Highlights
-- Third quarter silver production of 3.3 million ounces at average
cash cost of $3.04 per ounce
-- Gold production of 31,000 ounces in the third quarter
-- First nine months silver production of 10.7 million ounces at an
average cash cost of $3.24 per ounce
-- Nine months gold production of 93,000 ounces
-- Cerro Bayo/Martha mines produced 1.2 million silver ounces in recent
quarter, and 15,000 gold ounces, at cash costs of $1.18 per
ounce/silver
-- Nine months operating cash flow (before working capital changes) of
$5.0 million compared to $(13.2) million in 2002's comparable period
-- Crusher relocation successfully completed at Rochester, on time and
within budget. Cash costs at Rochester have steadily declined
during the year with completion of project to $3.66 per ounce in 3Q
-- $76.0 million raised in oversubscribed 23.7 million-share common
stock offering
-- A total of $94.2 million in cash and short term investments at
September 30
-- Total debt now just 8.7% of total capital, putting Coeur in
strongest financial position in close to a decade
-- Standard & Poor's rating agency issues positive outlook for Coeur
CIBC World Markets initiates analyst coverage
-- Success in South America leads to 35% expansion of exploration
budget
"Coeur continued to report stronger financial results in the third quarter and first nine months compared to last year, fueled by consistent production, reduced cash costs and increased metals prices," said Dennis E. Wheeler, Chairman and Chief Executive Officer. "With the success of our recent equity offering, Coeur is now in its best financial position in nearly a decade, with no net debt and available liquidity approaching $100 million. Meanwhile, we are moving ahead with final feasibility studies at our San Bartolome and Kensington development projects, which we expect will significantly increase the diversity of Coeur's asset base and future production and lower overall operating costs.
"Our South American mines -- the Cerro Bayo and Martha -- continued to contribute strong production and cash flow, by increasing their silver equivalent ounces over last year's third quarter and first nine months, at an extremely low production cost. Because of our exploration success around these two new and highly prospective properties, we have increased our exploration budget in South America by 35 percent for the remainder of this year. We anticipate additional high-grade reserve increases there by year-end.
"The major crusher relocation project was completed at Rochester, and we lowered cash costs there to $3.66 per ounce of silver in the third quarter, a reduction of 15 percent from the second quarter, and 43 percent below first quarter costs.
"Also, at Silver Valley, our oldest and most long-lived reserve, we have initiated the long-term expansion plan designed to increase reserves and production, and to lower operating costs. By 2006, we expect a record seven million ounces of silver production from Silver Valley, with average cash costs of below $4 per ounce," Mr. Wheeler added.
Financial Summary
Coeur d'Alene Mines Corporation (NYSE: CDE), the world's largest primary silver producer, today reported third quarter 2003 metals sales of $23.4 million, compared to $24.4 million in the same period last year, due primarily to the temporary suspension of operations at Silver Valley during the quarter to prepare the mine for its long-term expansion plan. For the first nine months of 2003, Company metals sales were $78.1 million, an increase of 29 percent from $60.5 million reported during in the same period last year.
For the third quarter, Coeur realized an average silver price of $4.77 per ounce compared to an average realized price during last year's third quarter of $4.65 per ounce. For its gold sales, Coeur realized an average price of $353 per ounce during the third quarter compared to an average gold price of $315 per ounce during the same period last year.
For the first nine months, Coeur realized an average silver price of $4.71 per ounce compared to an average realized price during last year's period of $4.67 per ounce. For its gold sales, Coeur realized an average price of $341 per ounce in the first nine months of this year compared to an average gold price of $306 per ounce during the same period last year.
Third quarter production totaled 3.3 million ounces of silver and 31,000 ounces of gold, compared to 3.8 million ounces of silver and 34,000 ounces of gold in last year's third quarter. Consolidated cash costs in the quarter were $3.04 per ounce of silver, an increase of four percent from the last year's third quarter. The recent quarter's cash costs represent a 10 percent decrease from cash costs in the 2nd quarter of 2003.
First nine-months production totaled 10,671,000 ounces of silver, a seven percent increase from last year's period, and gold production of 93,000 ounces, up 27 percent from last year's period. Consolidated cash costs for the first nine months were $3.24 per ounce of silver, a reduction of three percent from last year's comparable period.
For the third quarter of 2003 the Company reported a net loss of $17.9 million, or $0.10 per share, compared to a net loss of $12.3 million, or $0.14 per share in the third quarter of 2002. This year's third quarter loss was impacted by $12.5 million in charges for interest expense and charges related to the early retirement of debt. Exclusive of these charges, the Company would have reported a net loss of $5.4 million, or $0.03 per share.
For the first nine months of 2003, the Company's net loss was $53.5 million, or $0.35 per share, compared to a loss of $35.1 million, or $0.51 per share for the same period a year ago. This year's nine months period included $44.7 million in charges for interest expense and losses related to the early retirement of debt resulting from the issuance of common shares in excess of the original conversion ratio, and a charge of $2.3 million related to a change in accounting principle associated with reclamation accruals. Exclusive of these charges, the Company would have reported a net loss of $6.5 million, or $0.04 per share in this year's period.
During the first nine months of 2003, operating cash flow before working capital changes improved to $5.0 million compared to $(13.2) million in 2002.
In the third quarter, the Company's cash position and balance sheet strengthened to its best position in a decade with the successful completion of a 23.7 million common shares offering for $76.0 million of net proceeds. At September 30, 2003, cash and equivalents plus short-term investments, totaled $94.2 million. During the quarter, Coeur also eliminated $41.1 million in convertible debt from its balance sheet, with the conversion of $29.8 million of its 9% Senior Convertible Notes, the final conversion and/or redemption of $9.9 million of its 13 3/8% Senior Convertible Notes, exchanges of $1.0 million of 6 3/8% Convertible Subordinated Debentures, and $$0.4, and $0.4 million of 7 1/4% Convertible Subordinated Debentures. Total convertible debt at quarter-end was $18.7 million, or just 8.7 percent of capital.
Overview of Operations
South America
Cerro Bayo (Chile)/Martha (Argentina)
-- Third quarter production of 1,150,751 ounces of silver and
15,220 ounces of gold
-- Low cash costs of $1.18 per ounce of silver during third quarter
-- Nine months production: 3,775,953 ounces of silver and
52,173 ounces of gold
-- Cash cost in the first nine months of $0.73 per ounce of silver
2003 exploration budget increased 35% to $3.5 million
During the third quarter, silver production increased 31 percent over last year's third quarter to 1.2 million ounces. Gold production was consistent at 15,220 ounces, compared to 15,089 in last year's period. Cash operating costs in the quarter were $1.18 per ounce of silver, compared to $0.91 in 2002's comparable period.
For the nine months period, silver production more than tripled to 3,775,953 ounces and gold production grew two-and-a-half times to 52,173 ounces compared to 1,141,891 ounces of silver and 21,000 ounces of gold produced in the first nine months of 2002. Cash costs through the first nine months were $0.73 per ounce of silver, versus $1.21 per ounce in the first nine months of 2002.
North America
Rochester Mine (Nevada)
-- Third quarter silver production of 1,717,947 ounces and
15,346 ounces of gold
-- Cash costs of $3.66 per ounce of silver, a decrease of 15% from the
second quarter of this year, and 43% less than the first quarter of
this year
-- Nine months silver production 4,160,993 ounces and 41,237 ounces of
gold
-- Crusher relocation completed on schedule and within budget
Near the end of the third quarter, Rochester completed its major crusher relocation project, on schedule and within budget. Measures taken to reduce operating costs during the project effectively lowered cash costs in the third quarter to $3.66 per ounce -- a reduction of 15 percent from the second quarter of this year, and 43 percent lower than the first quarter of this year. With the installation of the new crusher, cash costs are expected to continue at their lower, historical levels.
Rochester produced 1.7 million ounces of silver and 15,346 ounces of gold during the third quarter, compared to 1.7 million ounces of silver and 18,885 ounces of gold in 2003's comparable period. Cash costs in last year's third quarter were $2.83 per ounce silver.
First nine months of production at Rochester was 4.2 million ounces of silver and 41,237 ounces of gold at an average cash cost of $4.61 per ounce of silver. This compared to 4.8 million ounces of silver and 52,440 ounces of gold at an average cash cost of $3.11 a year ago.
Coeur Silver Valley - Galena Mine (Idaho)
-- Temporary suspension of operations in the quarter as the mine was
prepared for expansion. Short-term impact on third quarter
production and costs.
-- Third quarter silver production of 437,249 ounces versus 1.9 million
ounces a year ago.
-- Cash operating costs of $5.46 per ounce in quarter compared to
$4.54 per ounce in last year's third quarter.
-- Nine months silver production of 2,733,716 ounces
-- Long-range development program begins during the quarter
At Coeur Silver Valley, silver production was 0.4 million ounces in the third quarter compared to 1.2 million ounces a year ago. The recent quarter's production was impacted by the temporary suspension of operations in the quarter, as maintenance work prepared the mine for start up of the long range development program designed to increase production 40 percent to 7 million ounces commencing in 2006, with estimated cash costs below $4.00 per ounce. The early focus of this optimization work is the exploration of a number of new high-grade silver veins located above the 5200 level, and extension of the more prolific vein systems at depth.
Expanded South American Exploration Program
Cerro Bayo
Successful drilling continued during the quarter on the Javiera Sur vein and the new Veronica vein, where a recent thick, high-grade drill intercept recorded 27 feet of 0.77 ounces per ton gold equivalent. Both of these veins are located near existing mine infrastructure at Cerro Bayo. Drilling thus far totals 106,000 feet in 270 holes using three core rigs. Due to the ongoing exploration success in the area, the Cerro Bayo exploration budget was increased during the third quarter by $400,000 for a total of $2.2 million for the entire year. Exploration remains on track to meet the goal of discovering 267,000 ounces of new gold equivalent resources.
Martha Mine and Santa Cruz Province
Exploration success at Martha has led to an increase in the exploration budget there in the third quarter by $500,000, or 63 percent, to a total of $1.3 million for the year. Work now includes two full-time drill rigs and one reverse circulation drill around the existing mine. Drilling continued to look for extensions of the high-grade mineralization around the R4 Zone, an area of very high-grade ore shoots, 600 feet east of the Martha mine and along the eastern extension of the Martha vein. The proximity to the existing mine has the potential to add these new ounces quickly and economically into production.
In addition, current exploration is delineating both shallow, open pit reserves and a southeast extension of the R4 Zone. A new geologic model is being prepared for R4 with this new information.
Hedging
Coeur does not currently have any of its silver production hedged. The Company currently has 27,000 ounces of gold sold forward over the next 15 months at an average price of $343 per ounce. In 2003, every 10 cent increase in silver price adds approximately $1.5 million in free cash flow on an annualized basis.
Coeur d'Alene Mines Corporation is the country's largest silver producer, as well as a significant, low-cost producer of gold. The Company has mining interests in Nevada, Idaho, Alaska, Argentina, Chile and Bolivia.
Cautionary Note to U.S. Investors -- The United States Securities and Exchange Commission permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use the term "resources" in this press release which the SEC guidelines strictly prohibit us from including in our filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 10-K and Form 10-Q for the quarter ended September 30, 2003. You can review and obtain copies of that filing from the SEC website at http://www.sec.gov/edgar.html.
This document contains numerous forward-looking statements relating to the Company's silver and gold mining business. The United States Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. Operating, exploration and financial data, and other statements in this document are based on information the company believes reasonable, but involve significant uncertainties as to future gold and silver prices, costs, ore grades, estimation of gold and silver reserves, mining and processing conditions, changes that could result from the Company's future acquisition of new mining properties or businesses, the risks and hazards inherent in the mining business (including environmental hazards, industrial accidents, weather or geologically related conditions), regulatory and permitting matters, and risks inherent in the ownership and operation of, or investment in, mining properties or businesses in foreign countries. Actual results and timetables could vary significantly from the estimates presented. Readers are cautioned not to put undue reliance on forward-looking statements. The Company disclaims any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.
CONTACT: Tony Ebersole, Investor Relations of Coeur d'Alene Mines Corporation, +1-208-665-0335
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