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Press Release Source: Coeur d'Alene Mines Corporation
Coeur Reports Third Quarter 2007 Results
Friday November 2, 9:00 am ET
COEUR D'ALENE, IDAHO, November 2 /CNW/ - Coeur d'Alene Mines Corporation (NYSE:CDE - News; TSX:CDM - News) today reported quarterly revenue of $52.9 million compared to $50.6 million during last year's third quarter. Quarterly net income totaled $3.6 million, or $0.01 per diluted share, compared to net income of $18.4 million, or $0.06 per diluted share for the third quarter of 2006. Included in the third quarter results for 2007 are expenses of $2.5 million associated with the cessation of mining activities at the Rochester mine during the third quarter.
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For the first nine months of 2007, revenue was $155.4 million, compared to $149.5 million in the year-ago period. Net income during the first nine months of 2007 was $29.6 million, or $0.10 per diluted share, compared to net income of $65.3 million, or $0.23 per share, for the same period in 2006. Results for the first nine months of 2006 included a gain of $11.1 million from the sale of Coeur Silver Valley ("CSV") as well as $2.0 million of income from CSV operations.
In terms of production levels, Coeur produced 2.7 million ounces of silver and 20,500 ounces of gold during the third quarter and 8.3 million ounces of silver and 70,500 ounces of gold through the first nine months of the year. Coeur produced 3.3 million ounces of silver and 30,000 ounces of gold during the third quarter of 2006 and 9.4 million ounces of silver and 84,500 ounces of gold during the first nine months of 2006.
In commenting on the Company's performance, Dennis E. Wheeler, Chairman, President and Chief Executive Officer, said, "During the recent quarter, we made substantial progress on all of the Company's strategic initiatives that we believe will result in Coeur becoming the world's undisputed leader in silver. The San Bartolome silver mine in Bolivia, the world's largest pure silver mine under construction, remains on schedule for a February 2008 production start up.
"In Australia, both Broken Hill and Endeavor continue to deliver improved results in 2007. Cash costs remain consistently low and we are nearing complete payback of our investments made just 2 years ago. The Company expects to continue receiving silver production from Endeavor for at the least the next 15 years and from Broken Hill for the next 7 years," Mr. Wheeler continued.
"The Bolnisi Gold NL and Palmarejo Silver and Gold Corporation merger transaction is expected to close in mid-December following the Coeur shareholder vote on December 3, 2007. Construction is progressing at the Palmarejo project under Coeur's management. We believe the Palmarejo project is the largest and highest quality silver-gold project currently under development in the world today. Once Palmarejo is in production in 2009, Coeur expects to produce nearly 29 million ounces of silver--a 142% increase over current levels--at industry-low cash costs below $1.75 per ounce--a 55% reduction from current levels."
Update on Strategic Growth Initiatives:
----------------------------------------------------------------------
--Bolnisi and Palmarejo Transactions: On May 3, 2007, Coeur, Bolnisi
Gold NL, and Palmarejo Silver and Gold Corporation announced the
companies had entered into agreements to merge. Coeur has commenced
mailing of the proxy materials to its shareholders, will hold a
shareholder meeting on December 3, 2007, and expects to close these
transactions in mid-December. The record date for this shareholder
vote is October 19, 2007. The Bolnisi and Palmarejo shareholder
meetings are scheduled to be held on December 3.
The Palmarejo Project is expected to be the largest and highest
quality silver-gold project currently being built in the world
today. The mine is expected to begin production in the first
quarter of 2009 at an average annual rate of production of 10.4
million ounces of silver and 115,000 ounces of gold, which will
nearly double Coeur's current production profile. Once in
production, cash costs at Palmarejo are projected to average
negative $0.41 per ounce of silver(1) (after gold by-product
credits), which will result in a 55% reduction in Coeur's
companywide projected cash costs to an industry-low of $1.75 per
ounce of silver. Capital costs to place the project into production
are estimated to be approximately $200 million.
When combined with Coeur's production from its existing operations
and expected production from San Bartolome, the combined companies
expect to produce nearly 29 million ounces of silver in 2009,
making Coeur the largest primary silver producer in the world. The
combined companies also expect to produce approximately 200,000
ounces of gold, which will allow Coeur to maintain its current
revenue split between silver and gold of two-thirds/one-third,
respectively. Compared with current production levels, Coeur is
anticipating increases of 142% and 65% in silver and gold
production, respectively, between 2007 and 2009.
Palmarejo Silver and Gold and Bolnisi Gold announced substantial
mineral resource increases at the Palmarejo project during the
third quarter. Mineral resources at the Guadalupe deposit, located
seven kilometers from the main Palmarejo project area, more than
doubled to 39 million ounces of silver (3.8 million indicated
ounces; 35.1 million inferred ounces) and nearly 400,000 ounces of
gold (49,000 indicated ounces; 345,000 inferred ounces).
In total, the current Palmarejo mineral resource stands at 150
million ounces of silver resources (88.7 million measured and
indicated ounces; 61.4 million inferred ounces) and 1.7 million
ounces of gold resources (987,000 measured and indicated ounces;
719,000 inferred ounces).
Also during the third quarter, Coeur announced the appointment of
Stuart Mathews as Interim Project Manager for the Palmarejo Project
and he is expected to be named General Manager at Palmarejo once
the transaction is completed. Mr. Mathews has a Master's Degree in
Geology from the University of Canterbury, Christchurch, New
Zealand, and has worked in a number of senior geology, project
development and management positions at major mines and mining
projects throughout Australia, New Zealand, South America and
Mexico.
(1) Costs are averaged over the initial mine life of an estimated
eight year period assessed in Coeur's Preliminary Assessment for the
Palmarejo project.
--San Bartolome Silver Project (Bolivia): San Bartolome is expected to
initially produce an annualized rate of approximately 6 to 9
million ounces of silver per year, which will increase Coeur's
total silver production by approximately 75% over current levels.
Construction activities continue with over two million man hours
worked without a lost-time accident. Recent tax legislation has
been passed by Bolivia's House and is currently in the Senate,
which would result in a 50% effective tax rate. Coeur considers
this proposed tax package to be acceptable and believes it would
not materially impact the project's existing financial metrics.
The Company is pleased to report that Rick Irvine has been appointed
General Manager for San Bartolome. Rick recently joined Coeur and
Empresa Minera Manquiri, Coeur's Bolivian subsidiary, with 17 years
of mining experience in Canada, Argentina, Chile, Honduras,
Nicaragua, as well as Bolivia. Rick was most recently Operations
Manager at the Manantial Espejo development project in Argentina.
He was also previously Vice President and Chief Operating Officer
of Apogee Minerals.
--Kensington Gold Project (Alaska): At Kensington, the mill and
related surface facilities are now 100% complete, as is the nearly
two-and-a-half mile underground tunnel connecting the Kensington
and the Jualin properties, where the mill and processing facilities
are located. Contractors from Kake Tribal/Redpath Native
Corporation joint venture, along with Coeur Alaska, completed the
final 6,800 feet of tunneling over the past year.
The Company is continuing to review its options to resolve the
Kensington litigation relating to the tailings disposal facility to
enable the mine to proceed to production. As announced by the Mayor
of Juneau, Bruce Botelho, the parties met in Juneau on October 2nd
and October 15th and plan to hold further meetings next month. In
addition, the City and Borough of Juneau has agreed to sponsor a
third party facilitator to meet with the parties to work toward a
desirable outcome.
The Kensington Mine is expected to produce 150,000 ounces of gold
per year in its initial years at an estimated cash cost of $310 per
ounce of gold, with an expected 10-15 year mine life based on
current mineral inventory. The mine has 1.35 million ounces of
proven and probable gold mineral reserves.
On October 18, Coeur announced the appointment of Tom Henderson as
General Manager for Coeur Alaska. Mr. Henderson was Mine Manager at
Kensington for the past year and brings a total of thirty years of
mining operations experience to Coeur Alaska, including management
roles at the Grasberg Mine in Indonesia and the Robinson Mine and
Goldstrike mines in Nevada.
Balance Sheet and Capital Investment Highlights
The Company had $208.8 million in cash, equivalents and short term investments as of September 30, 2007. Capital expenditures during the third quarter of 2007 totaled $57.3 million, most of which was spent on the San Bartolome silver project.
Mr. Wheeler commented, "Our liquidity position remains very strong, with $209 million in cash, equivalents and short-term investments. Together with cash flow from operations, we expect to complete the construction of the San Bartolome silver project, the Palmarejo silver and gold project, and the Kensington gold project without the need for additional outside capital."
3Q Production Highlights by Individual Property
----------------------------------------------------------------------
--Cerro Bayo (Chile) - Silver production increased 5% and gold
production was comparable to last year's third quarter; however,
cash costs during the third quarter were $15.58 per ounce compared
to $8.33 per ounce in the prior year's quarter. Costs were
significantly higher due to increases in contract and outside
services, supplies, diesel, explosives, supervision and other
operating costs associated with the transition to bulk mining
methods.
Mr. Wheeler commented, "Clearly, we are disappointed with the
operating performance at Cerro Bayo. We have made several recent
personnel changes that are expected to improve operating
performance. Most importantly, we have hired Don Gray as the new
General Manager for Cerro Bayo. Mr. Gray was most recently Vice
President and General Manager for Hecla at its La Camorra operation
in Venezuela. Mr. Gray is a mining engineering graduate of the
University of Idaho with a Masters degree in civil engineering from
MIT. He has 27 years of mining industry experience, including 16
years with Hecla. He has also worked for Newmont, Exxon and Climax
Molybdenum.
"In addition, we are conducting a full review of the mine planning
and scheduling processes. We are also expanding the exploration
program to increase the number of higher-grade, wider veins that
will be mined going forward. As previously reported, these
exploration efforts have already resulted in a 51% increase in
Cerro Bayo's mineral reserves. These reserve additions represent
higher-grade ounces that are located near existing processing
facilities, open in most directions, and are already being
incorporated in the operation's development and mining plan."
--Martha (Argentina) - Silver production was nearly 544,000 ounces in
the third quarter of 2007 compared to approximately 806,000 ounces
in the third quarter of 2006. The decrease in silver production was
primarily due to a 35% decrease in silver ore grades. This
reduction in grade contributed to higher cash costs per ounce in
the third quarter of $8.33 per ounce compared to $4.01 per ounce in
the third quarter of 2006. Cash costs per ounce were also impacted
by increases in certain operating expenses, including labor,
royalties and export taxes.
Year-to-date, Martha has produced nearly 2.0 million ounces of
silver, which is comparable to the production levels achieved
during the first nine months of 2006.
Completion of a 240 tonnes per day, $13.9 million stand-alone mill
at Martha is on schedule for a completion in December. The mill
will support the Company's ongoing success in expanding the mine's
reserve and resource base and is expected to lower per ounce cash
costs.
--Rochester (Nevada) - Mining operations ceased, as scheduled, during
August as Rochester entered its residual leaching phase, which is
expected to continue through 2011. During this phase, we expect to
experience continued low cash costs and generate substantial net
cash flow. As a result of this transition to processing-only
operations, cash costs declined 43% to $0.65 per ounce of silver,
compared to $1.14 per ounce in the previous year's third quarter.
Both silver and gold production were lower than the previous year's
third quarter due to this scheduled transition.
--Endeavor (Australia) - Silver production increased by 26% from the
third quarter of last year, with cash costs consistent at $2.65 per
ounce of silver. The mine continues to show production improvement
since last fall, as mine development accelerates into the fourth
quarter of 2007. Year-to-date, silver production is up 51% compared
to the first nine months of 2006 to nearly 457,000 ounces.
Since acquiring the silver reserves and production from the Endeavor
mine in May of 2005, Coeur has recouped nearly 50% of its initial
investment from approximately 1.1 million payable ounces of silver
produced to date. According to the terms of the acquisition, Coeur
will pay the remainder of the acquisition price of approximately
$26.6 million, subject to certain conditions and will be entitled
to receive an additional 18.9 million payable silver ounces before
reaching the agreed-upon cap of 20.0 million payable ounces. Coeur
expects to continue generating cash flow and silver production from
Endeavor for at least fifteen more years, making this transaction a
high-return investment for Coeur's shareholders.
--Broken Hill (Australia) - Silver production was 427,000 ounces in
the third quarter compared to 587,000 ounces in the year-ago
quarter. Cash costs of $3.10 per ounce of silver were consistent
with the year ago period. Broken Hill continues to steadily
increase its production rates each month since suffering a fatality
on-site in January, which caused the mine to be shut-down for
approximately six weeks as it reviewed its safety practices and
implemented safety training to all mine employees.
Since acquiring the silver reserves and production from the historic
Broken Hill mine in September of 2005, Coeur has recouped over 75%
of its initial investment from approximately 3.7 million payable
ounces of silver produced to date. According to the terms of the
transaction, Coeur is entitled to receive an additional 13.5
million ounces of silver production before reaching the agreed upon
cap of 17.2 million payable ounces. Based on current mining levels,
Coeur expects to continue generating cash flow from silver
production from Broken Hill for another seven years, producing a
high return on investment for Coeur's shareholders.
Exploration Results Continuing at South American Properties
Exploration results at the Company's aggressive drilling programs at its Cerro Bayo and Martha Mines in southern Chile and Argentina continued to return positive results in the third quarter, a continuation of a exploration program that in the first six months of the year have resulted in a 51% increase in silver mineral reserves at Cerro Bay and a 25% increase in silver mineral reserves at Martha through the first six months of the year over last year's levels.
In addition to the positive drill results announced in September at Cerro Bayo, drilling continues on the new Coigues Este area, including two new veins, Dalila and Yasna, which brings the total to five new veins now under exploration within approximately one kilometer of the existing plant facilities. Focus remains on the Dagny and Fabiola systems, plus new drill holes on Dalila and Yasna with continued good results.
Drilling also began on a new target at Martha--the Isabel Oeste vein. This target is about one kilometer north of the Martha mine, and southwest of the nearby Betty West structure discovered last year. So far on the new Isabel Oeste, the first three drill holes intersected high-grade silver and gold in rock types similar to the Martha mine. Coeur's Martha mine staff is currently planning a decline into the Betty West zone, and will drive by the Isabel zone, which could be accessed by the Betty West decline.
Drilling has also commenced at the Rochester mine at new high-grade structures identified last quarter in the Rochester deposit. These structures extend below and between the Rochester and Nevada Packard deposits. In addition, at Kensington in Alaska, drilling began recently on targets in the Jualin area adjacent to the Kensington Mine.
About Coeur
Coeur d'Alene Mines Corporation is one of the world's leading primary silver producers and has a strong presence in gold. The Company has mining interests in Alaska, Argentina, Australia, Bolivia, Chile, and Nevada.
Conference Call Information
Coeur d'Alene Mines Corporation will hold a conference call to discuss the Company's third quarter 2007 results at 2 p.m. Eastern time on November 2, 2007. To listen live via telephone, call 866-853-4681 (US and Canada) or 660-422-4718 (International). The conference ID number is 21052099. The conference call and presentation will also be web cast on the Company's web site, www.coeur.com. A replay of the call will be available through November 9, 2007. The replay dial-in numbers are 800-642-1687 (US and Canada) and 706-645-9291 (International) and the access code is 21052099.
New drill data from the Coigues Este area of Cerro Bayo and from the
Martha mine area:
Mineralized Interval (meters) Assays (g/t)
Drill Hole I.D.-------------------------------------------- Vein
From To Interval Horiz. Au Ag
Width
----------------------------------------------------------------------
Cerro Bayo District drilling data (October 2007)
----------------------------------------------------------------------
FCH-227 96.73 97.14 0.41 0.37 3.99 591 Dagny
----------------------------------------------------------------------
228 262.58 267.3 4.72 2.9 3.40 158 Dagny
----------------------------------------------------------------------
231 357.24 359.69 2.45 1.2 0.18 17 Dagny
----------------------------------------------------------------------
232 54.84 55.15 0.30 0.25 0.05 5 Fabiola
----------------------------------------------------------------------
233 104.34 105.7 1.36 1.36 1.43 460 Fabiola
----------------------------------------------------------------------
234 62.95 63.84 0.89 0.75 1.19 298 Dagny
----------------------------------------------------------------------
----------------------------------------------------------------------
Martha District, new Isabel Oeste and Martha Este drilling (October
2007)
----------------------------------------------------------------------
M-558 301.76 302.9 1.14 1.12 1.27 1,277 Isabel
----------------------------------------------------------------------
304.95 305.5 0.55 0.54 0.05 1,633 Loop
----------------------------------------------------------------------
M-559 288.6 289.1 0.50 0.49 0.35 363 Isabel
----------------------------------------------------------------------
M-560 266.2 267.3 1.10 1.08 0.19 912 Isabel
----------------------------------------------------------------------
274.5 276.0 1.50 1.47 0.05 152 Loop
----------------------------------------------------------------------
----------------------------------------------------------------------
M-564 95.4 95.96 0.56 0.48 1.00 889 Martha Este
----------------------------------------------------------------------
Cautionary Statement
Company press releases may contain numerous forward-looking statements within the meaning of securities legislation in the United States and Canada relating to the Company's silver and gold mining business. Such statements are subject to numerous assumptions and uncertainties, many of which are outside the Company's control. Operating, exploration and financial data, and other statements in this document are based on information the Company believes reasonable, but involve significant uncertainties as to future gold and silver prices, costs, ore grades, estimation of gold and silver reserves, mining and processing conditions, construction schedules, currency exchange rates, and the completion and/or updating of mining feasibility studies, changes that could result from the Company's future acquisition 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 the Company's filings from time to time with the SEC and the Ontario Securities Commission, including, without limitation, the Company's reports on Form 10-K and Form 10-Q. Actual results and timetables could vary significantly from the estimates presented. Readers are cautioned not to put undue reliance on forward-looking statements. The Company disclaims any intent or obligation to update publicly such forward-looking statements, whether as a result of new information, future events or otherwise.
Donald J. Birak, Coeur's Senior Vice President of Exploration, is the qualified person responsible for the preparation of the scientific and technical information concerning Coeur's mineral reserve information in this document. For a description of the key assumptions, parameters and methods used to estimate mineral reserves, as well as a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant factors, please see the Technical Reports for each project as filed on SEDAR at www.sedar.com.
Additional Information
The proxy statement that Coeur filed with the United States Securities and Exchange Commission ("SEC") and Ontario Securities Commission and mail to its shareholders contains information about Coeur, Bolnisi, Palmarejo, the Palmarejo Project, the transaction and related matters. Shareholders are urged to read the proxy statement carefully, as it will contain important information that shareholders should consider before making a decision about the transaction. In addition to receiving the proxy statement from Coeur by mail, shareholders may also obtain the proxy statement, as well as other filings containing information about Coeur, without charge, from the SEC's website (www.sec.gov) and the Canadian securities regulators' website (www.sedar.com) or, without charge, from Coeur. This announcement is neither a solicitation of a proxy, an offer to purchase, nor a solicitation of an offer to sell shares of Coeur. Coeur and its executive officers and directors may be deemed to be participants in the solicitation of proxies from Coeur's shareholders with respect to the proposed transaction. Information regarding any interests that Coeur's executive officers and directors may have in the transaction will be set forth in the proxy statement. The Coeur shares to be issued in the transaction have not been and will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Coeur intends to issue such Coeur shares pursuant to the exemption from registration set forth in Section 3(a)(10) of the Securities Act.
Copies of the merger implementation agreements and certain related documents are filed with the SEC and Canadian securities regulators and are available at the SEC's website at www.sec.gov and at the Canadian securities regulators' website at www.sedar.com.
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
2007 2006 2007 2006
------- ------- ------- -------
REVENUES (In thousands except per share data)
Sales of metal $ 52,863 $ 50,606 $155,388 $149,501
COSTS AND EXPENSES
Production costs applicable to
sales 38,231 21,915 85,991 63,602
Depreciation and depletion 3,895 6,536 16,669 19,843
Administrative and general 4,706 4,045 16,590 13,662
Exploration 3,268 2,572 8,699 6,474
Litigation settlement - 874 507 1,343
------- ------- ------- -------
Total costs and expenses 50,100 35,942 128,456 104,924
OTHER INCOME AND EXPENSE
Interest and other income 3,436 5,619 12,301 12,933
Interest expense, net of
capitalized interest (79) (232) (249) (1,120)
------- ------- ------- -------
Total other income and
expense 3,357 5,387 12,052 11,813
Income from continuing
operations before income
taxes 6,120 20,051 38,984 56,390
Income tax provision (2,485) (1,673) (9,413) (4,155)
------- ------- ------- -------
INCOME FROM CONTINUING
OPERATIONS 3,635 18,378 29,571 52,235
Income from discontinued
operations, net of income
taxes - - - 1,969
Gain (loss) on sale of net
assets of discontinued
operations - (27) - 11,132
------- ------- ------- -------
NET INCOME 3,635 18,351 29,571 65,336
Other comprehensive income
(loss) (226) 420 290 2,161
------- ------- ------- -------
COMPREHENSIVE INCOME $ 3,409 $ 18,771 $ 29,861 $ 67,497
------- ------- ------- -------
BASIC AND DILUTED INCOME PER
SHARE
Basic income per share:
Income from continuing
operations $ 0.01 $ 0.07 $ 0.11 $ 0.19
Income from discontinued
operations - - - 0.05
------- ------- ------- -------
Net income $ 0.01 $ 0.07 $ 0.11 $ 0.24
------- ------- ------- -------
Diluted income per share:
Income from continuing
operations $ 0.01 $ 0.06 $ 0.10 $ 0.18
Income from discontinued
operations - - - 0.05
------- ------- ------- -------
Net income $ 0.01 $ 0.06 $ 0.10 $ 0.23
------- ------- ------- -------
Weighted average number of
shares of common stock
Basic 277,800 277,543 277,747 269,259
Diluted 302,336 302,172 302,249 293,975
Operating Statistics From Continuing Operations
The following table presents information by mine and consolidated
sales information for the three- and nine-month periods ended
September 30, 2007 and 2006:
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
---------- --------- ---------- ---------
Rochester
Tons processed 911,925 2,648,263 4,861,935 7,917,710
Ore grade/Ag oz 0.51 0.83 0.65 0.75
Ore grade/Au oz 0.00 0.01 0.01 0.01
Recovery/Ag oz (A) 244.6% 63.9% 108.9% 62.0%
Recovery/Au oz (A) 465.0% 93.0% 135.3% 68.1%
Silver production ounces 1,144,622 1,403,302 3,554,651 3,704,960
Gold production ounces 12,244 21,583 40,679 55,965
Cash cost/oz $0.65 $1.14 $2.72 $2.58
Total cost/oz $2.47 $4.02 $5.51 $5.68
Cerro Bayo
Tons milled 105,767 105,945 263,312 321,581
Ore grade/Ag oz 4.28 4.04 4.60 5.64
Ore grade/Au oz 0.076 0.075 0.11 0.088
Recovery/Ag oz 93.8% 94.9% 94.5% 94.4%
Recovery/Au oz 90.0% 92.0% 92.7% 92.1%
Silver production ounces 424,206 405,586 1,145,654 1,711,153
Gold production ounces 7,229 7,325 26,874 26,054
Cash cost/oz $15.58 $8.33 $8.45 $3.86
Total cost/oz $18.92 $11.25 $12.09 $6.20
Martha Mine
Tons milled 9,382 9,101 27,246 24,767
Ore grade/Ag oz 60.10 92.82 76.27 84.56
Ore grade/Au oz 0.118 0.123 0.116 0.111
Recovery/Ag oz 96.5% 95.5% 95.1% 94.7%
Recovery/Au oz 91.7% 91.9% 92.8% 91.9%
Silver production ounces 543,803 806,384 1,975,927 1,982,884
Gold production ounces 1,015 1,026 2,939 2,535
Cash cost/oz $8.33 $4.01 $6.34 $4.51
Total cost/oz $9.03 $4.39 $6.83 $4.94
Endeavor (B)
Tons milled 280,978 218,997 818,844 440,776
Ore grade/Ag oz 1.27 0.94 1.07 1.07
Recovery/Ag oz 48.3% 66.1% 52.3% 63.9%
Silver production ounces 171,834 136,849 456,552 302,019
Cash cost/oz $2.65 $2.52 $2.91 $2.48
Total cost/oz $3.66 $3.39 $3.90 $3.59
Broken Hill
Tons milled 472,531 614,620 1,221,918 1,721,512
Ore grade/Ag oz 1.12 1.27 1.19 1.33
Recovery/Ag oz 80.4% 75.1% 83.3% 73.3%
Silver production ounces 427,254 587,360 1,206,595 1,672,713
Cash cost/oz $3.10 $3.05 $3.16 $3.07
Total cost/oz $4.87 $5.01 $5.05 $5.54
CONSOLIDATED PRODUCTION
TOTALS
Silver ounces 2,711,719 3,339,481 8,339,379 9,373,729
Gold ounces 20,488 29,934 70,492 84,554
Cash cost per oz/silver $5.04 $3.10 $4.44 $3.31
Total cost/oz $6.82 $5.14 $6.57 $5.53
CONSOLIDATED SALES TOTALS
Silver ounces sold 2,984,932 3,020,351 8,466,845 9,148,095
Gold ounces sold 22,249 26,595 72,401 81,486
Realized price per silver
ounce $12.87 $11.55 $13.34 $11.73
Realized price per gold
ounce $702 $634 $669 $625
(A) The leach cycle at Rochester requires 5 to 10 years to recover
gold and silver contained in the ore. The Company estimates the
ultimate recovery to be approximately 61.5% for silver and 93% for
gold. However, ultimate recoveries will not be known until leaching
operations cease which is currently estimated to occur in 2011.
Current recovery may vary significantly from ultimate recovery. See
Critical Accounting Policies and Estimates - Ore on Leach Pad.
Operating Statistics From Discontinued Operation
The following table presents information for Coeur Silver Valley which
was sold on June 1, 2006:
Three Months Nine Months
Ended September 30, Ended September 30,
2007 2006 2007 2006(1)
--------- ------------------------------
Silver Valley/Galena
Tons milled - - - 52,876
Ore grade/Silver oz - - - 15.15
Recovery/Silver oz - - - 96.0%
Silver production ounces - - - 768,674
Cash cost/oz - - - $9.75
Total cost/oz - - - $10.64
Gold production - - - 180
(1)Amounts represent five months ended May 31, 2006.
"Cash Costs per Ounce" are calculated by dividing the 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 costs per ounce as a key indicator of the profitability of each of its mining properties. Gold and silver are sold and priced in the world financial markets on a US dollar per ounce basis.
"Cash Costs" are costs directly related to the physical activities of producing silver and gold, and include mining, processing and other plant costs, third-party refining and smelting costs, marketing expense, on-site general and administrative costs, royalties, in-mine drilling expenditures that are related to production and other direct costs. Sales of by-product metals are deducted from the above in computing cash costs. Cash costs exclude depreciation, depletion and amortization, corporate general and administrative expense, exploration, interest, and pre-feasibility costs and accruals for mine reclamation. Cash costs are calculated and presented using the "Gold Institute Production Cost Standard" applied consistently for all periods presented.
Total cash costs per ounce is a non-GAAP measurement and investors are cautioned not to place undue reliance on it and are urged to read all 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-GAAP Cash Costs to GAAP Production Costs" set forth below.
Reconciliation of Non-GAAP Cash Costs to GAAP Production Costs
The tables below present reconciliations between Non-GAAP cash costs per ounce to production costs applicable to sales including depreciation, depletion and amortization (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. Total cash costs are a performance measure and provide management and investors an indication of net cash flow, after consideration of the realized price received for production sold. Management also uses this measurement for the comparative monitoring of performance of our mining operations period-to-period from a cash flow perspective. "Total cash cost per ounce" is a measure developed by precious metals companies in an effort to provide a comparable standard, however, there can be no assurance that our reporting of this non-GAAP measure is similar to that reported by other mining companies.
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 Statement of Operations and Comprehensive Loss.
THREE MONTHS ENDED SEPTEMBER 30, 2007
(In thousands except ounces and per ounce costs)
Rochester Cerro Bayo Martha
---------- ---------- ---------
Production of Silver (ounces) 1,144,622 424,206 543,803
Cash Costs per ounce $ 0.65 $ 15.58 $ 8.33
---------- ---------- ---------
Total Cash Costs (Non-GAAP) $ 739 $ 6,611 $ 4,532
Add/Subtract:
Third party smelting costs - (901) (420)
By-product credit (1) 8,332 4,912 692
Other adjustments 1,177 - -
Change in inventory 7,572 3,974 (1)
Depreciation, depletion and
amortization 2,088 1,416 382
---------- ---------- ---------
Production costs applicable to sales,
including depreciation, depletion and
amortization (GAAP) $ 19,908 $ 16,012 $ 5,185
---------- ---------- ---------
Endeavor Broken Hill Total
--------- ----------- -----------
Production of Silver (ounces) 171,834 427,254 2,711,719
Cash Costs per ounce $ 2.65 $ 3.10 $ 5.04
--------- ----------- -----------
Total Cash Costs (Non-GAAP) $ 456 $ 1,325 $ 13,663
Add/Subtract:
Third party smelting costs (294) (482) (2,097)
By-product credit (1) - - 13,936
Other adjustments - - 1,177
Change in inventory (21) 28 11,552
Depreciation, depletion and
amortization 174 756 4,816
--------- ----------- -----------
Production costs applicable to
sales, including depreciation,
depletion and amortization (GAAP) $ 315 $ 1,627 $ 43,047
--------- ----------- -----------
THREE MONTHS ENDED SEPTEMBER 30, 2006
(In thousands except ounces and per ounce costs)
Rochester Cerro Bayo Martha
----------- ---------- ---------
Production of Silver (ounces) 1,403,302 405,586 806,384
Cash Costs per ounce $ 1.14 $ 8.33 $ 4.01
----------- ---------- ---------
Total Cash Costs (Non-GAAP) $ 1,598 $ 3,380 $ 3,230
Add/Subtract:
Third party smelting costs - (672) (552)
By-product credit (1) 13,423 4,542 630
Other adjustments 383 - -
Change in inventory (4,635) (546) -
Depreciation, depletion and
amortization 4,037 1,184 313
----------- ---------- ---------
Production costs applicable to sales,
including depreciation, depletion
and amortization (GAAP) $ 14,806 $ 7,888 $ 3,621
----------- ---------- ---------
Endeavor Broken Hill Total
--------- ----------- -----------
Production of Silver (ounces) 136,849 587,360 3,339,481
Cash Costs per ounce $ 2.52 $ 3.05 $ 3.10
--------- ----------- -----------
Total Cash Costs (Non-GAAP) $ 346 $ 1,791 $ 10,345
Add/Subtract:
Third party smelting costs (224) (666) (2,114)
By-product credit (1) - - 18,595
Other adjustments - - 383
Change in inventory (35) (78) (5,294)
Depreciation, depletion and
amortization 119 1,152 6,805
--------- ----------- -----------
Production costs applicable to
sales, including depreciation,
depletion and amortization (GAAP) $ 206 $ 2,199 $ 28,720
--------- ----------- -----------
NINE MONTHS ENDED SEPTEMBER 30, 2007
(In thousands except ounces and per ounce costs)
Rochester Cerro Bayo Martha
---------- ----------- -----------
Production of Silver (ounces) 3,554,651 1,145,654 1,975,927
Cash Costs per ounce $ 2.72 $ 8.45 $ 6.34
---------- ----------- -----------
Total Cash Costs (Non-GAAP) $ 9,673 $ 9,682 $ 12,531
Add/Subtract:
Third party smelting costs - (2,352) (1,402)
By-product credit (1) 27,028 17,827 1,962
Other adjustments 1,828 - -
Change in inventory 4,296 1,641 517
Depreciation, depletion and
amortization 9,919 4,165 966
---------- ----------- -----------
Production costs applicable to
sales, including depreciation,
depletion and amortization (GAAP) $ 52,744 $ 30,963 $ 14,574
---------- ----------- -----------
Endeavor Broken Hill Total
--------- ----------- -----------
Production of Silver (ounces) 456,552 1,206,595 8,339,379
Cash Costs per ounce $ 2.91 $ 3.16 $ 4.44
--------- ----------- -----------
Total Cash Costs (Non-GAAP) $ 1,328 $ 3,809 $ 37,023
Add/Subtract:
Third party smelting costs (910) (1,451) (6,115)
By-product credit (1) - - 46,817
Other adjustments - - 1,828
Change in inventory 10 (26) 6,438
Depreciation, depletion and
amortization 453 2,284 17,787
--------- ----------- -----------
Production costs applicable to
sales, including depreciation,
depletion and amortization (GAAP) $ 881 $ 4,616 $ 103,778
--------- ----------- -----------
NINE MONTHS ENDED SEPTEMBER 30, 2006
(In thousands except ounces and per ounce costs)
Rochester Cerro Bayo Martha
----------- ----------- -----------
Production of Silver (ounces) 3,704,960 1,711,153 1,982,884
Cash Costs per ounce $ 2.58 $ 3.86 $ 4.51
----------- ----------- -----------
Total Cash Costs (Non-GAAP) $ 9,570 $ 6,602 $ 8,939
Add/Subtract:
Third party smelting costs - (2,464) (1,333)
By-product Credit (1) 33,899 15,713 1,523
Other adjustments 1,320 - -
Change in inventory (11,657) (2,142) -
Depreciation, depletion and
amortization 11,491 4,004 853
----------- ----------- -----------
Production costs applicable to
sales, including depreciation,
depletion and amortization (GAAP) $ 44,623 $ 21,713 $ 9,982
----------- ----------- -----------
Endeavor Broken Hill Total
--------- ----------- -----------
Production of Silver (ounces) 302,019 1,672,713 9,373,729
Cash Costs per ounce $ 2.48 $ 3.07 $ 3.31
--------- ----------- -----------
Total Cash Costs (Non-GAAP) $ 750 $ 5,127 $ 30,988
Add/Subtract:
Third party smelting costs (481) (2,000) (6,278)
By-product Credit (1) - - 51,135
Other adjustments - - 1,320
Change in inventory (89) 325 (13,563)
Depreciation, depletion and
amortization 334 4,137 20,819
--------- ----------- -----------
Production costs applicable to
sales, including depreciation,
depletion and amortization (GAAP) $ 514 $ 7,589 $ 84,421
--------- ----------- -----------
The following tables present a reconciliation between non-GAAP cash
costs per ounce to GAAP production costs applicable to sales reported
in Discontinued Operations:
Coeur Silver Valley/Galena NINE MONTHS
ENDED SEPTEMBER 30,
-------------------------------------------
2006 (2)
--------------------------
Production of Silver (ounces) 768,674
Cash Costs per ounce $9.75
--------------------------
Total Cash Costs (Non-GAAP) $7,498
Add/Subtract:
Third party smelting costs (1,464)
By-Product credit (1) 1,473
Change in inventory 726
Depreciation, depletion and amortization 681
--------------------------
Production costs applicable to sales,
including depreciation, depletion and
amortization (GAAP) $ 8,914
--------------------------
(1) By-product credits are based upon production units and the
period's average metal price for the purposes of reporting cash costs
per ounce.
(2) Amounts represent five months ended May 31, 2006.
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2007 2006
------------- ------------
ASSETS (In Thousands)
CURRENT ASSETS
Cash and cash equivalents $ 170,490 $ 270,672
Short-term investments 38,300 70,373
Receivables 45,900 43,233
Ore on leach pad 31,354 31,302
Metal and other inventory 15,369 16,341
Deferred tax assets 3,436 3,629
Prepaid expenses and other 16,517 6,047
------------- ------------
321,366 441,597
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 193,087 132,315
Less accumulated depreciation (69,347) (64,206)
------------- ------------
123,740 68,109
MINING PROPERTIES
Operational mining properties 138,211 130,447
Less accumulated depletion (123,077) (116,361)
------------- ------------
15,134 14,086
Mineral interests 74,526 72,201
Less accumulated depletion (10,565) (7,828)
------------- ------------
63,961 64,373
Non-producing and development properties 288,924 190,988
------------- ------------
368,019 269,447
OTHER ASSETS
Ore on leach pad, non-current portion 30,959 35,367
Restricted cash and cash equivalents 21,946 19,492
Debt issuance costs, net 4,924 5,151
Deferred tax assets 2,564 2,544
Other 15,973 7,919
------------- ------------
76,366 70,473
------------- ------------
TOTAL ASSETS $ 889,491 $ 849,626
------------- ------------
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2007 2006
---------------- ---------------
(In thousands except share data)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 37,175 $ 22,315
Accrued liabilities and other 8,950 11,865
Accrued income taxes 6,161 10,317
Accrued payroll and related
benefits 6,867 8,527
Accrued interest payable 469 1,031
Current portion of reclamation
and mine closure 4,330 4,460
---------------- ---------------
63,952 58,515
LONG-TERM LIABILITIES
1 1/4% Convertible Senior Notes
due January 2024 180,000 180,000
Reclamation and mine closure 27,715 27,226
Other long-term liabilities 4,336 2,891
---------------- ---------------
212,051 210,117
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common Stock, par value $1.00 per
share; authorized 500,000,000
shares, issued 279,525,051 and
279,054,344 shares in 2007 and
2006 (1,059,211 shares held in
treasury) 279,525 279,054
Additional paid-in capital 779,960 777,798
Accumulated deficit (433,650) (463,221)
Shares held in treasury (13,190) (13,190)
Accumulated other comprehensive
income 843 553
---------------- ---------------
613,488 580,994
---------------- ---------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 889,491 $ 849,626
---------------- ---------------
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
2007 2006 2007 2006
---------- --------- ---------- ----------
(In Thousands)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 3,635 $ 18,351 $ 29,571 $ 65,336
Add (deduct) non-cash
items:
Depreciation and
depletion 3,895 6,536 16,669 19,843
Deferred taxes (469) (816) 806 (3,947)
Unrealized loss (gain)
on embedded
derivative, net (983) (954) 107 2,247
Share based
compensation 910 655 2,516 1,819
Other charges (credits) 162 (268) (71) 253
Changes in Operating Assets
and Liabilities:
Receivables (14,781) 282 (8,996) 1,092
Metal and other
inventory 10,773 (5,345) 5,328 (14,290)
Prepaid and other
current assets (7,755) (846) (10,915) (1,872)
Accounts payable and
accrued liabilities (936) 3,196 (6,354) 10,832
Discontinued operations - 27 - (11,308)
---------- --------- ---------- ----------
CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES (5,549) 20,818 28,661 70,005
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures (57,325) (49,021) (157,029) (102,505)
Purchases of short-term
investments (26,455) (32,983) (77,034) (257,131)
Proceeds from sales of
short-term investments 24,130 298,390 106,392 399,496
Other (97) 25 330 (409)
Discontinued operations - 1,081 - 15,446
---------- --------- ---------- ----------
CASH (USED IN) PROVIDED BY
INVESTING ACTIVITIES (59,747) 217,492 (127,341) 54,897
CASH FLOWS FROM FINANCING
ACTIVITIES:
Retirement of long-term
debt and capital
leases (370) (377) (1,148) (1,066)
Proceeds from issuance
of common stock - - - 154,560
Payment of public
offering costs - 59 - (8,329)
Common stock
repurchased (102) - (379) -
Other 26 167 25 93
---------- --------- ---------- ----------
CASH (USED IN) PROVIDED
BY FINANCING
ACTIVITIES (446) (151) (1,502) 145,258
(DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (65,742) 238,159 (100,182) 270,160
Cash and cash
equivalents at
beginning of period 236,232 86,897 270,672 54,896
---------- --------- ---------- ----------
Cash and cash
equivalents at end of
period $ 170,490 $325,056 $ 170,490 $ 325,056
---------- --------- ---------- ----------
For further information
Coeur d'Alene Mines Corporation Jim Sabala, 208-769-8152
Source: Coeur d'Alene Mines Corporation
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