Coeur d’Alene poised to open Mexican mine

It was less than a year ago that Coeur d’Alene Mines (CDM-T, CDE-n, CXC-a) opened its massive San Bartolome silver mine in the Andes Mountains of Bolivia. Now the company is poised to open a second one in the region: The Palmarejo silver mine in Mexico.

Palmarejo is on track to pour its first dore before the end of March and the mine is expected to produce 5.3 million ounces of silver and 72,000 ounces of gold before the end of the year. Production in 2010 is forecast to be roughly 7.4 million ounces of silver and 92,000 ounces of gold.

“The construction has gone very well, there haven’t been any major delays or difficulties,” said Tony Ebersole, Coeur d’Alene’s director of corporate communications. “Mexico has a strong mining tradition and the workers generally have a lot of experience; they’ve been a big part of this.”

Coeur d’Alene acquired the property at the very end of 2007 and invested US$181 million in Palmarejo last year. It anticipates spending roughly US$100 million on the mine this year.

“There had been some development [on the property before we acquired it] so we went full bore and it’s been a little bit over a year of construction,” Ebersole said. “There had been some early construction – about $50 million had been put into it in terms of construction — but it has been transformed since then.”

Situated in the Sierra Madre mineral belt of Chihuahua state, Palmajero will have the capacity to produce an average of about 120,000 ounces of gold and 9 million ounces of silver a year over an 11-year lifespan.

At the end of the year, Palmajero’s proven and probable reserves reached 63.6 million oz. silver and 2.3 million oz. gold, and an additional 53.3 million oz. silver and 676,000 oz. gold in the measured and indicated category. The property has an additional 58.5 million oz. silver and 880,000 oz. gold in the inferred category.

Last year Coeur invested over US$8 million in exploration at Palmarejo and expects to invest another US$8.2 million this year.

Recent exploration at Palmarejo concentrated on expanding and defining the district’s second large silver and gold deposit, named Guadalupe, six km from Palmarejo.

Late last year, Coeur signed an option agreement to acquire 100% of the La Currita property, which borders Guadalupe on the southeast.
The company has started drilling at La Currita and has planned an initial program of 8,000 metres.

Outside Mexico, Coeur d’Alene owns and operates underground mines in southern Chile and Argentina and one open-pit mine in Nevada. In addition it owns non-operating interests in two low-cost mines in Australia as well as the Kensington gold project in Alaska.

Coeur d’Alene leads the primary silver producers with 248 million ounces of proven and probable silver reserves and 2.3 million
in gold reserves.

Financial results for the year ended Dec. 31, 2008 demonstrated the company is well capitalized with liquidity of about US$100 million as of Jan. 31 2009 and capex remaining for the year of about US$65 million. The company has debt of US$410 million.

This year US$17.6 million has been earmarked for exploration, of which about 85% will be used for expanding producing mines.

The full budget for exploration in Mexico is $8.2 million, of which more than 90% will be devoted to the Palmarejo district including La Currita.

In Toronto, the company, based in Coeur d’Alene, Idaho, trades at about 83¢ per share. It has traded in a 52-week window of 50¢-$4.83 per share and has 610.6 million shares outstanding.

In New York the company trades at about 62¢ per share and has a 52-week trading range of 36¢-$4.65 per share.