Coeur d'Alene Mines Corporation (NYSE:CDE, TSX:CDM) produced 4.9
million ounces of silver and 63,047 ounces of gold during the
second quarter, which resulted in $254.4 million in sales, $88.4
million in operating cash flow,1 and a $47.1 million increase in
cash, cash equivalents and short-term investments to $200.3
million.
The Company expects to achieve the high-end of its 2012 silver
and gold production guidance of 18.5 - 20.0 million silver ounces
and 210,000 - 230,000 gold ounces. The Company also expects to
achieve the low-end of its 2012 guidance for cash operating costs1
per silver ounce of $6.50 - $7.50.
Second Quarter
Highlights
- Silver production totaled 4.9 million
ounces, equal to first quarter 2012 levels.
- Gold production totaled 63,047 ounces,
up 44% from the first quarter.
- Net metal sales totaled $254.4 million,
up 24% from the first quarter.
- Operating cash flow1 totaled $88.4
million, down 6% from the first quarter. Including changes in
working capital, net cash from operating activities totaled $113.2
million compared to $17.0 million in the first quarter.
- Consolidated cash operating costs1
totaled $6.41 per silver ounce, up slightly from the first
quarter.
- Cash operating costs1 per gold ounce
declined 50% from the first quarter to $1,348 and are expected to
reach $900 by year-end.
- Adjusted earnings1 totaled $28.0
million, or $0.31 per share, compared to $41.5 million, or $0.46
per share, in the first quarter. Net income totaled $23.0 million,
or $0.26 per share, compared to $4.0 million, or $0.04 per share,
in the first quarter.
- Announced a share repurchase program of
up to $100 million of the Company's common stock and finalized a
$100 million, four-year revolving credit facility.
- Cash, cash equivalents and short-term
investments totaled $200.3 million as of June 30, 2012, $47.1
million higher than March 31, 2012.
“The Company is performing according to plan, which is leading
to strong financial performance,” said Mitchell J. Krebs, Coeur's
President and Chief Executive Officer. “The Board of Directors'
authorization in June to repurchase up to $100 million of the
Company's common stock reflects our confidence in the Company's
underlying cash flow and the long-term value the Company represents
for shareholders,” he said.
“Our Kensington gold mine in Alaska nearly tripled its
production and cut its operating costs per ounce in half during the
second quarter with the mine's return to full production, which
represent key milestones for this important operation. We also saw
higher silver and gold production levels and substantially lower
costs at our Rochester mine in Nevada as a result of an expansion
that took place in 2011. Our Palmarejo silver and gold mine in
Mexico and our San Bartolomé silver mine in Bolivia both delivered
consistent results during the second quarter. Despite industry-wide
cost pressures, the Company delivered flat cash operating costs1
per ounce during the second quarter, due mostly to efficiency
improvements achieved at its key operations,” Krebs said.
1. EBITDA, operating cash flow, adjusted
earnings and cash operating costs are non-GAAP measures. Please see
tables in the Appendix for reconciliation to U.S. GAAP. Total debt
includes short and long-term indebtedness and excludes capital
leases and royalty obligations.
Table 1: Financial Highlights
(Unaudited)
US$ and silver ounces sold in millions
(except per shareamounts, average realized prices, and gold
ounces sold)
2Q 2012 2Q 2011
QuarterVariance
YTD 2012 YTD 2011
YTDVariance
Sales of Metal $ 254.4 $ 231.1
10 %
$ 459.0 $ 430.7 7 %
Production Costs 131.8 77.1 71 %
224.4 169.6
32 %
EBITDA (1) 102.6 137.0 (25 %)
199.4 225.6 (12 %)
Adjusted Earnings (1)
28.0 58.0 (52 %)
69.4 95.6 (27 %)
Adjusted
Earnings Per Share(1) $ 0.31 $ 0.65 (52 %)
$ 0.77 $ 1.07 (28 %)
Net Income 23.0
38.6 (40 %)
26.9 51.1 (47 %)
Earning Per Share
$ 0.26 $ 0.43 (40 %)
$ 0.30 $ 0.57 (47
%)
Operating Cash Flow (1) 88.4 115.8 (24 %)
182.2 206.0 (12 %)
Capital Expenditures 32.2
25.8 25 %
63.9 41.7 53 %
Cash, Cash Equivalents, and
Short Term Investments 200.3 107.3 87 %
200.3
107.3 87 %
Total Debt(1) 118.8 157.1 (24 %)
118.8 157.1 (24 %)
Weighted Average Shares Issued &
Outstanding 89.6 89.3 — %
89.6 89.3 — %
Average Realized Price Per Ounce - Silver $
29.28 $ 39.11 (25 %)
$ 30.72 $ 35.42 (13 %)
Average Realized Price Per Ounce - Gold $
1,610 $ 1,504 7 %
$ 1,646 $ 1,430 15 %
Silver Ounces Sold 5.6 4.1 37 %
9.9 7.8 27 %
Gold Ounces Sold 59,579 49,930 19 %
98,464
115,852 (15 %)
Net metal sales for the second quarter totaled $254.4 million,
higher than both the second quarter of 2011 and the first quarter
of 2012. This increase is due primarily to increased silver ounces
sold year-over-year and higher gold production at Kensington and
Rochester. Average realized prices per ounce of silver and gold
were $29.28 and $1,610, respectively, in the second quarter, which
were 25% lower and 7% higher, respectively, than the second quarter
of 2011. Silver contributed 63.2% of the Company's total metal
sales in the second quarter compared to 68.7% a year ago.
Prior to changes in working capital, Coeur generated $88.4
million in operating cash flow1 in the second quarter of 2012
compared to $115.8 million a year ago. After working capital
changes, the Company generated net cash from operating activities
of $113.2 million in the second quarter of 2012 compared to $111.1
million in the second quarter of 2011.
Consolidated cash operating costs1 totaled $6.35 per silver
ounce for the first half of 2012 compared to $5.69 per silver ounce
for the first half of 2011. These higher unit cash operating costs1
are due primarily increased costs of consumables at San Bartolomé
in 2012, higher maintenance costs at Palmarejo, and higher costs at
Rochester in 2012 due to the resumption of active mining late in
2011.
Coeur reports a non-U.S. GAAP metric of adjusted earnings1 as a
measure of operating income, which excludes non-cash fair value
adjustments, other non-cash adjustments, deferred taxes and
discontinued operations. Second quarter 2012 adjusted earnings1
were $28.0 million, or $0.31 per share. On a U.S. GAAP basis, the
Company realized net income of $23.0 million, or $0.26 per share,
in the second quarter compared with net income of $38.6 million, or
$0.43 per share, in the second quarter of 2011. The earnings
reflect non-cash fair value adjustments that increased net income
by $16.0 million and decreased net income by $12.4 million in the
three months ended June 30, 2012 and 2011, respectively. These
fair value adjustments are driven primarily by changing gold prices
which impact the estimated future liabilities related to the
Palmarejo gold production royalty obligation.
On June 7, 2012, Coeur announced a share repurchase program of
up to $100 million of the Company's common stock. Since the end of
the quarter, the Company has finalized a $100 million, four-year
revolving credit facility and has provided notice to repay from
existing cash the remaining outstanding $68.0 million balance of
the Kensington term loan facility.
1. EBITDA, operating cash flow, adjusted
earnings and cash operating costs are non-GAAP measures. Please see
tables in the Appendix for reconciliation to U.S. GAAP. Total debt
includes short and long-term indebtedness and excludes capital
leases and royalty obligations.
Table 2: Operational Highlights:
Production
(silver ounces in thousands) 2Q 2012 2Q
2011 Quarter Variance
YTD 2012
YTD 2011 YTD Variance
Silver
Gold Silver Gold Silver Gold
Silver Gold Silver Gold
Silver Gold
Palmarejo 2,366
31,258 2,370 33,389 — % (6 %)
4,848 62,338 4,100 61,148
18 % 2 %
San Bartolomé 1,470 —
1,742 — (16 %) n.a.
3,062 — 3,453 — (11 %) n.a.
Rochester 713 10,120 333 1,397 114 % 624 %
1,154 15,412 677 2,848 70 % 441 %
Martha
108 97 101 112 7 % (13 %)
231 181 281
356 (18 %) (49 %)
Kensington — 21,572 — 25,758
n.a. (16 %)
— 29,016 — 49,434 n.a. (41 %)
Endeavor 240 — 215 —
12 %
n.a.
488 — 364 —
34 % n.a.
Total 4,897 63,047 4,761
60,656 3 % 4 %
9,783 106,947 8,875 113,786 10 % (6 %)
Additional operating statistics are in the
tables in the Appendix.
Table 3: Operational Highlights: Cash
Operating Costs Per Ounce 1
2Q 2012 2Q 2011
QuarterVariance
YTD 2012 YTD 2011
YTDVariance
Palmarejo $ (0.85 ) $ (3.68 )
77 %
$ (1.58 ) $ (0.10 )
1,480 %
San Bartolomé 11.05 8.73 27 %
10.62 8.93 19 %
Rochester 9.83 4.34 126 %
15.00 7.31 105 %
Martha 55.07 38.79 42 %
50.50 29.60 71 %
Endeavor 17.50
20.04 (13 %)
17.07
18.85 (9 %)
Total
$ 6.41 $ 3.39 89 %
$ 6.35 $ 5.69 12 %
Kensington $ 1,348 $ 924 46 %
$
1,697 $ 955 78 %
Additional operating statistics are in the
tables in the Appendix.
Palmarejo, Mexico - Strong Cash Flow
- Second quarter production totaled 2.4
million ounces of silver and 31,258 ounces of gold, which was
consistent with first quarter of 2012 and second quarter 2011
production.
- Cash operating costs1 per silver ounce
in the second quarter were $(0.85) compared to ($2.27) in the first
quarter. Higher costs in the second quarter compared to first
quarter 2012 and second quarter 2011 were primarily due to higher
maintenance costs and to downtime related to a temporary work
stoppage at the mine in May.
- Sales and operating cash flow1 totaled
$136.4 million and $63.6 million, respectively, in the second
quarter. Capital expenditures were $11.2 million.
San Bartolomé, Bolivia - Consistent Performance
- Silver production totaled 1.5 million
ounces in the second quarter; consistent with first quarter
production.
- Cash operating costs1 per silver ounce
were $11.05 compared to $10.21 in the first quarter. Lower ore
grade impacted cash operating costs1 per ounce.
- Sales and operating cash flow1 totaled
$53.4 million and $24.8 million, respectively, in the second
quarter. Capital expenditures were $7.8 million.
1. EBITDA, operating cash flow, adjusted
earnings and cash operating costs are non-GAAP measures. Please see
tables in the Appendix for reconciliation to U.S. GAAP. Total debt
includes short and long-term indebtedness and excludes capital
leases and royalty obligations.
Kensington, Alaska - Production Accelerating as Costs
Drop
- Second quarter production returned to
full-scale, almost tripling over the first quarter to 21,572 ounces
of gold.
- Cash operating costs1 per gold ounce
declined 50% from the first quarter to $1,348 and are expected to
reach $900 by year-end.
- Sustainable production levels are now
being achieved and all major improvement projects have been
completed.
- Sales and operating cash flow1 totaled
$21.1 million and $0.6 million, respectively, in the second
quarter. Capital expenditures were $9.3 million.
Rochester, Nevada - Rising Production Levels and Lower
Costs
- Second quarter silver production
increased over the first quarter by 62% to 712,706 ounces and gold
production increased 91% to 10,120 ounces.
- Cash operating costs1 in the second
quarter declined 58% to $9.83 per silver ounce compared to the
first quarter.
- Sales and operating cash flow1 totaled
$34.2 million and $11.8 million, respectively, in the second
quarter. Capital expenditures were $2.9 million.
The Martha mine in the Santa Cruz province of Argentina has
continued to experience high operating costs and low production due
to a short remaining expected mine life after ten years of
production since 2002. The Company expects to cease active mining
operations by September 30, 2012, and to commence reclamation
activities after mining operations have concluded. Employees
affected by the cessation of mining operations are expected to be
placed with other mining companies in the region. As previously
disclosed, the Company is evaluating strategic and operational
alternatives for the Martha mine. As a result, the Company recorded
an impairment charge of $4.8 million in the second quarter.
Exploration Highlights
During the second quarter, the Company completed 60,292 meters
(197,808 feet) of drilling and trenching in its exploration
programs at Palmarejo, Rochester, projects in Argentina,
Kensington, San Bartolomé, and the Carrizalillo prospect in Chile.
Up to 17 drills were employed by the Company during the second
quarter. Coeur's exploration teams received three awards from the
International Society of Mine Safety Professionals in recognition
of their commitment to safety.
Donald J. Birak, Senior Vice President of Exploration for Coeur,
commented, “On the exploration front, we are enthusiastic about the
results from drilling at Palmarejo. The Guadalupe deposit, which is
expected to be in production next year, continues to expand and
remains open at depth and to the northwest. A new target called La
Blanca Norte was defined during the second quarter near the
existing Palmarejo operation and it is planned to be aggressively
drilled during the remainder of 2012. In addition, we are pleased
to announce completion of an upgraded mineral resource estimate for
the Joaquin silver-gold project in southern Argentina. We are
especially pleased with the safety awards received by our teams in
Mexico, Argentina and Chile,” Birak said.
Palmarejo
The Company completed 32,321 meters (106,040 feet) of
exploration core drilling in the Palmarejo district. This drilling
was divided between targets around the current Palmarejo mine and
at the Guadalupe area located approximately six kilometers from the
Palmarejo mine. Mineralization at Guadalupe has now been defined
over a length of more than 2.5 kilometers (+8,200 feet) from
southeast to northwest and remains open to the northwest and at
depth. Since the last mineral resource and reserve estimate for
Guadalupe was prepared, 100 new core holes have been completed and
will be used to prepare a new model of mineral resources and
reserves at year-end. Surface drilling commenced on the new La
Blanca Norte zone situated immediately northwest of the Palmarejo
mill complex. A helicopter-borne geophysical (magnetics) survey was
completed over the Company's entire land holding, which is helping
to identify new drill targets.
1. EBITDA, operating cash flow, adjusted
earnings and cash operating costs are non-GAAP measures. Please see
tables in the Appendix for reconciliation to U.S. GAAP. Total debt
includes short and long-term indebtedness and excludes capital
leases and royalty obligations.
Kensington
Exploration at Kensington consisted of 4,534 meters (14,875
feet) of core drilling. Nearly all of the drilling was devoted to
infill drilling of the Raven zone, which is located approximately
670 meters (2,200 feet) due west of the Kensington ore body. In
addition, drilling recommenced on the new Kensington South target
where drilling encountered veining and alteration similar to that
of the main Kensington mine with encouraging gold grades. A
helicopter-borne geophysical (magnetics) survey was conducted to
help identify future drill targets.
In addition, the Company completed 3,976 meters (13,045 feet) of
definition core drilling at Zone 10, which is expected to
constitute a major part of the mine plan for the next three years.
Assay results from 85 new holes from independent laboratories
showed multiple gold-mineralized intervals, ranging from one foot
to 34-feet true widths and gold grades from a cutoff grade of 0.1
to over 6.0 ounces per ton. The Company plans to use this data to
update the mineral resources and reserves of Zone 10.
Rochester
Drilling at Rochester totaled 14,548 meters (47,730 feet) in 252
holes on the property. Over 80% of this drilling focused on
existing Rochester stockpile inventory with the remainder at
Northwest Rochester.
San Bartolomé
One hundred new backhoe trenches were completed and sampled at
San Bartolomé. In the third quarter, trenching and sampling are
planned to shift to new targets due west of the current mining
area.
Carrizalillo
An initial program of 3 core holes, totaling 1,328 meters (4,357
feet), was completed at this prospect in north-central Chile. Three
prominent zones of hydrothermal alteration with anomalous precious
metals detected from past sampling were tested. Results are
pending.
Joaquin
A total of 3,450 meters (11,319 feet) of drilling was completed
at the Joaquin joint venture property, located approximately 70
kilometers (43 miles) north of the Company's Martha mine, to
complete infill drilling at the La Negra and La Morocha deposits
and test new targets on the property. Data from this drilling, and
drilling completed in the second half of 2011, were used to update
the 2011 resource estimates at La Negra and La Morocha.
As a result, the August 2012 mineral estimate for Joaquin (shown
in table 4 below) reflects a 102% increase in contained silver
ounces and an 18% increase in contained gold ounces in measured and
indicated resources compared to the May 2011 mineral estimate. The
estimated silver and gold ounces contained in inferred resources
were reduced from May 2011 levels as material was upgraded from the
inferred category to measured and indicated categories. The August
2012 resource estimate used metal prices of $30 per silver ounce
and $1,500 per gold ounce compared with $20 per silver ounce and
$1,300 per gold ounce in May 2011.
The new mineral resource estimate incorporates results from 123
new core drill holes (16,707 meters) designed to upgrade inferred
mineral resources in the May 2011 estimate to measured and
indicated levels. In addition to the new drilling, results from 43
drill holes (6,231 meters) were received after the model was
completed and are expected to be incorporated into the next update
in early 2013.
Table 4: Joaquin Project Mineral
Resources (100% Basis)
August 20121,2,3,4 Classification
Tonnes (000s) Average Grade
(grams/tonne) Contained Ounces
Gold Silver Gold
Silver (000)
Measured
1,800 0.10 95.8 6,000 5,600
Indicated 11,900 0.10 89.2 36,600
34,100
Measured & Indicated 13,700
0.10 90.1 42,600
39,700 Inferred 8,300 0.07
118.3 19,800 31,700
May
20113,4,5,6,7 Classification Tonnes (000s)
Average Grade (grams/tonne) Contained Ounces
Gold Silver
Gold Silver (000) Measured — —
— — — Indicated
7,200
0.16 85 36,200 19,700
Measured &
Indicated 7,200 0.16
85 36,200 19,700
Inferred 13,800 0.10 108.1 43,600
48,000
1.
Metal prices used were $30 per silver
ounce and $1,500 per gold ounce.
2.
Oxide mineral resources estimated using a
cutoff grade of 25 grams per tonne silver and sulfide mineral
resources with a cutoff grade of 37 grams per tonne silver within
Whittle®-estimated, surface mine, scoping level parameters.
3.
Mineral resources estimated by the
consulting firm of NCL Ingeniería y Construcción Ltda. in Santiago,
Chile.
4.
Mineral resources that are not mineral
reserves have not demonstrated economic viability.
5.
Metal prices used were $20 per silver
ounce and $1,300 per gold ounce.
6.
Oxide mineral resources estimated using a
cutoff grade of 33 grams per tonne silver equivalent and sulfide
mineral resources with a cutoff grade of 51.9 grams per tonne
silver equivalent within Whittle®-estimated, surface mine, scoping
level parameters.
7.
Silver equivalent = gold grade in grams
per tonne times 65 + silver grade in grams per tonne.
2012 Outlook
The Company expects to achieve the high-end of its production
guidance for 2012 of 18.5 - 20.0 million ounces of silver and
210,000- 230,000 ounces of gold, and the low-end of its cash
operating costs1 guidance for 2012 of $6.50 - $7.50 per silver
ounce. Kensington's cash operating costs1 for the full year 2012
are expected to be unchanged at $1,150 - $1,250 per gold ounce.
Table 5: 2012 Production
Outlook
(silver ounces in thousands) Country
Silver Gold Palmarejo Mexico
8,500-9,000 98,000-108,000
San Bartolomé
Bolivia 6,300-6,700 —
Rochester Nevada, USA 2,600-2,900
30,000-35,000
Martha Argentina 700-900 400-500
Endeavor Australia 400-500 —
Kensington
Alaska, USA — 82,600-86,500
Total
18,500-20,000 210,000-230,000
1. EBITDA, operating cash flow, adjusted
earnings and cash operating costs are non-GAAP measures. Please see
tables in the Appendix for reconciliation to U.S. GAAP. Total debt
includes short and long-term indebtedness and excludes capital
leases and royalty obligations.
Conference Call Information
Coeur will hold a conference call to discuss the Company's
second quarter 2012 results at 1 p.m. Eastern time on August 7,
2012.
Dial-In Numbers: (877) 464-2820 (US and Canada) (660)
422-4718 (International) Conference ID:
133 212 42
The conference call and presentation will also be webcast on the
Company's website www.coeur.com. A replay of the call will be
available through August 14, 2012.
Replay number: (855) 859-2056 (US and Canada) International
replay: (404) 537-3406 (International) Conference ID:
133 212 42
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,
production levels, operating costs, and expectations with respect
to its Martha mine. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause
Coeur's actual results, performance or achievements to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements. Such factors include, among others, any failure or
delay in obtaining required governmental approvals, the risks and
hazards inherent in the mining business (including environmental
hazards, industrial accidents, weather or geologically related
conditions), changes in the market prices of gold and silver, the
uncertainties inherent in Coeur's production, exploratory and
developmental activities, including risks relating to permitting
and regulatory delays and disputed mining claims, any future labor
disputes or work stoppages, the uncertainties inherent in the
estimation of gold and silver ore reserves, changes that could
result from Coeur's future acquisition of new mining properties or
businesses, reliance on third parties to operate certain mines
where Coeur owns silver production and reserves, the loss of any
third-party smelter to which Coeur markets silver and gold, the
effects of environmental and other governmental regulations, the
risks inherent in the ownership or operation of or investment in
mining properties or businesses in foreign countries, Coeur's
ability to raise additional financing necessary to conduct its
business, make payments or refinance its debt, 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 and Exhibit 99.2 to
Coeur's Current Report on Form 8-K filed June 25, 2012. 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.
Current mineralized material estimates include disputed and
undisputed claims at Rochester. While the Company believes it holds
a superior position in the ongoing claim dispute, the Company
believes an adverse legal outcome would cause it to modify
mineralized material estimates. 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 Canadian 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 may
use certain terms in public disclosures, such as "measured,"
"indicated," "inferred” and “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
built and commenced production from three wholly-owned, long-lived
mines between 2008 and 2010: the San Bartolomé silver mine in
Bolivia, the Palmarejo silver-gold mine in Mexico and the
Kensington gold mine in Alaska. Further production has commenced
from a new heap leach pad at Coeur's long-time Rochester
silver-gold mine in Nevada. The Company also owns and operates the
Martha silver-gold mine in Argentina and owns a non-operating
interest in a silver-base metal mine in Australia. Coeur conducts
ongoing exploration activities near and within its operating
properties in Argentina, Mexico, Alaska, Nevada and Bolivia. In
addition, Coeur owns strategic minority shareholdings in seven
silver and gold development companies in North and South
America.
Table 6:
Operating Statistics from Continuing Operations:
Three months ended
June 30,
Six months ended
June 30,
2012 2011 2012 2011
Silver
Operations:
Palmarejo Tons milled 489,924 414,719 1,018,467 813,459 Ore
grade/Ag oz 5.74 7.30 5.94 6.65 Ore grade/Au oz 0.07 0.08 0.07 0.08
Recovery/Ag oz 84.2 % 78.3 % 80.2 % 75.8 % Recovery/Au oz 92.0 %
95.2 % 92.6 % 91.5 % Silver production ounces 2,365,484 2,370,536
4,848,298 4,100,303 Gold production ounces 31,258 33,389 62,338
61,148 Cash operating cost/oz $ (0.85 ) $ (3.68 ) $ (1.58 ) $ (0.10
) Cash cost/oz $ (0.85 ) $ (3.68 ) $ (1.58 ) $ (0.10 ) Total
production cost/oz $ 17.28 $ 14.16 $ 15.10 $ 18.48
San
Bartolomé Tons milled 391,005 378,640 769,109 766,308 Ore
grade/Ag oz 4.26 5.24 4.43 5.11 Recovery/Ag oz 88.3 % 87.7 % 89.8 %
88.2 % Silver production ounces 1,470,342 1,741,578 3,061,634
3,452,525 Cash operating cost/oz $ 11.05 $ 8.73 $ 10.62 $ 8.93 Cash
cost/oz $ 12.04 $ 10.32 $ 11.76 $ 10.40 Total production cost/oz $
14.89 $ 13.51 $ 14.44 $ 13.44
Martha Tons milled 39,199
22,122 73,268 39,940 Ore grade/Ag oz 3.52 5.44 3.94 8.39 Ore
grade/Au oz 0.003 0.01 0.004 0.01 Recovery/Ag oz 78.2 % 84.0 % 79.8
% 83.8 % Recovery/Au oz 72.4 % 72.4 % 68.6 % 74.3 % Silver
production ounces 107,895 101,122 230,688 281,107 Gold production
ounces 97 112 181 356 Cash operating cost/oz $ 55.07 $ 38.79 $
50.50 $ 29.60 Cash cost/oz $ 56.21 $ 40.47 $ 51.39 $ 30.86 Total
production cost/oz $ 62.30 $ 33.83 $ 56.74 $ 30.92
Rochester
(A) Tons milled 2,268,896 — 4,278,414 — Ore grade/Ag oz 0.63 — 0.59
— Ore grade/Au oz 0.005 — 0.005 — Recovery/Ag oz 49.8 % — 45.7 % —
Recovery/Au oz 84.0 % — 74.9 % — Silver production ounces 712,706
333,432 1,154,043 667,127 Gold production ounces 10,120 1,397
15,412 2,848 Cash operating cost/oz $ 9.83 $ 4.34 $ 15.00 $ 7.31
Cash cost/oz $ 11.45 $ 6.88 $ 16.54 $ 9.37 Total production cost/oz
$ 14.66 $ 8.92 $ 20.02 $ 11.22
Three months ended
June 30,
Six months ended
June 30,
2012 2011 2012 2011 Endeavor
Tons milled 201,057 207,388 396,903 374,674 Ore grade/Ag oz 3.31
2.41 3.33 2.23 Recovery/Ag oz 36.1 % 42.9 % 36.9 % 43.5 % Silver
production ounces 240,168 214,613 488,126 363,795 Cash operating
cost/oz $ 17.50 $ 20.04 17.07 $ 18.85 Cash cost/oz $ 17.50 $ 20.04
17.07 $ 18.85 Total production cost/oz $ 24.13 $ 24.07 23.70 $
22.93
Gold
Operation:
Kensington(B) Tons milled 97,794 121,565 141,730 227,385 Ore
grade/Au oz 0.23 0.23 0.22 0.23 Recovery/Au oz 94.2 % 93.0 % 94.0 %
92.7 % Gold production ounces 21,572 25,758 29,016 49,434 Cash
operating cost/oz $ 1,348 $ 924 $ 1,697 $ 955 Cash cost/oz $ 1,348
$ 924 $ 1,697 $ 955 Total production cost/oz $ 1,799 $ 1,308 $
2,260 $ 1,345
CONSOLIDATED PRODUCTION TOTALS (B)
Total silver ounces 4,896,595 4,761,281 9,782,789
8,864,857
Total gold ounces 63,047 60,656 106,947
113,786
Silver
Operations:(C)
Cash operating cost per oz - silver $ 6.41 $ 3.39 $ 6.35 $ 5.69
Cash cost per oz - silver $ 6.97 $ 4.19 $ 6.91 $ 6.46 Total
production cost oz - silver $ 17.51 $ 14.42 $ 16.88 $ 16.55
Gold
Operation:(D)
Cash operating cost per oz - gold $ 1,348 $ 924 $ 1,697 $ 954.78
Cash cost per oz - gold $ 1,348 $ 924 $ 1,697 $ 954.78 Total
production cost per oz - gold $ 1,799 $ 1,308 $ 2,260 $ 1,345
CONSOLIDATED SALES TOTALS (E) Silver ounces sold 5,601,953
4,133,283 9,892,001 7,792,436 Gold ounces sold 59,579 49,930 98,464
115,852 Realized price per silver ounce $ 29.28 $ 39.11 $ 30.72 $
35.42 Realized price per gold ounce $ 1,610 $ 1,504 $ 1,646 $ 1,430
(A)
The Rochester mine recommenced production
in the fourth quarter of 2011. The leach cycle at Rochester
requires five to ten 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 2017. 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, 2011.
(B)
Current production ounces and recoveries
reflect final metal settlements of previously reported production
ounces.
(C)
Amount includes by-product gold credits
deducted in computing cash costs per ounce.
(D)
Amounts reflect Kensington per ounce
statistics only.
(E)
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.
Table
7:COEUR D’ALENE MINES CORPORATION AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(Unaudited)
June 30, 2012 December 31,
2011 ASSETS (In thousands, except share data)
CURRENT ASSETS Cash and cash equivalents $ 199,397 $ 175,012 Short
term investments 907 20,254 Receivables 70,443 83,497 Ore on leach
pad 30,562 27,252 Metal and other inventory 145,144 132,781
Deferred tax assets 2,090 1,869 Restricted assets 456 60 Prepaid
expenses and other 22,184 24,218
471,183 464,943 NON-CURRENT ASSETS Property, plant and equipment,
net 693,026 687,676 Mining properties, net 1,945,763 2,001,027 Ore
on leach pad, non-current portion 12,631 6,679 Restricted assets
29,134 28,911 Marketable securities 21,150 19,844 Receivables,
non-current portion 45,352 40,314 Debt issuance costs, net 2,738
1,889 Deferred tax assets 132 263 Other 12,401
12,895 TOTAL ASSETS $ 3,233,510 $ 3,264,441
LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES
Accounts payable $ 66,991 $ 78,590 Accrued liabilities and other
8,321 13,126 Accrued income taxes 23,929 47,803 Accrued payroll and
related benefits 18,119 16,240 Accrued interest payable 1,437 559
Current portion of debt and capital leases 82,708 32,602 Current
portion of royalty obligation 63,269 61,721 Current portion of
reclamation and mine closure 4,812 1,387 Deferred tax liabilities
53 53 269,639 252,081 NON-CURRENT
LIABILITIES Long-term debt and capital leases 53,974 115,861
Non-current portion of royalty obligation 150,534 169,788
Reclamation and mine closure 30,531 32,371 Deferred tax liabilities
545,031 527,573 Other long-term liabilities 23,091
30,046 803,161 875,639 COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY
Common stock, par value $0.01 per share;
authorized 150,000,000 shares, 89,901,675issued at June 30, 2012
and 89,655,124 issued at December 31, 2011
899 897 Additional paid-in capital 2,587,923 2,585,632 Accumulated
deficit (417,885 ) (444,833 ) Accumulated other comprehensive loss
(10,227 ) (4,975 ) 2,160,710
2,136,721 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $
3,233,510 $ 3,264,441
Table
8:COEUR D’ALENE MINES CORPORATION AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)
Three months endedJune 30, Six
months endedJune 30, 2012 2011
2012 2011 (In thousands, except share
data) Sales of metal $ 254,406 $ 231,090 $ 458,970 $ 430,714
Production costs applicable to sales (131,823 ) (77,102 ) (224,377
) (169,576 ) Depreciation, depletion and amortization
(61,024 ) (57,641 ) (113,616 ) (107,682 )
Gross profit 61,559 96,347 120,977 153,456 COSTS AND EXPENSES
Administrative and general 8,594 1,827 16,190 14,058 Exploration
6,305 4,077 12,872 6,839 Loss on impairment and other 4,813
— 4,813 —
Pre-development, care, maintenance and other 273
11,104 1,341 14,678 Total
cost and expenses 19,985 17,008
35,216 35,575 OPERATING INCOME 41,574 79,339
85,761 117,881 OTHER INCOME AND EXPENSE Loss on debt
extinguishments — (389 ) — (856 ) Fair value adjustments, net
16,039 (12,432 ) (7,074 ) (17,700 ) Interest income and other, net
(3,221 ) 2,763 1,786 4,664 Interest expense, net of capitalized
interest (7,557 ) (9,268 ) (14,227 )
(18,573 ) Total other income and expense, net 5,261
(19,326 ) (19,515 ) (32,465 ) Income before
income taxes 46,835 60,013 66,246 85,416 Income tax provision
(23,862 ) (21,402 ) (39,298 ) (34,341 )
NET INCOME $ 22,973 $ 38,611 $ 26,948 $ 51,075
BASIC AND DILUTED INCOME PER SHARE Basic income per share:
Net income $ 0.26 $ 0.43 $ 0.30 $ 0.57
Diluted income per share: Net income $ 0.26 $ 0.43 $
0.30 $ 0.57 Weighted average number of shares of
common stock Basic 89,631 89,310 89,611 89,299 Diluted 89,733
89,712 89,777 89,683
Table
9:COEUR D’ALENE MINES CORPORATION AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited)
Three months endedJune 30, Six
months endedJune 30, 2012 2011
2012 2011 (In thousands) (In
thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $
22,973 $ 38,611 $ 26,948 $ 51,075 Add (deduct) non-cash items
Depreciation, depletion and amortization 61,024 57,641 113,616
107,682 Accretion of discount on debt and other assets, net 808 494
1,605 944 Accretion of royalty obligation 5,492 5,770 10,072 11,037
Deferred income taxes 9,690 4,223 17,368 10,093 Loss on debt
extinguishment — 389 — 856 Fair value adjustments, net (17,759 )
13,933 4,018 20,593 Gain (loss) on foreign currency transactions 70
(848 ) 369 (737 ) Share-based compensation 1,033 (3,351 ) 3,170
4,804 (Gain) loss on sale of assets 264 (1,223 ) 264 (1,224 ) Loss
on impairment 4,813 — 4,813 — Other non-cash charges (40 ) 200 (40
) 831 Changes in operating assets and liabilities: Receivables and
other current assets 10,319 (8,138 ) 7,365 (12,979 ) Prepaid
expenses and other (2,857 ) 1,354 1,916 1,335 Inventories 3,097
(23,575 ) (21,625 ) (36,068 ) Accounts payable and accrued
liabilities 14,276 25,585 (39,655 ) (11,392 ) CASH
PROVIDED BY OPERATING ACTIVITIES 113,203 111,065
130,204 146,850 CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of short term investments and marketable securities (6,831
) (11,881 ) (7,866 ) (13,110 ) Proceeds from sales and maturities
of short term investments 683 2,773 20,701 3,360 Capital
expenditures (32,238 ) (25,764 ) (63,885 ) (41,681 ) Other 995
325 1,180 273 CASH USED IN INVESTING
ACTIVITIES (37,391 ) (34,547 ) (49,870 ) (51,158 ) CASH FLOWS FROM
FINANCING ACTIVITIES: Proceeds from issuance of notes and bank
borrowings — — — 27,500 Payments on long-term debt, capital leases,
and associated costs (8,794 ) (16,704 ) (14,244 ) (34,099 )
Payments on gold production royalty (19,287 ) (17,441 ) (40,660 )
(32,059 ) Payments on gold lease facility — — — (13,800 ) Additions
to restricted assets associated with the Kensington Term Facility —
— — (1,325 ) Other (217 ) 30 (1,045 ) (1,197 ) CASH USED IN
FINANCING ACTIVITIES (28,298 ) (34,115 ) (55,949 ) (54,980 )
INCREASE IN CASH AND CASH EQUIVALENTS 47,514 42,403 24,385 40,712
Cash and cash equivalents at beginning of period 151,883
64,427 175,012 66,118 Cash and cash
equivalents at end of period $ 199,397 $ 106,830 $
199,397 $ 106,830
Table
10:Operating Cash Flow Reconciliation
(in thousands)
2Q 2012
1Q 2012 4Q 2011 3Q 2011
2Q 2011 Cash provided by operating activities
$ 113,203 $ 17,002 $ 87,412 $ 181,911 $ 111,065 Changes in
operating assets and liabilities: Receivables and other current
assets (10,319 ) 2,956 (8,904 ) 10,513 8,138 Prepaid expenses and
other 2,857 (4,774 ) 8,839 8,697 (1,354 ) Inventories (3,097 )
24,722 17,574 (23,234 ) 23,575 Accounts payable and accrued
liabilities (14,276 ) 53,929 (7,452 )
(26,930 ) (25,585 )
Operating Cash Flow
$ 88,368 $ 93,835
$ 97,469 $ 150,957
$ 115,839
Table
11:EBITDA Reconciliation
(in thousands)
2Q 2012
1Q 2012 4Q 2011 3Q 2011
2Q 2011 Net income (loss) $ 22,973 $ 3,975 $ 11,364 $
31,060 $ 38,611 Income tax provision 23,862 15,436 52,390 27,606
21,402 Interest expense, net of capitalized interest 7,557 6,670
8,222 7,980 9,268 Interest and other income 3,221 (5,007 ) 4,697
6,610 (2,763 ) Fair value adjustments, net (16,039 ) 23,113 (19,035
) 53,351 12,432 Loss on debt extinguishments — — 3,886 784 389
Depreciation and depletion 61,024 52,592
58,166 58,652 57,641
EBITDA $ 102,598
$ 96,779 $ 119,690
$ 186,043 $
136,980
Table
12:Adjusted Earnings Reconciliation
(in thousands)
2Q 2012
1Q 2012 4Q 2011 3Q 2011
2Q 2011 Net income (loss) $ 22,973 $ 3,975 $ 11,364 $
31,060 $ 38,611 Share Based Compensation 1,033 2,137 2,861 457
(3,351 ) Deferred income tax provision 9,690 7,677 38,614 3,110
4,198 Interest expense, accretion of royalty obligation 5,492 4,580
5,523 4,990 5,770 Fair value adjustments, net (16,039 ) 23,113
(19,035 ) 53,351 12,432 Loss on impairment 4,813 — — — — Loss on
debt extinguishments — — 3,886
784 389
Adjusted Earnings
(Loss) $ 27,962 $
41,482 $ 43,213
$ 93,752 $ 58,049
Table
13:Results of Operations by Mine - Palmarejo
in millions of US$
2Q
2012 1Q 2012 4Q 2011 3Q
2011 2Q 2011 Sales of Metal $ 136.4 $ 123.7 $
134.3 $ 166.9 $ 123.7 Production Costs $ 62.5 $ 45.9 $ 47.0 $ 64.1
$ 37.7 EBITDA $ 72.3 $ 76.5 $ 83.7 $ 100.4 $ 84.6 Operating Income
$ 29.5 $ 38.8 $ 38.7 $ 61.6 $ 43.0 Operating Cash Flow $ 63.6 $
81.4 $ 77.4 $ 91.2 $ 81.8 Capital Expenditures $ 11.2 $ 7.2 $ 12.1
$ 9.5 $ 10.3 Gross Profit $ 31.1 $ 40.1 $ 44.7 $ 61.6 $ 44.2 Gross
Margin 22.8 % 32.4 % 33.3 % 36.9 % 35.7 %
2Q
2012 1Q 2012 4Q 2011 3Q
2011 2Q 2011 Underground Operations: Tons Mined
162,820 158,030 191,966 143,010 144,614 Average Silver Grade (oz/t)
8.91 7.82 8.04 9.36 10.08 Average Gold Grade (oz/t) 0.14 0.11 0.11
0.13 0.14 Surface Operations: Tons Mined 321,758 347,609 321,881
260,618 276,699 Average Silver Grade (oz/t) 4.14 5.32 5.88 6.56
5.85 Average Gold Grade (oz/t) 0.04 0.04 0.05 0.05 0.06 Processing:
Total Tons Milled 489,924 528,543 505,619 403,978 414,719 Average
Recovery Rate – Ag 84.2 % 76.8 % 77.9 % 75.9 % 78.3 % Average
Recovery Rate – Au 92.0 % 93.3 % 92.4 % 93.6 % 95.2 % Silver
Production - oz (000's) 2,365 2,483 2,690 2,251 2,371 Gold
Production - oz 31,258 31,081 34,108 29,815 33,389 Cash Operating
Costs/Ag Oz $ (0.85 ) $ (2.27 ) $ (2.13 ) $ (1.16 ) $ (3.68 )
Table
14:Reconciliation of EBITDA for Palmarejo
in millions of US$
2Q
2012 1Q 2012 4Q 2011 3Q
2011 2Q 2011 Sales of metal $ 136.4 $ 123.7 $
134.3 $ 166.9 $ 123.7 Production costs applicable to sales $ (62.5
) (45.9 ) (47.0 ) (64.1 ) (37.8 ) Administrative and general $ — —
— — — Exploration $ (1.6 ) (1.3 ) (2.8 ) (2.2 ) (1.3 ) Care and
maintenance and other $ — — (0.8 ) (0.2 ) — Pre-development
$ — — — — —
EBITDA $ 72.3
$ 76.5 $ 83.7
$ 100.4 $ 84.6
Table
15:Operating Cash Flow for Palmarejo
in millions of US$
2Q
2012 1Q 2012 4Q 2011 3Q
2011 2Q 2011 Cash provided by operating
activities $ 90.5 $ 63.0 $ 70.9 $ 104.7 $ 62.9 Changes in operating
assets and liabilities: Receivables and other current assets $
(12.5 ) 5.4 5.7 (0.8 ) 8.9 Prepaid expenses and other $ 0.5 (1.9 )
(3.2 ) 3.4 (0.4 ) Inventories $ (11.5 ) 4.0 9.9 (16.2 ) 12.0
Accounts payable and accrued liabilities $ (3.4 ) 8.6
(5.9 ) 0.1 (1.6 )
Operating
Cash Flow $ 63.6 $
79.1 $ 77.4
$ 91.2 $ 81.8
Table
16:Results of Operations by Mine - San
Bartolomé
in millions of US$
2Q
2012 1Q 2012 4Q 2011 3Q
2011 2Q 2011 Sales of Metal $53.4 $41.4 $62.8
$102.8 $55.6 Production Costs $22.8 $13.6 $21.4 $30.1 $14.1 EBITDA
$30.5 $27.7 $41.2 $72.5 $41.4 Operating Income $26.6 $23.5 $34.9
$66.7 $36.2 Operating Cash Flow $24.8 $20.8 $28.7 $49.6 $25.7
Capital Expenditures $7.8 $10.2 $6.5 $4.4 $3.3 Gross Profit $26.5
$23.5 $35.3 $66.7 $36.3 Gross Margin 49.6% 56.8% 56.2% 64.9% 65.3%
1Q 2012 1Q 2012 4Q 2011
3Q 2011 2Q 2011 Tons Milled 391,005
378,104 371,983 428,978 378,640 Average Silver Grade (oz/t) 4.3 4.6
5.4 5.4 5.2 Average Recovery Rate 88.3% 91.2% 90.5% 88.6% 87.7%
Silver Production (000's) 1,470 1,591 1,997 2,051 1,742 Cash
Operating Costs/Ag Oz $11.05 $10.21 $9.18 $9.32 $8.73
Table
17:Reconciliation of EBITDA for San Bartolomé
in millions of US$
2Q
2012 1Q 2012 4Q 2011 3Q
2011 2Q 2011 Sales of metal $ 53.4 $ 41.4 $ 62.8
$ 102.8 $ 55.6 Production costs applicable to sales (22.8 ) (13.6 )
(21.4 ) (30.1 ) (14.1 ) Administrative and general — — — — —
Exploration (0.1 ) (0.1 ) — (0.1 ) (0.1 ) Care and maintenance and
other — — (0.2 ) (0.1 ) — Pre-development — —
— — —
EBITDA $ 30.5 $
27.7 $ 41.2
$ 72.5 $ 41.4
Table
18:Operating Cash Flow for San Bartolomé
in millions of US$
2Q
2012 1Q 2012 4Q 2011 3Q
2011 2Q 2011 Cash provided by (used in) operating
activities $ 31.0 $ (27.4 ) $ 22.3 $ 78.1 $ 38.2 Changes in
operating assets and liabilities: Receivables and other current
assets $ (0.7 ) 2.2 0.2 5.0 1.5 Prepaid expenses and other $ 4.4
(2.8 ) 4.6 0.2 (0.6 ) Inventories $ (3.4 ) 4.7 2.9 (7.2 ) 4.0
Accounts payable and accrued liabilities $ (6.5 )
44.1 (1.3 ) (26.5 ) (17.4 )
Operating Cash Flow $ 24.8
$ 20.8 $ 28.7
$ 49.6 $
25.7
Table
19:Results of Operations by Mine - Kensington
in millions of US$
2Q
2012 1Q 2012 4Q 2011 3Q
2011 2Q 2011 Sales of Metal $ 21.1 $ 10.4 $ 32.9
$ 44.2 $ 26.0 Production Costs $ 16.1 $ 17.1 $ 31.7 $ 24.3 $ 12.8
EBITDA $ 4.7 $ (6.9 ) $ 0.5 $ 19.6 $ 12.8 Operating Income/(Loss) $
(5.0 ) $ (13.6 ) $ (6.6 ) $ 10.3 $ 2.8 Operating Cash Flow $ 0.6 $
(7.8 ) $ (4.1 ) $ 14.5 $ 11.7 Capital Expenditures $ 9.3 $ 10.9 $
12.0 $ 9.2 $ 7.4 Gross Profit/(Loss) $ (4.7 ) $ (13.3 ) $ (5.7 ) $
10.3 $ 3.3 Gross Margin (22.3 )% (127.9 )% (17.3 )% 23.3 % 12.7 %
2Q 2012 1Q 2012 4Q 2011
3Q 2011 2Q 2011 Tons Milled 97,794
43,936 71,700 116,255 121,565 Average Gold Grade (oz/t) 0.23 0.18
0.19 0.24 0.23 Average Recovery Rate 94.2 % 93.4 % 96.5 % 91.7 % 93
% Gold Production 21,572 7,444 13,299 25,687 25,758 Cash Operating
Costs/Ag Oz $ 1,348 $ 2,709 $ 1,807 $ 973 $ 924
Table
20:Reconciliation of EBITDA for Kensington
in millions of US$
2Q
2012 1Q 2012 4Q 2011 3Q
2011 2Q 2011 Sales of metal $ 21.1 $ 10.4 $ 32.9
$ 44.2 $ 26.0 Production costs applicable to sales (16.1 ) (17.1 )
(31.7 ) (24.3 ) (12.8 ) Administrative and general — — — — —
Exploration (0.3 ) (0.2 ) (0.5 ) (0.3 ) (0.3 ) Care and maintenance
and other — — (0.2 ) — (0.1 ) Pre-development —
— — — —
EBITDA $ 4.7 $
(6.9 ) $ 0.5
$ 19.6 $ 12.8
Table
21:Operating Cash Flow for Kensington
in millions of US$
2Q
2012 1Q 2012 4Q 2011 3Q
2011 2Q 2011 Cash provided by operating
activities $ (12.5 ) $ 1.1 $ 9.3 $ 8.6 $ 7.6 Changes in operating
assets and liabilities: Receivables and other current assets $ 4.6
(10.3 ) (5.1 ) 5.0 (1.0 ) Prepaid expenses and other $ (0.5 ) (1.0
) 0.5 1.3 0.2 Inventories $ 9.9 3.3 (10.1 ) (1.3 ) 8.0 Accounts
payable and accrued liabilities $ (0.9 ) (0.9 )
1.3 0.9 (3.1 )
Operating Cash
Flow $ 0.6 $
(7.8 ) $ (4.1 )
$ 14.5 $ 11.7
Table
22:Results of Operations by Mine - Rochester
in millions of US$
2Q
2012 1Q 2012 4Q 2011 3Q
2011 2Q 2011 Sales of Metal $ 34.2 $ 18.8 $ 11.1
$ 17.5 $ 14.4 Production Costs $ 20.8 $ 9.6 $ 4.2 $ 11.4 $ 5.3
EBITDA $ 11.6 $ 7.2 $ 3.2 $ 2.7 $ (2.2 ) Operating Income/(Loss) $
9.5 $ 5.5 $ 4.6 $ 2.1 $ (2.9 ) Operating Cash Flow $ 11.8 $ 7.2 $
3.4 $ 2.7 $ (3.9 ) Capital Expenditures $ 2.9 $ 2.6 $ 7.7 $ 13.6 $
4.2 Gross Profit $ 11.3 $ 7.6 $ 5.9 $ 5.5 $ 8.5 Gross Margin 33.0 %
40.4 % 53.2 % 31.4 % 59.0 %
2Q 2012 1Q
2012 4Q 2011 3Q 2011 2Q
2011 Silver Production (000's) 713 441 373 352 333 Gold
Production 10,120 5,292 1,993 1,435 1,397 Cash Operating Costs/Ag
Oz $ 9.83 $ 23.35 $ 37.99 $ 36.71 $ 4.34
Table
23:Reconciliation of EBITDA for Rochester
in millions of US$
2Q
2012 1Q 2012 4Q 2011 3Q
2011 2Q 2011 Sales of metal $ 34.2 $ 18.8 $ 11.1
$ 17.5 $ 14.4 Production costs applicable to sales (20.8 ) (9.6 )
(4.2 ) (11.4 ) (5.3 ) Administrative and general — — — — —
Exploration (1.1 ) (0.7 ) (1.5 ) (0.2 ) (0.3 ) Care and maintenance
and other (0.7 ) (1.3 ) (2.2 ) (3.2 ) (11.0 ) Pre-development
— — — —
—
EBITDA $ 11.6
$ 7.2 $ 3.2
$ 2.7 $ (2.2
)
Table
24:Operating Cash Flow for Rochester
in millions of US$
2Q
2012 1Q 2012 4Q 2011 3Q
2011 2Q 2011 Cash provided by (used in) operating
activities $ 10.1 $ (7.1 ) $ (11.4 ) $ 0.9 $ (2.1 ) Changes in
operating assets and liabilities: Receivables and other current
assets $ (0.1 ) 0.3 (0.2 ) 0.2 — Prepaid expenses and other $ (1.0
) 1.4 0.7 0.7 0.4 Inventories $ 3.9 11.2 14.2 5.9 0.6 Accounts
payable and accrued liabilities $ (1.1 ) 1.4
0.1 (5.0 ) (2.8 )
Operating Cash
Flow $ 11.8 $
7.2 $ 3.4 $
2.7 $ (3.9 )
Table
25:Results of Operations by Mine - Martha
in millions of US$
2Q
2012 1Q 2012 4Q 2011 3Q
2011 2Q 2011 Sales of Metal $ 4.1 $ 3.6 $ 2.8 $
6.0 $ 4.8 Production Costs $ 7.1 $ 3.7 $ 3.9 $ 8.1 $ 3.9 EBITDA $
(10.6 ) $ (3.7 ) $ (3.3 ) $ (3.8 ) $ (0.5 ) Operating Loss $ (11.3
) $ (4.3 ) $ (3.0 ) $ (4.0 ) $ (0.4 ) Operating Cash Flow $ (5.5 )
$ (5.1 ) $ (5.0 ) $ (1.7 ) $ (0.9 ) Capital Expenditures $ 0.5 $
0.7 $ 1.4 $ 1.1 $ 0.6 Gross Profit/(Loss) $ (3.7 ) $ (0.7 ) $ (1.7
) $ (2.3 ) $ 1.8 Gross Margin (90.2 )% (19.4 )% (60.7 )% (38.3 )%
37.5 %
2Q 2012 1Q 2012 4Q
2011 3Q 2011 2Q 2011 Total Tons
Milled 39,199 34,069 37,141 24,086 22,122 Average Silver Grade
(oz/t) 3.52 4.43 4.65 5.33 5.44 Average Gold Grade (oz/t) — — 0.01
0.01 0.01 Average Recovery Rate – Ag 78.2 % 81.4 % 75.2 % 92.3 % 84
% Average Recovery Rate – Au 72.4 % 64.6 % 74.2 % 72.9 % 72.4 %
Silver Production (000's) 108 123 130 119 101 Cash Operating
Costs/Ag Oz $ 55.07 $ 46.48 $ 33.75 $ 39.31 $ 38.79
Table
26:Reconciliation of EBITDA for Martha
in millions of US$
2Q
2012 1Q 2012 4Q 2011 3Q
2011 2Q 2011 Sales of metal $ 4.1 $ 3.6 $ 2.8 $
6.0 $ 4.8 Production costs applicable to sales (7.1 ) (3.7 ) (3.9 )
(8.2 ) (3.8 ) Administrative and general — — — — — Exploration (2.8
) (3.4 ) (2.1 ) (1.5 ) (1.5 ) Care and maintenance and other (4.8 )
(0.2 ) (0.1 ) (0.1 ) — Pre-development — —
— — —
EBITDA $ (10.6 ) $
(3.7 ) $ (3.3 )
$ (3.8 ) $ (0.5 )
Table
27:Operating Cash Flow for Martha
in millions of US$
2Q
2012 1Q 2012 4Q 2011 3Q
2011 2Q 2011 Cash provided by (used in) operating
activities $ (3.3 ) $ (7.1 ) $ (3.2 ) $ 0.2 $ (3.2 ) Changes in
operating assets and liabilities: Receivables and other current
assets (0.6 ) 3.5 (0.9 ) 2.3 0.2 Prepaid expenses and other 0.1
(0.1 ) (0.3 ) 0.4 0.1 Inventories (2.3 ) 0.4 0.4 (3.3 ) 0.1
Accounts payable and accrued liabilities 0.6
(1.8 ) (1.0 ) (1.3 ) 1.9
Operating
Cash Flow $ (5.5 ) $
(5.1 ) $ (5.0 )
$ (1.7 ) $ (0.9 )
Table
28:Results of Operations by Mine - Endeavor
in millions of US$
2Q
2012 1Q 2012 4Q 2011 3Q
2011 2Q 2011 Sales of Metal $ 5.2 $ 6.7 $ 2.8 $
6.2 $ 6.6 Production Costs $ 2.6 $ 2.7 $ 1.0 $ 3.2 $ 3.3 EBITDA $
2.6 $ 4.0 $ 1.8 $ 3.0 $ 3.3 Operating Income $ 1.1 $ 2.3 $ 1.1 $
2.1 $ 2.4 Operating Cash Flow $ 2.8 $ 3.5 $ 2.1 $ 1.3 $ 3.6 Capital
Expenditures $ — $ — $ — $ — $ — Gross Profit $ 1.1 $ 2.3 $ 1.1 $
2.1 $ 2.4 Gross Margin 21.2 % 34.3 % 39.3 % 33.9 % 36.4 %
2Q 2012 1Q 2012 4Q 2011
3Q 2011 2Q 2011 Silver Production (000's) 240
248 111 138 215 Cash Operating Costs/Ag Oz $ 17.50 $ 16.64 $ 14.74
$ 22.26 $ 20.04
Table
29:Reconciliation of EBITDA for Endeavor
in millions of US$
2Q
2012 1Q 2012 4Q 2011 3Q
2011 2Q 2011 Sales of metal $ 5.2 $ 6.7 $ 2.8 $
6.2 $ 6.6 Production costs applicable to sales (2.6 ) (2.7 ) (1.0 )
(3.2 ) (3.3 ) Administrative and general — — — — — Exploration — —
— — — Care and maintenance and other — — — — — Pre-development
— — — —
—
EBITDA $ 2.6
$ 4.0 $ 1.8
$ 3.0 $ 3.3
Table
30:Operating Cash Flow for Endeavor
in millions of US$
2Q
2012 1Q 2012 4Q 2011 3Q
2011 2Q 2011 Cash provided by operating
activities $ 3.6 $ 2.5 $ 2.1 $ 2.4 $ 2.5 Changes in operating
assets and liabilities: Receivables and other current assets (1.7 )
1.7 (1.2 ) (1.4 ) 2.7 Prepaid expenses and other — — — — —
Inventories 0.2 0.6 0.1 (0.9 ) — Accounts payable and accrued
liabilities 0.7 (1.3 ) 1.1
1.2 (1.6 )
Operating Cash Flow
$ 2.8 $ 3.5
$ 2.1 $ 1.3
$ 3.6
Table
31:Reconciliation of Non-U.S. GAAP Cash Costs to U.S.
GAAP Production CostsThree months ended June 30,
2012
(In thousands
except ounces and per ounce costs)
Palmarejo
SanBartolomé
Kensington Rochester Martha Endeavor
Total Total cash operating cost (Non-U.S. GAAP) $ (2,009 ) $
16,249 $ 29,083 $ 7,008 $ 5,942 $ 4,204 $ 60,477 Royalties — 1,457
— 510 124 — 2,091 Production taxes — — — 641
— — 641 Total cash costs (Non-U.S.
GAAP) $ (2,009 ) $ 17,706 $ 29,083 $ 8,159 $
6,066 $ 4,204 $ 63,209 Add/Subtract: Third
party smelting costs — — (2,820 ) — (1,444 ) (1,449 ) (5,713 )
By-product credit 50,363 — — 16,295 157 — 66,815 Other adjustments
124 117 7 229 26 — 503 Change in inventory 14,060 4,950 (10,165 )
(3,931 ) 2,297 (202 ) 7,009 Depreciation, depletion and
amortization 42,741 4,070 9,719 2,060
631 1,592 60,813
Production costs applicable to sales,
including depreciation,depletion and amortization (U.S. GAAP)
$ 105,279 $ 26,843 $ 25,824 $ 22,812 $
7,733 $ 4,145 $ 192,636 Production of silver
(ounces) 2,365,484 1,470,342 — 712,706 107,895 240,168 4,896,595
Cash operating cost per silver ounce $ (0.85 ) $ 11.05 $ — $ 9.83 $
55.07 $ 17.50 $ 6.41 Cash costs per silver ounce $ (0.85 ) $ 12.04
$ — $ 11.45 $ 56.21 $ 17.50 $ 6.97 Production of gold (ounces) — —
21,572 — — — 21,572 Cash operating cost per gold ounce $ — $ — $
1,348 $ — $ — $ — $ 1,348 Cash cost per gold ounce $ — $ — $ 1,348
$ — $ — $ — $ 1,348
Table
32:Reconciliation of Non-U.S. GAAP Cash Costs to U.S.
GAAP Production CostsSix months ended June 30, 2012
(In thousands
except ounces and per ounce costs)
Palmarejo
SanBartolomé
Kensington Rochester Martha Endeavor
Total Total cash operating cost (Non-U.S. GAAP) $ (7,652 ) $
32,502 $ 49,251 $ 17,311 $ 11,649 $ 8,331 $ 111,392 Royalties —
3,493 — 1,119 206 — 4,818 Production taxes — — —
653 — — 653 Total cash costs
(Non-U.S. GAAP) $ (7,652 ) $ 35,995 $ 49,251 $ 19,083
$ 11,855 $ 8,331 $ 116,863
Add/Subtract: Third party smelting costs — — (3,903 ) — (3,418 )
(2,238 ) (9,559 ) By-product credit 102,889 — — 25,252 298 —
128,439 Other adjustments 368 (77 ) 14 316 83 — 704 Change in
inventory 12,793 463 (12,166 ) (14,335 ) 1,977 (803 ) (12,071 )
Depreciation, depletion and amortization 80,501 8,289
16,324 3,702 1,151 3,236 113,203
Production costs applicable to sales,
includingdepreciation, depletion and amortization (U.S. GAAP)
$ 188,899 $ 44,670 $ 49,520 $ 34,018 $
11,946 $ 8,526 $ 337,579 Production of silver
(ounces) 4,848,298 3,061,634 — 1,154,043 230,688 488,126 9,782,789
Cash operating cost per silver ounce $ (1.58 ) $ 10.62 $ — $ 15.00
$ 50.50 $ 17.07 $ 6.35 Cash costs per silver ounce $ (1.58 ) $
11.76 $ — $ 16.54 $ 51.39 $ 17.07 $ 6.91 Production of gold
(ounces) — — 29,016 — — — 29,016 Cash operating cost per gold ounce
$ — $ — $ 1,697 $ — $ — $ — $ 1,697 Cash cost per gold ounce $ — $
— $ 1,697 $ — $ — $ — $ 1,697
Table
33:Reconciliation of Non-U.S. GAAP Cash Costs to U.S.
GAAP Production CostsThree months ended June 30,
2011
(In thousands
except ounces and per ounce costs)
Palmarejo
SanBartolomé
Kensington Rochester Martha Endeavor
Total 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,
includingdepreciation, depletion and amortization (U.S. GAAP)
$ 79,514 $ 19,308 $ 22,734 $ 5,925 $
3,001 $ 4,138 $ 134,620 Production of silver
(ounces) 2,370,536 1,741,578 — 333,432 101,122 214,613 4,761,281
Cash operating cost per silver ounce $ (3.68 ) $ 8.73 $ — $ 4.34 $
38.79 $ 20.04 $ 3.39 Cash costs per silver ounce $ (3.68 ) $ 10.32
$ — $ 6.88 $ 40.47 $ 20.04 $ 4.19 Production of gold (ounces) — —
25,758 — — — 25,758 Cash operating cost per gold ounce $ — $ — $
924 $ — $ — $ — $ 924 Cash cost per gold ounce $ — $ — $ 924 $ — $
— $ — $ 924
Table
34:Reconciliation of Non-U.S. GAAP Cash Costs to U.S.
GAAP Production CostsThree months ended March 31,
2012
(In thousands
except ounces and per ounce costs)
Palmarejo
SanBartolomé
Kensington Rochester Martha Endeavor
Total Total cash operating cost (Non-U.S. GAAP) $ (5,643 ) $
16,253 $ 20,168 $ 10,303 $ 5,708 $ 4,127 $ 50,916 Royalties — 2,036
— 609 82 — 2,727 Production taxes — — — 12
— — 12 Total cash costs (Non-U.S. GAAP)
$ (5,643 ) $ 18,289 $ 20,168 $ 10,924 $ 5,790
$ 4,127 $ 53,655 Add/Subtract: Third party
smelting costs — — (1,083 ) — (1,975 ) (788 ) (3,846 ) By-product
credit 52,526 — — 8,957 141 — 61,624 Other adjustments 244 (194 ) 7
87 57 — 201 Change in inventory (1,268 ) (4,487 ) (2,001 ) (10,403
) (320 ) (601 ) (19,080 ) Depreciation, depletion and amortization
37,761 4,219 6,604 1,642 520
1,644 52,390
Production costs applicable to sales,
includingdepreciation, depletion and amortization (U.S. GAAP)
$ 83,620 $ 17,827 $ 23,695 $ 11,207 $
4,213 $ 4,382 $ 144,944 Production of silver
(ounces) 2,482,814 1,591,292 — 441,337 122,793 247,958 4,886,194
Cash operating cost per silver ounce $ (2.27 ) $ 10.21 $ — $ 23.35
$ 46.48 $ 16.64 $ 6.29 Cash costs per silver ounce $ (2.27 ) $
11.49 $ — $ 24.75 $ 47.15 $ 16.64 $ 6.85 Production of gold
(ounces) — — 7,444 — — — 7,444 Cash operating cost per gold ounce $
— $ — $ 2,709 $ — $ — $ — $ 2,709 Cash cost per gold ounce $ — $ —
$ 2,709 $ — $ — $ — $ 2,709
Table
35:Reconciliation of Non-U.S. GAAP Cash Costs to U.S.
GAAP Production CostsSix months ended June 30, 2011
(In thousands
except ounces and per ounce costs)
Palmarejo
SanBartolomé
Kensington Rochester Martha Endeavor
Total 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,
includingdepreciation, depletion and amortization (U.S. GAAP)
$ 150,549 $ 38,569 $ 65,019 $ 13,796 $
3,203 $ 5,856 $ 276,992 Production of silver
(ounces) 4,100,303 3,452,525 — 667,127 281,107 363,795 8,864,857
Cash operating cost per silver ounce $ (0.10 ) $ 8.93 $ — $ 7.31 $
29.60 $ 18.85 $ 5.69 Cash costs per silver ounce $ (0.10 ) $ 10.40
$ — $ 9.37 $ 30.86 $ 18.85 $ 6.46 Production of gold (ounces) — —
49,434 — — — 49,434 Cash operating cost per gold ounce $ — $ — $
955 $ — $ — $ — $ 955 Cash cost per gold ounce $ — $ — $ 955 $ — $
— $ — $ 955
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