Coeur Set to Start Up New Mine inBolivia
By Ripley, Richard
Coeur d’Alene Mines Corp. says it’s in the final stages of startup of a new silver mine at its San Bartolome property in Bolivia after investing $146.8 million through the first quarter to construct the mine and ore-processing facilities there.
The Coeur d’Alene-based company says in its first-quarter earnings report that the property has estimated reserves of 153 million troy ounces of silver and is expected to produce 9 million ounces of the metal a year during an estimated 14-year mine life.
A spokesman for the company couldn’t be reached for comment, but in a statement released by Coeur, Dennis Wheeler, the company’s chairman, president, and CEO says, “This new mine, the largest pure silver operation in the world, is expected to produce 6 million (troy) ounces of silver during the remainder of the year, boosting Coeur’s overall production for 2008 by nearly 40 percent and more than doubling the company’s operating cash flow this year.”
In its earnings statement, Coeur reported net income of $4.7 million, or 1 cent a share, in the first quarter, down from $14 million, or 5 cents a share, in the year-earlier period. The company said its revenues from metal sales in the quarter increased to just under $57.3 million, up from $50.9 million.
Coeur says it remains on track to begin production at another new mine, whichit’s constructing at its Palmarejo silver and gold deposit in Mexican state of Chihuahua near the town of Temoris, during the first quarter next year.
“With expected annual silver production of over 10 million ounces and gold production of 115,000 ounces, this new mine will lead to even greater production and cash-flow increases,” Wheeler says. The project is expected to produce 10 million ounces of silver and 110,000 ounces of gold annually and have an estimated mine life of 10 years, the company says.
Coeur says nearly 450 construction workers are on site at the property, and it’s moving 20,000 tons of earth a day there to get ready for open-pit mining. Excavation work has been completed for the main camp site, and the 358-room camp is expected to be completed in October.
Coeur incurred $15.3 million in capital expenditures and recorded $5.8 million of pre-development expenses on the Palmarejo project during the first quarter, and it expects to spend an additional $209.7 million on the project this year, it says. The company believes that the value of the gold produced there will enable it to produce silver at negative cost.
During the first quarter, the mines Coeur already has in operation delivered strong performances, enabling it to cut its cash cost of producing an ounce of silver by 43 percent to $2.52, from $4.40 in the year-earlier quarter, Coeur says. Coeursays that with the exception of its Rochester Mine, in Nevada, where the company ended mining activities last August but still is processing ore, all of its mines increased production in the quarter.
Coeur also says it has submitted permit applications to regulatory agencies that, if approved, could allow it to start construction next spring on an alternative tailings facility at its Kensington gold property in Alaska, where a lengthy development project was interrupted when the company lost a court ruling on a plan to dispose of tailings in a lake. The Kensington property is on the Lynn Canal 45 miles north-northwest of Juneau.
In other news, Coeur says its cash hoard at the end of the first quarter totaled $298.7 million, almost double what it had last year, and its working capital also had almost doubled, to $300.5 million, primarily because of its sale in March of $230 million in 20-year, 3.25 percent convertible notes.
Copyright Northwest Business Press Inc. May 29, 2008
(c) 2008 Journal of Business; Spokane. Provided by ProQuest Information and Learning. All rights Reserved.