Silver major
Both studies, due for completion next quarter, are said to contain economic projections that are “significantly improved” from previous estimates. The company now expects both properties will be contributing to its silver and gold output in 2006, assuming a positive production decision is reached in each case.
San Bartolome is on the flanks of the Cerro Rico Mountains, near Bolivia’s historic mining centre of Potosi, which has produced some 2 billion oz. silver since its discovery in 1545.
A prefeasibility study of San Bartolome in 2000 concluded that a 7,000-to-7,500-ton-per-day mine could be built at a capital cost of US$80 million. More recent studies have shown that San Bartolome could ramp up to 6 million oz. silver per year over 14 years, with an average cash operating cost of about US$2.50 per oz.
At June 2003, reserves stood at 123 million oz. silver contained in 35.3 million tons grading 3.48 oz. silver per ton plus some byproduct tin. The silver is found in gravel deposits that can be hauled directly to processing facilities near Potosi.
At Kensington, 45 miles north of Juneau, Coeur d’Alene estimates production could average 100,000 oz. gold per year at a cash operating cost of US$195 per oz.
Capital costs would be in the neighbourhood of US$75 million, and the mine life is pegged at 10 years, though successful exploration could easily extend that.
(An earlier development plan had envisaged a 175,000 oz.-per-year mine with significantly higher operating and capital costs.)
In December 2002, reserves at Kensington were estimated to be 1.8 million oz. gold contained in 10.9 million proven tons grading 0.16 oz. gold, plus 12 million probable tons of 0.12 oz. gold. About 1.4 million oz. gold were estimated to be in the resource category.
Coeur d’Alene anticipates receiving all necessary permits for Kensington during the second quarter of 2004, several months later than expected.
In mid-January, Coeur d’Alene completed a US$180-million offering of 1.25% convertible senior notes due in 2024, with funds likely reserved for development of San Bartolome and Kensington.
Coeur d’Alene is the world’s largest primary silver producer, with 2003 production expected to reach 14.6 million oz. silver plus 112,000 oz. gold. The company has major assets in its home state Idaho as well as in Nevada, Alaska, Argentina, Chile and Bolivia.
Coeur’s flagship Rochester mine, a silver and gold producer in northwestern Nevada, recently produced its 100-millionth ounce of silver. Opened in 1986 and ranking today as the world’s seventh-largest silver mine, Rochester is an open-pit, heap-leach operation that yielded 6.4 million oz. silver and 71,905 oz. gold in 2002 a total cost of US$3.75 per silver-equivalent ounce. Recovery rates from the heaps are 62% for silver and 93% for gold with a leach cycle of seven years.
In November 2003, Coeur d’Alene signed a preliminary agreement to buy the assets of Mexican silver company Minera Real de Cosala, which has the La Verde underground silver mine and other concessions about 100 miles north of Mazatlan in Sinaloa state.
Coeur d’Alene says small-scale underground mining has taken place at La Verde for more than 20 years, with total production exceeding 30 million oz. silver and 40 million lbs. copper.
Coeur d’Alene has been conducting confirmation sampling and drilling, and will try to determine the viability of developing a larger-scale, low-cost operation.
Coeur d’Alene will make annual escalating payments to Minera Real de Cosala totalling US$10 million over five years, and has an option to buy out the asset in one go.
The company also intends to explore silver-mineralized structures that have been found in the region around the mine.
Guiding Coeur’s exploration efforts worldwide will be Donald Birak, the company’s new senior vice president of exploration. He was most recently AngloGold North America’s VP of exploration.
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