Coeur d’Alene posts “all-time” record earnings

Vancouver A strategy to diversify to newer, low-cost gold and silver mines in foreign lands from aging high-cost mines at home is paying off for Coeur d’Alene Mines (CDM-T, CDE-N). The Idaho-based company posted record net income of US$9.9 million, or US4 per diluted share, on record revenue of US$54.8 million in the fourth quarter of 2005.

Coeur produced 3.9 million oz. silver and 36,000 oz. gold from various mines around the world in the last three months of 2005. Full-year production was 13.7 million oz. silver and 134,000 oz. gold.

The company earned US$10.6 million, or US4 per share, in 2005, compared to a net loss of US$16.9 million, or US8 per share, in 2004. One factor contributing to the improved performance was a 30% drop in cash production costs for silver during the second half of 2005 over results in the first half of the year.

Coeur’s roots are in the historic Coeur d’Alene silver district of Idaho, but production from its aging mines there has fallen steadily in recent years because of lower grades and high production costs. The company is evaluating “strategic alternatives” for the Galena mine and other assets in the region, which could include a possible sale.

The lowest-cost producer in the company’s portfolio is now the Cerro Bayo mine in Chile, where silver cash costs averaged US$0.54 per oz. last year. The company also generated significant new earnings from its share of production at the Broken Hill and Endeavor mines in Australia.

Coeur paid US$36 million last year to acquire a portion of silver reserves and production from the Broken Hill mine, owned and operated by Australian-listed Perilya (PEM). This transaction followed a previous US$38.5-million deal (with a separate company) to acquire silver production from the Endeavor mine. Silver cash costs at Endeavor reached US$2.05 per oz. last year, and US$2.72 per oz. at Broken Hill.

Coeur expects to produce 18 million oz. silver this year, a 31% increase over production in 2005, at average cash costs of about US$4.11 per oz. Gold production is forecast at about 129,000 oz.

Coeur has two new mines in its development pipeline. The Kensington gold mine in the Alaskan Panhandle is slated to begin production in 2007, though the U.S. Army of Engineers has temporarily suspended construction activities pending the outcome of a permitting review. The company believes the permit will be reinstated once the review is completed. If all goes as planned, the mine would produce about 100,000 oz. gold annually at cash costs of about US$250 per oz.

Construction should resume in mid-2006 at the San Bartolome silver project in Bolivia. The US$135-million mine is designed to produce 6-to-8 million oz. silver annually at cash costs of US$3.50 per oz.

At year-end 2005, Coeur had US$240.4 million in cash and short-term investments. Proven and probable silver reserves at year-end stood at 221.4 million oz., a 13% increase over the previous year. Gold reserves were reported as 1.3 million contained oz., with potential for expansion as exploration continues at the Kensington mine property.