Coeur Posts Record Quarterly Sales and Operating Cash Flow as Its New Kensington Gold Mine Joins Company′s Two Other New, Long-Life Mines in Production
Highlights:
Record metal sales of $101.0 million, 49% higher than last year′s
second quarter and 15% higher than first quarter
Record operating cash flow of $32.5 million, 116% higher than last
year′s second quarter and up from ($9.2) million in first quarter
Gold production up 68% to 23,124 ounces compared to last year′s second
quarter
Silver production up 7% to 4.2 million ounces compared to last year′s
second quarter
- Kensington ramp-up exceeding plan; plant reaching design
capacity; on-target for 2010
- Palmarejo silver and gold production up significantly
from last year′s second quarter
- San Bartolom?b> silver production increased 79% while cash
operating costs dropped 22% compared to the previous quarter;
operations continue to perform according to plan1
Maintaining overall 2010 production outlook of 17.3 million ounces of
silver and approximately 170,000 ounces of gold
Coeur d′Alene Mines Corporation (NYSE:CDE) (TSX:CDM) (ASX:CXC) today
announced record quarterly sales and operating cash flow, driven by its
two new, long-life gold and silver mines in Mexico and Bolivia. The
Company′s Kensington gold mine in Alaska, the world′s newest pure gold
mine, began processing ore in the second quarter ahead of schedule and
is expected to drive a 135% increase in companywide gold production this
year over last year′s levels.
Companywide metal sales jumped nearly $33 million, or 49%, to a record
$101.0 million, compared to last year′s second quarter, aided by strong
production and robust metals prices. Operating cash flow increased 116%
compared to last year′s second quarter to a quarterly Company record of
$32.5 million, driven by Coeur′s Palmarejo and San Bartolom?ines,
which started operations within the past two years.
'Coeur made significant progress this quarter, and we are pleased to
have achieved the highest metal sales and operating cash flow in Company
history. As our third of three new, long-life, precious metals mines
comes on-stream, our strategy has us well-positioned to take advantage
of the continued strength in precious metals prices,? said Dennis E.
Wheeler, Chairman, President and Chief Executive Officer of Coeur. 'The
successful and early start-up of our Kensington gold mine in Alaska,
together with Palmarejo and San Bartolom?hould continue to deliver
record growth in metal sales and cash flow for shareholders.?
'Companywide, we remain on-track to produce approximately 17.3 million
ounces of silver this year with annual gold production increasing over
135% to 170,000 ounces,? concluded Mr. Wheeler.
The Company produced 4.2 million ounces of silver and 23,124 ounces of
gold compared to 3.9 million ounces of silver and 13,795 ounces of gold
during last year′s second quarter. Cash operating costs declined to
$8.06 per ounce of silver versus $8.57 per ounce during last year′s
second quarter. Silver production contributed 73% of the Company′s total
metal sales during the second quarter compared to 84% during the second
quarter of 2009.
For the first six months of 2010, metal sales increased nearly $78
million, or approximately 70%, to a record $189.3 million. Coeur
produced 7.6 million ounces of silver and 48,907 ounces of gold during
the first six months of 2010, compared to 7.4 million ounces of silver
and 17,586 ounces of gold during last year′s first half. Cash operating
costs averaged $7.77 per ounce of silver. Silver production contributed
70% of the Company′s total metal sales during the first half of 2010
compared to 87% during the first half of 2009.
Operational Highlights
Kensington (Alaska) ? World′s Newest
Pure Gold Mine
Production started ahead of schedule and is on-track for targeted 2010
production of approximately 50,000 ounces
Process plant operating at design tonnage of 1,250 tons per day, ahead
of schedule
Recovery rates during initial month of ramp-up consistent with plan
and expected to climb as processing of higher-grade ore begins
First two gold concentrate shipments have been sent to China National
Gold Corporation, marking a groundbreaking agreement, the first of its
kind, between a Chinese state-owned corporation and a U.S. precious
metals mine
Expected annual average gold production of approximately 125,000
ounces over initial 12.5 year mine life
Projected average life-of-mine cash operating costs of $490 per ounce
Palmarejo (Mexico) ? Test Work
Identifying Next Steps to Boost Operating Performance
Many important milestones were achieved during the second quarter as
part of the Company′s on-going optimization program, which are expected
to increase production and lower costs during the remainder of 2010.
These include:
Commissioning of Merrill Crowe refining plant during June
Mining transitioned in June from development activities to mining of
higher-grade ore from underground production stopes
Improved ore sorting and blending procedures for the various ore types
at Palmarejo
Second quarter production increased to 1.1 million ounces compared to
587,716 ounces last year′s second quarter, (the mine′s initial quarter
of operations), while gold production increased to 19,950 ounces
compared to 9,730 ounces last year
First half silver production totaled 2.4 million ounces while gold
production was 42,527 ounces
Cash operating costs averaged $10.78 per ounce of silver during the
quarter and $7.83 per ounce of silver during the first half of 2010
versus $19.44 per ounce during last year′s second quarter and first
six months
5.4 million silver ounces and 97,267 gold ounces have been produced in
total, representing less than 9% of total contained mineral reserves
In July, silver production increased 50% while gold production jumped
58%, marking the mine′s second highest month of gold production since
inception. Cash operating costs during July were ($0.97) per silver
ounce, dramatically reduced from the second quarter′s average cash
operating costs of $10.78 per silver ounce. These improvements are a
direct result of recently commenced mining of higher-grade underground
ore and improved ore blending procedures.
Full-year 2010 production is expected to reach approximately 6.3 million
ounces of silver and 109,000 ounces of gold at an average cash operating
cost of approximately $3.00 per silver ounce.
San Bartolom?Bolivia) ? Achieving
Consistent Production Levels at Reduced Costs
Markedly higher production and reduced costs compared to last quarter
due to process handling improvements and mining of higher-grade ore
Production increased 79% to 1.9 million ounces in the second quarter
compared to 1.0 million ounces produced during the first quarter
Cash operating costs dropped 22% to $7.78 per ounce in the second
quarter, down from $9.98 in the first quarter due to a 52% increase in
tons mined and a 34% increase in average grade mined
Strong performance continued in July with silver production reaching
approximately 679,000 ounces and cash costs declining a further to
$7.39 per ounce
Full-year 2010 silver production estimate increased to approximately
6.5 million ounces at average cash operating costs of approximately
$8.00 per ounce
13.2 million silver ounces have been produced in total, representing
less than 9% of total contained mineral reserves
Rochester (Nevada) ? Progress
Continues on Plan to Restart Active Mining in 2011
On-target to restart active mining activities next year, leading to at
least six years of incremental production, averaging 30,000 ounces of
gold and 2.5 million ounces of silver annually
Expected production from resumption of active mining will be in
addition to on-going leaching activities
Project will make significant contribution to Nevada economy, creating
nearly 200 new jobs
2010 production forecast increased to 2.0 million ounces silver along
with 10,000 ounces of gold at an average cash cost of approximately
$3.50 per silver ounce
Metals Prices
The Company′s average realized silver and gold prices during the second
quarter were $18.56 per ounce and $1,176 per ounce, representing
increases of 35% and 26% over prior year quarter. During the first half
of 2010, the Company′s average realized silver and gold prices were
$17.74 per ounce and $1,138 per ounce, representing increases of 34% and
22% compared to the first half of 2009.
Financial Highlights
The Company reported operating income of $1.9 million during the quarter
compared to an $8.8 million operating loss during last year′s second
quarter. During the first six months of 2010, the Company reported
operating income of $1.0 million versus an $8.5 million operating loss
during the first six months of 2009.
The Company′s financial statements reflect several non-cash adjustments.
The largest component of these non-cash adjustments relates to its
obligation to make royalty payments on a minimum of 400,000 ounces of
future gold production from the Palmarejo silver and gold mine. This
royalty financing transaction was completed in January of 2009,
providing the Company with $75 million of cash used to complete the
construction at Palmarejo. This minimum obligation requires the Company
to account for the quarter-to-quarter changes in these estimated future
payments as a derivative. As the gold price rises (or declines) from
quarter to quarter, the estimated future value of these royalty payments
changes. This causes quarterly, non-cash, unrealized adjustments to flow
through the Company′s income statement.
For the quarter, the Company reported a net loss of $50.7 million, or
($0.57) per share. This net loss includes $46.6 million of negative
non-cash adjustments.2 During last year′s second quarter, the
Company reported net income of $11.6 million, or $0.17 per share, which
included $18.5 million in positive non-cash adjustments.3
During the first six months of 2010, the Company reported a net loss of
$58.8 million, or ($0.69) per share. This net loss includes $58.7
million of negative non-cash adjustments.4 During the first
six months of 2009, the Company reported net income of $17.7 million, or
$0.27 per share, which included $24.8 million of positive non-cash
adjustments.5
At June 30th, 2010, cash and equivalents totaled $41.2
million and the Company had approximately 89.3 million shares
outstanding.
Exploration Highlights
The Company′s exploration strategy is largely focused on drilling
activities on its large land positions surrounding existing operations.
This strategy has generated very cost-effective, near-term additions to
the Company′s substantial mineral reserve and resource base.
Palmarejo (Mexico)
The Palmarejo exploration program, which completed a total of 12,359
meters (40,458 feet) of core drill in the second quarter, focused on
several promising targets around the existing surface and underground
mines.
In addition, drilling recommenced on the Guadalupe Norte zone at the
north end of the long Guadalupe mineral system in the Palmarejo District
where a total of 7,420 meters (24,344 feet) of core drill was completed
in the second quarter. Favorable results were obtained from several of
the known ore shoots (clavos). Notable results are; 18.5 meters true
width @ 3.51 g/t Au, 249 g/t Ag in core hole RN-008 from Rosario
Norte, 16.1 m @ 1.95 Au, 252 Ag in hole 0004 from Tucson, 7.3
m @ 20.33 Au, 1,006 Ag in hole 032 from 108 Clavo, 2.3 m @ 30.12
Au, 2,416 Ag in hole 0039 from 76 Clavo and 6.1 meters @ 5.67 Au
and 157 Ag from hole 351 in Guadalupe Norte.
Kensington (Alaska)
With Kensington now in production, the Company started exploration in
the second quarter of 2010. The main focus of this work was on the
Horrible structure, a prominent, gold-bearing quartz vein and vein swarm
situated about 650 meters west of the current Kensington mining area. A
total of 9,941 feet (3,030 meters) of core drilling was completed at
Horrible in the second quarter. Drilling has cut multiple quartz-vein
structures down-dip and on-strike of the known zone. Drilling will
continue on Horrible and other nearby targets in the third quarter.
Martha and Joaquin (Argentina)
Exploration at the Martha mine in Argentina consisted of target
generation and drill site selection. In addition to Martha, the Company
also conducted exploration in other parts of the Santa Cruz Province,
about 80 kilometers north of Martha. In particular, the Company focused
on Joaquin, on which the Company has an option to acquire up to a 71%
managing joint venture interest. During the second quarter, a fourth
phase of drilling and further reconnaissance to identify new targets
commenced at Joaquin. The best results were from La Negra, where a main
zone measuring 1,000 meters on strike and up to 170 meters vertically
has been defined, as well as seven sub-parallel zones of silver and gold
mineralization.
Rochester (Nevada)
Late in the quarter, drilling commenced on new targets between the
Rochester and Packard mines. Over 3,700 feet of angled reverse
circulation drilling was completed on new targets in the NE-trending
structural corridor between the two mines. Numerous geochemical
anomalies have been defined in this belt and the Company believes there
is good potential to add to the total mineral resource and reserves in
this area. As of December 31, 2009, Rochester had 25,884,000 ounces of
silver and 233,000 ounces of gold in proven and probable reserves.
2010 Safety Award
In June, the Company′s Coeur South America exploration team received a
major award from the Chilean Safety Association (ACHS). Coeur was
awarded the 'Honors Award?
in safety, the highest award that ACHS confers every year among over
10,000 Chilean companies. Coeur was the only company in the mining
industry presented with an award, which recognized the attention to
safety from all Coeur South America employees.
Donald J. Birak, Coeur′s Senior Vice President of Exploration commented,
'We are very pleased that the efforts of our South American exploration
team have been recognized by ACHS. While we continue to operate at the
highest safety standards, I would like to congratulate our South
American team for receiving this important award, and thank all of our
exploration groups for their high level of attention to safety.?
Conference Call Information
Coeur will hold a conference call to discuss the Company's second
quarter 2009 results at 1:00 p.m. Eastern time on August 10, 2010. To
listen live via telephone, call (877) 464-2820 (US and Canada) or (660)
422-4718 (International). The conference ID number is 84903832. The
conference call and presentation will also be webcast on the Company's
web site www.coeur.com.
A replay of the call will be available through August 13, 2010. The
replay dial-in numbers are (800) 642-1687 (US and Canada) and (706)
645-9291 (International) and the access code is 84903832. In addition,
the call will be archived for a limited time on the company′s web site.
-------------------------
1 Cash costs and cash operating costs are both non-GAAP
financial measures. A reconciliation of these measures to production
costs is provided at the end of this news release.
2 $4.1 million from loss on debt extinguishments and ($42.5)
million in other fair value adjustments
3 $22.7 million from gain on debt extinguishments and ($4.1)
million in other fair value adjustments
4 $11.9 million from loss on debt extinguishments and ($46.8)
million in other fair value adjustments
5 $38.4 million from gain on debt extinguishments and ($13.6)
million in other fair value adjustments
Cautionary Statement
This press release contains forward-looking statements within the
meaning of securities legislation in the United States, Canada, and
Australia, including statements regarding anticipated operating results.
Such statements are subject to numerous assumptions and uncertainties,
many of which are outside the control of Coeur. Operating, exploration
and financial data, and other statements in this presentation are based
on information that Coeur believes is reasonable, but involve
significant uncertainties affecting the business of Coeur, including,
but not limited to, future gold and silver prices, costs, ore grades,
estimation of gold and silver reserves, mining and processing
conditions, construction schedules, currency exchange rates, and the
completion and/or updating of mining feasibility studies, changes that
could result from future acquisitions of new mining properties or
businesses, the risks and hazards inherent in the mining business
(including environmental hazards, industrial accidents, weather or
geologically related conditions), regulatory and permitting matters,
risks inherent in the ownership and operation of, or investment in,
mining properties or businesses in foreign countries, as well as other
uncertainties and risk factors set out in filings made from time to time
with the SEC, the Canadian securities regulators, and the Australian
Securities Exchange, including, without limitation, Coeur′s reports on
Form 10-K and Form 10-Q. Actual results, developments and timetables
could vary significantly from the estimates presented. Readers are
cautioned not to put undue reliance on forward-looking statements. Coeur
disclaims any intent or obligation to update publicly such
forward-looking statements, whether as a result of new information,
future events or otherwise. Additionally, Coeur undertakes no obligation
to comment on analyses, expectations or statements made by third parties
in respect of Coeur, its financial or operating results or its
securities.
Donald J. Birak, Coeur's Senior Vice President of Exploration, is the
qualified person responsible for the preparation of the scientific and
technical information concerning Coeur's mineral projects in this
presentation. For a description of the key assumptions, parameters and
methods used to estimate mineral reserves and resources, as well as a
general discussion of the extent to which the estimates may be affected
by any known environmental, permitting, legal, title, taxation,
socio-political, marketing or other relevant factors, please see the
Technical Reports for each of Coeur's properties as filed on SEDAR at www.sedar.com.
Cautionary Note to U.S. Investors ? The United States Securities and
Exchange Commission permits U.S. mining companies, in their filings with
the SEC, to disclose only those mineral deposits that a company can
economically and legally extract or produce. We use certain terms in
this presentation, such as 'measured,? 'indicated,? and 'inferred?
'resources,? that are recognized by Canadian and Australian regulations,
but that SEC guidelines generally prohibit U.S. registered companies
from including in their filings with the SEC. U.S. investors are urged
to consider closely the disclosure in our Form 10-K which may be secured
from us, or from the SEC′s website at http://www.sec.gov/edgar.shtml.
Non-GAAP Measures
We supplement the reporting of our financial information determined
under generally accepted accounting principles (GAAP) with certain
non-GAAP financial measures, including cash operating costs. We believe
that these adjusted measures provide meaningful information to assist
management, investors and analysts in understanding our financial
results and assessing our prospects for future performance. We believe
these adjusted financial measures are important indicators of our
recurring operations because they exclude items that may not be
indicative of, or are unrelated to our core operating results, and
provide a better baseline for analyzing trends in our underlying
businesses. We also provide the amount of our operating cash flow to
supplement our cash flow determined under GAAP. We define operating cash
flow as net income plus depreciation, depletion and amortization and
plus/minus any other non-cash items. We believe operating cash flow is
an important measure in assessing the Company's overall financial
performance.
About Coeur
Coeur d'Alene Mines Corporation is one of the world's leading silver
companies and also a growing gold producer. Coeur is also a recognized
leader in environmental stewardship and worker safety, with 13 national
and international awards earned over the past year. The Company′s three
new long-life mines include the San Bartolom?ilver mine in Bolivia
which began operations in 2008, the Palmarejo silver/gold mine in
Mexico, which began operations in 2009, and the Kensington gold mine in
Alaska, which began production in June of this year. The Company also
owns underground mines in Argentina and one surface mine in Nevada, and
owns a non-operating interest in a low-cost mine in Australia. The
Company conducts exploration activities in Alaska, Argentina and Mexico.
Coeur common shares are traded on the New York Stock Exchange under the
symbol CDE, and the Toronto Stock Exchange under the symbol CDM, and its
CHESS Depositary Interests are traded on the Australian Securities
Exchange under symbol CXC.
Photos of projects and other information can be accessed through company
website at www.coeur.com.
Operating Statistics from Continuing Operations
The following table presents information by mine and consolidated sales
information for the three and six month periods ended June 30, 2010 and
2009:
| |||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||||||
| Palmarejo(A) | |||||||||||||||||
Tons milled | 457,268 | 285,095 | 915,275 | 285,095 | |||||||||||||
Ore grade/Ag oz | 3.23 | 3.84 | 3.57 | 3.84 | |||||||||||||
Ore grade/Au oz | 0.05 | 0.04 | 0.05 | 0.04 | |||||||||||||
Recovery/Ag oz | 72.5 | % | 53.6 | % | 72.6 | % | 53.6 | % | |||||||||
Recovery/Au oz | 87.3 | % | 77.0 | % | 89.4 | % | 77.0 | % | |||||||||
Silver production ounces | 1,070,638 | 587,716 | 2,371,231 | 587,716 | |||||||||||||
Gold production ounces | 19,950 | 9,730 | 42,527 | 9,730 | |||||||||||||
Cash operating costs/oz | $ | 10.78 | $ | 19.44 | $ | 7.83 | $ | 19.44 | |||||||||
Cash cost/oz | $ | 10.78 | $ | 19.44 | $ | 7.83 | $ | 19.44 | |||||||||
Total production cost/oz | $ | 29.73 | $ | 40.50 | $ | 25.16 | $ | 40.50 | |||||||||
| San Bartolom?b> | |||||||||||||||||
Tons milled | 446,909 | 352,938 | 740,014 | 716,717 | |||||||||||||
Ore grade/Ag oz | 5.00 | 6.10 | 4.50 | 6.46 | |||||||||||||
Recovery/Ag oz | 83.4 | % | 89.0 | % | 87.2 | % | 87.1 | % | |||||||||
Silver production ounces | 1,863,141 | 1,916,359 | 2,903,068 | 4,029,910 | |||||||||||||
Cash operating costs/oz | $ | 7.78 | $ | 7.37 | $ | 8.57 | $ | 7.04 | |||||||||
Cash cost/oz | $ | 8.32 | $ | 10.64 | $ | 9.22 | $ | 9.35 | |||||||||
Total production cost/oz | $ | 11.56 | $ | 13.13 | $ | 12.39 | $ | 11.82 | |||||||||
| Martha Mine | |||||||||||||||||
Tons milled | 12,421 | 27,097 | 29,996 | 54,914 | |||||||||||||
Ore grade/Ag oz | 50.24 | 28.31 | 35.21 | 30.02 | |||||||||||||
Ore grade/Au oz | 0.06 | 0.04 | 0.04 | 0.04 | |||||||||||||
Recovery/Ag oz | 88.1 | % | 92.3 | % | 86.6 | % | 91.9 | % | |||||||||
Recovery/Au oz | 81.7 | % | 83.4 | % | 89.5 | % | 83.9 | % | |||||||||
Silver production ounces | 549,885 | 707,898 | 915,111 | 1,515,905 | |||||||||||||
Gold production ounces | 558 | 834 | 1,074 | 1,807 | |||||||||||||
Cash operating costs/oz | $ | 8.97 | $ | 7.89 | $ | 11.57 | $ | 6.74 | |||||||||
Cash cost/oz | $ | 9.57 | $ | 8.33 | $ | 12.12 | $ | 7.20 | |||||||||
Total production cost/oz | $ | 14.10 | $ | 10.03 | $ | 17.38 | $ | 8.74 | |||||||||
| Rochester(B) | |||||||||||||||||
Silver production ounces | 533,093 | 543,543 | 1,055,253 | ||||||||||||||