Coeur trims debt and looks to future gold production

It’s shaping into a good year for Coeur d’Alene Mines (CDM-T, CDE-N, CXC-A).

On top of having two new silver mines in production and a third gold mine on the way, the Idaho-based silver miner’s renewed strength in its share price has allowed it to retire a significant amount of debt.

Through privately negotiated deals, Coeur was able to cut debt payments to its convertible bonds by over US$150 million, or 37%.

The company reduced its 1.25% convertible senior notes due in 2024 to 106.7 million from 180 million, and reduced its 3.25% convertible notes due in 2028 to 150.2 million from 230 million.

“This is just one element of our plan to strategically position Coeur for a strong future,” Mitchell Krebs, Coeur’s chief financial officer, said in a statement.

He went on to list reducing non-operating costs, improving working capital and boosting operating cash flow from new mines as other key components to the plan.

One new mine that will figure into the company’s future is the Kensington gold project in Alaska.

On June 22 Coeur announced a key legal victory that paves the way for the development of the mine.

Environmental groups had tried to thwart development of the project but the U.S. Supreme Court affirmed the permit for the tailings facility that was in question.

Coeur says the tailings dam will be the last piece of infrastructure to be built and that the mine will be in production by the second half of 2010.

Kensington is expected to produce 125,000 oz. of gold per year – enough to bolster Coeur’s annual gold production by 135%. The project currently has 5.3 million tonnes in the probable reserve category with an average grade of 8.9 grams gold for 1.4 million ounces of gold.

Kensington is wholly owned by Coeur and is situated 72 km northwest of Juneau.

As for the commodity that the company is most often associated with, silver, 2009 will represent the first full year of production at its San Bartolomé in Bolivia – a project that it calls “the world’s largest pure silver mine.”

In March it also began production at the Palmarejo silver mine in Mexico.

In Toronto on July 2 the company’s shares rose 23¢ to $14.30 on 31,000 shares traded. Coeur has 75.4 million shares outstanding, fully diluted however, the number moves up to 80 million.