Coeur d'Alene Mines production jumps to record

COEUR d'ALENE - With the onset of production at its Kensington gold mine in Alaska, Coeur d'Alene Mines Corp. on Monday reported record quarterly sales and operating cash flow in the second quarter of 2010.

Coeur (NYSE:CDE) (TSX:CDM) (ASX:CXC) said the records were driven by its two new, long-life gold and silver mines in Mexico and Bolivia. The company's Kensington gold mine in Alaska began processing ore in the second quarter ahead of schedule and is expected to drive a 135 percent increase in companywide gold production this year over last year's levels.

Coeur reported operating income of $1.9 million during the quarter compared to an $8.8 million operating loss during last year's second quarter. During the first six months of 2010, the company reported operating income of $1.0 million versus an $8.5 million operating loss during the first six months of 2009.

For the second quarter, the company reported a net loss of $50.7 million, or 57 cents per share. During the first six months of 2010, the company reported a net loss of $58.8 million, or 69 cents per share.

Metal sales jumped nearly $33 million, or 49 percent, to a record $101 million, compared to last year's second quarter, aided by strong production and robust metals prices. Operating cash flow increased 116 percent compared to last year's second quarter to a quarterly Company record of $32.5 million, driven by Coeur's Palmarejo and San Bartolome mines, which started operations within the past two years.

"Coeur made significant progress this quarter, and we are pleased to have achieved the highest metal sales and operating cash flow in company history," said Dennis E. Wheeler, chairman, president and chief executive officer of Coeur. "As our third of three new, long-life, precious metals mines comes on-stream, our strategy has us well-positioned to take advantage of the continued strength in precious metals prices. The successful and early start-up of our Kensington gold mine in Alaska, together with Palmarejo and San Bartolome should continue to deliver record growth in metal sales and cash flow for shareholders.

"Companywide, we remain on-track to produce approximately 17.3 million ounces of silver this year with annual gold production increasing over 135 percent to 170,000 ounces."

The company produced 4.2 million ounces of silver and 23,124 ounces of gold compared to 3.9 million ounces of silver and 13,795 ounces of gold during last year's second quarter. Cash operating costs declined to $8.06 per ounce of silver versus $8.57 per ounce during last year's second quarter. Silver production contributed 73 percent of the company's total metal sales during the second quarter compared to 84 percent during the second quarter of 2009.

For the first six months of 2010, metal sales increased nearly $78 million, or approximately 70 percent, to a record $189.3 million. Coeur produced 7.6 million ounces of silver and 48,907 ounces of gold during the first six months of 2010, compared to 7.4 million ounces of silver and 17,586 ounces of gold during last year's first half. Cash operating costs averaged $7.77 per ounce of silver. Silver production contributed 70 percent of the company's total metal sales during the first half of 2010 compared to 87 percent during the first half of 2009.

First half silver production totaled 2.4 million ounces while gold production was 42,527 ounces.

Cash operating costs averaged $10.78 per ounce of silver during the quarter and $7.83 per ounce of silver during the first half of 2010 versus $19.44 per ounce during last year's second quarter and first six months.

In July, silver production increased 50 percent while gold production jumped 58 percent, marking the mine's second highest month of gold production since inception. Cash operating costs during July were 97 cents per silver ounce, dramatically reduced from the second quarter's average cash operating costs of $10.78 per silver ounce. The improvements are a direct result of recently commenced mining of higher-grade underground ore and improved ore blending procedures.

Full-year 2010 production is expected to reach approximately 6.3 million ounces of silver and 109,000 ounces of gold at an average cash operating cost of approximately $3 per silver ounce.

At San Bartolome, Bolivia, higher production and reduced costs were achieved compared to last quarter due to process handling improvements and mining of higher-grade ore. Production increased 79 percent to 1.9 million ounces in the second quarter compared to 1 million ounces produced during the first quarter.

Full-year 2010 silver production estimate increased to about 6.5 million ounces at average cash operating costs of approximately $8 per ounce.

In Rochester, Nev., Coeur reported it is on target to restart active mining activities next year, leading to at least six years of incremental production, averaging 30,000 ounces of gold and 2.5 million ounces of silver annually.