COEUR D'ALENE MINES CORP. (NYSE:CDE/TSX:CDM):
FOLLOW-UP N° 5/October 7, 2005
Home Page of Coeur
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THE WORLD'S LARGEST PRIMARY SILVER PRODUCER
Business Summary
Coeur d' Alene Mines Corporation is the world's largest primary silver producer and a growing, low-cost gold producer. In 2004, the Company produced 14.1 million ounces of silver and 129,000 ounces of gold at a cash operating cost of approximately $3.65 per ounce of silver.
- Coeur has two of the largest silver mines in the U.S.;
- two expanding low-cost mines in southern Chile and Argentina; and
- two advanced development projects, in Bolivia and Alaska. Coeur also owns large land positions around its two South American mines, where major exploration is ongoing in 2005.
- The Company has no silver or gold production hedged.
Internal growth projects already in place have the potential of increasing silver production by 56% over 2004 levels, and increasing gold production by 77%, by as soon as 2006. At the beginning of 2004, silver reserves totaled 196 million ounces, an increase of 12% from the previous year, and gold reserves of 1.4 million ounces.
Properties
SILVER VALLEY - DEVELOPMENT FOR FUTURE PRODUCTION GROWTH
In 2004, Silver Valley advanced its Long-Range Development Plan designed to increase future production levels and lead to reduced operating costs. During the year, the mine produced 3.5 million ounces of silver at an average cash cost of $5.46 per ounce. Exploration and development work discovered and defined over three (3) million new silver ounces to mineral reserves and mineral resources.
Coeur's Silver Valley operations encompass the Coeur and Galena mines and the Caladay exploration property, which are at the very heart of the Coeur d'Alene mining district, one of the richest silver mining regions in the world. Infrastructure is well in place at these properties, including three shafts, which can easily facilitate the expected future increases in production levels and expand to new areas as needed.
Coeur is a leader in the new growth in primary production of this essential metal. The internal growth profile is unparalleled, with both production and reserve growth. Coeur also holds some of the best silver assets in the world at the newer operating properties and extensive, highly-prospective land packages around those mines, demonstrated by the most successful exploration year in our history, 2004.
The success of the financial plan resulted in a year-end cash position of $322 million and zero net debt, providing Coeur with its strongest balance sheet in over a decade; the financial strength to fund the growth projects; and the flexibility to look for other opportunities to expand company production, reserves and cash flow.
ROCHESTER - THE WORLD'S 7TH LARGEST PRIMARY SILVER MINE
Rochester had an excellent year in gold production, producing 69,456 ounces in 2004, a 33% increase from the previous year. Silver production was strong also, a total of 5.7 million ounces, which was comparable to the previous year. Cash costs were lowered by 17% in the year compared to 2003, to $3.88 per ounce of silver, due to the higher gold production levels.
This higher gold output was the result of higher grade gold ores put on the pad during the first half of 2004. These ores are expected to continue contributing to higher gold production during 2005, an expected total of 74,000 ounces, which would be one of the highest gold producing years in the mine's 17-year life.
CERRO BAYO (CHILE) / MARTHA (ARGENTINA)- LEADERS IN LOW-COST SILVER
Cerro Bayo and Martha continue to lead Coeur's low-cost silver reserve and production growth.
The two mines, which combine their ores for processing at Cerro Bayo, remain among the lowest cost silver mines in the world - with cash costs of just $2.07 per ounce of silver last year. Production totaled 4.9 million ounces of silver and 60,000 ounces of gold.
The ongoing development at Cerro Bayo provided production in 2004 from five different vein systems. Mining at Martha included ores from the newly-developed R-4 Deep and Martha Deep zones.
ENDEAVOR MINE (AUSTRALIA)
In April, 2005, Coeur acquired the entire estimated silver reserves and production of the Endeavor mine in Australia for US$38.5 million.
The Endeavor mine, which is owned and operated by CBH Resources Ltd. of Australia, produces approximately 1.3 million silver ounces per year. Total proven and probable silver reserves measure 24.0 million ounces. Under the terms of the agreement, Coeur is entitled to receive a maximum of 17.7 million payable ounces from the current contained resource at the Endeavor mine.
KENSINGTON - LEADING COEUR'S GROWTH IN GOLD
Coeur's next leap in gold production is Kensington in Alaska, where projected annual production levels of 100,000 ounces represent a 77% increase over 2004 levels. Current proven and probable reserves at the property, located 45 miles north of Juneau, measure 1.1 million ounces.
In 2005, Coeur will embark on a drilling program to convert 300,000 to 400,000 ounces of gold currently reported as mineral resources to reserves, which would significantly increase the initial mine life from the current level of ten years. This involves additional in-fill drilling to delineate higher-grade sections of the deposit that might be mined in the earlier years of the operation. This 2005 program is expected to cost approximately $2.6 million.
SAN BARTOLOME - LEADING COEUR'S NEXT GENERATION IN SILVER
Leading Coeur's new growth in silver is San Bartolome, the largest new primary silver mine to be built in the Americas in decades. With construction underway in 2005, this major Bolivian silver mine is scheduled for annualized production of more than 8 million ounces of silver commencing in 2006. This represents a 56% increase in Company-wide silver production from 2004.
Construction of the open pit milling operation and processing facility is expected to cost approximately $135 million. By 2006, the new facility is expected to produce at the annual rate of eight (8) million ounces of silver during the first five years of production. Cash operating costs are anticipated at $3.50 per ounce, which at recent market prices would generate significant cash flow for the Company.
Recent News: Coeur Acquires Silver at Broken Hill Mine From Perilya LTD.
Accretive Transaction Expected to Boost Company's Annual Silver Production by 17%
- Adds average annual silver production of 2.3 million ounces
- Offers cash production cost of approximately US$2.75 per ounce
- Provides proven and probable reserves of 15 million ounces
- Acquisition price of US$36 million
- Boosts Coeur's annual silver production in Australia to 3.6 million ounces
Continues Coeur's transformation to lower-cost asset base
Fundamental Considerations
Technical Considerations
Both gold and silver are in the process of surging above multi-year resistance level. While it may take time to leave these levels behind, we remain confident about the eventual outcome.
No signs yet that gold has reached its peak.
With an average volume exceeding three million shares, this share price will move when the big institutions start buying as they did in 2003.
Peter Zihlmann
www.pzim.com
www.timeless-gold.com
investment@pzim.com
forex@pzim.com
October 7, 2005
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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