
The first phase of a drilling program focused on new targets
located on a major structural corridor between the Company’s
Rochester and Nevada Packard mines was completed during the
quarter. This represents the first drilling in this area in over a
decade. Several holes returned ore-grade silver and gold
mineralization. Further drilling is planned in 2011 to test this
same area again as well as other untested zones on the large
Rochester property. The Company expects this work to lead to
further increases in mineral resources and reserves.
Conference Call
Information
Coeur will hold a conference call to discuss the Company's third
quarter 2010 results at 1:00 p.m. Eastern time on November 4, 2010.
To listen live via telephone, call 877-464-2820 (US and Canada) or
660-422-4718 (International). The conference ID number is 18309250.
The conference call and presentation will also be webcast on the
Company's web site at www.coeur.com. A replay of the call will be
available through November 11, 2010. The replay dial-in numbers are
800-642-1687 (US and Canada) and 706-645-9291 (International) and
the access code is 18309250. In addition, the call will be archived
for a limited time on the Company’s web site.
1 Cash operating costs is a non-U.S. GAAP measure. A
reconciliation of this measure to production costs is provided at
the end of this release. Excludes cash operating costs at
Kensington, which are presented on a gold basis.
2 Represents operating cash flow prior to changes in
operating assets and liabilities. A reconciliation between U.S.
GAAP and non-U.S. GAAP operating cash flow is provided at the end
of this release.
3 Represents sales of metal less production costs. Excludes
depreciation, depletion, and amortization expense.
4 EBITDA is a non-U.S. GAAP measure and defined as earnings
before interest, taxes, depreciation and amortization. A
reconciliation of this measure to U.S. GAAP is provided at the end
of this release.
5 Includes short-term and long-term indebtedness; excludes
capital lease obligations and Mitsubishi gold lease facility.
6 Reflects income/(loss) before other income and expenses. On a
net income/(loss) basis, the Company recorded a net loss from
continuing operations of $23.3 million, or ($0.26) per share for
the quarter, which included $19.1 million of negative non-cash fair
value adjustments. During last year’s third quarter, the Company
reported a net loss from continuing operations of $36.7 million, or
($0.48) per share, which included $35.7 million of negative
non-cash fair value adjustments.
7 As of December 31, 2009.
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
United States Securities and Exchange Commission, 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 third 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 presentation. 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 presentation, 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 secured from
us, or from the SEC’s website at
http://www.sec.gov/edgar.shtml.
Non-U.S. GAAP Measures
We supplement the reporting of our financial information
determined under United States generally accepted accounting
principles (U.S. GAAP) with certain non-U.S. GAAP financial
measures, including cash operating costs, operating cash flow and
EBITDA. 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 provide the
amount of our operating cash flow to supplement our cash flow
determined under U.S. GAAP. We define operating cash flow as net
income plus depreciation, depletion and amortization and plus/minus
any other non-cash items. We believe operating cash flow is an
important measure in assessing the Company's overall financial
performance.
About Coeur
Coeur d'Alene Mines Corporation is one of the world's leading
silver companies and is also a growing gold producer. Coeur is also
a recognized leader in environmental stewardship and worker safety,
with 13 national and international awards earned over the past
year. The Company’s three new long-life mines include the San
Bartolomé silver mine in Bolivia, which began operations in 2008,
the Palmarejo silver and gold mine in Mexico, which began
operations in 2009, and the Kensington gold mine in Alaska, which
began commercial production in July of this year. The Company also
owns an underground mine in Argentina and a surface mine in Nevada,
and owns a non-operating interest in a low-cost mine in Australia.
The Company conducts exploration activities in Alaska, Argentina
and Mexico. Coeur common shares are traded on the New York Stock
Exchange under the symbol CDE, and 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
the Company’s website at www.coeur.com.
Excluding changes in operating assets and liabilities, the
Company’s operating cash flow consisted of the following:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2010 2009 2010
2009
(In thousands)
(In thousands)
CASH PROVIDED BY OPERATING ACTIVITIES 12,939 28,938 36,166
47,023 Changes in operating assets and liabilities: Receivables and
other current assets 4,511 (1,855 ) 12,136 7,145 Inventories 22,980
10,547 27,888 23,733 Accounts payable and accrued liabilities
(5,704 ) (38,658 ) 8,298 (55,594 ) Operating cash flow $ 34,726
$ (1,028 ) $ 84,488 $ 22,307
Reconciliation of EBITDA to net income/(loss) is shown
below:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2010 2009 2010
2009 (In thousands, except per share data) NET
INCOME (LOSS) (22,628 ) (17,283 ) (81,389 ) 384 Gain (loss) on sale
of discontinued operations, net of income taxes (882 ) (22,411 )
2,095 (22,411 ) Loss from discontinued operations, net of income
taxes 251 3,003 6,029 1,451 Income tax benefit (provision) 3,233
(13,428 ) (17,977 ) (17,067 ) Interest expense, net of capitalized
interest 9,951 6,088 21,402 12,047 Interest and other income 638
1,245 2,725 (822 ) Fair value adjustments, net 19,107 35,718 65,881
49,269 Gain (loss) on debt extinguishments 806 2,947 12,714 (35,430
) Depreciation, depletion and amortization 37,801 27,591
95,503 54,282 EBITDA $ 48,277 $ 23,470
$ 106,983 $ 41,703
PALMAREJO:
US$ millions except where noted
3Q 2009 4Q 2009 1Q
2010 2Q 2010 3Q 2010
Underground Operations:
Tons Mined 154,845
173,078 180,526 166,381
146,682
Average Silver Grade (oz/t)
4.88 5.21 4.89
5.13 5.63
Average Gold Grade (oz/t)
0.09 0.08 0.07
0.09 0.10
Surface Operations:
Tons Mined
280,530 222,223 313,366
306,246 256,927
Average Silver Grade
(oz/t) 3.82 4.12
2.89 2.03 5.20
Average Gold
Grade (oz/t) 0.05 0.04
0.04 0.03 0.07
Processing:
Total Tons
Milled 410,137 370,276
458,006 457,268 405,742
Average Recovery Rate – Ag 73.4%
67.2% 72.7% 72.5%
69.6%
Average Recovery Rate – Au 94.3%
87.1% 92.1% 87.3%
94.4%
Silver Production (ounces)
1,275,904 1,184,223 1,300,593
1,070,638 1,506,742
Gold Production
(ounces) 24,289 20,721
22,577 19,950 29,823
Cash Operating Costs/Ag Oz $8.76
$6.15 $5.41 $10.78
$0.15
Total Sales of Metal 32.2
42.9 44.8 44.8 61.5
Production Costs 22.9
28.5 27.9 32.1 31.3
Capital Expenditures 42.3
22.8 16.5 10.8 16.0
SAN
BARTOLOME:
US$ millions except where noted
3Q 2009 4Q 2009 1Q
2010 2Q 2010 3Q 2010
Tons Milled 431,218
370,736 293,106 446,909
360,605
Average Silver Grade (oz/t)
5.36 3.76 3.74 5.00
5.70
Average Recovery Rate
91.3% 95.3% 94.8%
83.4% 87.2%
Silver Production (ounces)
2,111,313 1,327,999
1,039,923 1,863,141 1,794,617
Cash
Operating Costs/Ag Oz $7.63
$10.40 $9.98 $7.78 $7.05
Sales of
Metal $31.5 $26.6
$14.6 $31.3 $30.0
Production
Costs 25.2 18.1
9.4 15.3 12.9
Capital
Expenditures 1.4 1.4
0.5 1.3 0.8
KENSINGTON:
US$ millions except where noted
3Q 2009 4Q 2009 1Q
2010 2Q 2010 3Q 2010
Tons Milled
90,254
Average Gold Grade (oz/t)
0.19
Average Recovery Rate
87.7%
Gold Production (ounces)
-- -- -- --
15,155
Cash Operating Costs/Ag Oz
-- -- -- --
$1,199
Sales of Metal --
-- -- -- $8.5
Production Costs -- --
-- -- 7.4
Capital
Expenditures 10.0 18.9
29.9 33.2 20.0
ROCHESTER:
US$ millions except where noted
3Q 2009 4Q 2009 1Q
2010 2Q 2010 3Q 2010
Silver Production (millions) 528,037
640,347 522,159 533,093
419,433
Gold Production
3,097 3,517 2,690 2,616
1,935
Cash Operating Costs/Ag Oz
$2.77 $0.15 $1.68
$2.44 $5.10
Sales of Metal $9.3
$16.3 $10.8 $12.4
$5.8
Production Costs 5.4
7.9 5.8 5.6 2.8
Capital Expenditures 0.0
0.0 0.0 0.1 0.1
MARTHA:
US$ millions except where noted
3Q 2009 4Q 2009 1Q
2010 2Q 2010 3Q 2010
Total Tons Milled 28,431
26,630 17,575 12,421
12,790
Average Silver Grade (oz/t)
42.56 41.47 24.59 50.24
42.42
Average Gold Grade (oz/t)
0.06 0.06 0.03
0.06 0.05
Average Recovery Rate – Ag
97.4% 91.8% 84.5%
88.1% 96.3%
Average Recovery Rate – Au
93.0% 86.7% 88.5%
81.7% 93.6%
Silver Production
(ounces) 1,178,088 1,013,551
365,226 549,885 510,685
Gold Production (ounces) 1,569
1,333 515 558 601
Cash Operating Costs/Ag Oz $5.54
$6.13 $15.47 $8.97
$9.86
Total Sales of Metal 15.2
10.8 15.0 9.2 11.0
Production Costs 5.1 2.2
7.3 4.1 5.3
Capital
Expenditures 0.3 0.5
0.0 0.0 0.0
The following table presents consolidated production and sales
information for the three and nine month periods ended September
30, 2010 and 2009:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2010 2009 2010
2009 CONSOLIDATED PRODUCTION TOTALS Total
Silver ounces 4,333,530 5,196,315 11,921,891 12,607,769 Total Gold
ounces 47,514 28,955 96,421 46,541
Silver
Operations:(A)
Cash operating costs per oz/silver $ 4.87 $ 6.93 $ 6.72 $ 7.15 Cash
cost per oz/silver $ 5.40 $ 8.57 $ 7.17 $ 8.66 Total production
cost/oz $ 12.62 $ 13.88 $ 14.59 $ 12.94
Gold
Operation:(B)
Cash operating costs/oz $ 1,199.20 $ - $ 1,199.20 $ - Cash cost/oz
$ 1,199.20 $ - $ 1,199.20 $ - Total production cost/oz $ 1,675.56 $
- $ 1,675.56 $ -
CONSOLIDATED SALES
TOTALS(C)
Silver ounces sold 3,861,696 4,667,423 11,547,775 12,156,493 Gold
ounces sold 37,507 23,027 86,890 38,968 Realized price per silver
ounce $ 18.87 $ 14.52 $ 18.12 $ 13.72 Realized price per gold ounce
$ 1,228.51 $ 952.86 $ 1,177.31 $ 945.03
(A) Amount includes by-product gold credits deducted from
computing cash costs per ounce.
(B) Amounts reflect Kensington per ounce statistics only.
(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 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 per ounce 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 expenses, on-site general
and administrative costs, royalties, in-mine drilling expenditures
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 expenses, 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-U.S. GAAP
measures and investors are cautioned not to place undue reliance on
them and are urged to read all U.S. GAAP accounting disclosures
presented in the consolidated financial statements and accompanying
footnotes. In addition, see the reconciliation of “cash costs” to
production costs under “Reconciliation of Non-U.S. GAAP Cash Costs
to U.S. GAAP Production Costs” set forth below.
The following tables present a reconciliation between non-U.S.
GAAP cash operating costs per ounce and cash costs per ounce to
production costs applicable to sales including depreciation,
depletion and amortization, which are calculated in accordance with
U.S. GAAP:
Reconciliation of
Non-U.S. GAAP Cash Costs to U.S. GAAP Production Costs
Three months ended September 30,
2010
(In thousands except ounces and per
ounce costs)
Palmarejo
San
Bartolomé
Martha Rochester
Endeavor Kensington Total Production of silver
(ounces) 1,506,742 1,794,617 510,685 419,433 102,053 - 4,333,530
Production of gold (ounces) 15,155 15,155 Cash operating cost per
Ag ounce $ 0.15 $ 7.05 $ 9.86 $ 5.10 $ 10.32 $ 4.87 Cash costs per
Ag ounce $ 0.15 $ 7.83 $ 11.04 $ 5.82 $ 10.32 $ 5.40 Cash operating
cost per Au ounce $ 1,199.20 $ 1,199.20 Cash cost per Au ounce
$ 1,199.20 $ 1,199.20
Total Operating Cost (Non-U.S. GAAP) $ 227 $ 12,651 $
5,039 $ 2,140 $ 1,053 $ 18,174 $ 39,284 Royalties - 1,396 601 - - -
1,997 Production taxes - - -
304 - - 304
Total Cash Costs (Non-U.S. GAAP) 227 14,047 5,640
2,444 1,053 18,174 41,585 Add/Subtract: Third party smelting costs
- - (995 ) - (354 ) (1,618 ) (2,967 ) By-product credit 36,538 -
734 2,361 - - 39,633 Other adjustments - - 914 53 - - 967 Change in
inventory (5,423 ) (1,146 ) (1,009 ) (2,088 ) (15 ) (9,135 )
(18,816 ) Depreciation, depletion and amortization 22,491
4,943 2,119 446
330 7,219 37,548
Production costs applicable to sales,
including depreciation, depletion and amortization (U.S. GAAP)
$ 53,833 $ 17,844 $ 7,403 $ 3,216 $
1,014 $ 14,640 $ 97,950
Nine months ended September 30,
2010
(In thousands except ounces and per
ounce costs)
Palmarejo
San
Bartolomé
Martha Rochester Endeavor Kensington
Total Production of silver (ounces) 3,877,972 4,697,685
1,425,796 1,474,686 445,752 - 11,921,891 Production of gold
(ounces) 15,155 15,155 Cash operating cost per Ag ounce $ 4.85 $
7.99 $ 10.96 $ 2.93 $ 8.56 $ 6.72 Cash costs per Ag ounce $ 4.85 $
8.69 $ 11.74 $ 3.55 $ 8.56 $ 7.17 Cash operating cost per Au ounce
$ 1,199.20 $ 1,199.20 Cash cost per Au ounce
$ 1,199.20 $ 1,199.20 Total
Operating Cost (Non-U.S. GAAP) $ 18,799 $ 37,520 $ 15,624 $ 4,315 $
3,817 $ 18,174 $ 98,249 Royalties - 3,287 1,107 - - 4,394
Production taxes - - -
912 - 912 Total
Cash Costs (Non-U.S. GAAP) 18,799 40,807 16,731
5,227 3,817 18,174
103,555 Add/Subtract: Third party smelting costs - - (2,821 ) -
(964 ) (1,618 ) (5,403 ) By-product credit 85,429 - 1,971 8,480 - -
95,880 Other adjustments - - 1,173 216 - - 1,389 Change in
inventory (12,120 ) (3,162 ) (312 ) 230 (127 ) (9,135 ) (24,626 )
Depreciation, depletion and amortization 63,574
14,152 6,673 1,368 1,440
7,219 94,426
Production costs applicable to sales,
including depreciation, depletion and amortization (U.S. GAAP)
$ 155,682 $ 51,797 $ 23,415 $ 15,521 $ 4,166
$ 14,640 $ 265,221
Three months ended September 30,
2009
(In thousands except ounces and per
ounce costs)
Palmarejo
San
Bartolomé
Martha Rochester Endeavor Total
Production of silver (ounces) 1,275,904 2,111,313 1,178,088 528,037
102,973 5,196,315 Cash operating cost per ounce $ 8.76 $ 7.63 $
5.54 $ 2.77 $ 7.09 $ 6.93 Cash costs per ounce $ 8.76 $
11.17 $ 6.02 $ 3.67 $ 7.09 $ 8.57 Total
Operating Cost (Non-U.S. GAAP) $ 11,174 $ 16,118 $ 6,525 $ 1,461 $
730 $ 36,008 Royalties - 7,474 562 - - 8,036 Production taxes
- - - 475 -
475 Total Cash Costs (Non-U.S. GAAP) 11,174
23,592 7,087 1,936 730 44,519 Add/Subtract: Third party smelting
costs - - (2,221 ) - (225 ) (2,446 ) By-product credit 23,301 -
1,502 2,956 - 27,759 Other adjustments 20 - 469 16 - 505 Change in
inventory (11,078 ) 1,765 (1,714 ) 558 55 (10,414 ) Depreciation,
depletion and amortization 19,948 5,191
1,246 463 265 27,113
Production costs applicable to sales,
including depreciation, depletion and amortization (U.S. GAAP)
$ 43,365 $ 30,548 $ 6,369 $ 5,929 $ 825 $
87,036
Nine months ended September 30,
2009
(In thousands except ounces and per
ounce costs)
Palmarejo
San
Bartolomé
Martha Rochester Endeavor Total
Production of silver (ounces) 1,863,620 6,141,223 2,693,993
1,541,441 367,492 12,607,769 Cash operating cost per ounce $ 12.13
$ 7.24 $ 6.22 $ 2.69 $ 5.96 $ 7.15 Cash costs per ounce $ 12.13
$ 9.98 $ 6.68 $ 3.32 $ 5.96 $ 8.66
Total Operating Cost (Non-U.S. GAAP) $ 22,597 $ 44,484 $
16,748 $ 4,145 $ 2,190 $ 90,164 Royalties - 16,777 1,253 - - 18,030
Production taxes - - 978
- 978 Total Cash Costs (Non-U.S. GAAP)
22,597 61,261
18,001
5,123
2,190
109,172 Add/Subtract: Third party smelting costs - - (5,067 ) -
(759 ) (5,826 ) By-product credit 32,402 - 3,157 8,487 - 44,046
Other adjustments 20 8 636 103 - 767 Change in inventory (17,932 )
1,524 (1,046 ) 2,599 (42 ) (14,897 ) Depreciation, depletion and
amortization 32,328 15,137 3,420
1,391 946 53,222
Production costs applicable to sales,
including depreciation, depletion and amortization (U.S. GAAP)
$ 69,415 $ 77,930 $ 19,101 $ 17,703 $ 2,335 $
186,484
COEUR D’ALENE MINES CORPORATION AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December
31, 2010 2009 ASSETS (In thousands,
except share data) CURRENT ASSETS Cash and cash equivalents $
27,792 $ 22,782 Short-term investments 5,031 - Receivables 77,207
58,981 Ore on leach pad 7,397 9,641 Metal and other inventory
96,225 67,712 Prepaid expenses and other 19,026
26,920 232,678 186,036 NON-CURRENT ASSETS Property,
plant and equipment, net 659,840 539,037 Mining properties, net
2,140,586 2,240,056 Ore on leach pad, non-current portion 12,683
14,391 Restricted assets 27,892 26,546 Receivables, non-current
portion 31,910 37,534 Debt issuance costs, net 4,798 3,544 Deferred
tax assets 897 2,355 Other 13,729 4,536
TOTAL ASSETS $ 3,125,013 $ 3,054,035
LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES
Accounts payable $ 57,395 $ 77,003 Accrued liabilities and other
38,811 33,517 Accrued income taxes 21,818 11,783 Accrued payroll
and related benefits 14,432 9,815 Accrued interest payable 521
1,744 Current portion of capital leases and other debt obligations
67,653 15,403 Current portion of royalty obligation 46,417 34,672
Current portion of reclamation and mine closure 2,708
4,671 249,755 188,608 NON-CURRENT LIABILITIES
Long-term debt and capital lease obligations 146,821 185,397
Non-current portion of royalty obligation 160,367 128,107
Reclamation and mine closure 25,647 35,241 Deferred income taxes
480,954 516,678 Other long-term liabilities 15,623
6,799 829,412 872,222 COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common Stock, par value $0.01 per share;
authorized 150,000,000 shares, 89,311,920 issued at September 30,
2010 and 80,310,347 issued at December 31, 2009
893 803 Additional paid-in capital 2,578,043 2,444,262 Accumulated
deficit (533,254 ) (451,865 ) Accumulated other comprehensive
income 164 5 2,045,846
1,993,205 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$ 3,125,013 $ 3,054,035
COEUR D’ALENE MINES CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2010 2009 2010
2009 (In thousands, except per share data)
Sales of metal $ 118,564 $ 90,305 $ 307,871 $ 201,531
Production costs applicable to sales (60,402 ) (59,693 ) (170,795 )
(133,263 ) Depreciation, depletion and amortization (37,801
) (27,591 ) (95,503 ) (54,282 ) Gross profit
20,361 3,021 41,573 13,986 COSTS AND EXPENSES Administrative and
general 5,963 4,780 19,758 17,933 Exploration 3,840 2,362 9,521
8,632 Pre-development 82 - 814
- Total cost and expenses 9,885
7,142 30,093 26,565
OPERATING INCOME (LOSS) 10,476 (4,121 ) 11,480 (12,579 ) OTHER
INCOME AND EXPENSE Gain (loss) on debt extinguishments (806 )
(2,947 ) (12,714 ) 35,430 Fair value adjustments, net (19,107 )
(35,718 ) (65,881 ) (49,269 ) Interest and other income (638 )
(1,245 ) (2,725 ) 822 Interest expense, net of capitalized interest
(9,951 ) (6,088 ) (21,402 ) (12,047 )
Total other income and expense (30,502 ) (45,998 )
(102,722 ) (25,064 ) Loss from continuing operations
before income taxes (20,026 ) (50,119 ) (91,242 ) (37,643 ) Income
tax benefit (provision) (3,233 ) 13,428
17,977 17,067 Loss from continuing operations
(23,259 ) (36,691 ) (73,265 ) (20,576 ) Loss from discontinued
operations, net of income taxes (251 ) (3,003 ) (6,029 ) (1,451 )
Gain (loss) on sale of discontinued operations, net of income taxes
882 22,411 (2,095 )
22,411 NET INCOME (LOSS) (22,628 ) (17,283 ) (81,389 ) 384
Other comprehensive income, net of income taxes 164
- 159 - COMPREHENSIVE
INCOME (LOSS) $ (22,464 ) $ (17,283 ) $ (81,230 ) $ 384
BASIC AND DILUTED INCOME PER SHARE Basic income per share:
Loss from continuing operations $ (0.26 ) $ (0.48 ) $ (0.85 ) $
(0.29 ) Income (loss) from discontinued operations 0.01
0.25 (0.09 ) 0.30 Net
income (loss) $ (0.25 ) $ (0.23 ) $ (0.94 ) $ 0.01
Diluted income per share: Loss from continuing operations $ (0.26 )
$ (0.48 ) $ (0.85 ) $ (0.29 ) Income (loss) from discontinued
operations 0.01 0.25 (0.09 )
0.30 Net income (loss) $ (0.25 ) $ (0.23 ) $ (0.94 )
$ 0.01 Weighted average number of shares of common
stock Basic 89,236 76,133 86,489 69,163 Diluted 89,236 76,133
86,489 69,163
COEUR D’ALENE MINES CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2010 2009 2010
2009 (In thousands) CASH FLOWS FROM
OPERATING ACTIVITIES: Net income (loss) $ (22,628 ) $ (17,283 ) $
(81,389 ) $ 384 Add (deduct) non-cash items Depreciation, depletion
and amortization 37,913 28,647 97,697 59,086
Amortization of debt discount
537 4 537 504 Accretion of royalty obligation 4,778 5,227 14,407
9,086 Deferred income taxes (7,879 ) (24,175 ) (34,109 ) (29,896 )
Loss (gain) on debt extinguishment 806 2,947 12,714 (35,430 ) Fair
value adjustments, net 17,436 33,255 64,159 45,820 Loss (gain) on
foreign currency transactions 2,144 223 3,966 (185 ) Share-based
compensation 1,960 1,885 3,969 4,542 Loss (gain) from discontinued
operations and other assets (970 ) (32,212 ) 1,835 (32,291 ) Other
non-cash charges 629 454 702 687 Changes in operating assets and
liabilities: Receivables and other current assets (4,511 ) 1,855
(12,136 ) (7,145 ) Inventories (22,980 ) (10,547 ) (27,888 )
(23,733 ) Accounts payable and accrued liabilities 5,704
38,658 (8,298 ) 55,594
CASH PROVIDED BY OPERATING ACTIVITIES 12,939 28,938 36,166 47,023
CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments
(15 ) (6,525 ) (672 ) (15,104 ) Proceeds from sales of investments
12,477 11,237 13,134 31,247 Capital expenditures (36,783 ) (54,370
) (129,439 ) (174,849 ) Proceeds from sale of discontinued
operations and other assets 5,902 55,053
5,977 56,877 CASH (USED
IN) PROVIDED BY INVESTING ACTIVITIES (18,419 ) 5,395 (111,000 )
(101,829 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds
from sale of gold production royalty - - - 75,000 Payments on gold
production royalty (11,302 ) (6,112 ) (29,836 ) (7,218 ) Proceeds
from issuance of floating rate and senior term notes - - 100,000
20,368 Proceeds from gold lease facility 11,915 - 16,432 2,874
Payments on gold lease facility - - (17,101 ) (1,627 ) Proceeds
from bank borrowings 10,755 - 45,565 - Payments on senior secured
notes (9,139 ) - (13,306 ) - Repayment of credit facility,
long-term debt and capital leases (10,035 ) (7,268 ) (22,931 )
(22,137 ) Payments of common stock and debt issuance costs (22 )
(18 ) (2,202 ) (122 ) Proceeds from sale-leaseback transactions - -
4,853 12,511
Additions to restricted assets associated
with the Kensington Term Facility
(297 ) - (1,880 ) - Other 210 -
250 - CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES: (7,915 ) (13,398 )
79,844 79,649 INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (13,395 ) 20,935 5,010 24,843 Cash
and cash equivalents at beginning of period 41,187
24,668 22,782 20,760 Cash
and cash equivalents at end of period $ 27,792 $ 45,603
$ 27,792 $ 45,603
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