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 ProductionAug. 9, 2010 20:09 UTC
- 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 Bartolomé 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.
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 Bartolomé 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 Bartolomé should continue to deliver record growth in metal sales and cash flow for shareholders.”
“Companywide, we remain on-track to produce approximately 173 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.
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 Bartolomé (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
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.
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.
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.
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.
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.
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
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.
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.
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 Bartolomé silver 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 Bartolomé 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 1,013,404 Gold production ounces 2,616 3,231 5,306 6,049 Cash operating costs/oz $ 2.44 $ 2.50 $ 2.06 $ 2.64 Cash cost/oz $ 2.93 $ 2.96 $ 2.64 $ 3.14 Total production cost/oz $ 3.97 $ 3.90 $ 3.67 $ 4.14 Endeavor Tons milled 143,371 130,872 273,244 297,843 Ore grade/Ag oz 2.01 1.92 2.61 1.51 Recovery/Ag oz 48.4 % 48.7 % 48.2 % 58.8 % Silver production ounces 139,447 122,705 343,700 264,519 Cash operating costs/oz $ 8.98 $ 6.19 $ 8.04 $ 5.52 Cash cost/oz $ 8.98 $ 6.19 $ 8.04 $ 5.52 Total production cost/oz $ 12.21 $ 8.76 $ 11.27 $ 8.09 CONSOLIDATED PRODUCTION TOTALS (C) Silver ounces 4,156,204 3,878,221 7,588,363 7,411,454 Gold ounces 23,124 13,795 48,907 17,586 Cash operating costs/oz $ 8.06 $ 8.57 $ 7.77 $ 7.31 Cash cost per oz/silver $ 8.44 $ 10.33 $ 8.17 $ 8.72 Total production cost/oz $ 15.62 $ 15.28 $ 15.72 $ 12.28 CONSOLIDATED SALES TOTALS (D) Silver ounces sold 4,051,838 4,318,092 7,685,594 7,489,069 Gold ounces sold 23,645 11,816 49,379 15,941 Realized price per silver ounce $ 18.56 $ 13.71 $ 17.74 $ 13.22 Realized price per gold ounce $ 1,176.09 $ 936.53 $ 1,138.51 $ 933.72
(A) Palmarejo achieved commercial production on April 20, 2009.
(B) 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 for 2014. Current recovery may vary significantly from ultimate recovery. See Critical Accounting Policies and Estimates – Ore on Leach Pad.
(C) Current production ounces and recoveries reflect final metal settlements of previously reported production ounces.
(D) Units sold at realized metal prices will not match reported metal sales due primarily to the effects on revenues of mark-to-market adjustments on embedded derivatives in the Company’s provisionally priced sales contracts.
“Operating Costs per Ounce” and “Cash Costs per Ounce” are calculated by dividing the operating cash costs and cash costs computed for each of the Company’s mining properties for a specified period by the amount of gold ounces of silver ounces produced by that property during that same period. Management uses cash operating costs and cash costs per ounce as key indicators of the profitability of each of its mining properties. Gold and silver are sold and priced in the world financial markets on a U.S. dollar per ounce basis.
“Cash Operating Costs” and “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 expenses, 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, accretion, corporate general and administrative expenses, exploration, interest, and pre-feasibility costs. Cash operating costs include all cash costs except production taxes and royalties, if applicable. Cash costs are calculated and presented using the “Gold Institute Production Cost Standard” applied consistently for all periods presented.
Total operating costs and cash costs per ounce are non-U.S. GAAP measures and investors are cautioned not to place undue reliance on them it and are urged to read all U.S. 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-U.S. GAAP Cash Costs to U.S. GAAP Production Costs” set forth below.
The following tables present reconciliation between non-U.S. GAAP cash operating costs per ounce and cash costs per ounce to production costs applicable to sales including depreciation, depletion and amortization, which is calculated in accordance with U.S. GAAP:Reconciliation of Non-U.S. GAAP Cash Costs to U.S. GAAP Production Costs
Three months ended June 30, 2010
(In thousands except ounces and per ounce costs)
Palmarejo San Bartolomé Martha Rochester Endeavor Total Production of silver (ounces) 1,070,638 1,863,142 549,885 533,094 139,447 4,156,206 Cash operating cost per ounce $ 10.78 $ 7.78 $ 8.97 $ 2.44 $ 8.98 $ 8.06 Cash costs per ounce $ 10.78 $ 8.32 $ 9.57 $ 2.93 $ 8.98 $ 8.44 Total Operating Cost (Non-U.S. GAAP) $ 11,542 $ 14,490 $ 4,937 $ 1,298 $ 1,252 $ 33,519 Royalties - 999 329 - - 1,328 Production taxes - - - 260 - 260 Total Cash Costs (Non-U.S. GAAP) 11,542 15,489 5,266 1,558 1,252 35,107 Add/Subtract: Third party smelting costs - - (1,133 ) - (346 ) (1,479 ) By-product credit 23,846 - 666 3,131 - 27,643 Other adjustments - - 253 95 - 348 Change in inventory (3,289 ) (148 ) (920 ) 811 517 (3,029 ) Depreciation, depletion and amortization 20,289 6,032 2,236 458 450 29,465
Production costs applicable to sales, including depreciation, depletion and amortization (U.S. GAAP)$ 52,388 $ 21,373 $ 6,368 $ 6,053 $ 1,873 $ 88,055
Six months ended June 30, 2010
(In thousands except ounces and per ounce costs)
Palmarejo San Bartolomé Martha Rochester Endeavor Total Production of silver (ounces) 2,371,231 2,903,068 915,111 1,055,253 343,700 7,588,363 Cash operating cost per ounce $ 7.83 $ 8.57 $ 11.57 $ 2.06 $ 8.04 $ 7.77 Cash costs per ounce $ 7.83 $ 9.22 $ 12.12 $ 2.64 $ 8.04 $ 8.17 Total Operating Cost (Non-U.S. GAAP) $ 18,572 $ 24,869 $ 10,585 $ 2,175 $ 2,764 $ 58,965 Royalties - 1,891 506 - - 2,397 Production taxes - - - 608 - 608 Total Cash Costs (Non-U.S. GAAP) 18,572 26,760 11,091 2,783 2,764 61,970 Add/Subtract: Third party smelting costs - - (1,826 ) - (610 ) (2,436 ) By-product credit 48,891 - 1,237 6,119 - 56,247 Other adjustments - - 259 163 - 422 Change in inventory (6,697 ) (2,016 ) 697 2,318 (112 ) (5,810 ) Depreciation, depletion and amortization 41,083 9,209 4,553 923 1,110 56,878
Production costs applicable to sales, including depreciation, depletion and amortization (U.S. GAAP)$ 101,849 $ 33,953 $ 16,011 $ 12,306 $ 3,152 $ 167,271
Three months ended June 30, 2009
(In thousands except ounces and per ounce costs)
Palmarejo San Bartolomé Martha Rochester Endeavor Total Production of silver (ounces) 587,716 1,916,359 707,898 543,543 122,705 3,878,221 Cash operating cost per ounce $ 19.44 $ 7.37 $ 7.89 $ 2.50 $ 6.19 $ 8.57 Cash costs per ounce $ 19.44 $ 10.64 $ 8.33 $ 2.96 $ 6.19 $ 10.33 Total Operating Cost (Non-U.S. GAAP) $ 11,423 $ 14,119 $ 5,587 $ 1,358 $ 760 $ 33,247 Royalties - 6,277 307 - - 6,584 Production taxes - - - 249 - 249 Total Cash Costs (Non-U.S. GAAP) 11,423 20,396 5,894 1,607 760 40,080 Add/Subtract: Third party smelting costs - - (1,379 ) - (262 ) (1,641 ) By-product credit 9,101 - 772 2,974 - 12,847 Other adjustments - - 167 53 - 220 Change in inventory (6,854 ) 1,850 634 1,506 (25 ) (2,889 ) Depreciation, depletion and amortization 12,380 4,774 1,034 457 316 18,961
Production costs applicable to sales, including depreciation, depletion and amortization (U.S. GAAP)$ 26,050 $ 27,020 $ 7,122 $ 6,597 $ 789 $ 67,578
Six months ended June 30, 2009
(In thousands except ounces and per ounce costs)
Palmarejo San Bartolomé Martha Rochester Endeavor Total Production of silver (ounces) 587,716 4,029,910 1,515,905 1,013,404 264,519 7,411,454 Cash operating cost per ounce $ 19.44 $ 7.04 $ 6.74 $ 2.64 $ 5.52 $ 7.31 Cash costs per ounce $ 19.44 $ 9.35 $ 7.20 $ 3.14 $ 5.52 $ 8.72 Total Operating Cost (Non-U.S. GAAP) $ 11,423 $ 28,366 $ 10,223 $ 2,684 $ 1,460 $ 54,156 Royalties - 9,302 691 - - 9,993 Production taxes - - - 503 - 503 Total Cash Costs (Non-U.S. GAAP) 11,423 37,668 10,914 3,187 1,460 64,652 Add/Subtract: Third party smelting costs - - (2,846 ) - (534 ) (3,380 ) By-product credit 9,101 - 1,655 5,531 - 16,287 Other adjustments - 7 167 88 - 262 Change in inventory (6,853 ) (241 ) 669 2,040 (97 ) (4,482 ) Depreciation, depletion and amortization 12,380 9,947 2,174 927 681 26,109
Production costs applicable to sales, including depreciation, depletion and amortization (U.S. GAAP)$ 26,051 $ 47,381 $ 12,733 $ 11,773 $ 1,510 $ 99,448 COEUR D’ALENE MINES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, December 31, 2010 2009 ASSETS (In thousands, except share data) CURRENT ASSETS Cash and cash equivalents $ 41,187 $ 22,782 Receivables 72,094 53,436 Ore on leach pad 7,524 9,641 Metal and other inventory 72,212 64,359 Prepaid expenses and other 23,890 26,753 Assets of discontinued operations held for sale 30,042 35,797 246,949 212,768 NON-CURRENT ASSETS Property, plant and equipment, net 553,247 531,500 Mining properties, net 2,260,675 2,222,182 Ore on leach pad, non-current portion 13,585 14,391 Restricted assets 28,168 26,546 Receivables, non current 34,663 37,534 Debt issuance costs, net 5,607 3,544 Deferred tax assets 907 1,034 Other 4,558 4,536 TOTAL ASSETS $ 3,148,359 $ 3,054,035 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 70,988 $ 76,603 Accrued liabilities and other 24,709 33,514 Accrued income taxes 15,449 11,783 Accrued payroll and related benefits 12,291 9,636 Accrued interest payable 1,057 1,744 Current portion of capital leases and other debt obligations 61,773 15,403 Current portion of royalty obligation 42,228 34,672 Current portion of reclamation and mine closure 2,282 4,671 Liabilities of discontinued operations held for sale 13,150 14,030 243,927 202,056 NON-CURRENT LIABILITIES Long-term debt 156,989 185,397 Non-current portion of royalty obligation 150,495 128,107 Reclamation and mine closure 25,571 22,160 Deferred income taxes 488,608 516,678 Other long-term liabilities 14,787 6,432 836,450 858,774 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Common Stock, par value $0.01 per share; authorized 150,000,000 shares, 89,293,332 issued at June 30, 2010 and 80,310,347 issued at December 31, 2009. 893 803 Additional paid-in capital 2,577,715 2,444,262 Accumulated deficit (510,626 ) (451,865 ) Accumulated other comprehensive income - 5 2,067,982 1,993,205 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 3,148,359 $ 3,054,035 COEUR D’ALENE MINES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2010 2009 2010 2009 (In thousands, except per share data) Sales of metal $ 101,018 $ 67,857 $ 189,307 $ 111,226 Production costs applicable to sales (58,590 ) (48,850 ) (110,393 ) (73,569 ) Depreciation, depletion and amortization (29,983 ) (19,227 ) (57,702 ) (26,691 ) Gross profit (loss) 12,445 (220 ) 21,212 10,966 COSTS AND EXPENSES Administrative and general 6,859 5,409 13,794 13,152 Exploration 3,161 3,182 5,681 6,271 Pre-development 565 - 732 - Total cost and expenses 10,585 8,591 20,207 19,423 OPERATING INCOME (LOSS) 1,860 (8,811 ) 1,005 (8,457 ) OTHER INCOME AND EXPENSE Gain (loss) on debt extinguishments (4,050 ) 22,675 (11,908 ) 38,378 Fair value adjustments, net (42,516 ) (4,149 ) (46,774 ) (13,551 ) Interest and other income (3,821 ) 1,482 (2,088 ) 1,782 Interest expense, net of capitalized interest (5,646 ) (5,193 ) (11,451 ) (5,958 ) Total other income and expense (56,033 ) 14,815 (72,221 ) 20,651 Income (loss) from continuing operations before income taxes (54,173 ) 6,004 (71,216 ) 12,194 Income tax benefit 9,372 3,893 21,210 3,639 Income (loss) from continuing operations (44,801 ) 9,897 (50,006 ) 15,833 Income (loss) from discontinued operations, net of income taxes (2,966 ) 1,712 (5,778 ) 1,834 Loss on sale of assets of discontinued operations (2,977 ) - (2,977 ) - NET INCOME (LOSS) (50,744 ) 11,609 (58,761 ) 17,667 Other comprehensive loss - - (5 ) - COMPREHENSIVE INCOME (LOSS) $ (50,744 ) $ 11,609 $ (58,766 ) $ 17,667 BASIC AND DILUTED INCOME PER SHARE Basic income per share: Income (loss) from continuing operations $ (0.50 ) $ 0.14 $ (0.59 ) $ 0.24 Income (loss) from discontinued operations (0.07 ) 0.03 (0.10 ) 0.03 Net income (loss) $ (0.57 ) $ 0.17 $ (0.69 ) $ 0.27 Diluted income per share: Income (loss) from continuing operations $ (0.50 ) $ 0.14 $ (0.59 ) $ 0.24 Income (loss) from discontinued operations (0.07 ) 0.03 (0.10 ) 0.03 Net income (loss) $ (0.57 ) $ 0.17 $ (0.69 ) $ 0.27 Weighted average number of shares of common stock Basic 88,501 70,045 85,145 65,620 Diluted 88,501 70,227 85,145 65,718 COEUR D’ALENE MINES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY Six Months Ended June 30, 2010 (In thousands) Unaudited Common Stock Shares Common Stock Par Value Additional Paid-In Capital Accumulated (Deficit) Accumulated Other Comprehensive Income (Loss) Total Balances at December 31, 2009 80,310 $ 803 $ 2,444,262 $ (451,865 ) $ 5 $ 1,993,205 Net loss - - - (58,761 ) - (58,761 )
Common stock issued for payment of principal, interest and financing fees on 6.5% Senior Secured Notes1,357 13 19,994 - - 20,007
Common stock issued to extinguish 3.25% and 1.25% debt7,639 77 113,357 - - 113,434
Common stock cancelled under long-term incentive plans, net(13 ) - 102 - - 102 Other - - - - (5 ) (5 ) Balances at June 30, 2010 89,293 $ 893 $ 2,577,715 $ (510,626 ) $ - $ 2,067,982 COEUR D’ALENE MINES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2010 2009 2010 2009 (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (50,744 ) $ 11,609 $ (58,761 ) $ 17,667 Add (deduct) non-cash items Depreciation, depletion and amortization 31,010 21,160 59,784 30,439 Amortiztation of debt discount - 500 - 500 Accretion of royalty obligation 4,637 3,859 9,629 3,859 Deferred income taxes (14,892 ) (4,207 ) (26,229 ) (5,721 ) Loss on sale of discontinued assets 2,977 - 2,977 - Loss (gain) on debt extinguishment 4,050 (22,675 ) 11,908 (38,378 ) Fair value adjustments, net 43,052 5,608 46,723 12,566 Loss (gain) on foreign currency transactions 1,471 (342 ) 1,821 (408 ) Share-based compensation 622 954 2,009 2,657 Other non-cash charges (136 ) 75 (99 ) 154 Changes in operating assets and liabilities: Receiveables and other current assets 3,662 (11,653 ) (7,625 ) (9,000 ) Inventories (2,251 ) (8,024 ) (4,908 ) (13,186 ) Accounts payable and accrued liabilities 8,998 18,175 (14,003 ) 16,936 CASH PROVIDED BY OPERATING ACTIVITIES 32,456 15,039 23,226 18,085 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments - (1,221 ) - (8,579 ) Proceeds from sales of investments - 4,758 - 20,010
Capital expenditures(45,467 ) (42,349 ) (92,656 ) (120,479 ) Other 150 1,966 76 1,824 CASH USED IN INVESTING ACTIVITIES (45,317 ) (36,846 ) (92,580 ) (107,224 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from sale of gold production royalty - - - 75,000 Payments on gold production royalty (9,582 ) (1,106 ) (18,533 ) (1,106 ) Proceeds from issuance of short-term and senior convertible notes - - 100,000 20,368 Proceeds from gold lease facility - 2,874 4,517 2,874 Payments on gold lease facility (2,210 ) - (17,101 ) (1,627 ) Proceeds from bank borrowings 22,041 - 34,810 - Payments on senior secured notes (4,167 ) - (4,167 ) - Repayment of credit facility, long-term debt and capital leases (7,186 ) (5,919 ) (12,896 ) (14,869 ) Payments of common stock and debt issuance costs (24 ) (9 ) (2,180 ) (82 ) Proceeds from sale-leaseback transactions - 12,511 4,853 12,511 Additions to restricted assets associated with the Kensington Term Facility (786 ) - (1,584 ) - Other - (22 ) 40 (22 ) CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES: (1,914 ) 8,329 87,759 93,047 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (14,775 ) (13,478 ) 18,405 3,908 Cash and cash equivalents at beginning of period 55,962 38,146 22,782 20,760 Cash and cash equivalents at end of period $ 41,187 $ 24,668 $ 41,187 $ 24,668
Source: Coeur d’Alene Mines Corporation
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Posted: August 9, 2010