Coeur basks in record Q1 profits

Vancouver – A 31% increase in silver production helped Coeur d’Alene Mines (CDM-T, CDE-N) post net earnings of US$14.3 million, or a nickel a share, for the first quarter of 2006, an all-time quarterly earnings record for the Idaho-based company.

Coeur reported a net loss of US$1.1 million in the first quarter of 2005. Other factors that contributed to the 2006 record quarter were higher gold and silver prices, an 8% decrease in corporate overhead expenses, and trimming cash costs of production to below US$4 per oz.

Coeur produced 2.84 million oz. silver in the latest quarter, compared with 2.17 million oz. a year earlier. Gold production was down slightly at 25,581 oz. from 29,331 oz. a year earlier. The company operates or has interests in producing mines in North and South America and Australia and New Zealand. Cash costs for silver from all mines averaged US$3.94 per oz. (US$6.37 total costs), compared with cash costs of US$4.13 per oz. (US$5.95 total costs) a year earlier.

Coeur ended the quarter with US$374.3 million in cash and short-term investments, and spent US$27.8 million on capital investments during the period, mostly at its Kensington gold mine in the Alaskan Panhandle. The company has obtained all necessary permits to construct a mine and mill at Kensington. The underground mine is expected to begin producing gold at an annual rate of 100,000 oz., at estimated cash costs of US$250 per oz., starting in late 2007.

The US$135-milllion San Bartolome mine in Bolivia’s Potosi district is also expected to begin producing silver in late 2007, at an annual rate of about 8 million oz. Cash costs are projected to average US$3.50 per oz. over the mine life. Coeur spent US$1.9 million in the latest quarter on access roads and other infrastructure, and plans to resume full-scale construction this summer, pending clarification of the government’s position on nationalization of natural resources.

In early May, newly elected President Evo Morales nationalized Bolivia’s oil and gas industry as a first step to exerting greater state control over natural resources. Since then, Morales and other government leaders have stated that they do not intend to nationalize the mining sector to the same extent, but may make changes to the mining laws, which could include higher taxes and other measures to ensure that foreign companies do not profit “unfairly” from the nation’s natural resources.

Coeur notes that the state-owned mining company Corporacion Minera Bolivia (Comibol) is already the underlying owner of the San Bartolome project. Coeur’s rights to the project are through leases or sub-leases originally emanating from Comibol.