COEUR REPORTS NEW MINES LEAD TO RECORD SECOND QUARTER SILVER PRODUCTION AND NEARLY 700% INCREASE IN OPERATING CASH FLOW
Second Quarter Highlights:
. 74% increase in silver production to a second quarter record 4.3 million ounces . 46% increase in revenue to all-time high of $73 million . 692% increase in quarterly operating cash flow to $16.8 million . Quarterly net income of $11.6 million, or $0.17 per share . 22% reduction in G&A expenses - third consecutive quarter of double digit declines . Favorable Supreme Court decision received regarding Kensington permit . Total debt reduced over $150 million, or 37% . Sale of Broken Hill interest for $55 million results in pro forma cash balance of $80 million
COEUR D'ALENE, Idaho - August 6, 2009 - Coeur d'Alene Mines Corporation (NYSE:CDE, TSX:CDM, ASX:CXC) today announced a second quarter silver production record of 4.3 million ounces during the second quarter of 2009. This represents a 74% increase compared to last year's second quarter and was driven by silver production from the Company's two new large, long-life mines, the San Bartolomé silver mine in Bolivia and the Palmarejo silver and gold mine in Mexico, which combined for a total of 2.5 million ounces of silver production, or 58% of the Company's total silver production, during the second quarter.
"Our second quarter results reflect the significant impact the Company's two new large mines are now having on production levels and cash flow," said Dennis E. Wheeler, Chairman, President and Chief Executive Officer. "As the new Palmarejo mine continues to ramp up production through the remainder of the year, we expect this growth in production and cash flow to continue."
"Meanwhile, Coeur continues to fortify its balance sheet. The Company's cash position now stands at a strong $80 million, and our total debt has been reduced by over $150 million, or 37%, since the beginning of the year.
"Finally, we are very pleased with the recent decision by the U.S. Supreme Court affirming the previously issued tailings permit at our Kensington gold mine project in Alaska. The Court decision and dissolution of the previous injunction now clears the way for the only remaining item left to be constructed at the mine - the tailings facility - and for production to commence beginning in the second half of 2010, providing long-term economic benefits to the Alaskan economy and Coeur shareholders," Mr. Wheeler said.
Palmarejo (Mexico) Continues to Ramp Up to Full Scale
The Palmarejo silver and gold mine in northern Mexico continued to ramp up production during its initial quarter of operations. During the quarter, Palmarejo produced 588,000 ounces of silver and 9,730 ounces of gold. All construction contractors have been demobilized and both underground and open-pit operations are performing according to plan. Final commissioning of certain areas of the processing plant continue to take place. The Company expects to achieve design mining and processing rates by the beginning of the fourth quarter.
San Bartolomé (Bolivia) Quarterly Production of 1.9 Million Ounces
Silver production during the second quarter at San Bartolomé was 1.9 million ounces with cash operating costs of $7.37 per ounce. Production was slightly lower and costs were slightly higher than the first quarter of the year due to a temporary SAG mill motor failure, which caused the mill to not operate for fifteen days during the month of May. The SAG mill issue was successfully addressed and operations resumed at normal levels throughout the rest of the quarter. For the first six months of the year, San Bartolomé produced 4.0 million ounces of silver at average cash operating costs of $7.04 per ounce.
The Company expects full-year 2009 silver production at San Bartolomé to reach approximately 8.4 million ounces of silver at an average cash operating cost of approximately $6.50 per ounce.
U.S. Supreme Court Decision Upholds Kensington Permit; Company Updates Cost Estimates
In the second quarter, the United States Supreme Court released its decision reversing the Ninth Circuit Court of Appeals and upholding the previously issued permit for the tailings facility for the Kensington gold mine near Juneau, Alaska. The Ninth Circuit Court then lifted the prior court ordered injunction, and the only remaining action needed is for the Corps of Engineers to lift the prior suspension of the permit which is expected timely. The Company then plans to proceed with construction of the only item remaining to be constructed, the tailings facility, and for production to commence at the mine, providing job growth and economic stimulus to Southeast Alaska.
The Company is expecting production to begin in the second half of 2010. The mine is expected to average approximately 120,000 ounces of annual gold production over a 12.5 year mine life based on current proven and probable mineral reserves. Cash operating costs are expected to average $475 per ounce. The remaining construction and mine-related capital costs estimated to bring the mine into production are expected to be approximately $70 million. Construction contracts have been awarded and the construction management team has been mobilized. In 2009, construction activities will be focused on completing the tailings facility towards a second half 2010 startup.
Balance Sheet Strengthened Through Debt Reduction Program and Sale of Broken Hill Interest
During the first half of 2009, the Company reduced its convertible debt by over $150 million, or approximately 37%. During the second quarter, the Company reduced the outstanding balance of its 1.25% convertible notes by $51.1 million and reduced the outstanding balance of its 3.25% convertible notes by $63.0 million.
Coeur announced on July 16 that it agreed to sell back to Perilya Limited its interest in the silver contained at the Broken Hill mine in Australia for US$55.0 million in cash. Coeur originally purchased this interest from Perilya in September 2005 for $36.9 million, and has received a total of more than 6.1 million ounces of payable silver from the Broken Hill mine. As of June 30, 2009, the Company had recovered approximately 137.2% of the original consideration. The Company will also continue to review rationalization of smaller assets.
Coeur's issued and outstanding shares stood at 75.4 million on August 4th, 2009, giving effect to the reverse split on May 26, 2009.
Exploration Update
Guadalupe, Mexico. The Company's exploration program was focused on the Guadalupe vein system in the Palmarejo District. The program, which completed over 7,200 meters of new drilling, was designed to expand the Guadalupe deposit, define the known mineralization at Las Animas and Guadalupe Sur zone - both of which show potential for surface mining and quick ore access - and to discover new silver and gold mineralization nearby. Favorable results were obtained from all drilling. In addition, field work identified two new silver and gold bearing structures to the west and northwest of Guadalupe - termed La Antena and La Higuera, respectively - and a new model of Las Animas and Guadalupe is being completed which is expected to have important positive implications for future discoveries in the district. All of these new targets will be part of the next phase of drilling during the remainder of the year. The Company expects this work will yield an increase in proven and probable mineral reserves for the Guadalupe vein system to be reported later this year.
Cerro Bayo, Chile. Exploration drilling focused on definition and expansion of the large Delia vein system during the second quarter, which is located less than 500 meters southeast of the Cerro Bayo mill, and on testing new targets in the district. A total of 13,300 meters of drilling was completed this quarter on all targets. In June, the Company's exploration team intersected very high-grade silver and gold mineralization in a new vein - termed Trinidad - which occurs just to the west of Delia. Follow up drilling on this and other targets is underway.
Joaquin, Argentina. Coeur's exploration teams completed a second phase of drilling at the La Morocha and La Negra zones at the Joaquin Project, under option from Mirasol Resources Ltd., located north of the Company's Martha mine. A total of 15 holes and 1,900 meters were completed in this phase. All of the second phase core holes encountered wide zones of silver and gold mineralization. A third phase of drilling is planned for Q3 at Joaquin as well as a first phase on Nico, a second property under option, which borders the Martha mine property at the north.
Don Birak, Coeur's Senior Vice President of Exploration, said, "We are pleased to report these positive exploration results. The results from this quarter's drilling at Guadalupe continue to expand and define the mineralized system in this large target located approximately six kilometers from the processing facilities at Palmarejo. The deposit is over 2 kilometers long and still open for expansion. As drilling activities continued on our land position at Palmarejo during the quarter, we were encouraged with the discovery of the new La Antena and La Higuera zones located near Guadalupe."
"In Chile, the new high-grades at the Trinidad vein at Cerro Bayo are significant given their close proximity to the Delia vein, discovered late last year, and we will continue to drill there and on other new targets. Results at Joaquin in southern Argentina have been very encouraging this year with wide zone of silver and gold mineralization encountered in nearly all drill holes, and a third phase of drilling will commence in the next quarter at this potential stand-alone surface mining opportunity to establish the size of the mineralization and provide samples for initial metallurgical testing."
About Coeur Coeur d'Alene Mines Corporation is one of the world's leading silver companies and also a significant gold producer. Coeur will have its first full year of production this year at the world's largest pure silver mine - San Bartolomé in Bolivia - and began production in March at another world-leading silver mine - Palmarejo in Mexico. The Company also operates underground mines in southern Chile and Argentina and one surface mine in Nevada; and owns a non-operating interest in a low-cost mine in Australia. The Company also owns a major gold project - Kensington in Alaska - and conducts exploration activities in Argentina, Chile and Mexico. Coeur common shares are traded on the New York Stock Exchange under the symbol CDE, 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.
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 6, 2009. To listen live via telephone, call (866) 853-4681 (US and Canada) or (660) 422-4718 (International). The conference ID number is 21050936. 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, 2009. The replay dial-in numbers are (800) 642-1687 (US and Canada) and (706) 645-9291 (International) and the access code is 21050936. In addition, the call will be archived for a limited time on the company's web site. For Additional Information: Investors Director of Investor Relations Karli Anderson, 208-665-0345 Media Director of Corporate Communications Tony Ebersole, 208-665-0777
CXC Price at posting:
$18.60 Sentiment: None Disclosure: Held
