Coeur gains on quarterly results

Coeur d’Alene Mines (CDM-T, CDE-N) had a stellar third quarter, reporting all-time record sales and operating cash flow for both the period and the first nine months.

Quarterly sales came in at US$343.6 million, a 190% improvement from the year-ago period. Operating cash flow was US$151 million, almost five times more than the same period last year.

“Our increasing quarterly cash flow has strengthened our cash and equivalents balance to over US$200 million,” remarked Mitchell Krebs, Coeur’s president and CEO, on a recent conference call. “Late last month we paid off the remaining US$18-million of senior notes, leaving only US$128 of remaining debt – equivalent to less than three months of cash flow.”

Quarterly profits totaled US$31.1 million or 35¢ a share, a significant comeback from the net loss of US$22.6 million in last year’s third period. Adjusted earnings equaled US$93.8 million, or US$1.05 per share, up from a loss of US$4.5 million.

“Our record quarterly results were driven by our consistent performance from our Palmarejo gold-silver mine in Mexico and our San Bartolome silver mine in Bolivia,” added Krebs. “Higher silver and gold prices also augmented our results.”

The Idaho-based miner produced 4.9 million oz. silver and 57,052 oz. gold during the quarter.

Averaged realized prices for silver more than doubled from the year-ago period to US$38.28 per oz., while the price of gold increased by 33% to US$1,681 per oz.

This helped offset the rising cash operating cost, which came in at US$7.57 per oz, representing a 55% increase over the comparable quarter. Coeur says this was mainly due to short-term production cost hikes at Palmarejo, San Bartolome and at its Nevada mine, which are expected to improve during the fourth quarter. The company also noted higher costs for power, diesel and labour during the period. 

For the first nine months, the company saw sales of US$774.3 million and an operating cash flow of US$356.9 million, a 152% and a 322% increase, respectively, over the same period last year.

Adjusted earnings for this period totaled US$189.3 million, or US$2.12, bouncing up from a loss of US$11.7 million, or US13¢ a share, reported for the comparable period last year. 

During the first nine months, the company produced a total of 13.8 million oz. silver and 170,838 oz. gold. 

Looking ahead, Coeur remains on track to meet its 2011 guidance of 19.5 million oz. silver at a cash operating cost of US$5.75 per oz. However, the company has lowered its gold production estimate to 220,000 oz. from 240,000 oz., due to momentarily reducing processing rates at its Kensington gold mine in Alaska.

“We plan to temporarily reduce processing rates by 50% at Kensington over the next six months to allow time for the operation to complete several key initiatives, which we expect to better position the mine for long-term, sustainable and consistent performance,” explained Krebs.

He added that the company is in-line to reach US$1 billion in total sales and US$500 million in operating cash flow for the year.

On the quarterly news, Coeur jumped 7.1% in Toronto to close at $29.70 a share. In New York its shares moved up 7.6% to $29.33.