Vancouver — Greater spending on exploration and development contributed to a first-quarter loss for
The Idaho-based company posted a net loss of US$1.8 million on revenue of US$38.1 million, compared with a loss of US$1.7 million on revenue of US$29 million in the corresponding quarter of 2004.
Excluding income taxes and a one-time charge for settlement of litigation, the company would have delivered net income of US$500,000, even despite having spent US$5.5 million on exploration and development.
The company produced 2.8 million oz. silver and 29,423 oz. gold in the recent quarter, compared with 3.4 million oz. silver and 22,011 oz. gold a year earlier.
The lower volume of silver resulted from lower production and grades at older mines in North America.
Production of silver and gold in all of 2005 is expected to reach 13.5 million oz. and 130,000 oz., respectively, at an average cash operating cost of US$3.90 per oz. silver.
Coeur has increased its investment in exploration 250% over the past three years, to US$13.4 million in 2005.
In April, the company acquired the silver reserves and production of the Endeavor silver-lead-zinc mine in Australia. In return, US$38.5 million, in two instalments, must be paid.
Endeavor is owned and operated by CBH Resources of Australia, which produces 1.3 million oz. silver annually. Total proven and probable reserves stand at 24 million oz. silver, of which Coeur is entitled to a maximum of 17.7 million oz.
Coeur will participate in new exploration at the mine site and, in return, can benefit from additional discoveries.
At present, Coeur generates most of its production from various mines in North and South America, including its namesake Coeur mine in Idaho. This underground operation produced 710,296 oz. silver in the first quarter at a cash cost of US$6.73 per oz. and is expected to produce at least 3.6 million oz. this year.
The company’s Rochester mine in Nevada churned out 1.1 million oz. silver and 13,992 oz. gold in the first quarter at a cash cost of US$6.30 per oz. This year’s production should average 4 million oz. silver and 72,500 oz. gold at a cash cost of US$5.55 per oz. silver.
In Chile, Cerro Bayo produced 659,293 oz. and 14,868 oz. gold at a cash cost below US15 (net of gold credits), while the Martha mine in Argentina generated 379,060 oz. silver and 471 oz. gold at US$5.07 per oz. silver.
The company has five rigs turning near Cerro Bayo as part of a US$3.9-million program aimed at testing extensions of known vein systems, and at discovering other high-grade veins in the region. The goal is to boost reserves for at least three more years of production.
Similarly, the US$2.7-million program at Martha is aimed at boosting reserves to support three more years of production.
Coeur intends to start up two new mines next year: San Bartolome in Bolivia, and Kensington in Alaska. These are expected to boost the company’s silver and gold production by 66% and 77%, respectively.
San Bartolome is designed to produce an average of 8 million oz. silver annually at a cash cost of US$3.50 per oz. over a lifespan of at least 15 years.
The US$91.5-million Kensington mine will initially produce 100,000 oz. gold annually, starting in late 2006. All the major permits are in hand, with the few remaining ones expected shortly.
Coeur does not hedge its silver or gold production. At the end of March, the company had cash and cash-equivalents of US$314.2 million in its treasury.
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