Vancouver — A US$36-million transaction with an Australian company will give
Coeur’s Australian subsidiary inked the deal with a unit of Australian-listed
Coeur President Dennis Wheeler notes that the deal will be accretive to the company’s per-share financial and operating results, including cash flow, earnings, production and reserves.
Coeur is already the world’s largest primary silver producer with mines and advanced projects in Idaho, Nevada, Alaska, Argentina, Chile, Bolivia, and Australia. Before the Perilya deal was announced, these operations were expected to produce 13.5 million oz. in 2005, at cash costs of between US$4.30 and US$4.40 per oz. Gold production is forecast at 130,000 oz. for the full year.
Coeur’s Broken Hill deal is capped at about 24.5 million contained ounces silver (or 17.2 million recoverable ounces) mined by Perilya on Coeur’s behalf. This gives Coeur about 10 million oz. of upside over the remaining reserve base at Broken Hill.
The world-famous mine has turned out about 500 million oz. silver since production began in 1885, and in the process, established its previous owner, Broken Hill Proprietary — now part of
Remaining proven and probable silver reserves stand at 11.5 million tons grading 1.3 oz. silver per ton. Measured and indicated resources are 7.3 million tons at 1.81 oz. silver, while inferred resources add another 3.4 million tons grading 2.17 oz. silver. (Silver content is tabulated as a byproduct, as the mine is a major producer of zinc and lead).
Coeur’s Broken Hill agreement mirrors a previous deal with a separate company allowing the company to acquire silver production from the Endeavor mine, also in Australia. The price tag for Endeavor was slightly higher, at US$38.5 million.
These transactions together boost Coeur’s estimated annual silver production from Australia to 3.6 million oz. In both cases, the company will not assume operating responsibility for the mines.
Coeur’s Australian expansion is part of a broader effort to transform itself into a global silver producer with low-cost, long-lived mines. Most of the company’s current production comes from older, high-cost mines, primarily in Idaho and Nevada.
Coeur is also looking for growth at the Kensington gold mine in Alaska. Construction is under way, and by early 2007, Kensington is expected to produce at an annual rate of 100,000 oz. gold at cash costs of about US$250 per oz. Capital costs are estimated at about US$105 million.
The company also plans to form a “strategic alliance” with a Chinese metals company for silver-mining opportunities in China.
Be the first to comment on "Coeur d’Alene corners share of Broken Hill"