q2 july titbit operating costs 97c per oz

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.


August 09, 2010 04:09 PM Eastern Daylight Time
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? 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, Idaho--(BUSINESS WIRE)--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.

?Reconciliation of Non-U.S. GAAP Cash Costs to U.S. GAAP Production Costs?
.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? mines, 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? should 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.

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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