COEUR D'ALENE, Idaho, Nov. 13, 1998 (PRIMEZONE) -- Coeur d'Alene Mines Corp. (NYSE: CDE) reported improved financial results with a net loss of approximately $21,000 in the third quarter ended September 30, 1998, compared to a net loss of $6.3 million in the year-earlier period. After dividends to preferred shareholders, the loss attributable to common shareholders was $2.7 million for the third quarter of 1998, or $0.12 per basic and diluted share, compared to $8.9 million, or $0.41 per basic and diluted share, for the year-earlier period. Moreover, Coeur achieved the improved performance despite a 23% decline in the average market price of gold. The Company recorded an extraordinary gain of approximately $6.3 million in the third quarter of 1998, net of taxes, on the reduction in its indebtedness. The sale of concentrates and doré totaled $23.9 million in the third quarter of 1998, compared to $38.6 million for the year-earlier period. During the three months ended September 30, 1998, gross profit was $486,000 compared to a gross loss of $2.1 million in the similar period in 1997.
Silver and gold production in the third quarter of 1998 totaled 2,664,307 and 41,342 ounces respectively. The average silver price received increased to $5.18 per ounce in the third quarter of 1998, compared to $4.57 per ounce in the year-earlier period. The average gold price received was $300.87 per ounce in the third quarter of 1998, compared to $333.41 per ounce in the year-earlier period.
"The third quarter's improved performance is attributable to Coeur's uncompromising commitment to positive cash flow in this gold price environment and a testament to the excellent team of mining professionals within the Coeur organization," said Dennis E. Wheeler, chairman, president, and chief executive officer. "During the third quarter of 1998 we reduced annual interest paid by $1.9 million while maintaining more than $154 million in cash and short-term investments. Our strong cash position supports our long-term goals of significantly increasing precious metal production levels and substantially adding to shareholder value."
First Nine Months of 1998 -------------------------
For the nine months ended September 30, 1998, the net loss was $63.1 million, reflecting a previously announced $54.5 milion non-recurring charge in the first quarter of 1998 related to a write-down of the Company's investment in its Petorca property. By comparison, the net loss was $8.3 million in the first nine months of 1997. After dividends to preferred shareholders, the loss attributable to common shareholders was $71.0 million in the first nine months of 1998, or $3.24 per basic and diluted share, compared to $16.2 million, or $0.74 per basic and diluted share, for the year-earlier period. The sale of concentrates and doré was $77.3 million in the first nine months of 1998, compared to $96.8 million in the year-earlier period. The gross profit was $4.2 million in the first nine months of 1998, compared to a gross loss of $6.5 million in the similar period of 1997.
Silver and gold production was 7,752,180 and 162,038 ounces respectively in the first nine months of 1998. The average silver price received increased to $5.76 per ounce in the first nine months of 1998, compared to $4.75 per ounce in the year-earlier period. The average gold price received declined to $314.87 per ounce in the first nine months of 1998, compared to $343.87 per ounce in the year-earlier period.
Operational Highlights ----------------------
Rochester (Nevada)
Although Rochester experienced record precipitation during the nine months ended September 30, 1998, the Company anticipates that it will meet planned 1998 production of 6.7 million ounces of silver and 77,000 ounces of gold. During the three months ended September 30, 1998, the Company produced 19,295 and 1,814,459 gold and silver ounces, respectively, at a cash cost of US$3.98 per silver equivalent ounce. A new ore reserve study reduces life of mine cash cost by an estimated $0.46 per silver ounce.
During the third quarter of 1998, the Company announced that it was conducting a planned optimization study at Rochester consisting of deep-drilling and metallurgical testing programs designed to add reserves and extend the present eight-year mine life. The Company is continuing optimization programs designed to further decrease cash costs and increase metal recoveries.
Silver Valley Resources (Idaho)
During the third quarter of 1998, the planned transition from the Coeur mine to the Galena mine was completed. As expected, the Galena performed well with the Company's share of production totaling 441,988 silver ounces at a cash cost of $3.94 per silver equivalent ounce for the three months ending September 30, 1998. For the nine months ended September 30, 1998, Silver Valley Resources produced 1,337,543 silver ounces compared to 1,296,328 silver ounces for year-earlier period, a 3.2% increase in production. Also during the third quarter of 1998, the Joint Venture negotiated placement of concentrates with three new suppliers of smelting services, resulting in additional inventories of concentrate available to be shipped during the fourth quarter of 1998.
Yilgarn Star (Australia)
During the third quarter of 1998, Coeur's share of production from the Yilgarn Star operation was 7,544 ounces of gold at a cash cost of US$232 per ounce. The Company expects that its share of gold production at Yilgarn Star will be approximately 37,800 gold ounces for 1998. Currently, the joint venture is conducting a systematic exploration program in the highly prospective tenements and anticipates that the program will increase short-term and long-term reserves near the Yilgarn Star mine, and elsewhere in the region. The mine operator has stated it intends to achieve a minimum fifteen-year mine life.
Petorca (El Bronce) (Chile)
The Company has withdrawn its previously planned closure of the Petorca mine based upon substantial operating improvements and the discovery of additional proven and probable reserves. During the third quarter of 1998, the Company commenced an improved mining program focused on an uncompromising objective of positive cash flow. Petorca achieved this initiative with production during the third quarter totaling 7,060 and 10,087 gold and silver ounces respectively at a cash/full cost of US$267 per gold equivalent ounce. As a result of writing down Petorca in the first quarter of 1998, the cash costs of the operation reflect complete full costs and encompass all development and capital expenditures. The Company expects that the fourth quarter of 1998 will continue to enjoy similar operating improvements. Based on proven and probable reserves, the company estimates that operations should continue for at least the next twelve months with similar production and operating costs. Additional resources, as well as recent exploration indications, exhibit strong potential for an extended mine life beyond the present twelve month period.
Fachinal (Chile)
During the first nine months of 1998, ramp development designed to improve access to the lower end of the Juncos vein resulted in lower-than-budgeted production at Fachinal. During the three months ended September 30, 1998 the Fachinal mine produced 7,443 and 397,773 gold and silver ounces respectively at a cash cost of US$352.96 per gold equivalent ounce. The company remains committed to improving operating results and expects significant improvement in the fourth quarter of 1998 and into 1999.
Pursuant to our objective of achieving positive cash flow from the Fachinal operation, during the third quarter of 1998 the Company identified additional reserves in and around the open pit and in the vicinity of Guanaco. During the fourth quarter of 1998, Fachinal reduced headcount by approximately 50%, as a first major step in implementing an aggressive optimization plan.
Kensington (Alaska)
During the third and into the fourth quarter of 1998, the Company continued the planned optimization study and development program designed to increase ore reserves and to reduce capital and operating costs. As a result of the optimization study performed by independent consultants, the project's operating cash cost is estimated at below $195 per ounce with lower than originally expected capital costs currently estimated to be $192 million. The Company has initiated its planned drilling program, which to date has added an estimated additional 400,000 ounces of unaudited resources. Achieving those cost levels is dependent on optimizing the mine plan and receiving additional permits.
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This document contains numerous forward-looking statements relating to the Company's silver and gold mining business. The United States Private Securities Litigation Reform Act of 1955 provides a "safe harbor" for certain forward-looking statements. Operating, exploration and financial data, and other statements in this document are based on information the company believes reasonable, but involve significant uncertainties as to future gold and silver prices, costs, ore grades, estimation of gold and silver reserves, mining and processing conditions, changes that could result from the Company's future acquisition of new mining properties or businesses, the risks and hazards inherent in the mining business (including environmental hazards, industrial accidents, weather or geologically related conditions), regulatory and permitting matters, and risks inherent in the ownership and operation of, or investment in, mining properties or businesses in foreign countries. Actual results and timetables could vary significantly from the estimates presented. Readers are cautioned not to put undue reliance on forward-looking statements. The Company disclaims any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.
COEUR D'ALENE MINES CORPORATION
(Unaudited)
(In thousands except
per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
-------- -------- ------- --------
ROCHESTER MINE
Gold ozs. 19,295 27,359 64,942 65,398
Silver ozs. 1,814,459 1,811,415 5,055,676 5,023,757
Cash Costs per eq. oz./silver $3.98 $3.49 $4.21 $3.74
Full Costs per eq. oz./silver $4.68 $4.04 $4.82 $4.34
GALENA MINE
Silver ozs. 441,988 370,420 1,206,910 370,420
Cash Costs per oz./silver $3.94 $3.58 $4.26 $4.79
Full Costs per oz./silver $4.97 $4.64 $5.31 $6.10
COEUR MINE
Silver ozs. N/A 164,697 130,633 925,908
Cash Costs per oz./silver N/A $3.89 $5.34 $2.79
Full Costs per oz./silver N/A $4.89 $6.37 $3.72
YILGARN STAR MINE
Gold ozs. 7,544 9,131 31,289 26,192
Cash Costs per oz./gold $232.48 $300.32 $224.75 $259.78
Full Costs per oz./gold $422.36 $475.28 $417.10 $409.22
FACHINAL MINE
Gold ozs. 7,443 6,763 21,247 23,417
Silver ozs. 397,773 487,256 1,255,687 1,581,125
Cash Costs per eq. oz./gold $352.96 $389.81 $328.50 $350.21
Full Costs per eq. oz./gold $542.30 $593.07 $523.44 $529.19
EL BRONCE MINE
Gold ozs. 7,060 12,816 28,702 36,398
Silver ozs. 10,087 26,494 53,738 73,803
Cash Costs per oz./gold $267.37 $314.74 $371.12 $335.58
Full Costs per oz./gold $267.37 $376.41 $428.97 $397.57
GOLDEN CROSS MINE
Gold ozs. N/A 23,123 15,858 61,804
Silver ozs. N/A 72,795 49,536 216,919
Cash Costs per oz./gold N/A $206.70 $210.51 $247.09
Full Costs per oz./gold N/A $247.23 $210.51 $292.65
CONSOLIDATED TOTALS
Gold ozs. 41,342 79,192 162,038 213,209
Silver ozs. 2,664,307 2,933,077 7,752,180 8,191,932
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
1998 1997
-------- --------
ASSETS (In Thousands)
CURRENT ASSETS
Cash and cash equivalents $140,959 $114,204
Short-term investments 13,590 98,437
Receivables 9,002 11,503
Inventories 44,334 35,927
-------- --------
TOTAL CURRENT ASSETS 207,885 260,071
PROPERTY, PLANT, AND EQUIPMENT
Property, plant and equipment 105,194 119,808
Less accumulated depreciation (55,649) (58,097)
-------- --------
49,545 61,711
MINING PROPERTIES
Operational mining properties 128,104 169,969
Less accumulated depletion (59,080) (61,477)
-------- --------
69,024 108,492
Developmental properties 147,389 134,236
-------- --------
216,413 242,728
OTHER ASSETS
Investment in unconsolidated subsidiaries 68,666 76,010
Notes receivable 1,557 8,498
Debt issuance costs, net of accumulated
Amortization 7,477 8,809
Other 2,737 875
-------- --------
80,437 94,192
-------- --------
$554,280 $658,702
======== ========
CONSOLIDATED BALANCE SHEETS
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
(Unaudited)
September 30, December 31,
1998 1997
-------- ---------
(In Thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,883 $ 5,983
Accrued liabilities 12,355 6,345
Accrued interest payable 5,669 6,631
Accrued salaries and wages 4,235 7,553
Bank loans 4,406
Current portion of remediation costs 3,745 7,300
Current portion of obligations under
capital leases 302 243
TOTAL CURRENT LIABILITIES 30,189 38,461
LONG-TERM LIABILITIES
6% subordinated convertible debentures due 2002 46,012 49,840
6 3/8% subordinated convertible debentures due 2004 95,000 95,000
7 1/4% subordinated convertible debentures due 2005 120,707 143,750
Other long-term liabilities 11,542 8,403
Long-term borrowings 1,159
TOTAL LONG-TERM LIABILITIES 273,261 298,152
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Mandatory Adjustable Redeemable Convertible
Securities (MARCS), par value $1.00 per
share,(a class of preferred stock) -
authorized 7,500,000 shares, 7,077,833
issued and outstanding 7,078 7,078
Common Stock, par value $1.00 per share-
authorized 60,000,000 shares, issued 22,957,835
and 22,949,779 shares in 1998 and 1997
(including 1,059,211 shares held in treasury) 22,958 22,950
Capital surplus 381,813 389,648
Accumulated deficit (147,689) (84,542)
Other comprehensive accumulated income:
Unrealized gains on short-term investments (140) 145
Repurchased and nonvested shares (13,190) (13,190)
--------- --------
250,830 322,089
--------- --------
$554,280 $658,702
========= ========
CONSOLIDATED STATEMENTS OF OPERATIONS
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
Three Months Ended September 30, 1998 and 1997
Nine Months Ended September 30, 1998 and 1997
(Unaudited)
3 MONTHS ENDED 9 MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1998 1997 1998 1997
--------- --------- -------- -------
(In thousands except for per share data)
INCOME
Sale of concentrates and dore' $ 23,890 $ 38,628 $ 77,312 $ 96,757
Less cost of mine operations 23,404 40,684 73,078 103,258
-------- -------- -------- -------
Gross Profit (Loss) 486 (2,056) 4,234 (6,501)
OTHER INCOME
Interest and other 1,966 2,843 7,862 20,427
--------- -------- -------- -------
Total Income 2,452 787 12,096 13,926
EXPENSES
Administration and corporate 3,259 2,688 9,265 9,466
Interest 3,219 1,982 10,687 6,330
Mining exploration 2,261 2,385 6,633 6,397
Write down of mining
Properties 54,506
Total Expenses 8,739 7,055 81,091 22,193
------- -------- -------- -------
NET LOSS FROM CONTINUING
OPERATIONS BEFORE TAXES (6,287) (6,268) (68,995) (8,267)
Income tax (benefit) provision 79 (2) 497 (2)
-------- --------- --------- --------
NET LOSS BEFORE EXTRAORDINARY ITEM $(6,366) $ (6,270) $(69,492) $ (8,265)
Early retirement of debt,
net of taxes 6,345 6,345
NET LOSS $ (21) $ (6,270) $(63,147) $ (8,265)
------- -------- --------- ---------
Unrealized holding gain (loss)
on securities (303) (689) (285) (935)
COMPREHENSIVE INCOME (LOSS) $ (324) $ (6,959) $(63,432) $ (9,200)
======= ========= ========= =========
NET LOSS ATTRIBUTABLE TO
COMMON SHAREHOLDERS
Net loss (21) (6,270) (63,147) (8,265)
Preferred stock dividends $ (2,633) $ (2,633) $ (7,899) $ (7,899)
--------- --------- --------- ---------
NET LOSS ATTRIBUTABLE TO
COMMON SHAREHOLDERS $ (2,654) $ (8,903) $(71,046) $(16,164)
========= ========= ========= =========
BASIC AND DILUTED LOSS PER SHARE DATA
Weighted average number
of shares of Common Stock
and equivalents used in
calculation 21,899 21,891 21,899 21,889
======== ======== ======== ========
Income (loss) before extraordinary
item (.41) (.41) (3.53) (.74)
Extraordinary item: Early
retirement of debt, net of taxes .29 .29
-------- -------- -------- ---------
Net Loss per share attributable
to Common Shareholders $ (.12) $ (.41) $ (3.24) $ (.74)
======== ======== ========= =========
CONSOLIDATED STATEMENTS OF CASH FLOWS
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
Nine months ended September 30, 1998 and 1997
(Unaudited)
1998 1997
------- --------
(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(63,147) $ (8,265)
Add noncash items:
Depreciation, depletion and amortization 23,472 24,614
(Gain) on early retirement of debt (6,345)
Undistributed losses of unconsolidated subsidiaries 1,245
(Gain) loss on disposition of assets 338 (170)
Write down of mining properties 54,506
Other changes 775 (439)
------- --------
CASH PROVIDED BY OPERATING ACTIVITIES BEFORE
WORKING CAPITAL CHANGES 10,844 15,740
Change in working capital:
Receivables 719 3,071
Inventories (10,835) (485)
Accounts payable and accrued liabilities (10,166) (6,781)
Interest payable (963) (1,941)
-------- --------
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (10,401) 9,604
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in unconsolidated affiliates (4,591) (14,643)
Proceeds from sale of assets 8,519
Purchase of property, plant, and equipment (2,908) (1,678)
Purchase of short-term investments and
marketable securities (17,203) (78,582)
Proceeds from sales of short-term investments and
marketable securities 102,171 123,263
Expenditures on developmental properties (13,704) (9,849)
Expenditures on operational mining properties (2,554) (12,529)
Other assets (788) (1,232)
---------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 68,942 4,750
CASH FLOWS FROM FINANCING ACTIVITIES
Retirement of long-term debt (23,179) (4,807)
Payment of cash dividends (7,899) (7,899)
Other (708) (914)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (31,786) (13,620)
INCREASE IN CASH AND CASH EQUIVALENTS 26,755 734
Cash and cash equivalents at beginning of year 114,204 43,455
--------- --------
CASH AND CASH EQUIVALENTS AT
SEPTEMBER 30, 1998 AND 1997 $ 140,959 $ 44,189
========= ========
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