Silver lining for Coeur d’Alene

A late starter in the gold mining business, the company now boasts as its largest revenue source the Rochester mine in northern Nevada which last year produced 52,388 oz gold and slightly more than five million ounces of silver. That’s quite a performance for a heap leach operation which grades 1.7 oz silver and 0.012 oz gold.

During a recent visit by The Northern Miner to the company’s head office at Coeur d’Alene, Dennis E. Wheeler, president, noted that Rochester was the largest primary silver producer in the United States and its added gold output put Coeur d’Alene among the 15 largest gold companies in the country.

“In 1986, we were strictly a silver producer with one million oz. But we now produce six million oz of silver and 76,000 oz gold and our revenue mix is now about 55/45 in favor of silver,” said Wheeler.

About 846,000 oz of Rochester’s silver output came from its 40% interest in the Coeur mine in northern Idaho which is operated by Asarco Inc. The Coeur mine has reserves of about 622,800 tons grading 18.5 oz — enough for 4.5 years of underground mining at present rates. The mine’s cost of production was less than $5 per oz.

Coeur d’Alene’s Thunder Mountain mine in central Idaho generated 24,250 oz gold and 29,066 oz silver from 542,000 tons of ore in 1988. The heap leach mine has 1.5 million tons of reserves grading 0.046 oz gold in two orebodies. Additional drilling is planned this year which the company “hopes will confirm and expand the mine’s reserves.”

Pointing to the higher unit profit margin for gold, Coeur d’Alene’s affable president left no doubt that his company intends to “remain a precious metals company.” He predicted the Kensington gold project near Juneau, Alaska would be it’s next producer. Kensington is a 50/50 joint venture with Echo Bay Mines (TSE) which acts as operator. Echo Bay has experience from the Lupin mine in the Northwest Territories.

Last year a 5,200-ft-long tunnel was driven into a mountain some 800 ft above sea level at Kensington and Wheeler said the joint venture has a $12.9-million budget for follow-up work this year. A good portion of the program is devoted to reserve delineation along the Kensington vein. The program will also try to find any extension to the structure below the 800-ft level, he said.

At least six other mineralized zones were encountered when the tunnel was being driven that revealed “some interesting mineralization,” he said. A footwall ramp is also planned which will open up new ground and assist in ventilating the underground.

Wheeler suggested that 1992 was a reasonable goal for beginning production and he was cautiously optimistic that final feasibility studies would be under way by year’s end.

Admitting that production parameters “have yet to be defined,” he suggested a production rate of 130,000 oz per year “assuming the feasibility comes out favorable.” Based on updated information, the joint venture estimates the Kensington vein contains 7.3 million tons of probable ore reserves grading 0.152 oz gold.

Coeur d’Alene is funding its share of the project out of cash flow. Net profits of $15.4 million for 1988 were reported by Coeur d’Alene, almost $20 million higher than the figure for 1986 when its precious metals production was confined to the Coeur mine. Wheeler said the company has about $50 million in long-term debt in the form of a convertible, subordinated debenture. This debenture is from a 1987 offering that matures in 2002 and carries a 6% fixed interest rate, he said. The company has approximately 11.7 million shares outstanding with insiders controlling about 2% of the issued capital.

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