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Coeur metal production up, stock prices down in 1st Q

Kensington expected to increase yield as year goes forward By RUSSELL STIGALL

Posted: May 17, 2012 - 12:10am
The Kensington Mine mill site and portal sit at the base of Lions Head Mountain in this 2007 file photo. Berners Bay can be seen in the background.
The Kensington Mine mill site and portal sit at the base of Lions Head Mountain in this 2007 file photo. Berners Bay can be seen in the background.

Coeur d'Alene Mines Corp. recently released its first quarter results. Coeur, owner of the Kensington Mine, expects it will see increased production in 2012.

Mitchell Krebs, president and CEO, called his company’s first quarter of 2012 “solid” with a strong start to the year by its mines in Palmarejo, Mexico and San Bartolomè, Bolivia.

Kensington spent the quarter upgrading its facility with a subsequent planned reduction in production.

“As planned, our Kensington Mine in Alaska spent the majority of the quarter positioning for a return to sustainable production,” Krebs said in an earnings call on May 7. "We are particularly pleased that full production has resumed two months ahead of schedule at Kensington."

Quiet for five years, Coeur’s mine at Rochester, Nev. completed a full quarter of active mining in the first quarter.

Krebs said he expects improved production at Kensington and Rochester and “more of the same from Palmarejo and San Bartolomè.”

Krebs said Coeur is expected to end the year with greater reserves due to exploration at Kensington Mine and its mine in Mexico. Coeur d'Alene Mines Corp. is listed on the New York Stock Exchange as CDE.

Coeur’s May 16 stock price of $16.55 is about 10 cents above its year low and almost half of its year high of $30.99. It was as high as $30.22 on Feb. 28.

Krebs said the drop in stock price does not reflect current gold and silver prices.

“We are frustrated that all precious metals equities, including ours, have seen a significant short-term correction despite the fact that silver and gold prices remain at very healthy levels,” Krebs said. The fundamentals on metals prices did not change, he said. “The U.S. fiscal outlook isn’t improving, Europe’s issues are not going away by any means, and loose monetary policies around the globe are likely to remain in place,” Krebs said.

Coeur produced 4.9 million ounces of silver in the first three months of 2012, a 19 percent increase over first quarter of the previous year, according to a Coeur press release. Silver made up 68 percent of the company’s total metal sales.

The company’s six mines produced 43,901 ounces of gold over the same time frame. Production resulted in $204.6 million in sales, 3 percent higher than the first quarter of 2011.

Silver’s average realized price was $32.61 per ounce, a four percent increase over 2011’s first quarter. At $1,702 per ounce, gold’s realized price increased 24 percent.

The mining company was able to reduce general and administrative costs by 38 percent.

Capital expenditures at Kensington totaled $10.9 million out of a company-wide $31.6 million during the first quarter. Kensington’s expenditures included construction of the paste backfill plant, surface construction projects and underground development.

With its new infrastructure Kensington's production is expected to increase throughout the rest of the year. The company expects costs to decline.

First quarter exploration at Kensington totaled nearly 10,000 feet of core drilling. Exploration focused on the Raven vein, west of the Kensington ore body.

Drilling recommenced on the new Kensington South target.

To further define the zone expected to form the bulk of mining for the next three years, Kensington drilled 20,377 feet of exploration in the first quarter.

Kensington's cash operating costs are expected to average approximately $1,150-$1,250 per ounce of gold for the full year.

Kensington is expected to produce 82,600-86,500 ounces of gold at an operating cost of between $1,150 and $1,250 per ounce.

• Contact reporter Russell Stigall at 523-2276 or at russell.stigall@juneauempire.com.

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