Coeur d’Alene starts Kensington gold mine, strikes concentrate deal

Silver and gold producer Coeur d’Alene Mines (CDM-T, CDE-N, CXC-A) has opened its third precious metals mine in as many years.

The new Kensington gold mine in Alaska will produce 50,000 oz. gold during the remainder of 2010 and will average roughly 125,000 oz. gold annually over the mine’s initial 12.5-year life based on current reserves of 1.5 million oz.

Once in full production, cash costs are expected to average US$490 per oz. over the mine life. The mine will employ nearly 200 workers.

Coeur also signed an agreement with China National Gold Group Corp., China’s largest gold producer, for buying and processing gold concentrates produced at the Kensington mine. According to Coeur d’Alene, the agreement is “the first of its kind” between a state-owned enterprise in China and a U.S. precious metals mine. The contract relates to about half of the concentrates to be produced at Kensington.

China National Gold operates about 60 gold mines across China, which accounts for more than 20% of the country’s total gold production. The Beijing-based company also operates a number of smelters and refineries and is the only Chinese gold company to become a member of the World Gold Council.

Apart from Kensington, Coeur d’Alene’s two other new long-life mines are its San Bartolom silver mine in Bolivia, which began operations in 2008, and the Palmarejo silver-gold mine in Mexico, which started up last year.

The Idaho-headquartered company also owns underground mines in Argentina and one surface mine in Nevada, as well as a non-operating interest in a low-cost mine in Australia. Currently, it is exploring for new opportunities in Alaska, Argentina, Chile and Mexico.

At presstime in Toronto, Coeur d’Alene was trading at $15.40 a share.

The company has a 52-week trading range of $11.78-$25.79, with 88.94 million shares outstanding.