Coeur d’Alene starts Kensington gold mine ahead of schedule

Silver and gold producer Coeur d’Alene Mines (CDM-T, CDE-N, CXC-A) has opened its third precious metals mine in the last three years.

The new Kensington gold mine in Alaska will produce 50,000 oz. gold during the remainder of 2010 and will average roughly 125,000 oz. gold annually over the mine’s initial 12.5 year life based on current reserves of 1.5 million ounces.

Once in full production, cash costs are expected to average about US$490 per oz. over the mine life. The mine will employ nearly 200 workers.

Earlier this week, Coeur signed an agreement with China National Gold Group Corp., China’s largest gold producer, for the purchase and processing of gold concentrates produced at the Kensington mine. According to Coeur d’Alene, the agreement is “the first of its kind” between a state-owned enterprise in China and a U.S. precious metals mine. The contract relates to about half of the concentrates to be produced at Kensington.

China National Gold operates about sixty gold mines across China, which make up more than 20% of the country’s total gold production. The Beijing-based enterprise also and operates a number of smelters and refineries and is the only Chinese gold company to become a member of the World Gold Council.

Apart from Kensington, Coeur d’Alene’s two other new long-life mines are its San Bartolomé silver mine in Bolivia, which began operations in 2008, and the Palmarejo silver/gold mine in Mexico, which started up last year.

The Idaho-headquartered company also owns underground mines in Argentina and one surface mine in Nevada, as well as a non-operating interest in a low-cost mine in Australia. Currently it is exploring for new opportunities in Alaska, Argentina, Chile and Mexico.

In Toronto Coeur d’Alene closed 78¢ or 4.7% higher at $17.43 per share.

Over the last year Coeur d’Alene has traded in a range of $11.78-$25.79 and has 88.04 million shares outstanding.