Perhaps Shaw stock broking's silver tongue comments may be of...

Perhaps Shaw stock broking's silver tongue comments may be of some interest to those patient holders.


Coeur d’Alene Mines (CXC) Buy
Key Points
• San Bartolome now operating.
• Full capacity expected in 4th quarter.
• Earnings & valuation downgraded on
lower silver price assumptions.
• Forecast production & earnings growth
remains very strong.

YE Dec 2008F 2009F 2010F
NPAT ($M) 31.8 190.8 241.1
PE (X) 34.7 5.8 4.6
Yield (%) 0.0 0.0 0.0
Franking 0.0 0.0 0.0
Target (12
mth) ($ps) $5.00



Analyst: TJL Recommendation @ $2.01
San Bartolome Now Ramping Up
CXC has reported that its San Bartolome mine is now ramping up silver production after previous
mechanical problems substantially delayed commissioning. The mill has now been operational for
two weeks since new bearings were installed. Silver production has steadily increased to the
current level of 15koz per day which 50% capacity. San Bartolome has produced 390koz to the
end of August and is expected to produce 500koz in September. Recoveries are between 70%
and 80% and head grades are around 250g/t. Full capacity of 9mozpa of silver equivalent is
expected to be achieved in the fourth quater.
Increasing production from San Bartolome is the first good news to come from CXC in some time.
A production rate of 15koz per day is equivalent to 5mozpa which is approximately half capacity
and we look to the September quarterly report for further improvements. We anticipate cash costs
to be around US$5/oz, equivalent to cash margins in excess of 50%, once full production rates are
achieved. San Bartolome is CXC's second best asset after Palmarejo.
With a share price having more than halved since early 2008, CXC is now in recovery mode. We
now expect total group silver and gold production of 17.3moz of silver equiv for 2008. We
anticipated 30.3moz silver equiv in 2009 due to San Bartolome operating at full capacity and
Palmarejo commissioning mid year.
Due to a sharp fall in the spot silver price we have down graded our average silver price
assumptions as follows:
• CY08: from US$17.9/oz to US$16.2/oz
• CY09: from US$17.6/oz to US$15.0/oz
This has resulted in our earnings falling as follows
• CY08: US$49m to US$32m
• CY09: US$233m to US$191m
We have also down graded our price target/valuation from A$5.00ps to A$4.00ps. Whilst this is a
sharp down grade of forecast earnings and valuation, CXC's production and earnings growth into
CY09 is extremely strong - for that reason we maintain our Buy recommendation.
CXC is to removed from the ASX300 index on the 19 September, however we don't see this as a
big issue as CXC's price is primarily driven by the NYSE listing price. Any relative CXC price
weakness on the ASX would just invite arbitrage activity.