Coeur's New Mines Lead to Record Production and Revenue Aided by Continued Strong Silver and Gold Prices
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- Coeur Announces Plans to Increase Silver and Gold Production at Its Historic Rochester Mine in Nevada
Final Construction Activities Underway at Kensington Gold Mine in Alaska
Highlights:
- 86% increase in silver production over last year's third quarter to record 5.2 million ounces
- 222% increase in gold production to nearly 29,000 ounces
- 146% increase in revenue to all-time high of $89.8 million
- Operating cash flow increased to $23.0 million from $1.2 million in last year's third quarter
- As announced yesterday, the Company reported a nearly 40% increase in silver and gold proven and probable reserves reported at the expanding Palmarejo District in Mexico to 88.6 million ounces of silver and 1.1 million ounces of gold
- Entered into a $45 million term loan facility to fund completion of Kensington tailings facility
COEUR D'ALENE, Idaho--(BUSINESS WIRE)-- Coeur d'Alene Mines Corporation (NYSE: CDE) (TSX: CDM) (ASX: CXC) today announced record silver production of 5.2 million ounces during the third quarter of 2009. This record production represents an 86% increase compared to last year's third quarter and was driven by Coeur's two new large, long-life mines - San Bartolome in Bolivia and Palmarejo in Mexico - which combined for a total of 3.4 million ounces of silver production, or 65% of the Company's total silver production, during the third quarter. Gold production also increased dramatically due to the continued ramp-up of production at Palmarejo, which produced 24,289 ounces during the quarter.
The Company also reported record quarterly revenue of $89.8 million, a 146% increase over last year's third quarter revenue, along with quarterly operating cash flow of $23.0 million compared to $1.2 million of operating cash flow during last year's third quarter.
"Our third quarter results continued to highlight the Company's dramatic growth and successful transition to its new, long-life mines. As the Palmarejo silver and gold mine in Mexico continues to ramp up its production levels and as we look ahead to the Kensington gold mine in Alaska contributing production and cash flow next year, we look forward to continuing to deliver strong operational and financial results for our shareholders," said Dennis E. Wheeler, Chairman, President and Chief Executive Officer. "Silver and gold prices look to remain strong based on a weakening U.S. dollar, consistent investment demand, and - in the case of silver - increasing industrial demand, particularly in medical, electronic and technology applications."
Commenting on the Company's outlook for full-year 2009, Mr. Wheeler commented, "Coeur expects to produce approximately 18 million ounces of silver in 2009, a 50% increase compared to 2008 production levels. Earlier this year, the Company sold its 100% interest in the silver at the Broken Hill mine in Australia. Despite the loss of production from the strategic sale of this asset and a small adjustment to our San Bartolome mine plan, our Martha and Rochester mines have exceeded budgeted production levels. The Company also expects to produce approximately 70,000 ounces of gold for the full-year - a 52% increase over last year."
"Total operating cash flow - the Company's chief benchmark for financial performance - increased 35% in the third quarter compared to the most recent quarter," commented Mitchell J. Krebs, Coeur's Chief Financial Officer. "In addition, the Company recorded two significant items during the third quarter which are reflected in its income statement and third quarter results. This included a $22.4 million gain on the sale of Coeur's interest in the Broken Hill mine, as well as a $32 million non-cash expense related to the Palmarejo gold production royalty, which was completed in January. U.S. GAAP requires that a portion of this royalty be treated as an embedded derivative subject to quarterly non-cash mark-to-market adjustments. The primary trigger for this adjustment was gold's impressive rise in price from the end of the second quarter to the end of the third. Finally, the Company continues to strengthen the balance sheet, with outstanding debt reduced by over $40 million during the third quarter and with added financial flexibility with the closing of the term facility for Coeur Alaska with Credit Suisse."
Palmarejo (Mexico) continues to ramp up to full-scale production levels as reserves continue to grow
- In a separate press release issued late yesterday, the Company reported a nearly 40% increase in both silver and gold reserves based on ongoing drilling at the Guadalupe deposit located six kilometers from the Palmarejo mine and processing facilities. These new reserves - 25.0 million silver ounces and 313,000 gold ounces - significantly add to the 63.6 million silver ounces and 756,000 gold ounces in reserves reported at the Palmarejo project at the beginning of the year.
-
Palmarejo continued ramp-up activities during the third quarter:
-- Silver production increased 117% to 1.3 million ounces in the third quarter compared to 587,716 ounces of silver production in the second quarter while gold production increased 150% to 24,289 ounces in the third quarter versus 9,730 ounces of gold production in the second quarter. -- Tons milled increased 44% during the third quarter compared to the prior quarter. -- Average silver grade increased 10% and the average gold grade increased 41% versus the second quarter. -- Average silver recoveries increased 37% from 53.6% in the second quarter to 73.4% during the third quarter. Further increases in recovery are being seen in the fourth quarter of 2009. -- Average gold recoveries increased 22% from 77.0% to 94.3% during the third quarter. -- Cash operating costs per ounce declined over 55% from the mine's initial quarter of operations to $8.76 per ounce during the third quarter. Further cost reductions are expected in the fourth quarter and in 2010 as the operation's production levels continue to ramp-up. - The mine is now operating at near full-scale production levels and expects to be in position to achieve its full-year 2010 production targets of approximately 9 million ounces of silver and 110,000 ounces of gold with cash operating costs per ounce of approximately $1.50.
San Bartolome (Bolivia) demonstrating consistent performance for third consecutive quarter
- Silver production during the third quarter was 2.1 million ounces with cash operating costs of $7.63 per ounce, representing the third consecutive quarter of consistent production and operating costs during this initial full year of operations.
- Silver production through the first nine months of 2009 reached 6.1 million ounces with cash operating costs of $7.24 per ounce.
- The mine plan has been temporarily adjusted while temporary suspension of mining above 4,400 meters is in effect as stability studies of the Cerro Rico Mountain are undertaken by COMIBOL. The potential impact of the revised mine plan in the fourth quarter may be up to 500,000 ounces. Meanwhile, mining continues on the remainder of the property.
- Cerro Rico Mountain is an historic mining site that is the subject of centuries of unregulated underground mining by numerous groups and individuals. The Company does not use explosives in its surface-only mining activities and is sensitive to the preservation of the mountain under its contracts with the state-owned mining entity and the local cooperatives, which are supported by Supreme Decree.
Kensington (Alaska) maintains construction schedule toward second half 2010 startup
- The U.S. Army Corps of Engineers reactivated the 404 permit in the third quarter, allowing construction activities to recommence. During the quarter, the construction management team and outside contractors were mobilized and work is ongoing on the tailings facility and related remaining infrastructure.
- The Company expects to produce 40,000 ounces of gold in 2010, with 120,000 ounces in its first full year of operation (2011) at average operating costs of approximately $475 per ounce.
- Coeur Alaska, a wholly owned subsidiary of the Company, recently finalized a $45 million term facility with Credit Suisse of Zurich to ensure sufficient financial flexibility to complete the remaining construction work.
Rochester (Nevada) pursuing restart of gold and silver production
- At the Rochester mine, which has been producing silver and gold for over 23 years, the Company is pursuing a restart of mining operations that may add an average of 2.9 million ounces of incremental annual silver production and 30,000 ounces of further gold production through 2017
- Meanwhile, the mine continues low-cost production and high-margin cash flow from ongoing residual leaching activities. Silver production through the first nine months of 2009 reached 1.5 million ounces and gold production during the first nine months totaled 9,146 ounces with low average cash operating costs of $2.69 per ounce.
Martha (Argentina) delivers robust quarter of production and cash flow
- Martha produced 1.2 million ounces of silver during the third quarter, representing a 44% increase over last year's third quarter and a 66% increase in production compared to the most recent quarter.
- Cash operating costs declined 30% from the second quarter to $5.54 per ounce.
- Production was higher primarily due to a 50% increase in silver grades compared to last quarter and due to 78% increase in tons milled versus last year's third quarter.
- Metal sales from Martha during the third quarter totaled $15.2 million compared to $10.0 million in the prior quarter and $3.7 million during last year's third quarter.
Exploration Update
- At Palmarejo (Mexico), the Company plans to continue drilling activities at Guadalupe into 2010, which will consist of additional in-fill drilling to test large areas of sparse drilling and inferred mineral resources, exploration to extend the size of the deposit to the northwest and on other targets near Guadalupe.
- In Argentina, a third phase of drilling commenced at the Joaquin property near the company's Martha Mine. To-date, five targets have been drilled at Joaquin, with favorable results from three. Based on results from two prior phases of drilling, a third phase commenced September 23rd and continues today. Through October, a total of twelve phase three holes were complete - nine at the La Negra target and three at the La Morocha target. Some assays results have been received (see drill results table in this release), which encountered wide zones of silver and gold mineralization. Further drilling is planned on these two targets and at the nearby La Morena target to the west. The La Morocha and La Negra mineralized systems trend to the northwest, dip to the northeast and remain open at depth and on strike to the northwest. Coeur has an option to earn up to a 71% managing interest in a joint venture with Mirasol Resources Ltd.
- At Kensington (Alaska), a new drilling program commenced targeting a new vein named the Kimberly, which is located between the Jualin and Kensington properties. A total of three new core holes were completed on the Kimberly Vein through the end of October. All core holes cut the vein, consisting of quartz and sulfides, typical of other structures in the district, in fans drilled to test the upward and downward and strike extent of the vein. Assays are pending. Drilling will continue into 2010 on Kimberly and other targets in the district.
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 Bartolome 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 November 5, 2009. To listen live via telephone, call (866) 853-4681 (US and Canada) or (660) 422-4718 (International). The conference ID number is 34563098. 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 November 12, 2009. The replay dial-in numbers are (800) 642-1687 (US and Canada) and (706) 645-9291 (International) and the access code is 34563098. In addition, the call will be archived for a limited time on the company's web site.
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 first 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 press release. 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 press release, 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 obtained 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 cash flow from operations (US GAAP) less working capital changes as set forth in cash flow statement. We believe operating cash flow is an important measure in assessing the Company's overall financial performance. The following table provides a reconciliation of operating cash flow to cash provided by (used in) operating activities:
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2009 2008
ASSETS (In thousands)
CURRENT ASSETS
Cash and cash equivalents $ 45,603 $ 20,760
Short-term investments - 7,881
Receivables 53,647 53,187
Ore on leach pad 8,341 9,193
Metal and other inventory 62,068 34,846
Deferred tax assets 208 240
Prepaid expenses and other 26,152 26,344
196,019 152,451
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 655,834 575,020
Less accumulated depreciation (115,579 ) (88,890 )
540,255 486,130
MINING PROPERTIES
Operational mining properties 327,657 218,569
Less accumulated depletion (140,604 ) (131,557 )
187,053 87,012
Mineral interests 1,727,915 1,764,794
Less accumulated depletion (21,354 ) (16,796 )
1,706,561 1,747,998
Non-producing and development properties 334,497 356,912
2,228,111 2,191,922
OTHER ASSETS
Ore on leach pad, non-current portion 18,361 20,998
Restricted assets 23,865 23,110
Receivables, non-current 37,943 34,139
Debt issuance costs, net 4,804 10,253
Deferred tax assets 5,750 4,666
Other 4,651 4,452
95,374 97,618
TOTAL ASSETS $ 3,059,759 $ 2,928,121
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2009 2008
(In thousands, except share data)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 79,374 $ 66,300
Accrued liabilities and other 37,615 64,673
Accrued income taxes 19,077 927
Accrued payroll and related benefits 10,221 8,106
Accrued interest payable 839 4,446
Current portion of capital lease and other 12,487 14,608
short-term obligations
Current portion of royalty obligation 30,232 -
Current portion of reclamation and mine 3,496 1,924
closure
193,341 160,984
LONG-TERM LIABILITIES
3 1/4% Convertible Senior Notes due March 125,448 185,001
2028
1 1/4% Convertible Senior Notes due January 65,204 180,000
2024
Senior Secured Floating Rate Convertible - 1,830
Notes due 2012
Non-current portion of royalty obligation 104,620 -
Non-current portion of capital lease 21,564 16,837
obligations
Reclamation and mine closure 36,880 34,093
Deferred income taxes 528,605 557,449
Other long-term liabilities 6,638 6,015
888,959 981,225
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common Stock, par value $0.01 per share;
authorized 150,000,000 shares, 78,142,194 781 568
issued at September 30, 2009 and 56,779,909
shares issued at December 31, 2008.
Additional paid-in capital 2,396,247 2,218,487
Accumulated deficit (419,574 ) (419,958 )
Shares held in treasury, at cost (none at
September 30, 2009 and 105,921 shares at - (13,190 )
December 31, 2008).
Accumulated other comprehensive income 5 5
1,977,459 1,785,912
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,059,759 $ 2,928,121
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
2009 2008 2009 2008
(In thousands, except per share amounts)
REVENUES
Sales of metal $ 89,793 $ 36,538 $ 202,436 $ 131,145
COSTS AND EXPENSES
Production costs applicable 59,139 30,049 133,706 78,696
to sales
Depreciation and depletion 28,647 6,068 57,466 16,677
Administrative and general 4,905 4,606 17,938 20,163
Exploration 3,167 5,824 10,785 14,291
Care and maintenance and 1,162 - 3,828 -
other
Pre-development - 780 - 17,222
Total costs and expenses 97,020 47,327 223,723 147,049
OPERATING LOSS (7,227 ) (10,789 ) (21,287 ) (15,904 )
OTHER INCOME AND EXPENSE
Gain (loss) on debt (2,947 ) - 35,890 -
extinguishments
Loss on derivatives, net (35,718 ) - (49,572 ) -
Interest and other income (1,704 ) 2,295 1,676 3,803
(expense)
Interest expense, net of (6,088 ) (1,412 ) (12,047 ) (3,141 )
capitalized interest
Total other income and (46,457 ) 883 (24,053 ) 662
expense
Loss from continuing
operations before income (53,684 ) (9,906 ) (45,340 ) (15,242 )
taxes
Income tax benefit 13,876 4,444 18,272 2,200
NET LOSS FROM CONTINUING (39,808 ) (5,462 ) (27,068 ) (13,042 )
OPERATIONS
Income from discontinued
operations, net of income 114 1,419 5,041 8,301
taxes
Gain on sales of assets of
discontinued operations, net 22,411 - 22,411 -
of income taxes
NET LOSS (17,283 ) (4,043 ) 384 (4,741 )
Other comprehensive loss - (526 ) - (854 )
COMPREHENSIVE LOSS $ (17,283 ) $ (4,569 ) $ 384 $ (5,595 )
BASIC AND DILUTED INCOME
(LOSS) PER SHARE
Basic income (loss) per
share:
Loss from continuing $ (0.52 ) $ (0.10 ) $ (0.39 ) $ (0.24 )
operations
Income from discontinued $ 0.29 $ 0.03 $ 0.40 $ 0.15
operations
Net loss $ (0.23 ) $ (0.07 ) $ 0.01 $ (0.09 )
Diluted income (loss) per
share:
Loss from continuing $ (0.52 ) $ (0.10 ) $ (0.39 ) $ (0.24 )
operations
Income from discontinued $ 0.29 $ 0.03 $ 0.40 $ 0.15
operations
Net loss $ (0.23 ) $ (0.07 ) $ 0.01 $ (0.09 )
Weighted average number of
shares of common stock
Basic 76,133 55,010 69,163 55,006
Diluted 76,133 55,010 69,163 55,006
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
2009 2008 2009 2008
(In thousands, except per share amounts)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $ (17,283 ) $ (4,043 ) $ 384 $ (4,741 )
Add (deduct) non-cash
items:
Depreciation and depletion 28,647 6,068 57,466 16,677
Amortization of debt 5,231 409 9,590 450
discount
Deferred income taxes (24,175 ) (3,894 ) (29,896 ) (7,795 )
Gain on debt 2,947 - (35,890 ) -
extinguishment
Loss on derivatives, net 32,380 5,115 45,250 8,639
Gain on foreign currency 223 (63 ) (185 ) 1
transactions
Share based compensation 1,885 356 4,542 2,244
Gain from sale of
discontinued operations (32,212 ) 163 (32,291 ) 167
and other assets
Other charges 662 750 2,965 2,538
Changes in operating
assets and liabilities:
Receivables and other 1,855 2,393 (7,145 ) (23,825 )
current assets
Inventories (10,547 ) (685 ) (23,733 ) 5,974
Accounts payable and 33,421 (5,381 ) 50,654 (9,366 )
accrued liabilities
CASH PROVIDED BY (USED IN) 23,034 1,188 41,711 (9,037 )
OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of investments (6,525 ) (58,973 ) (13,906 ) (304,596 )
Proceeds from sales of 11,237 124,894 30,050 334,604
investments
Capital expenditures (54,578 ) (87,727 ) (175,509 ) (256,362 )
Proceeds from sale of 55,053 49 56,877 11
assets and other
CASH PROVIDED BY (USED IN) 5,187 (21,757 ) (102,488 ) (226,343 )
INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from sale of gold - - 75,000 -
production royalty
Proceeds from issuance of - - 20,368 230,000
convertible notes
Repayment of long-term (7,268 ) (22,389 ) (22,138 ) (30,213 )
debt and capital leases
Payment of debt issuance - 293 - (8,258 )
costs
Proceeds from short-term - 500 - 1,194
borrowings
Proceeds from sale-lease - - 12,511 -
back transactions
Common stock repurchased (18 ) - (121 ) (372 )
Other - - - 35
CASH PROVIDED BY (USED IN) (7,286 ) (21,596 ) 85,620 192,386
FINANCING ACTIVITIES
INCREASE (DECREASE) IN 20,935 (42,165 ) 24,843 (42,994 )
CASH AND CASH EQUIVALENTS
Cash and cash equivalents 24,668 97,842 20,760 98,671
at beginning of period
Cash and cash equivalents $ 45,603 $ 55,677 $ 45,603 $ 55,677
at end of period
Operating Statistics From Continuing Operations
The following table presents information by mine and consolidated sales information for the three and nine month periods ended September 30, 2009 and 2008:
Three Months Ended September Nine Months Ended September
30, 30,
2009 2008 2009 2008
Palmarejo(B)
Tons milled 410,137 - 695,232 -
Ore grade/Ag oz 4.24 - 4.08 -
Ore grade/Au oz 0.062 - 0.055 -
Recovery/Ag oz 73.4% - 65.7% -
Recovery/Au oz 94.3% - 88.9% -
Silver production 1,275,904 - 1,863,620 -
ounces
Gold production 24,289 - 34,019 -
ounces
Cash operating $ 8.76 - $12.13 -
costs/oz
Cash cost/oz $ 8.76 - $12.13 -
Total cost/oz $ 24.41 - $29.48 -
San Bartolome
Tons milled 431,218 160,678 1,147,935 177,756
Ore grade/Ag oz 5.36 7.54 6.05 6.82
Recovery/Ag oz 91.3% 58.3% 88.5% 60.1%
Silver production 2,111,313 706,538 6,141,223 728,394
ounces
Cash operating $7.63 $13.35 $7.24 $13.32
costs/oz
Cash cost/oz $11.17 $15.66 $9.98 $15.59
Total cost/oz $13.63 $18.20 $12.45 $18.13
Martha Mine
Tons milled 28,431 15,940 83,344 38,087
Ore grade/Ag oz 42.56 54.40 34.30 57.35
Ore grade/Au oz 0.059 0.072 0.046 0.072
Recovery/Ag oz 97.4% 94.2% 94.2% 95.3%
Recovery/Au oz 93.0% 89.0% 87.9% 91.2%
Silver production 1,178,088 816,495 2,693,993 2,081,573
ounces
Gold production 1,569 1,028 3,376 2,497
ounces
Cash operating $5.54 $5.89 $6.22 $6.75
costs/oz
Cash cost/oz $6.02 $6.73 $6.68 $7.57
Total cost/oz $7.48 $8.27 $8.19 $9.39
Rochester(A)
Silver production 528,037 795,351 1,541,441 2,374,698
ounces
Gold production 3,097 4,983 9,146 16,895
ounces
Cash operating $ 2.77 $(0.05) $ 2.69 $ (1.30)
costs/oz
Cash cost/oz $ 3.67 $ 0.72 $ 3.32 $(0.46)
Total cost/oz $ 4.58 $ 1.47 $ 4.29 $ 0.33
Endeavor
Tons milled 130,319 298,601 428,162 827,755
Ore grade/Ag oz 1.76 1.46 1.59 1.50
Recovery/Ag oz 45.0% 51.8% 54.1% 54.9%
Silver production 102,973 226,180 367,492 683,470
ounces
Cash operating $ 7.09 $2.53 $5.96 $2.49
costs/oz
Cash cost/oz $ 7.09 $2.53 $5.96 $2.49
Total cost/oz $ 9.66 $4.94 $8.53 $4.72
Cerro Bayo
Tons milled - 50,253 208,837
Ore grade/Ag oz - 5.52 - 5.29
Ore grade/Au oz - 0.066 - 0.104
Recovery/Ag oz - 91.8% - 93.4%
Recovery/Au oz - 89.4% - 90.3%
Silver production - 254,638 - 1,031,524
ounces
Gold production - 2,973 - 19,695
ounces
Cash operating - $19.89 - $7.97
costs/oz
Cash cost/oz - $19.89 - $7.97
Total cost/oz - $26.25 - $14.34
CONSOLIDATED
PRODUCTION TOTALS
Silver ounces 5,196,315 2,799,202 12,607,769 6,899,659
Gold ounces 28,955 8,984 46,541 39,087
Cash operating $6.93 $7.08 $7.15 $4.43
cost per oz
Cash cost per $8.57 $8.13 $8.66 $5.21
oz/silver
Total cost/oz $13.88 $10.21 $12.94 $7.47
CONSOLIDATED SALES
TOTALS(C)
Silver ounces sold 4,667,995 2,237,675 12,207,964 6,150,086
Gold ounces sold 23,079 11,215 40,003 41,145
Realized price per $14.54 $14.53 $13.70 $17.13
silver ounce
Realized price per $954 $886 $946 $952
gold ounce
(A) 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.
(B) Palmarejo achieved commercial production on April 20, 2009. Mine
statistics do not represent normal operating results. It is expected that
Palmarejo will continue to ramp up its production rate and achieve full
capacity during the fourth quarter of 2009.
(C) 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 Statistics From Discontinued Operations
The following table presents information for Broken Hill which was sold on July 30, 2009, effective as of July 1, 2009:
Three Months Ended September Nine Months Ended September
30, 30,
2009 2008 2009 2008
Broken Hill
Tons milled - 496,552 827,766 1,523,719
Ore grade/Silver oz - 0.85 1.44 0.97
Recovery/Silver oz - 74.2% 70.5% 73.0%
Silver production (1,739) 312,425 841,855 1,081,254
ounces
Cash operating $19.58 $3.38 $3.40 $3.60
cost/oz
Cash cost/oz $19.58 $3.38 $3.40 $3.60
Total cost/oz $48.76 $5.15 $5.26 $5.37
"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 or 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 expense, 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 expense, 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-GAAP measures and investors are cautioned not to place undue reliance on them and are urged to read all GAAP accounting disclosures presented in the consolidated financial statements and accompanying footnotes.
The following table presents a reconciliation between non-GAAP cash operating costs per ounce and cash costs per ounce to production costs applicable to sales including depreciation, depletion and amortization, calculated in accordance with U.S. GAAP:
THREE MONTHS ENDED SEPTEMBER 30, 2009
(In thousands except ounces and per ounce costs)
San Martha Palmarejo Cerro Rochester Endeavor Total
Bayo
Bartolome
Production of
Silver 2,111,313 1,178,088 1,275,904 - 528,037 102,973 5,196,315
(ounces)
Cash
operating $ 7.63 $ 5.54 $ 8.76 $ - $ 2.77 $ 7.09 $ 6.93
costs per
ounce
Cash Costs $ 11.17 $ 6.02 $ 8.76 $ - $ 3.67 $ 7.09 $ 8.57
per ounce
Total
operating $ 16,118 $ 6,525 $11,174 $ - $1,461 $ 730 $36,008
costs
(Non-GAAP)
Royalties 7,474 562 - - - - 8,036
Production - - - - 475 - 475
taxes
Total Cash
Costs 23,592 7,087 11,174 - 1,936 730 44,519
(Non-GAAP)
Add/Subtract:
Third party
smelting - (2,221) (554) - - (225) (3,000)
costs
By-product - 1,502 23,301 - 2,956 - 27,759
credit
Other - 469 20 - 16 - 505
adjustments
Change in 1,765 (1,714) (11,078) - 558 55 (10,414)
inventory
Depreciation,
depletion and 5,191 1,246 19,948 - 463 265 27,113
amortization
Production
costs
applicable to
sales,
including $ 30,548 $ 6,369 $ 42,811 $ - $ 5,929 $ 825 $ 86,482
depreciation,
depletion and
amortization
(GAAP)
NINE MONTHS ENDED SEPTEMBER 30, 2009
(In thousands except ounces and per ounce costs)
San Martha Palmarejo Cerro Rochester Endeavor Total
Bayo
Bartolome
Production of
Silver 6,141,223 2,693,993 1,863,620 - 1,541,441 367,492 12,607,769
(ounces)
Cash
operating $ 7.24 $ 6.22 $ 12.13 $ - $ 2.69 $ 5.96 $ 7.15
costs per
ounce
Cash Costs $ 9.98 $ 6.68 $ 12.13 $ - $ 3.32 $ 5.96 $ 8.66
per ounce
Total
operating $44,484 $16,748 $22,597 $ - $ 4,145 $2,190 $90,164
costs
(Non-GAAP)
Royalties 16,777 1,253 - - - - 18,030
Production - - - - 978 - 978
taxes
Total Cash
Costs 61,261 18,001 22,597 - 5,123 2,190 109,172
(Non-GAAP)
Add/Subtract:
Third party
smelting - (5,067) (768) - - (759) (6,594)
costs
By-product - 3,157 32,402 - 8,487 - 44,046
credit
Other 8 636 20 - 103 - 767
adjustments
Change in 1,524 (1,046) (17,932) 1,211 2,599 (42) (13,686)
inventory
Depreciation,
depletion and 15,137 3,420 32,328 - 1,391 946 53,222
amortization
Production
costs
applicable to
sales, $
including $ 77,930 $ 19,101 $ 68,647 1,211 $ 17,703 $ 2,335 $ 186,928
depreciation,
depletion and
amortization
(GAAP)
THREE MONTHS ENDED SEPTEMBER 30, 2008
(In thousands except ounces and per ounce costs)
San Martha Cerro Bayo Rochester Endeavor Total
Bartolome
Production of
Silver 706,538 816,495 254,638 795,351 226,180 2,799,202
(ounces)
Cash
operating $ 13.35 $ 5.89 $ 19.89 $ (0.05 ) $ 2.53 $ 7.08
costs per
ounce
Cash Costs $ 15.66 $ 6.73 $ 19.89 $ 0.72 $ 2.53 $ 8.13
per ounce
Total Cash $ 11,065 $ 5,491 $ 5,064 $ 569 $ 573 $ 22,762
Costs
Add/Subtract:
Third party
smelting - (1,030 ) (724 ) - (344 ) (2,098 )
costs
By-product - 887 2,624 4,383 - 7,894
credit
Other - - - 48 - 48
adjustments
Change in (5,544 ) (1,120 ) 1,566 6,584 (43 ) 1,443
inventory
Depreciation,
depletion and 1,794 1,260 1,620 550 545 5,769
amortization
Production
costs
applicable to
sales,
including $ 7,315 $ 5,488 $ 10,150 $ 12,134 $ 731 $ 35,818
depreciation,
depletion and
amortization
(GAAP)
NINE MONTHS ENDED SEPTEMBER 30, 2008
(In thousands except ounces and per ounce costs)
San Martha Cerro Bayo Rochester Endeavor Total
Bartolome
Production of
Silver 728,394 2,081,573 1,031,524 2,374,698 683,470 6,899,659
(ounces)
Cash
operating $ 13.32 $ 6.75 $ 7.97 $ (1.30 ) $ 2.49 $ 4.43
costs per
ounce
Cash Costs $ 15.59 $ 7.57 $ 7.97 $ (0.46 ) $ 2.49 $ 5.21
per ounce
Total Cash $ 11,353 $ 15,765 $ 8,220 $ (1,085 ) $ 1,703 $ 35,956
Costs
Add/Subtract:
Third party
smelting - (2,493 ) (3,131 ) - (1,023 ) (6,647 )
costs
By-product - 2,228 17,984 15,213 - 35,425
credit
Other - 471 - 147 - 618
adjustments
Change in (5,891 ) (3,489 ) 1,523 21,099 102 13,344
inventory
Depreciation,
depletion and 1,853 3,323 6,571 1,724 1,523 14,994
amortization
Production
costs
applicable to
sales,
including $ 7,315 $ 15,805 $ 31,167 $ 37,098 $ 2,305 $ 93,690
depreciation,
depletion and
amortization
(GAAP)
The following tables present a reconciliation between non-GAAP cash costs per ounce to GAAP production costs applicable to sales reported in Discontinued Operations:
THREE MONTHS NINE MONTHS
Broken Hill ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
2009(1) 2008 2009 2008
(In thousands except ounces and per ounce costs)
Production of Silver (ounces) (1,739) 312,425 841,855 1,081,254
Cash operating costs per ounce $19.58 $ 3.38 $ 3.40 $ 3.60
Cash Costs per ounce $19.58 $ 3.38 $ 3.40 $ 3.60
Total Cash Costs (Non-GAAP) $ (34) $ 1,056 $ 2,863 $ 3,892
Add/Subtract:
Third party smelting costs (15) (416) (1,167) (1,748)
By-Product credit - - - -
Other adjustments - - - -
Change in inventory 98 5 39 12
Depreciation, depletion and (51) 553 1,568 1,914
amortization
Production costs applicable to
sales, including depreciation, $ (2) $ 1,198 $ 3,303 $ 4,070
depletion and amortization
(GAAP)
(1) Amounts reflect final metal settlement adjustments.
JOAQUIN PROJECT, SANTA CRUZ, ARGENTINA
Initial Phase 3 Drilling Results; Third and Fourth Quarter 2009
La Negra Zone
Mineralized Interval (meters) Assays (g/t)
Hole I.D.
From To Length TRUE Au Ag
DDJ-39 19.5 119.1 99.6 85.5 0.07 88
Incl. 27.3 30 2.7 2.3 0.58 951
Incl. 75.8 77.6 1.8 1.5 0.68 982
Incl. 87.45 95.2 7.75 6.7 0.21 114
Incl. 101.5 119.1 17.6 15 0.09 122
159.25 245.2 89.85 77 0.06 50
Incl. 205.25 230.4 25.15 21.6 0.12 108
DDJ-40 200.4 229 28.6 24 0.23 23
Incl. 205 214 9 7.5 0.54 37
235 263.5 28.5 24 0.24 78
Incl. 244 262 18 15 0.31 117
DDJ-41 14 33 19 16 0.06 40
493 core samples analyzed at Alex Stewart (Assayers), Argentina S.A. in
Mendoza, Argentina.
Drill Intercepts calculated at 10 g/t Ag Eq cutoff; "Includes" calculated
at 50 g/t Ag Eq cutoff.
Maximum 3 meter of internal dilution (less than cutoff) permitted.
Ag Eq (equivalent) = Ag g/t + (Au g/t * 69.23)
Samples were from half splits of cut HQ diameter drill core.
QA/QC checks performed at ALS-Chemex Laboratories in Mendoza, Argentina
consisting of
49 pulp checks, all assayed within acceptable reproducibility
Internal QA/QC checks performed at Alex Stewart (Assayers), Argentina S.A.
in Mendoza, Argentina, consisting of
12 duplicates and 25 standards; all assayed within acceptable ranges
24 blanks assayed below the detection limits both for gold and silver
All values uncapped.
Source: Coeur d'Alene Mines Corporation
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