VANCOUVER — Coeur d’AleneMines (CDM-T, CDE-N) has reported a significant increase to its silver and gold reserves in a feasibility study of its Palmarejo project, 240 km southwest of the city of Chihuahua, in northwestern Mexico.
The Palmarejo deposit, part of a 120-sq.-km tenement, adds 62 million proven and probable oz. silver to Coeur’s company-wide reserves of 216 million oz.
The deposit also contains 750,000 oz. gold, which gives its pre-existing gold reserves a 50% boost for a total of 2.2 million oz.
The feasibility study projects that a mine at Palmarejo, currently under construction, would increase Coeur’s silver production by 5.1 million oz. in 2009 for a total of 23.6 million oz. In 2010, it would add 7.4 million oz. silver for a total of 25 million oz.
As for gold, Coeur projects a boost of 67,000 oz. to 132,000 oz. in 2009, and an increase of 92,000 oz. to 282,000 oz. in 2010.
If Palmarejo hits the target of 5.1 million oz. silver in 2009, it would account for about 5% of Mexico’s yearly production.
Mexico is the world’s secondlargest producer of silver, churning out 99.2 million oz. in 2007 behind Peru’s 112.3 million oz.
With the increased production, Coeur envisions a doubling of operating cash flow in 2009, adding US$116 million to its projected operating cash flow of US$120 million (based on prices of US$17 per oz. for silver and US$850 per oz. for gold).
Coeur would extract the silver and gold from both open-pit and underground operations.
The deposit slated for underground mining is richer in silver than the open-pit portion and accounts for 56% of the proven and probable silver reserves with 3.7 million tonnes grading 295.9 grams silver per tonne and 4.49 grams gold.
The open-pit portion contains 6.1 million proven and probable tonnes grading 137.9 grams silver and 1.09 grams gold.
Capital costs to build the mine are estimated at US$235.1 million this year and US$62.5 million in 2009.
Among other developments at Palmarejo, Coeur is digging 560 metres of underground workings for the north and south portals of the underground mine and has completed earthworks for a processing plant and main camp.
Coeur also reports that its construction crews have begun to pour concrete for the processing plant, and to build a tailings and environmental control dam.
Open-pit, pre-stripping operations are under way.
In a statement, the company’s senior vice-president, Donald Birak, noted that the Palmarejo deposit is only one of three mineral deposits so far identified on the Palmarejo property.
He expects future drilling at two other silver and gold-bearing structures, Guadalupe and La Patria, to add to the company’s reserves.
Guadalupe hosts 710,000 indicated tonnes grading 166 grams silver and 2.15 grams gold, and 8 million inferred tonnes grading 136.5 grams silver and 1.34 grams gold.
La Patria hosts 3.6 million inferred tonnes grading 34.8 grams silver and 1.48 grams gold.
On news of the feasibility, Coeur’s share price slipped US24 to close at US$3.02 on a volume of 14.7 million. The stock has traded from US$2.74-5.18 over the last 52 weeks and the company has 550 million shares issued.
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