Coeur d’Alene Mines (CDM-T, CDE-N) reports a significant increase to the company’s silver and gold reserves in a feasibility study of its Palmarejo project, 240 km southwest of the city of Chihuahua in northwestern Mexico.
The Palmarejo deposit, part of a 120-sq.-km tenement, adds 62 million proven and probable oz. of silver to Coeur’s company-wide reserves of 216 million oz.
The deposit also contains 750,000 oz. of gold, which gives its pre-existing gold reserves a 50% boost for a total of 2.2 million oz.
The feasibility study projects that a Palmarejo mine currently under construction would increase Coeur’s silver production by 5.1 million oz. in 2009 for a total of 23.6 million oz. and by 7.4 million oz. in 2010 for a total of 25 million oz.
As for gold, Coeur projects a boost of 67,000 oz. and 92,000 oz. to 132,000 oz. and 282,000 oz. in 2009 and 2010 respectively.
If Palmarejo hits the 5.1 million oz. of silver target in 2009, it would account for about 5% of Mexico’s yearly production.
Mexico is the world’s second-largest producer of silver, and churned out 99.2 million oz. of silver in 2007 behind Peru’s 112.3 million oz.
With the increased production Coeur envisions a doubling of operating cash flow in 2009, adding US$116 million to its projected operating cash flow of US$120 million (based on a US$17 per oz. for silver and US$850 per oz. for gold).
Coeur would extract the silver and gold from both open-pit and underground operations.
The deposit slated for underground mining is richer in silver than the open pit portion and accounts for 56% of the proven and probable silver reserves with 3.7 million tonnes grading 295.9 grams silver per tonne and 4.49 grams gold per tonne.
The open-pit portion contains 6.1 million proven and probable tonnes grading 137.9 grams silver and 1.09 grams gold.
Construction on the mine at Palmarejo continues with capital costs estimated to come in at US$235.1 million this year and US$62.5 million in 2009.
Among other developments at Palmarejo, Coeur reports digging 560 metres of underground workings for the north and south portals of the underground mine and that earthworks for a processing plant and a main operation camp are finished.
Coeur also reports that its construction crews have begun to pour concrete for the processing plant, and to build a tailings and environmental control dam.
It also states that open-pit, pre-stripping operations are underway.
In a statement the company’s senior vice-president Donald Birak noted that the Palmarejo deposit is only one of three mineral deposits so far identified on the Palmarejo tenement.
He expects two other silver and gold-bearing structures, Guadalupe and La Patria, to add to the company’s reserves following future drilling.
At Guadalupe Coeur has 710,000 indicated tonnes grading 166 grams silver per tonne and 2.15 grams gold per tonne, and 8 million inferred tonnes grading 136.5 grams silver and 1.34 grams gold.
At La Patria Coeur reports 3.6 million inferred tonnes grading 34.8 grams silver and 1.48 grams gold.
On news of the feasibility study Coeur’s share price slipped US24 to close at US$3.02 on a volume of 14.7 million. It has traded between US$5.18 and US$2.74 over the last 52 weeks and has 550 million shares issued.
At presstime on Tuesday morning, shares traded at US$2.83 and C$2.89.
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