Coeur d’Alene Mines Corporation (NYSE:CDE) (TSX:CDM) today
announced record quarterly metal sales of $231.1 million and
operating cash flow1 of $115.8 million. The Company’s strong second
quarter results were led by its Palmarejo silver and gold mine in
Mexico, which produced a record 2.4 million ounces of silver and
33,389 ounces of gold.
2nd Quarter 2011 Highlights:
- Record net metal sales of $231.1
million represents 16% increase over prior quarter and is 129%
higher than last year’s second quarter
- Record $115.8 million of operating cash
flow1 represents 29% jump over prior quarter and 425% increase over
last year’s second quarter
- Adjusted earnings2 of $58.0 million, or
$0.65 per share, versus an adjusted loss of ($8.9) million, or
($0.10) per share during last year’s second quarter
- Silver production of 4.8 million
ounces, up 16% compared to prior quarter and 15% over last year’s
second quarter
- Record gold production of 60,656
ounces, up 14% over prior quarter and 162% compared to last year’s
second quarter
- Consolidated cash operating costs of
$3.39 per silver ounce3, down 59% compared to prior quarter and 58%
versus last year’s second quarter
- Average realized prices of $39.11 per
ounce of silver and $1,504 per ounce of gold
- Cash and equivalents were $106.8
million at June 30, 2011, up 159% from June 30, 2010
First Six Months 2011 Highlights:
- Record net metal sales of $430.7
million represents 128% increase over first six months of 2010
- Record operating cash flow of $206.0
million up 314% compared to first six months of 2010
- Adjusted earnings2 of $95.6 million, or
$1.07 per share compared to an adjusted loss of ($7.2) million, or
($0.08) per share during the first six months of 2010
- Silver production of 8.9 million
ounces, up 17% versus the first six months of 2010
- Gold production of 113,786 ounces, up
133% over first six months of 2010
- Consolidated cash operating costs of
$5.69 per silver ounce3, down 27% versus first six months of
2010
- Average realized prices of $35.42 per
ounce of silver and $1,430 per ounce of gold
2011 Outlook:
- Anticipating full-year production of
19.5 million – 20.5 million ounces of silver and 240,000 - 250,000
ounces of gold. Higher production levels are expected in the fourth
quarter from Rochester, San Bartolomé and Martha.
- Kensington is expected to slightly
increase its gold production during the second half compared to the
first six months of 2011, resulting in lower cash operating costs
per gold ounce.
- Expecting full-year net metal sales of
approximately $1.0 billion and operating cash flow in excess of
$500.0 million based on price assumptions of $35.09 per ounce of
silver and $1,426 per ounce of gold (first half 2011 average spot
prices).
- Expecting capital expenditures for 2011
to total $130 million-$140 million. A total of $42 million of which
was spent during the first six months of the year. Projected
capital expenditures are higher than the previous estimate of $120
million due to additional capital projects at Kensington that are
expected to enhance productivity and reduce costs.
- Forecasting average full-year cash
operating costs of approximately $5.75 per ounce of silver and
approximately $850 per ounce of gold at Kensington.
- Increasing second half exploration
expenditures by 67% to approximately $14.0 million to accelerate
drilling activities at Palmarejo, Rochester and Joaquin due to
ongoing positive results.
“Our second quarter performance reflects record high production
and record low costs per ounce at Palmarejo, another consistent
quarter at San Bartolomé, and steady progress at Kensington,” said
Mitchell J. Krebs, Coeur’s newly appointed President and Chief
Executive Officer. “Overall, we feel comfortable that full-year
2011 silver production will reach 19.5 million to 20.5 million
ounces and gold production will be 240,000 to 250,000 ounces.”
“As we continue focusing on operational consistency at our new,
large mines, we are also pursuing new internal and external growth
initiatives that will create value for shareholders. Our Rochester
silver and gold mine in Nevada is one such opportunity. We have now
resumed active mining and expect to generate additional silver and
gold ounces in the fourth quarter from a newly constructed leach
pad. Rochester offers opportunity for further high-return growth
beyond this initial expansion, which we are actively pursuing,” Mr.
Krebs said.
1 Operating cash flow is a non-U.S. GAAP measure defined as net
income plus depreciation, depletion and amortization and other
non-cash items prior to changes in operating assets and
liabilities. On a U.S. GAAP basis, the Company generated cash flow
from operations of $111.1 million in the second quarter of 2011 and
$146.9 million in the first six months of 2011. See the
reconciliation from non-U.S. GAAP to U.S. GAAP at the end of this
news release.
2 Adjusted earnings is a non-U.S. GAAP measure defined as
operating income plus interest and other income less interest
expense and current taxes. Adjusted earnings exclude non-cash fair
value adjustments, other non-cash adjustments, deferred taxes and
discontinued operations. The Company realized net income of $38.6
million in the second quarter of 2011 and $51.1 million during the
first six months of 2011. See reconciliation between non-U.S. GAAP
adjusted earnings and U.S. GAAP at the end of this news
release.
3 Cash operating costs is a non-U.S. GAAP measure defined as
cash costs less production taxes and royalties if applicable. See
reconciliation between non-U.S. GAAP adjusted earnings and U.S.
GAAP at the end of this news release. Consolidated cash operating
costs per silver ounce are net of gold by-product credit and
represent the consolidation of all Coeur’s mines except for
Kensington, which is a primary gold mine and reports cash operating
costs per gold ounce.
Financial
Highlights
US$ in millions (except price
of
YOY Qtr. 1st 6 Mo 1st 6 Mo YOY 1st 6
Mo.
silver and gold)
2Q 2011 2Q
2010 Variance 2011
2010 Variance Sales of
Metal $231.1
$101.0 129%
$430.7
$189.3 128%
Production Costs
77.1 58.6 32%
169.6 110.4 54%
EBITDA4 137.0
31.8 331%
225.6
58.7 284%
Adjusted
Earnings2 58.0
(8.9) 751%
95.6
(7.2) 1428%
Operating Cash Flow1
115.8 22.0
425%
206.0 49.8
314%
Capital Expenditures
25.8 45.5 -43%
41.7 92.7 -55%
Cash and
Equivalents 106.8
$41.2 159%
106.8
$41.2 159%
Total Debt5
157.0 181.0
-13%
157.0 181.0
-13%
Shares Issued & Outstanding
89.5 89.3 0%
89.5 89.3 0%
Avg.
Realized Price – Silver
39.11 18.56 111%
35.42 17.74 100%
Avg.
Realized Price – Gold 1,504
1,176 28%
1430
1,139 26%
Note: Reflects results from
continuing operations.
Second quarter 2011 metal sales totaled $231.1 million, up 129%
compared to last year’s second quarter and up 16% compared to the
prior quarter. This year-over-year increase is mostly due to record
silver and gold production from Palmarejo, gold production from
Kensington (which was not yet in operation during last year’s
second quarter), and higher silver and gold prices.
The Company realized average silver and gold prices during the
second quarter of $39.11 and $1,504 per ounce, representing
increases of 111% and 28%, respectively, compared to last year’s
second quarter. Sales of silver contributed 69% of the Company’s
total metal sales during the recent quarter while the remainder was
derived from the sale of gold.
Adjusted earnings2 in the second quarter were $58.0 million, or
$0.65 per share, compared to an adjusted loss of $8.9 million, or
($0.10) per share in the second quarter of 2010. Second quarter
2011 net income was $38.6 million, or $0.43 per share compared to a
net loss of $50.7 million, or ($0.57) per share in the second
quarter of 2010.
Second quarter operating cash flow1 of $115.8 million
represented a five-fold increase compared to the second quarter of
2010 and a 26% increase over the prior quarter.
Capital expenditures totaled $25.8 million during the second
quarter, 43% lower than last year’s second quarter, during which
construction at Kensington was nearing completion.
Cash and equivalents were $106.8 million at June 30, 2011.
Operational
Highlights: Production6
Year Over Year
First Six Months Year Over Year
2Q
'11
2Q
'10
Qtr.
Variance
2011
2010
1H
Variance
Silver Gold
Silver Gold Silver
Gold Silver
Gold Silver Gold
Silver Gold
Palmarejo 2,370 33,389
1,071 19,950 121%
67%
4,100 61,148
2,371 42,527 73%
44%
San Bartolomé 1,742
- 1,863 - -6%
-
3,453 -
2,903 0 19%
-
Rochester 333 1,397
533 2,616 -38%
-47%
667 2,848
1,055 5,306 -37%
-46%
Martha 101
112 550 558 -82%
-80%
281
356 915 1,074 -69%
-67%
Endeavor 215
- 139 - 55%
-
364 -
344 - 6% -
Kensington - 25,758
- - - -
- 49,434 -
- - -
Total
4,761 60,656 4,156
23,124 15% 162%
8,865 113,786 7,588
48,907 17% 133%
Operational
Highlights: Cash Operating Costs6
YOY Qtr.
First Six
Months
YOY 1st 6 Mo. 2Q '11
2Q '10
Variance
2011
2010 Variance Palmarejo
$ (3.68 ) $ 10.78
-134 %
$ (0.10 ) $
7.83 -101 %
San Bartolomé
$ 8.73 $ 7.78 12 %
$ 8.93 $ 8.57
4 %
Rochester $
4.34 $ 2.44 78 %
$ 7.31 $ 2.06
255 %
Martha $ 38.79
$ 8.97 332 %
$ 29.60 $ 11.57
156 %
Endeavor $ 20.04
$ 8.98 123 %
$
18.85 $ 8.04 134 %
Total $ 3.39 $
8.06 -58 %
$ 5.69
$ 7.77 $ (0.27 )
Kensington
$ 924 -
-
$ 955
- -
1 Operating cash flow is a non-U.S. GAAP measure defined as net
income plus depreciation, depletion and amortization and other
non-cash items prior to changes in operating assets and
liabilities. On a U.S. GAAP basis, the Company generated cash flow
from operations of $111.1 million in the second quarter of 2011 and
$146.9 million in the first six months of 2011. See the
reconciliation from non-U.S. GAAP to U.S. GAAP at the end of this
news release.
2 Adjusted earnings is a non-U.S. GAAP measure defined as
operating income plus interest and other income less interest
expense and current taxes. Adjusted earnings exclude non-cash fair
value adjustments, other non-cash adjustments, deferred taxes and
discontinued operations. The Company realized net income of $38.6
million in the second quarter of 2011 and $51.1 million during the
first six months of 2011. See reconciliation between non-U.S. GAAP
adjusted earnings and U.S. GAAP at the end of this news
release.
4 EBITDA is a non-U.S. GAAP measure 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 news
release.
5 Includes short and long-term indebtedness; excludes capital
leases, royalty obligations and Mitsubishi gold lease facility.
6 For additional operating statistics by mine, please refer to
the tables in the Appendix of this news release.
In the second quarter, the Company produced 4.8 million ounces
of silver and 60,656 ounces of gold compared to 4.1 million and
53,130 ounces of silver and gold, respectively, in the prior
quarter and 4.2 million and 23,124 ounces of silver and gold,
respectively, during the second quarter of 2010.
Quarterly cash operating costs declined 58% from a year ago to
$3.39 per silver ounce. Cash operating costs at Kensington, the
Company’s only pure gold mine, were $924 per ounce in the second
quarter.
Palmarejo, Mexico – Record Quarter
- Quarterly silver production jumped 37%
compared to the prior quarter due to increases in open pit and
underground grades. In addition, silver recovery rates increased
from 72.7% in the first quarter to 78.3% in the second
quarter.
- Quarterly gold production increased 20%
compared to the prior quarter.
- During the second half of 2011, mill
throughput is expected to increase and silver recovery rates are
expected to remain near second quarter levels, leading to increased
production compared to the first half of the year.
- Second quarter metal sales were $123.7
million, operating cash flow was $78.6 million, and capital
expenditures totaled $10.3 million.
San Bartolomé, Bolivia – Consistent Performance
- Second quarter operational performance
was similar to the prior quarter and slightly lower compared to the
same quarter last year.
- Throughput is expected to be higher
during the remainder of 2011 while the average silver grade is
anticipated to drop slightly.
- Second quarter metal sales were $55.6
million, operating cash flow was $40.7 million, and capital
expenditures totaled $3.3 million.
Kensington, Alaska – Completing Initial Year of
Operations
- Throughput increased 15% in the second
quarter compared to the prior quarter while the average gold grade
declined 4%. Since the end of the second quarter, the mill has been
processing approximately 1,400 tons of ore per day (tpd), above its
1,250 tpd design rate. Mining activities took place in lower-grade
areas during the second quarter. As underground development
accelerates, higher-grade areas are expected to be mined, resulting
in slightly higher production levels during the second half of the
year.
- Kensington's projected capital
expenditures for the remainder of 2011 are expected to be higher by
approximately $10 million - $20 million. This additional investment
will complete additional surface facilities, accelerate underground
development, purchase additional mining equipment, and complete the
underground paste back fill plant.
- In April 2011, John M. Kinyon joined
the Company as Vice President and General Manager of Coeur Alaska
with overall responsibility for Kensington. He was most recently
General Manager of the Wolverine Mine with Yukon Zinc and formerly
held senior operational management positions with Oceana Gold and
Barrick Gold’s Eskay Creek Mine.
- Second quarter metal sales were $26.0
million, operating cash flow was $11.4 million, and capital
expenditures totaled $7.4 million.
Rochester, Nevada – Expansion on Schedule
- Ore is now being crushed and stacked on
the new leach pad, which will lead to increased silver and gold
production in the fourth quarter.
- Metal sales were $14.4 million,
operating cash flow was ($2.3) million and capital expenditures
totaled $4.2 million. Operating cash flow was negative because of
costs related to pre-stripping activities for the expansion. These
costs are expensed during the period in which they are incurred
rather than capitalized.
- Over 200 million tons of additional
mineral resources are located in the existing pit walls and
represent a further significant growth opportunity.
Martha, Argentina – Additional Silver and Gold
Production
- The doubling of mill throughput from
240 tpd to 480 tpd is expected to be completed in third
quarter.
- Development of the Betty vein, located
approximately 500 meters north of the mill, commenced during the
second quarter.
- Higher production is anticipated during
the second half of 2011 due to the mining of higher grade ore in
the Betty and associated Betty Sur veins and from the reprocessing
of existing tailings.
Exploration Highlights
Don Birak, Senior Vice President of Exploration, said,
“Exploration on our large landholdings around existing operations
is another example of value-creating growth. We are significantly
increasing the amount spent on drilling during the second half of
the year to identify additional silver and gold resources. We have
also made a series of strategic investments in five early-stage
silver exploration companies in both North and South America with
promising silver projects in order to increase our exposure to
silver exploration opportunities.”
The Company has increased the amount it plans to invest in
exploration activities during the remainder of the year by 67% to
approximately $14.0 million. The exploration budget for the full
year is approximately $23 million, which is 31% higher than 2010.
The decision to increase exploration expenditures was driven by
ongoing positive drill results – primarily at Palmarejo – and by a
commitment to generate high returns on the Company’s free cash flow
by cost-effectively adding new mineral resources and reserves near
existing mines, and to demonstrate the long-life potential and
long-term value of the Company’s existing operations.
Palmarejo, Mexico
The Company completed 16,841 meters (55,253 feet) of core
drilling in the second quarter in the large Palmarejo District.
This work was divided nearly equally between targets around the
Palmarejo mine from both surface and underground drill platforms,
specifically the Rosario, Tucson and Chapotillo zones, and at the
Guadalupe and La Patria deposits, located near the mine. Drilling
at La Patria represents the first drilling by Coeur on this
mineralized, northwest-trending, district-scale structure. La
Patria is over four kilometers (2.5 miles) long and consists of
three separate zones. This year’s drilling on just the north zone
of La Patria has encountered several gold- and silver-bearing veins
located near the surface, suggesting the potential for a surface
mineable deposit.
Joaquin Project and Martha, Argentina
Coeur is actively engaged in defining the mineral resources at
Joaquin and advancing towards completion of a feasibility study,
which will lift the Company’s managing joint venture interest in
the Joaquin project from 51% to 61%. The Company holds rights to
further its interest to 71%. The Joaquin project is located
approximately 100 kilometers (62 miles) by road northwest of the
Martha mine.
A total of 4,556 meters (14,948 feet) of core drilling was
completed on all targets in the Santa Cruz Province of southern
Argentina in the second quarter of 2011. This included 3,072 meters
(10,079 feet) at Joaquin with the remainder focused around Coeur’s
wholly owned and operated Martha mine. Targets drilled this quarter
were extensions of the La Morena, La Morocha and La Negra zones at
Joaquin, as well initial definition of the high-grade portions of
La Negra at Joaquin, and new targets at the Martha mine and at the
nearby Wendy target. At Joaquin, La Morocha and La Negra are open
along strike and at depth. Both need further in-fill drilling to
advance the current mineral resources for use in scoping and
feasibility studies.
Kensington, Alaska, USA
Exploration consisted of just over 1,000 meters (3,300 feet) of
core drilling to discover new mineralization and expand ore
reserves. The main focus of this drilling was on the Comet
exploration target, which is located approximately 1,000 meters
(3,300 feet) north of the ore processing facility. Comet is one of
several gold-bearing vein structures, occurring within a 305 to 457
meter (1,000 to 1,500 feet) corridor, extending over 3,000 meters
(9,800 feet) southward from the Raven zone at the north to the
Jualin deposit, near the mill, to the south.
Rochester, Nevada, USA
Drilling shifted from ore control to exploration in the second
quarter. A total of 6,809 meters (22,346 feet) of reverse
circulation drilling was completed in the second quarter at the LM
target, northwest of the mine and at the Nevada Packard area.
San Bartolomé, Bolivia
The new program of trenching and sampling, which commenced late
in the first quarter, continued into the second quarter of 2011.
Year to date, over 133 new trenches have been completed and sampled
resulting in 672 new samples collected from the trenches on
one-meter vertical intervals. All of this work was centered on the
Huacajchi and Santa Rita areas to identify targets for follow
up.
Strategic Investments
Year to date, Coeur has made an aggregate of $17.9 million of
strategic, minority investments in four publicly-listed silver
exploration companies and one soon-to-be-listed company. These
silver exploration companies have primary silver projects in
Canada, Mexico, Chile, Peru and Bolivia.
The Company will continue to evaluate opportunities and make
similar investments based on the project’s potential, location,
management team, and return potential for shareholders. These
assets are classified as Marketable Securities on the balance
sheet. The Company classifies its short-term investments as
available-for-sale securities. The securities are measured at fair
market value in the financial statements with unrealized gains or
losses recorded in other comprehensive income.
Conference Call Information
Coeur will hold a conference call to discuss the Company's
second quarter 2011 results at 1:00 p.m. Eastern time on August 8,
2011. To listen live via telephone, call (877) 464-2820 (US and
Canada) or (660) 422-4718 (International). The conference ID number
is 84576190. 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 August 15, 2011. The replay dial-in
numbers are (855) 859-2056 (US and Canada) and (404) 537-3406
(International) and the access code is 84576190. In addition, the
call will be archived for a limited time on the Company’s web
site.
Cautionary Statement
This news release contains forward-looking statements within the
meaning of securities legislation in the United States and Canada,
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, the expected cost of capital expenditures
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, and the Canadian securities
regulators, 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
and a qualified person under NI 43-101, supervised the preparation
of the scientific and technical information concerning Coeur's
mineral projects in this news release. For a description of the key
assumptions, parameters and methods used to estimate mineral
reserves and resources, as well as data verification procedures and
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 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.
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,
adjusted earnings, 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 believe cash operating costs, operating cash flow,
adjusted earnings and EBITDA are important measures in assessing
the Company's overall financial performance.
About Coeur
Coeur d’Alene Mines Corporation is the largest U.S.-based
primary silver producer and a growing gold producer. The Company
has three new, large precious metals mines generating significantly
higher production, sales and cash flow in continued strong metals
markets. In 2011, Coeur will realize the first full year of
production and cash flow from all three of its new, 100%-owned
mines: the San Bartolomé silver mine in Bolivia, the Palmarejo
silver-gold mine in Mexico, and the Kensington gold mine
in Alaska. In addition, the Company is expecting new production
from its long-time Rochester silver-gold mine in Nevada in the
fourth quarter of 2011. The Company also owns a non-operating
interest in a low-cost mine in Australia,
and conducts ongoing exploration activities near its
operations in Argentina, Mexico, Alaska, and Nevada.
Photos of projects and other information can be accessed through
the Company’s website at www.coeur.com.
COEUR D’ALENE MINES CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
June 30, December 31, 2011
2010 ASSETS (In thousands,
except share data) CURRENT ASSETS Cash and cash equivalents $
106,830 $ 66,118 Short term investments 480 - Receivables 74,624
58,880 Ore on leach pad 6,528 7,959 Metal and other inventory
155,640 118,340 Prepaid expenses and other 13,112
14,914 357,214 266,211 NON-CURRENT ASSETS Property,
plant and equipment, net 663,510 668,101 Mining properties, net
2,060,740 2,122,216 Ore on leach pad, non-current portion 10,205
10,005 Restricted assets 29,711 29,028 Marketable securities 9,056
- Receivables, non-current portion 40,941 42,866 Debt issuance
costs, net 3,167 4,333 Deferred tax assets 564 804 Other
13,863 13,963 TOTAL ASSETS $ 3,188,971
$ 3,157,527
LIABILITIES AND SHAREHOLDERS'
EQUITY CURRENT LIABILITIES Accounts payable $ 66,235 $ 67,209
Accrued liabilities and other 7,005 39,720 Accrued income taxes
31,581 28,155 Accrued payroll and related benefits 18,116 17,953
Accrued interest payable 567 834 Current portion of capital leases
and other debt obligations 55,839 63,317 Current portion of royalty
obligation 57,366 51,981 Current portion of reclamation and mine
closure 1,423 1,306 Deferred tax liabilities 462
242 238,594 270,717 NON-CURRENT LIABILITIES Long-term
debt and capital leases 135,322 130,067 Non-current portion of
royalty obligation 183,987 190,334 Reclamation and mine closure
28,334 27,779 Deferred income taxes 483,897 474,264 Other long-term
liabilities 23,241 23,599 854,781
846,043 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY
Common stock, par value $0.01 per share;
authorized 150,000,000 shares, 89,530,624 issued at June 30, 2011
and 89,315,767 issued at December 31, 2010
895 893 Additional paid-in capital 2,583,345 2,578,206 Accumulated
deficit (487,257 ) (538,332 ) Accumulated other comprehensive loss
(1,387 ) - 2,095,596
2,040,767 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $
3,188,971 $ 3,157,527
COEUR D’ALENE MINES CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Three months ended Six months ended June
30, June 30, 2011
2010 2011
2010 (In thousands, except per share
data) Sales of metal $ 231,090 $ 101,018 $ 430,714 $
189,307 Production costs applicable to sales (77,102 ) (58,590 )
(169,576 ) (110,393 ) Depreciation, depletion and amortization
(57,641 ) (29,983 ) (107,682 ) (57,702
) Gross profit 96,347 12,445 153,456 21,212 COSTS AND EXPENSES
Administrative and general 1,827 6,859 14,058 13,794 Exploration
4,077 3,161 6,839 5,681 Pre-development, care, maintenance and
other 11,104 565 14,678
732 Total cost and expenses 17,008
10,585 35,575 20,207
OPERATING INCOME 79,339 1,860 117,881 1,005 OTHER INCOME AND
EXPENSE Loss on debt extinguishments (389 ) (4,050 ) (856 ) (11,908
) Fair value adjustments, net (12,432 ) (42,516 ) (17,700 ) (46,774
) Interest income and other 2,763 (3,821 ) 4,664 (2,088 ) Interest
expense, net of capitalized interest (9,268 ) (5,646
) (18,573 ) (11,451 ) Total other income and expense
(19,326 ) (56,033 ) (32,465 ) (72,221 )
Income (loss) from continuing operations before income taxes 60,013
(54,173 ) 85,416 (71,216 ) Income tax benefit (provision)
(21,402 ) 9,372 (34,341 ) 16,370
Income (loss) from continuing operations 38,611 (44,801 ) 51,075
(54,846 ) Loss from discontinued operations, net of income taxes -
(2,966 ) - (5,778 ) Loss on sale of net assets of discontinued
operations, net of income taxes - (2,977 )
- (2,977 ) NET INCOME (LOSS) 38,611 (50,744 )
51,075 (63,601 ) Other comprehensive loss, net of income taxes
(1,387 ) - (1,387 ) (5 )
COMPREHENSIVE INCOME (LOSS) $ 37,224 $ (50,744 ) $ 49,688
$ (63,606 ) BASIC AND DILUTED INCOME PER SHARE Basic
income (loss) per share: Income (loss) from continuing operations $
0.43 $ (0.50 ) $ 0.57 $ (0.64 ) Income (loss) from discontinued
operations - (0.07 ) -
(0.11 ) Net income (loss) $ 0.43 $ (0.57 ) $ 0.57 $
(0.75 ) Diluted income (loss) per share: Income (loss) from
continuing operations $ 0.43 $ (0.50 ) $ 0.57 $ (0.64 ) Income
(loss) from discontinued operations - (0.07 )
- (0.11 ) Net income (loss) $ 0.43 $
(0.57 ) $ 0.57 $ (0.75 ) Weighted average number of
shares of common stock Basic 89,310 88,501 89,299 85,145 Diluted
89,712 88,501 89,683 85,145
COEUR D’ALENE MINES CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
Three months ended
Six months ended June 30, June 30,
2011 2010
2011 2010 (In
thousands)
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $
38,611 $ (50,744 ) $ 51,075 $ (63,601 ) Add (deduct) non-cash items
Depreciation, depletion and amortization 57,641 31,010 107,682
59,784 Accretion of discount on debt and other assets, net 494 -
944 - Accretion of royalty obligation 5,770 4,637 11,037 9,629
Deferred income taxes 4,223 (14,892 ) 10,093 (21,388 ) Loss on debt
extinguishment 389 4,050 856 11,908 Fair value adjustments, net
13,933 43,052 20,593 46,723 (Gain) loss on foreign currency
transactions (848 ) 1,471 (737 ) 1,821 Share-based compensation
(3,351 ) 622 4,804 2,009 (Gain) loss on sale of assets (1,223 )
2,826 (1,224 ) 2,805 Other non-cash charges 200 15 831 71 Changes
in operating assets and liabilities: Receivables and other current
assets (6,784 ) 3,662 (11,644 ) (7,625 ) Inventories (23,575 )
(2,251 ) (36,068 ) (4,908 ) Accounts payable and accrued
liabilities 25,585 8,998 (11,392
) (14,002 ) CASH PROVIDED BY OPERATING ACTIVITIES
111,065 32,456 146,850
23,226 CASH FLOWS FROM INVESTING ACTIVITIES Purchase
of investments (11,881 ) - (13,110 ) - Proceeds from sales and
maturities of investments 2,773 - 3,360 - Capital expenditures
(25,764 ) (45,467 ) (41,681 ) (92,656 ) Other 325
150 273 76 CASH USED IN
INVESTING ACTIVITIES (34,547 ) (45,317 )
(51,158 ) (92,580 ) CASH FLOWS FROM FINANCING
ACTIVITIES: Proceeds from issuance of notes and bank borrowings -
22,041 27,500 134,810 Payments on long-term debt, capital leases,
and associated costs (16,704 ) (11,377 ) (34,099 ) (18,978 )
Payments on gold production royalty (17,441 ) (9,582 ) (32,059 )
(18,533 ) Proceeds from gold lease facility - - - 4,517 Payments on
gold lease facility - (2,210 ) (13,800 ) (17,101 ) Proceeds from
sale-leaseback transactions - - - 4,853
Additions to restricted assets associated
with the Kensington Term Facility
- (786 ) (1,325 ) (1,584 ) Other 30 -
(1,197 ) (225 ) CASH PROVIDED (USED IN) BY FINANCING
ACTIVITIES: (34,115 ) (1,914 ) (54,980 )
87,759 INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 42,403 (14,775 ) 40,712 18,405 Cash and cash
equivalents at beginning of period 64,427
55,962 66,118 22,782 Cash and
cash equivalents at end of period $ 106,830 $ 41,187
$ 106,830 $ 41,187
The Company’s operating cash flow, excluding changes in
operating assets and liabilities, consisted of the following (in
thousands):
OPERATING CASH FLOW RECONCILIATION
2Q 11 1Q 11 4Q 10 3Q 10 2Q
10 Cash provided by operating activities 111,065 35,786 129,397
12,939 32,456 Changes in operating assets and liabilities:
Receivables and other current assets 6,784 4,860 (5,908 ) 4,511
(3,662 ) Prepaid expenses and other - - (5,871 ) - - Inventories
23,575 12,493 19,999 22,980 2,251 Accounts payable and accrued
liabilities (25,585 ) 36,977 (38,186 ) (5,704 ) (8,998 )
OPERATING CASH FLOW 115,839 90,116 99,431
34,726 22,047
Reconciliation of EBITDA to net income (loss) is shown below
(in thousands):
EBITDA RECONCILIATION
2Q 11 1Q 11 2010 4Q 10 3Q
10 2Q 10 Net income (loss) 38,611 12,464 (91,308 )
(5,078 ) (22,628 ) (50,744 ) Gain (loss) on sale of net assets of
discontinued operations, net of income taxes - - 2,095 1 (883 )
2,977 Income (loss) from discontinued operations, net of income
taxes - - 6,029 - 251 2,966 Income tax benefit 21,402 12,939 (9,481
) 3,655 3,233 (9,372 ) Interest expense, net of capitalized
interest 9,268 9,304 30,942 9,539 9,951 5,646 Interest and other
income (2,763 ) (1,934 ) (771 ) (3,495 ) 638 3,821 Fair value
adjustments, net 12,432 5,302 117,094 51,213 19,107 42,516 Gain
(loss) on debt extinguishments 389 467 20,300 7,586 806 4,050
Depreciation and depletion 57,641 50,041 141,619
46,116 37,801 29,983
EBITDA
136,980 88,583 216,519 109,537 48,276
31,843
Reconciliation of adjusted earnings to net income (loss) is
shown below (in thousands):
ADJUSTED EARNINGS RECONCILIATION 2Q 11 1Q
11 2010 4Q 10 3Q 10 2Q 10
Net income (loss) 38,611 12,464 (91,308 ) (5,078 ) (22,628 )
(50,744 ) Gain (loss) on sale of net assets of discontinued
operations, net of income taxes - - 2,095 1 (883 ) 2,977 Share
Based Compensation (3,351 ) 8,155 7,217 3,248 1,960 622 Income
(loss) from discontinued operations, net of income taxes - - 6,029
- 251 2,966 Deferred income tax provision 4,198 5,870 (38,901 )
(8,386 ) (7,860 ) (15,935 ) Interest expense, accretion of royalty
obligation 5,770 5,267 19,018 4,611 4,778 4,637 Fair value
adjustments, net 12,432 5,302 117,094 51,213 19,107 42,516 Gain
(loss) on debt extinguishments 389 467 20,300 7,586
806 4,050
ADJUSTED EARNINGS (LOSS)
58,049 37,525 41,544 53,195 (4,469 ) (8,911 )
Operating Statistics from Continuing
Operations
Three
months ended June 30, Six months ended June 30,
2011 2010
2011 2010
Silver
Operations:
Palmarejo Tons milled 414,719 457,268 813,459 915,275 Ore
grade/Ag oz 7.30 3.23 6.65 3.57 Ore grade/Au oz 0.08 0.05 0.08 0.05
Recovery/Ag oz 78.3 % 72.5 % 75.8 % 72.6 % Recovery/Au oz 95.2 %
87.3 % 91.5 % 89.4 % Silver production ounces 2,370,536 1,070,638
4,100,303 2,371,231 Gold production ounces 33,389 19,950 61,148
42,527 Cash operating costs/oz $ (3.68 ) $ 10.78 $ (0.10 ) $ 7.83
Cash cost/oz $ (3.68 ) $ 10.78 $ (0.10 ) $ 7.83 Total production
cost/oz $ 14.16 $ 29.73 $ 18.48 $ 25.16
San Bartolomé Tons
milled 378,640 446,909 766,308 740,014 Ore grade/Ag oz 5.24 5.00
5.11 4.50 Recovery/Ag oz 87.7 % 83.4 % 88.2 % 87.2 % Silver
production ounces 1,741,578 1,863,141 3,452,525 2,903,068 Cash
operating costs/oz $ 8.73 $ 7.78 $ 8.93 $ 8.57 Cash cost/oz $ 10.32
$ 8.32 $ 10.40 $ 9.22 Total production cost/oz $ 13.51 $ 11.56 $
13.44 $ 12.39
Martha Tons milled 22,122 12,421 39,940 29,996
Ore grade/Ag oz 5.44 50.24 8.39 35.21 Ore grade/Au oz 0.01 0.06
0.01 0.04 Recovery/Ag oz 84.0 % 88.1 % 83.8 % 86.6 % Recovery/Au oz
72.4 % 81.7 % 74.3 % 89.5 % Silver production ounces 101,122
549,885 281,107 915,111 Gold production ounces 112 558 356 1,074
Cash operating costs/oz $ 38.79 $ 8.97 $ 29.60 $ 11.57 Cash cost/oz
$ 40.47 $ 9.57 $ 30.86 $ 12.12 Total production cost/oz $ 33.83 $
14.10 $ 30.92 $ 17.38
Rochester (A) Silver production ounces
333,432 533,093 667,127 1,055,253 Gold production ounces 1,397
2,616 2,848 5,306 Cash operating costs/oz $ 4.34 $ 2.44 $ 7.31 $
2.06 Cash cost/oz $ 6.88 $ 2.93 $ 9.37 $ 2.64 Total production
cost/oz $ 8.92 $ 3.97 $ 11.22 $ 3.67
Endeavor Tons milled
207,388 143,371 374,674 273,244 Ore grade/Ag oz 2.41 2.01 2.23 2.61
Recovery/Ag oz 42.9 % 48.4 % 43.5 % 48.2 % Silver production ounces
214,613 139,447 363,795 343,700 Cash operating costs/oz $ 20.04 $
8.98 $ 18.85 $ 8.04 Cash cost/oz $ 20.04 $ 8.98 $ 18.85 $ 8.04
Total production cost/oz $ 24.07 $ 12.21 $ 22.93 $ 11.27
Three months ended June 30,
Six months ended June 30, 2011
2010 2011
2010
Gold
Operation:
Kensington(B) Tons milled 121,565 - 227,385 - Ore grade/Au
oz 0.23 - 0.23 - Recovery/Au oz 93.0 % - 92.7 % - Gold production
ounces 25,758 - 49,434 - Cash operating costs/oz $ 923.56 $ - $
954.78 $ - Cash cost/oz $ 923.56 $ - $ 954.78 $ - Total production
cost/oz $ 1,308.24 $ - $ 1,344.67 $ -
CONSOLIDATED
PRODUCTION TOTALS(C) Total silver ounces 4,761,281
4,156,204 8,864,857 7,588,363 Total gold ounces 60,656 23,124
113,785 48,907
Silver
Operations:(D)
Cash operating costs per oz/silver $ 3.39 $ 8.06 $ 5.69 $ 7.77 Cash
cost per oz/silver $ 4.19 $ 8.44 $ 6.46 $ 8.17 Total production
cost/oz $ 14.42 $ 15.62 $ 16.55 $ 15.72
Gold
Operation:(E)
Cash operating costs/oz $ 923.56 $ - $ 954.78 $ - Cash cost/oz $
923.56 $ - $ 954.78 $ - Total production cost/oz $ 1,308.24 $ - $
1,344.67 $ -
CONSOLIDATED SALES TOTALS (F) Silver ounces
sold 4,133,283 4,051,838 7,792,587 7,685,594 Gold ounces sold
49,930 23,645 115,852 49,379 Realized price per silver ounce $
39.11 $ 18.56 $ 35.42 $ 17.74 Realized price per gold ounce $ 1,504
$ 1,176 $ 1,430 $ 1,139 (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% for silver and 92% for gold. However,
ultimate recoveries will not be known until leaching operations
cease, which is currently estimated for 2014 for the current leach
pad. Current recovery may vary significantly from ultimate
recovery. See Critical Accounting Policies and Estimates – Ore on
Leach Pad in the Company’s Form 10-K for the year ended December
31, 2010. (B) Kensington achieved commercial production on July 3,
2010. (C) Current production ounces and recoveries reflect final
metal settlements of previously reported production ounces. (D)
Amount includes by-product gold credits deducted in computing cash
costs per ounce. (E) Amounts reflect Kensington per ounce
statistics only. (F) 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.
Reconciliation of Non-GAAP Cash Costs to GAAP Production
Costs
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.
Total cash costs include all direct and indirect operating cash
costs related directly to the physical activities of producing
metals, including mining, processing and other plant costs,
third-party refining and marketing expense, on-site general and
administrative costs, royalties and mining production taxes, net of
by-product revenues earned from all metals other than the primary
metal produced at each unit. Cash operating costs include all cash
costs except production taxes and royalties if applicable. Total
cash costs and cash operating costs are performance measures which
we believe provide management and investors with an indication of
net cash flow, after consideration of the realized price received
for production sold. Management also uses these measurements for
the comparative monitoring of performance of our mining operations
period-to-period from a cash flow perspective. “Cash operating
costs per ounce” and “Total cash costs per ounce” are measures
developed by precious metals companies in an effort to provide a
comparable standard, however, there can be no assurance that our
reporting of these non-GAAP measures are similar to that reported
by other mining companies. Cash operating costs and total cash
costs, as alternative measures, have the limitation of excluding
potentially large amounts related to inventory adjustments,
non-cash charges and byproduct credits. Management compensates for
this limitation by using both the GAAP production costs and the
non-GAAP cash costs metrics in its planning.
Production costs applicable to sales including depreciation,
depletion and amortization, is the most comparable financial
measure calculated in accordance with GAAP to total cash costs. The
sum of the production costs applicable to sales and depreciation,
depletion and amortization for our mines as set forth in the tables
below is included in our Consolidated Statements of Operations and
Comprehensive Income.
Reconciliation of Non-U.S. GAAP Cash Costs to U.S. GAAP
Production Costs Three months ended
June 30, 2011
(In thousands except ounces and per
ounce
San
costs)
Palmarejo
Bartolomé
Kensington Rochester Martha Endeavor
Total Production of silver (ounces) 2,370,537 1,741,577 -
333,431 101,122 214,613 4,761,280 Production of gold (ounces)
25,758 25,758 Cash operating cost per Ag ounce $ (3.68 ) $ 8.73 $
4.34 $ 38.79 $ 20.04 $ 3.39 Cash costs per Ag ounce $ (3.68 ) $
10.32 $ 6.88 $ 40.47 $ 20.04 $ 4.19 Cash operating cost per Au
ounce $ 923.56 $ 923.56 Cash cost per Au ounce $
923.56 $ 923.56 Total
Cash Operating Cost (Non-U.S. GAAP) $ (8,719 ) $ 15,211 $ 23,789 $
1,446 $ 3,922 $ 4,301 $ 39,950 Royalties 2,760 - 578 170 - 3,508
Production taxes - - 268
- - 268 Total Cash
Costs (Non-U.S. GAAP) (8,719 ) 17,971 23,789 2,292 4,092 4,301
43,726 Add/Subtract: Third party smelting costs - - (3,375 ) - (426
) (1,018 ) (4,819 ) By-product credit 50,188 - - 2,106 169 - 52,463
Other adjustments 552 376 19 97 76 - 1,120 Change in inventory
(4,252 ) (4,221 ) (7,588 ) 846 (162 ) (10 ) (15,387 ) Depreciation,
depletion and amortization 41,745 5,182
9,889 584 (748 ) 865
57,517
Production costs applicable to sales,
including depreciation, depletion and amortization (U.S. GAAP)
$ 79,514 $ 19,308 $ 22,734 $ 5,925 $ 3,001
$ 4,138 $ 134,620
Reconciliation of Non-U.S. GAAP Cash Costs to U.S. GAAP
Production Costs Six months ended
June 30, 2011
(In thousands except ounces and per
ounce
San
costs)
Palmarejo Bartolomé Kensington
Rochester Martha Endeavor Total
Production of silver (ounces) 4,100,303 3,452,525 667,127 281,107
363,795 8,864,857 Production of gold (ounces) 49,434 49,434 Cash
operating cost per Ag ounce $ 0.10 $ 8.93 $ 7.31 $ 29.60 $ 18.85 $
6.07 Cash costs per Ag ounce $ 0.10 $ 10.40 $ 9.37 $ 30.86 $ 18.85
$ 6.84 Cash operating cost per Au ounce $ 954.78 $ 954.78 Cash cost
per Au ounce $ 954.78 $
954.78 Total Cash Operating Cost (Non-U.S. GAAP) $
(407 ) $ 30,825 $ 47,199 $ 4,875 $ 8,322 $ 6,859 $ 97,673 Royalties
- 5,064 - 908 353 - 6,325 Production taxes - -
- 468 - -
468 Total Cash Costs (Non-U.S. GAAP) (407 )
35,889 47,199 6,251 8,675 6,859 104,466 Add/Subtract: Third party
smelting costs - - (6,025 ) - (1,799 ) (1,581 ) (9,405 ) By-product
credit 88,656 - - 4,121 508 - 93,285 Other adjustments 773 188 19
138 172 - 1,290 Change in inventory (13,884 ) (7,833 ) 4,572 2,188
(4,196 ) (905 ) (20,058 ) Depreciation, depletion and amortization
75,411 10,325 19,254
1,098 (157 ) 1,483 107,414
Production costs applicable to sales,
including depreciation, depletion and amortization (U.S. GAAP)
$ 150,549 $ 38,569 $ 65,019 $ 13,796 $ 3,203
$ 5,856 $ 276,992
Three
months ended June 30, 2010
(In thousands except ounces and
per
San
ounce costs)
Palmarejo Bartolomé Rochester Martha
Endeavor Total Production of silver (ounces)
1,070,638 1,863,142 533,094 549,885 139,447 4,156,206 Cash
operating cost per Ag ounce $ 10.78 $ 7.78 $ 2.44 $ 8.97 $ 8.98 $
8.06 Cash costs per Ag ounce $ 10.78 $ 8.32 $ 2.93 $
9.57 $ 8.98 $ 8.44 Total Operating Cost
(Non-U.S. GAAP) $ 11,542 $ 14,490 $ 1,298 $ 4,937 $ 1,252 $ 33,519
Royalties - 999 - 329 - 1,328 Production taxes -
- 260 - -
260 Total Cash Costs (Non-U.S. GAAP) 11,542 15,489
1,558 5,266 1,252 35,107 Add/Subtract: Third party smelting costs -
- - (1,133 ) (346 ) (1,479 ) By-product credit 23,846 - 3,131 666 -
27,643 Other adjustments - - 95 253 - 348 Change in inventory
(3,289 ) (148 ) 811 (920 ) 517 (3,029 ) Depreciation, depletion and
amortization 20,289 6,032 458
2,236 450 29,465
Production costs applicable to sales,
including depreciation, depletion and amortization (U.S. GAAP)
$ 52,388 $ 21,373 $ 6,053 $ 6,368 $ 1,873
$ 88,055
Six months ended
June 30, 2010
(In thousands except ounces and
per
San
ounce costs)
Palmarejo Bartolomé Rochester
Martha Endeavor Total Production of
silver (ounces) 2,371,231 2,903,068 1,055,253 915,111 343,700
7,588,363 Cash operating cost per Ag ounce $ 7.83 $ 8.57 $ 2.06 $
11.57 $ 8.04 $ 7.77 Cash costs per Ag ounce $ 7.83 $ 9.22
$ 2.64 $ 12.12 $ 8.04 $ 8.17
Total Operating Cost (Non-U.S. GAAP) $ 18,572 $ 24,869 $ 2,175 $
10,585 $ 2,764 $ 58,965 Royalties - 1,891 - 506 - 2,397 Production
taxes - - 608 -
- 608 18,572 26,760 2,783 11,091 2,764
61,970 Total Cash Costs (Non-U.S. GAAP) 61,970 Add/Subtract: Third
party smelting costs - - - (1,826 ) (610 ) (2,436 ) By-product
credit 48,891 - 6,119 1,237 - 56,247 Other adjustments - - 163 259
- 422 Change in inventory (6,697 ) (2,016 ) 2,318 697 (112 ) (5,810
) Depreciation, depletion and amortization 41,083
9,209 923 4,553 1,110
56,878
Production costs applicable to sales,
including depreciation, depletion and amortization (U.S. GAAP)
$ 101,849 $ 33,953 $ 12,306 $ 16,011 $ 3,152
$ 167,271
Financial information relating to the Company’s segments is as
follows (in thousands):
Palmarejo San Bartolomé Kensington
Rochester Martha Endeavor Three months
ended June 30, 2011 Mine Mine
Mine Mine Mine
Mine Other Total Sales of metals $
123,727 $ 55,598 $ 26,012 $ 14,434 $ 4,769 $ 6,550 $ - $ 231,090
Productions costs applicable to sales (37,770 ) (14,126 )
(12,844 ) (5,341 ) (3,749 ) (3,272 ) - (77,102 ) Depreciation and
depletion (41,753 ) (5,182 ) (9,890 )
(584 ) 747 (865 ) (114 ) (57,641
) Gross profit (loss) 44,204 36,290 3,278 8,509 1,767 2,413 (114 )
96,347 Exploration expense 1,276 31 320 340 1,527 - 583
4,077 Other operating expenses - 70
116 11,025 - -
1,720 12,931 OPERATING INCOME
(LOSS) 42,928 36,189 2,842 (2,856 ) 240 2,413 (2,417 ) 79,339
Interest and other income 539 180 2 5 (179 ) - 2,216 2,763
Interest expense (6,112 ) (2 ) (1,360 ) - (68 ) - (1,726 ) (9,268 )
Loss on debt extinguishment - - - - - - (389 ) (389 ) Fair value
adjustments, net (13,731 ) - 2,374 - - - (1,075 ) (12,432 ) Income
tax benefit (expense) (6,286 ) (12,109 )
- - (410 ) (3 )
(2,594 ) (21,402 ) Net income (loss) $ 17,338
$ 24,258 $ 3,858 $ (2,851 ) $ (417 ) $ 2,410 $
(5,985 ) $ 38,611 Segment assets (A) $ 2,095,411 $
269,439 $ 507,531 $ 35,606 $ 19,341 $ 40,760 $ 16,201 $ 2,984,289
Capital expenditures (B) $ 10,278 $ 3,276 $ 7,365 $ 4,201 $ 573 $ -
$ 71 $ 25,764
Palmarejo San Bartolomé
Kensington Rochester Martha Endeavor
Three months ended June 30, 2010 Mine
Mine Mine Mine
Mine Mine Other Total
Sales of metals $ 44,834 $ 31,275 $ - $ 12,416 $ 9,187 $ 3,306 $ -
$ 101,018 Productions costs applicable to sales (32,100 )
(15,340 ) - (5,595 ) (4,132 ) (1,423 ) - (58,590 ) Depreciation and
depletion (20,291 ) (6,032 ) -
(458 ) (2,619 ) (450 ) (133 ) (29,983 )
Gross profit (loss) (7,557 ) 9,903 - 6,363 2,436 1,433 (133 )
12,445 Exploration expense 1,307 - 229 20 1,205 - 400 3,161
Other operating expenses 38 - -
601 - -
6,785 7,424 OPERATING INCOME (LOSS) (8,902 )
9,903 (229 ) 5,742 1,231 1,433 (7,318 ) 1,860 Interest and
other income (1,903 ) (105 ) - 1 (2,180 ) - 366 (3,821 ) Interest
expense (5,401 ) (92 ) - - (17 ) - (136 ) (5,646 ) Loss on debt
extinguishment - - - - - - (4,050 ) (4,050 ) Fair value
adjustments, net (32,633 ) - (6,089 ) - - - (3,794 ) (42,516 )
Income tax benefit (expense) (4,006 ) (3,909 ) - - (2,160 ) -
19,447 9,372 Net loss from discontinued operations -
- - - -
- (5,943 ) (5,943 ) Net income
(loss) $ (52,845 ) $ 5,797 $ (6,318 ) $ 5,743
$ (3,126 ) $ 1,433 $ (1,428 ) $ (50,744 ) Segment
assets (A) $ 2,140,633 $ 274,156 $ 477,800 $ 28,625 $ 26,269 $
39,210 $ 10,683 $ 2,997,376 Capital expenditures (B) $ 10,811 $
1,325 $ 33,195 $ 86 $ 11 $ - $ 39 $ 45,467
Palmarejo
San Bartolomé Kensington Rochester
Martha Endeavor Six months ended June 30, 2011
Mine Mine Mine
Mine Mine Mine
Other Total Sales of metals $ 211,892 $ 101,919 $
74,122 $ 28,696 $ 4,455 $ 9,630 $ - $ 430,714 Productions
costs applicable to sales (75,139 ) (28,244 ) (45,764 ) (12,698 )
(3,359 ) (4,372 ) - (169,576 ) Depreciation and depletion
(75,428 ) (10,325 ) (19,255 ) (1,098 )
155 (1,484 ) (247 ) (107,682 ) Gross
profit (loss) 61,325 63,350 9,103 14,900 1,251 3,774 (247 ) 153,456
Exploration expense 1,912 35 366 362 2,823 - 1,341 6,839
Other operating expenses - 108
136 14,561 - -
13,931 28,736 OPERATING INCOME (LOSS)
59,413 63,207 8,601 (23 ) (1,572 ) 3,774 (15,519 ) 117,881
Interest and other income 1,828 787 3 51 (489 ) - 2,484 4,664
Interest expense (11,815 ) (36 ) (2,607 ) - (413 ) - (3,702 )
(18,573 ) Loss on debt extinguishment - - - - - - (856 ) (856 )
Fair value adjustments, net (20,041 ) - 1,676 - - - 665 (17,700 )
Income tax benefit (expense) (10,062 ) (22,146
) (20 ) - (369 ) (3 )
(1,741 ) (34,341 ) Net income (loss) $ 19,323
$ 41,812 $ 7,653 $ 28 $ (2,843 ) $ 3,771
$ (18,669 ) $ 51,075 Segment assets (A) $
2,095,411 $ 269,439 $ 507,531 $ 35,606 $ 19,341 $ 40,760 $ 16,201 $
2,984,289 Capital expenditures (B) $ 15,359 $ 6,812 $ 12,734 $
5,869 $ 824 $ - $ 83 $ 41,681
Palmarejo San
Bartolomé Kensington Rochester Martha
Endeavor Six months ended June 30, 2010 Mine
Mine Mine Mine
Mine Mine Other Total
Sales of metals $ 90,448 $ 45,867 $ - $ 23,167 $ 24,207 $ 5,618 $ -
$ 189,307 Productions costs applicable to sales (60,767 )
(24,743 ) - (11,384 ) (11,458 ) (2,041 ) - (110,393 ) Depreciation
and depletion (41,084 ) (9,209 ) -
(923 ) (5,104 ) (1,110 ) (272 )
(57,702 ) Gross profit (loss) (11,403 ) 11,915 - 10,860 7,645 2,467
(272 ) 21,212 Exploration expense 1,787 - 242 41 2,415 -
1,196 5,681 Other operating expenses 351 -
- 773 - -
13,402 14,526 OPERATING INCOME
(LOSS) (13,541 ) 11,915 (242 ) 10,046 5,230 2,467 (14,870 ) 1,005
Interest and other income 261 (144 ) - 1 (2,950 ) - 744
(2,088 ) Interest expense (10,868 ) (163 ) - - (55 ) - (365 )
(11,451 ) Loss on debt extinguishment - - - - - - (11,908 ) (11,908
) Fair value adjustments, net (36,179 ) - (6,552 ) - - - (4,043 )
(46,774 ) Income tax benefit (expense) 2,857 (4,501 ) - - (2,173 )
- 20,187 16,370 Net loss from discontinued operations
- - - - -
- (8,755 ) (8,755 ) Net income
(loss) $ (57,470 ) $ 7,107 $ (6,794 ) $ 10,047
$ 52 $ 2,467 $ (19,010 ) $ (63,601 ) Segment
assets (A) $ 2,140,633 $ 274,156 $ 477,800 $ 28,625 $ 26,269 $
39,210 $ 10,683 $ 2,997,376 Capital expenditures (B) $ 27,319 $
1,871 $ 63,097 $ 87 $ 3 $ - $ 279 $ 92,656
(A) Segment assets consist of
receivables, prepaids, inventories, property, plant and equipment,
and mining properties
(B) Balance represents cash
flow amounts
Segment Information from Continuing
Operations
Palmarejo
in millions of US$ 2Q 2011
1Q 2011 4Q 2010
3Q 2010 2Q 2010 Sales of
Metal $123.7 $88.2
$78.1 $61.5 $44.8
Production Costs 37.7
37.4 35.6 31.3
32.1
EBITDA 84.7
50.2 41.0 28.9 11.4
Operating Income/(Loss) 43.0
16.5 13.0 6.4
-8.9
Operating Cash Flow1
78.6 44.4 40.1
28.9 0.1
Capital Expenditures
10.3 5.1 11.1
15.8 10.8
Ounces unless otherwise noted
2Q 2011 1Q 2011
4Q 2010 3Q 2010
2Q 2010 Underground Operations:
Tons Mined
144,614 143,800 151,032
146,682 166,381
Average Silver Grade
(oz/t) 10.1 8.3
6.3 5.6 5.1
Average
Gold Grade (oz/t) 0.1371
0.14 0.10 0.10
0.09
Surface Operations:
Tons Mined 276,699
246,879 281,177 256,927
306,246
Average Silver Grade (oz/t)
5.8 4.6 7.3
5.2 2.0
Average Gold Grade (oz/t)
0.0559 0.05
0.07 0.07 0.03
Processing:
Total Tons
Milled 414,719
398,740 514,391 405,742
457,268
Average Recovery Rate – Ag
78.30% 72.70% 66.72%
69.60% 72.50%
Average Recovery Rate –
Au 95.20% 87.40%
90.32% 94.30% 86.70%
Silver
Production - oz 2,371
1,730 2,010 1,507 1,071
Gold Production - oz 33
28 30 30 20
Cash Operating Costs/Ag Oz
($3.68) $4.80 $2.68
$0.15 $10.78
San Bartolome
in millions of
US$ 2Q 2011 1Q
2011 4Q 2010 3Q 2010
3Q 2010 Sales of Metal
$55.6 $46.3 $67.1
$30.0 $30.0
Production Costs
14.1 14.1 22.4
12.9 12.9
EBITDA
41.4 $31.8 44.7
17.1 17.1
Operating Income/(Loss)
36.2 27.0
39.2 12.2 12.2
Operating Cash
Flow1 40.7
32.2 34.0 10.3 10.3
Capital Expenditures 3.3
3.5 3.5 0.8 0.8
Ounces
unless otherwise noted 2Q 2011
1Q 2011 4Q 2010
3Q 2010 2Q 2010 Tons
Milled 378,640
387,668 404,160 360,605
446,909
Average Silver Grade (oz/t)
5.75 5.6 5.4 5.7
5.0
Average Recovery Rate
87.70% 88.60% 92.04%
87.20% 83.40%
Silver Production
1,742 1,711 2,011
1,795 1,863
Gold Production
0 0 0
0 0
Cash Operating Costs/Ag Oz
$8.73 $9.13
$7.53 $7.05 $7.78
Kensington
in millions of US$ 2Q 2011
1Q 2011 4Q 2010
3Q 2010 2Q 2010 Sales of
Metal 26.0 $48.1
$15.1 $8.5 nm
Production Costs 12.8
32.9 6.6 7.4 nm
EBITDA 12.8
12.8
8.5 0.5 nm
Operating
Income/(Loss) 2.8 5.8
(1.8) (6.7) nm
Operating Cash Flow1 11.4
0.0 7.8 -0.5
nm
Capital Expenditures
7.4 5.4 9.6 20.0
33.2
Ounces unless otherwise noted
2Q 2011 1Q 2011 4Q
2010 3Q 2010 2Q 2010
Tons Milled 121,565
105,820 83,774 90,254
0
Average Gold Grade (oz/t) 0.23
0.24 0.37 0.19
0
Average Recovery Rate 93.00%
92.40% 91 87.70%
0
Gold Production 26
24 28 15 0
Cash Operating Costs/Ag Oz
$923.56 $988.75 $874.60
$1,199.20 $0.00
Rochester
in millions of US$
2Q 2011 1Q 2011
4Q 2010 3Q 2010
2Q 2010 Sales of Metal
$14.4 $14.3 $25.3
$5.8 $12.4
Production Costs
5.3 7.4 10.6
2.8 5.6
EBITDA
(2.2) 3.4 14.7 2.8
6.2
Operating Income/(Loss)
(2.9) 2.9 15.2
2.3 5.7
Operating Cash Flow1
-2.3 3.4
14.8 2.8 6.2
Capital
Expenditures 4.2 1.7
2.1 0.1 0.1
Ounces unless
otherwise noted 2Q 2011
1Q 2011 4Q 2010
3Q 2010 2Q 2010 Silver
Production 333 334
549 419 533
Gold
Production 1 2
2 2 3
Cash Operating Costs/Ag
Oz $4.34 $10.28
$2.94 $5.10 $2.44
Martha
in millions of US$ 2Q 2011
1Q 2011 4Q 2010
3Q 2010 2Q 2010 Sales of
Metal $4.8 ($0.3)
$18.6 $11.0 $9.2
Production Costs 3.9
-0.4 10.3 5.3 4.1
EBITDA (0.6) -1.2
6.4 4.3 3.9
Operating
Income/(Loss) -0.4
-1.8 5.2 2.1 1.2
Operating Cash Flow1 1.3
-0.3 3.5 -0.2
-0.5
Capital Expenditures
0.6 0.3 0.1 0.0
0.0
Ounces unless otherwise noted
2Q 2011 1Q 2011 4Q
2010 3Q 2010 2Q 2010
Total Tons Milled 22,122
17,818 13,616 12,790
12,421
Average Silver Grade (oz/t)
5.44 12.06 14.53
42.42 50.24
Average Gold Grade (oz/t)
0.01 0.02
0.02 0.05 0.06
Average Recovery Rate
– Ag 84.00% 83.70%
75.85% 96.30% 88.10%
Average Recovery Rate – Au
72.40% 75.30% 57.68%
93.60% 81.70%
Silver Production
101 180 150
511 550
Gold Production
0 0 0 1
1
Cash Operating Costs/Ag Oz
$38.79 $24.44 $33.99
$9.86 $8.97
Endeavor
in millions of
US$ 2Q 2011 1Q
2011 4Q 2010 3Q 2010
2Q 2010 Sales of Metal
$6.6 $3.1 $3.3
$1.7 $3.3
Production Costs
3.3 1.1 1.4
0.7 1.4
EBITDA
3.3 2.0 1.9 1.0
1.9
Operating Income/(Loss)
2.4 1.4 1.3
0.7 1.4
Operating Cash Flow1
3.2 2.0 1.9
1.0 1.9
Capital Expenditures
0.0 0.0 0.0
0.0 0.0
Ounces unless otherwise noted
2Q 2011 1Q 2011
4Q 2010 3Q 2010
2Q 2010 Silver Production
215 149 120 102
139
Gold Production
0 0 0 0
0
Cash Operating Costs/Ag Oz
$20.04 $17.15 $16.03
$10.32 $8.98
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