Silver increase fails to save Coeur

Denver — Despite producing a record amount of silver, Coeur d’Alene Mines (CDE-N) incurred a net loss of US$45.8 million (or $1.29 per share) in 2000, compared with a net loss of US$38.9 million ($1.61 per share) in 1999.

The company produced 11.7 million oz. silver during the year at a cash operating cost of US$4.09 per oz., compared with 9.6 million oz. at US$4.17 per oz. in 1999.

Most of the silver came from the Rochester open-pit mine in northern Nevada, which contributed 6.7 million oz., plus 75,886 oz. gold. The company has begun a 40,000-ft. program of reverse-circulation drilling at the property.

The overall increase is largely due to the Silver Valley operation in northern Idaho, where production jumped to 4 million oz. Coeur doubled its stake in Silver Valley to 100% in September 1999.

While silver production rose for the year, gold production fell to 144,900 oz., down from 151,700 oz. in 1999. Cash operating costs climbed to US$348 per oz., up from US$290.

Higher costs and lower production (caused by severe winter conditions) hurt the company’s Petorca mine in Chile. Cash operating costs were US$345 per oz., up from US$271 per oz. in 1999.

The same harsh conditions forced the closure of Coeur’s other Chilean operation, the Fachinal mine, in the fourth quarter. Cash operating costs hit US$447 per oz. gold-equivalent, up from US$304.

Coeur is evaluating the Cerro Bayo discovery, 9 miles east of the Fachinal mill. To date, the company has outlined 312,500 oz. gold-equivalent over a strike length of more than 8,000 ft. Coeur would not provide a grade and tonnage estimate.

Despite its exploration success at Cerro Bayo, the company has decided to liquidate its Chilean assets.

In Bolivia, Coeur has increased silver resources by 15% at the San Bartolome project. With the help of third-party engineering and geological consulting firms, the company boosted resources to 122 million oz. silver within 41.1 million tons grading 2.97 oz. per ton.

The resource was outlined in a prefeasibility study, which concluded that, at 7,500 tons per day and capital costs of up to US$70 million, San Bartolome could produce as much as 6 million oz. silver per year at an average cash cost of US$3.50 per oz.

At the end of 2000, the company saw proven and probable reserves shrink slightly to 88.1 million oz. silver and 2.51 million oz. gold.

Coeur sold its 25% interest in the Yilgarn Star mine, in Australia (through its 50% stake in Gasgoyne Gold), to Sons of Gwalia for US$15.6 million. Coeur also re-purchased US$31.7 million of its outstanding debentures, which resulted in a gain of US$16.1 million and lower future interest payments.

For the recent fourth quarter, the company recorded a net loss of US$14.9 million (or 40 per share), compared with a loss of US$26.3 million (90 per share) in the year-ago period.