COEUR D'ALENE MINES CORP. (NYSE:CDE)
Home page: http://www.coeur.com/index.asp?pageItem=frontpage
THE WORLD'S LARGEST PRIMARY SILVER PRODUCER
Business Summary
Coeur d'Alene Mines Corporation is the world's largest primary silver producer and a significant, low-cost gold producer.
The company owns and operates two of the largest primary silver mines in the United States, and last year began production at a new generation of mines in South America, which rank among the world's lowest-cost silver mines. During 2002, company-wide silver production increased 36 percent to a record 14.8 million ounces while cash operating costs improved by over 22 percent.
Gold production grew 22 percent to 117,000 ounces.
The company's higher metals production, combined with lower costs and a significant reduction in
overall debt, has resulted in improved cash flow, which has positioned the company for its next phase of meaningful growth.
In 2003, Coeur anticipates continued exploration success at its high-grade South American silver/gold mines, and a renewed focus on growth through acquisitions. The company is also in the advanced development stage at its major silver project, San Bartolomé, in Bolivia.
Coeur's mission is to increase shareholder value by enhancing its pre-eminent position as North
America's leading, low-cost primary silver producer while continuing to be a significant gold producer.
Coeur was formed in 1928 and is headquartered in Coeur d'Alene, Idaho.
American will not engage in this type of speculation.
Pan American is loath to give away the upside on any of its silver production and will do so only to the minimum extent required as a condition of prudent mine financing.
Recent News: Coeur Announces Major Memorandum of Understanding for Kensington Mine Permitting Signed By State and Federal Agencies
Coeur d'Alene Mines Corporation (NYSE: CDE) and the State of Alaska have announced a major
milestone toward the final permitting of Coeur's Kensington Gold Project. Key state and federal
agencies have signed a Memorandum of Understanding (MOU) to help complete the environmental approvals for the mine. The MOU, signed by the Alaska Department of Natural Resources, U.S. Forest Service, U.S. Environmental Protection Agency, and Army Corps of Engineers, outlines roles and responsibilities of the agencies with respect to the final Supplemental Environmental Impact Statement (SEIS) for Kensington, which is located in Southeast Alaska near Juneau.
The MOU also establishes the schedule for the project's major federal permits. These include:
approval of the Plan of Operations by the Forest Service; issuance of an NPDES water discharge
permit by EPA; and issuance of a 404 permit by the Corps for discharge of dredged and/or fill material into waters of the United States, including wetlands. The Alaska Department of Natural Resources will coordinate all state involvement to ensure a consolidated response, and to facilitate timely agency review.
Coeur anticipates receiving all necessary permits for Kensington by the end of January 2004, and
plans to reach a final decision on developing the mine after completion of the permitting and a
feasibility study update.
"The Kensington Project is one that has been very important to Southeast and all of Alaska for some time," Alaska Governor Frank H. Murkowski said. "It is consistent with our goal of helping to create high-paying jobs in the natural resource sector. I am pleased with the signing of the MOU and look forward to the permitting and construction of the project."
The Kensington Gold Project is located approximately 45 miles north of Juneau, Alaska and contains an estimated 1.8 million ounces of proven and probable gold reserves and 1.4 million ounces of resources. Capital costs necessary to place Kensington into production are currently estimated to be $150 million, while annual gold production is projected to average 175,000 ounces annually at estimated average cash operating costs of approximately $200 per ounce. Coeur believes that significant exploration potential exists at Kensington that could materially increase the project's total resources.
Fundamental Considerations: Production and Reserves
During 2002, company-wide silver production increased 36 percent to a record 14.8 million
ounces at a cash operating cost of $2.89 per ounce of silver. Gold production was up
22 percent to 117,000 ounces.
In 2003, Coeur anticipates another record year of silver production, as well as continued exploration success at its high-grade silver/gold mines in Chile and Argentina, and a renew focus on growth through acquisitions.
The company is also in the advanced development stage at its major San Bartolomé, Bolivia, silver project.
The company entered 2003 with proven and probable reserves of 75.0 million ounces of silver and 2.3 million ounces of gold.
The company emerged this year from a major restructuring, with debt reduced 75 percent, a new generation of mines in operation, consolidated operating costs reduced, and improved cash flow.
Silver is in demand because it has a number of unique properties including its strength,
malleability and ductility, its electrical and thermal conductivity, its sensitivity to and high
reflectance of light and the ability to endure extreme temperature ranges. Silver's unique
properties restrict its substitution in most applications. Choose from the following list to learn more
about some of the various applications of silver:
Electrical and Electronics
Silver is the best electrical conductor of all metals and is hence used in many electrical
applications, particularly in conductors, switches, contacts and fuses. Contacts, a junction between two conductors that can be separated and through which a current can flow, account for the largest proportion of electrical demand. Silver is invaluable in the manufacture of circuit breakers and motor controls.
In electronics, silver is also widely used. Uses include silk-screened circuit paths, membrane switches, electrically heated automobile windows, and conductive adhesives. Every time a home owner turns on a microwave oven, dishwasher, clothes washer, or television set, the action activates a switch with silver contacts that completes the required electrical circuit.
Medical Applications
While silver's importance as a bactericide has been documented only since the late 1800s, its use in purification has been known throughout the ages. Early records indicate that the Phoenicians, for example, used silver vessels to keep water, wine and vinegar pure during their long voyages.
In America, pioneers moving west put silver and copper coins in their water barrels to keep it clean. In fact, "born with a silver spoon in his mouth" is not a reference to wealth, but to health. In the early 18th century, babies who were fed with silver spoons were healthier than those fed with spoons made from other metals, and silver pacifiers found wide use in America because of their beneficial health effects.
Silver also has a variety of uses in pharmaceuticals. In fact, silver sulfadiazine is the most powerful compound for burn treatment. It is used by every hospital in North America for burn victims to kill bacteria and allow the body to naturally restore the burn area. It is used world-wide. In another application polyurethane central venus catheters are impregnated with silver sulfadiazine and chlorhexidine to eliminate catheter-related bacteria.
In a world concerned with the spreading of virus and disease, silver is increasingly being tapped for its bactericidal properties and used in treatments for conditions ranging from severe burns to
Legionnaires Disease.
Water Purification
Silver is employed as a bactericide and algaecide in an ever-increasing number of water
purification systems in hospitals, remote communities and, more recently, domestic households.
Silver ions have been used to purify drinking water and swimming pool water for generations. New research into silver compounds is providing physicians with powerful, clinically effective treatments against which bacteria cannot develop resistance.
Photography
When Joseph Nicephore Niepce created the first photographic image obtained through a camera-like device in 1813, it was silver nitrate that made it possible.
Although digital photography is increasing, silver-based photography will retain its pre-eminence due to its superior definition and low cost. An estimated 230 million troy ounces of silver were used worldwide in 2000 for photographic purpose.
William Conrad Roentgen's discovery of x-rays in 1895, led to his discovery that they activate silver halide crystals. This revolutionized medical diagnosis. Radiographic use of silver worldwide consumed 78 million troy ounces in 2000. Medical uses aside, X-ray inspection is essential to ensure integrity of metallic castings from small truck axles to the huge aircraft-carrier steam valves used to propel airplanes from a flight deck. Of all the inspection techniques, it is the image on a silver halide x-ray film that provides the clearest indication of flaws deep within metallic components.
Batteries
The silver battery provides the higher voltages and long life required for quartz watches. In fact, over 1.4 billion silver oxide-zinc batteries are supplied to world markets yearly, including miniature sized batteries for watches, cameras, and small electronic devices and larger batteries for tools and commercial portable TV cameras.
Coins
23,851,873 ounces of silver were issued in the form of silver coins in 1995.
Bearings
Steel bearings electroplated with high purity silver have greater fatigue strength and load carrying
capacity than any other type and are hence used in various hi-tech and heavy-duty applications.
Jewelry and Silverware
Silver possesses working qualities similar to gold, but enjoys greater reflectivity and can achieve the most brilliant polish of any metal. To make it durable for jewelry, however, pure silver (999 fineness) is often alloyed with small quantities of copper. In many countries, Sterling Silver (92.5% silver, 7.5% copper) is the standard for silverware and has been since the 14th century.
The copper toughens the silver and makes it possible to use sterling silver for cutlery, bowls and other decorative items such as picture frames.
Brazing and Soldering
In 2000, 38 million ounces of silver were used for brazing and soldering in industrial and electronics applications.
Catalysts
A worldwide inventory of some 23 million ounces of silver are in daily use for catalytic
oxidation in chemical reactors, principally in the plastic industry.
Electroplating
The ease of electrodeposition of silver accounts for silver's widespread use in coating. The plating thickness of some items, such as fuse caps, is less than one micron. Coatings of two to seven microns are normal for heavy-duty electrical equipment.
Solar Energy
Silver paste is used in 90 percent of all crystalline silicon photovoltaic cells, which are the most
common solar cell. All silicon cells used in space to power satellites use silver in the form of evaporated metal to make the electrical contact.
Technical Considerations
The silver price is completing its turn-around and the first hurdle will be the resistance zone around $5. Weeks.
With a little help from the silver price, this share could really take off once it breaks the resistance
around $3.
Our recommendation: Buy!
Peter Zihlmann www.pzim.com, or email to forex@pzim.com
August 25, 2003
Disclosure: The author has not been paid to write this article, nor has he
received any other inducement to do so. The author is a shareholder in the
company and will benefit from any increase in the company's share price.
Disclaimer: The author's objective in writing this article is to invoke an
interest on the part of potential investors in this stock to the point where
they are encouraged to conduct their own further diligent research. Neither
the information, nor the opinions expressed should be construed as a
solicitation to buy or sell this stock. Investors are recommended to obtain
the advice of a qualified investment advisor before entering into any transactions
in the stock.
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