Coeur d’Alene back in the black

Vancouver — Cost-cutting initiatives and increased production pushed Coeur d’Alene Mines (CDM-T, CDE-N) into the black during the latest quarter ended Sept. 30. The company posted net earnings of US$3.5 million, or a penny a share, for its third quarter, compared with a loss of US$18.1 million, or US8 a share, a year earlier.

The improved performance was attributed to an 18% drop in cash production costs, a 23% reduction in general and administrative expenses, higher metal prices, and increased production from newly acquired assets in Australia.

The Idaho-based company produced 3.8 million oz. silver and 39,000 oz. gold in the latest quarter. Cash costs averaged US$3.54 per oz. silver, while total costs rang in at US$4.78 per oz. for the period.

Coeur is the world’s largest silver producer, with projected annual production of about 14 million oz. silver and 130,000 oz. gold for 2005. Cash costs are estimated to average US$4.30 per oz. silver for the full year.

Earlier this fall, Coeur paid US$36 million to acquire a portion of silver reserves and production at the Broken Hill mine in Australia, owned and operated by Australian-listed Perilya (PEM-A).

The Perilya transaction followed a previous US$38.5-million deal with a separate company that allowed Coeur to acquire silver production from the Endeavor mine, also in Australia.

The Australian acquisitions boosted the company’s estimated annual silver production from Australia to 3.6 million oz. Cash costs at the Aussie mines are significantly lower than at the company’s aging mines in Idaho and Nevada. Cash costs at Broken Hill, for example, averaged US$2.75 per oz. in the latest quarter, while cash costs averaged US$8.39 per oz. at the Galena underground mine in Idaho.

Coeur’s lowest-cost mine is Cerro Bayo in Chile, which produced 742,825 oz. silver (plus 16,744 oz. gold) at cash costs of US37 per oz. silver and total costs of US$1.86 per oz. silver.

The company’s largest producer is the Rochester mine in Nevada, which churned out 1.7 million oz. silver (plus 21,436 oz. gold) in the latest quarter. Cash costs were US$3.64 per oz., while total costs reached US$5.07 per oz. silver.

In early 2007, Coeur expects to begin production at its Kensington gold mine in Alaska. The US$105-million mine is designed to produce 100,000 oz. gold annually at cash costs of about US$250 per oz.

Coeur ended the third quarter with US$257.5 million in cash, cash equivalents and short-term investments.