COEUR D'ALENE, Idaho, April 15, 1999 (PRIMEZONE) -- Coeur d'Alene Mines Corp. (NYSE: CDE) today reported a fourth quarter 1998 net loss of $171.1 million compared with a net loss of $5.8 million in the fourth quarter of 1997. The 1998 fourth quarter loss included non-cash write-downs in the carrying values of the Fachinal mine and Kensington project of $42.9 million and $121.5 million, respectively, necessitated by the low gold price climate. These write-downs were calculated using a $350 long-term gold price. Excluding the write-downs, the Company would have reported a net loss of $6.7 million or $.31 per share. After dividends to preferred shareholders, the loss attributable to common shareholders in 1998's fourth quarter was $173.7 million, or $7.93 per basic and diluted share, compared to $8.5 million, or $.39 per basic and diluted share, for the year earlier period.
For the year ended December 31, 1998, the Company reported a net loss of $234.3 million, or $11.18 per basic and diluted share, compared to a net loss of $14.1 million, or $1.12 per basic and diluted share in 1997. In addition to the $164.4 million non-cash write-down recorded in the fourth quarter, the 1998 year end results include the previously disclosed first quarter write-down of the Petorca mine of $54.5 million.
The non-cash write-down in the carrying values of the Fachinal mine, Petorca mine and Kensington project in 1998 were recorded as a result of generally accepted accounting principles that require the recognition of an asset impairment write-down when the estimated future undiscounted cash flow from the asset is projected to be less than the carrying value. Historically low current gold prices underlie the need to recognize the non-cash write-down for financial reporting purposes.
"1998 was a challenging year in the precious metals industry and for Coeur. Gold prices continued to decline throughout the year and last week briefly touched a seven-month low at $278 per ounce. These deteriorating conditions required us to take decisive action with respect to the carrying values of our gold assets. However, the prospects for silver remain strong as does Coeur's commitment to enhance our position as North America's leading low-cost primary silver producer," said Dennis E. Wheeler, Chairman, President, and Chief Executive Officer. "With these non-cash write-offs behind us and our significant cash balance, we are well positioned to make further progress on our strategic plan to add significantly to our low-cost silver production and reserves."
1998 Highlights
- 1998 production was 10.7 million ounces of silver and 210,000 ounces of gold. - Cash costs at primary silver operations decreased $.08 to $4.15 per ounce in 1998. - Cash costs at primary gold operations decreased $13 to $282 per ounce in 1998. - Cash costs at primary gold operations were $235 per ounce in the fourth quarter of 1998. - As of December 31, 1998, proven and probable reserves were 79.8 million ounces of silver and 2.8 million ounces of gold. - Kensington optimization was completed which decreased the projected cash costs to US$190 per ounce. - Exploration drilling added 400,000 gold ounces to the Kensington resource.
Consolidated Results
Coeur's production of gold and silver contained in concentrates and dore' sold totaled 10.7 million ounces of silver and 209,959 ounces of gold, compared to 11.0 million ounces of silver and 290,962 ounces of gold in 1997. In 1998 total cash costs per ounce, which include third party smelter costs, were $4.15 and $282 at Coeur's primary silver and gold operations, respectively.
Revenue from the sale of concentrates and dore' was $102.5 million in 1998, compared to $131.2 million in 1997. The decline in revenue in 1998 was the result of decreased gold production and lower gold prices, offset by somewhat higher silver prices. During 1998, the average silver price received increased to $5.37 per ounce, compared to $4.89 per ounce in the year-earlier period. The average gold price received declined to $309 per ounce in 1998, compared to $335 per ounce in 1997.
Demonstrating prudent financial management, the Company repurchased approximately $42.1 million principal amount of its outstanding convertible subordinated debentures for a price of $28.5 million. As a result of this repurchase, the Company reduced its annual interest expense by $3.1 million and recorded an extraordinary gain of approximately $12.2 million, net of taxes.
The Company entered into fixed-price gold contracts in the first quarter of 1999. As a result of these contracts, Coeur will sell 10,000 gold ounces a quarter at $349 over the next two years. In addition, as of December 31, 1998, the Company had forward sales for 30,000 ounces of annual gold production at Yilgarn Star through 2003 at a realized U.S. dollar-equivalent price of approximately $371 per ounce.
Operational Highlights
Rochester (Nevada)
The Company produced a record 7.2 million ounces of silver and 88,615 ounces of gold during fiscal 1998. Cash costs declined $.29 to $4.07 per silver equivalent ounce. During the fourth quarter of 1998, the Company produced 23,673 and 2,169,720 ounces of gold and silver, respectively, at a cash cost of US$3.80 per silver equivalent ounce. The decrease in silver equivalent cash costs was even more noteworthy given the weakness in the gold price throughout 1998. This achievement was facilitated by the Company's employee gainsharing program. The Company commenced an aggressive regional exploration program designed to increase reserves and further extend the life of Coeur's premier asset.
Silver Valley Resources (Idaho)
Silver Valley Resources expanded its presence in the heart of the Coeur d'Alene mining district, historically one of the richest silver producing regions in the world. During 1998, Coeur's share of Silver Valley Resources production was 1.76 million silver ounces at a cash cost of $4.46 per ounce. During the second quarter of 1998, production at Silver Valley Resources switched from the Coeur shaft to the Galena shaft. During the fourth quarter of 1998, the Galena property produced 423,272 ounces of silver at a silver equivalent cash cost of $4.73 per ounce. As of year-end 1998, Coeur's share of Silver Valley Resources silver equivalent reserves were 16.2 million ounces. Finally, recognizing the district's potential, Silver Valley Resources has further strengthened its land position around Silver Valley to allow for increased exploration work.
Yilgarn Star (Australia)
Through its 50% ownership in Gasgoyne Gold Mines, Coeur owns a 25% interest in the Yilgarn Star mine in Western Australia. During 1998, Coeur's share of Yilgarn Star production was 39,382 gold ounces. Cash costs decreased $30 an ounce to $215 in 1998. Through the investment in Gasgoyne Gold Mines, Coeur has interests in very exciting and prospective exploration tenements. The Company is enthusiastic about the potential of its holdings in the highly prospective Marvel Loch and Laverton Region and anticipates additional reserves and production over time. During 1999, independent consultants will be engaged to establish a life-of-mine plan and prioritize exploration targets.
Petorca (Chile)
The Company withdrew its previously planned closure of the Petorca mine based upon substantial operating improvements and the discovery of additional proven and probable reserves. During 1998, the Company implemented a revised mining program which significantly reduced total costs and helped generate positive cash flows. With the discovery of additional reserves, the Company expects the mine to continue to operate until the end of 1999. Petorca's production during the fourth quarter of 1998 was 9,045 and 17,018 ounces of gold and silver, respectively, at a total cost of US$226 per gold equivalent ounce. For the fiscal year ended December 31, 1998, Petorca produced approximately 38,925 gold equivalent ounces at a cash cost of approximately US$336 per ounce. Coeur anticipates that Petorca will produce approximately 31,000 gold equivalent ounces in 1999.
Fachinal (Chile)
Fachinal production during the fourth quarter of 1998 was 9,045 and 17,018 ounces of gold and silver, respectively, at a cash cost of $279 per gold equivalent ounce. During the twelve months ended December 31, 1998, Fachinal produced 28,358 and 1,596,676 ounces of gold and silver, respectively, at a cash cost of $314 per gold equivalent ounce. The Company expects Fachinal to continue the improved cost trend established in the fourth quarter. At December 31, 1998, Fachinal had proven and probable reserves totaling 176,000 gold equivalent ounces. Building on the momentum generated in the fourth quarter, the Company has instituted operating strategies which include reducing mine personnel by 40%, decreasing the mill operating schedule by 30%, decreasing diesel consumption, renegotiating transportation costs and decreasing explosive contracts to further reduce operating costs and improve efficiencies.
Kensington (Alaska)
The non-cash write-down taken in the fourth quarter has not at all compromised our commitment to the project. On April 14, 1998, the Company announced receipt of all major permits necessary to proceed with the development of the Kensington project. However, due to lower than anticipated gold prices, the Company commenced an optimization study designed to reduce capital and operating costs. Results of the optimization study indicate that cash costs of $190 per ounce are achievable. The Company is continuing to examine additional significant cost-saving opportunities. Kensington's proven and probable ore reserves are estimated at 13.893 million tons at a grade of 0.136 ounces of gold per ton, containing 1.896 million ounces of gold. The Company estimates a mineralized material inventory of 1.644 million tons with a gold grade of 0.143 ounce per ton. The tons and grades were estimated using a cut-off grade of 0.07 ounce of gold per ton. An additional 10.51 million tons of mineralized material averaging 0.130 ounces of gold per ton has been identified, including results from 1998 exploration. However, in order for the optimized mine plan to be realized, certain permits predicated on the original plan must be amended. The Company has embarked on amending the existing permits and expects a positive permitting decision by the first quarter of 2000. Once the permitting process has been completed, the Company will be in a position to make a production decision when gold prices return to historical levels.
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)
3 Months Ended 12 Months Ended
December 31, December 31,
-------------------- --------------------
1998 1997 1998 1997
-------------------- --------------------
ROCHESTER MINE
Gold ozs. 23,673 24,621 88,615 90,019
Silver ozs. 2,169,720 1,666,948 7,225,396 6,690,704
Cash Costs per
eq. oz./silver $3.88 $4.55 $4.07 $4.36
Full Costs per eq. oz./silver $4.48 $5.20 $4.67 $5.03
GALENA MINE
Silver ozs. 423,272 357,681 1,630,182 728,101
Cash Costs per oz./silver $4.73 $4.69 $4.39 $4.74
Full Costs per oz./silver $5.83 $5.85 $5.45 $5.98
COEUR MINE
Silver ozs. N/A 63,349 130,633 989,257
Cash Costs per oz./silver N/A $6.05 $5.34 $3.00
Full Costs per oz./silver N/A $7.18 $6.37 $3.95
YILGARN STAR MINE
Gold ozs. 8,093 12,859 39,382 39,051
Cash Costs per oz./gold $178.45 $244.29 $215.24 $255.11
Full Costs per oz./gold $369.91 $428.91 $416.31 $416.46
FACHINAL MINE
Gold ozs. 7,111 7,184 28,358 30,601
Silver ozs. 340,989 662,636 1,596,676 2,243,761
Cash Costs per eq. oz./gold $278.76 $304.87 $313.84 $339.46
Full Costs per eq. oz./gold $500.78 $458.55 $519.80 $512.32
EL BRONCE MINE
Gold ozs. 9,045 11,784 37,746 48,181
Silver ozs. 17,018 26,823 70,755 100,626
Cash Costs per oz./gold $225.66 $386.83 $336.26 $348.24
Full Costs per oz./gold $225.66 $414.89 $380.25 $401.93
GOLDEN CROSS MINE
Gold ozs. N/A 21,306 15,858 83,110
Silver ozs. N/A 54,857 49,536 271,776
Cash Costs per oz./gold N/A $240.01 $210.51 $245.34
Full Costs per oz./gold N/A $280.45 $210.51 $289.47
CONSOLIDATED TOTALS
Gold ozs. 47,922 77,754 209,959 290,962
Silver ozs. 2,950,999 2,832,294 10,703,178 11,024,225
CONSOLIDATED BALANCE SHEETS
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
December 31,
1998 1997
-------- --------
ASSETS (In Thousands)
CURRENT ASSETS
Cash and cash equivalents $127,335 $114,204
Funds held in escrow - 400
Short-term investments 1,753 98,437
Receivables 11,647 11,103
Inventories 43,675 35,927
-------- --------
TOTAL CURRENT ASSETS 184,410 260,071
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 79,173 119,808
Less accumulated depreciation 37,304 58,097
-------- --------
41,869 61,711
MINING PROPERTIES
Operational mining properties 82,018 168,305
Less accumulated depletion 46,149 52,332
-------- --------
35,869 115,973
Developmental properties 25,898 129,752
-------- --------
61,767 245,725
OTHER ASSETS
Investments in unconsolidated affiliates 66,914 73,013
Notes receivable 1,627 8,498
Debt issuance costs, net of accumulated
Amortization 6,625 8,809
Other 2,768 875
-------- --------
77,934 91,195
-------- --------
$365,980 $658,702
-------- --------
-------- --------
CONSOLIDATED BALANCE SHEETS
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
December 31,
1998 1997
-------- --------
(In Thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,512 $ 5,983
Accrued liabilities 12,700 6,345
Accrued interest payable 5,412 6,631
Accrued salaries and wages 5,642 7,553
Bank loans - 4,406
Current portion of remediation costs 3,052 7,300
Current portion of obligations under
capital leases 255 243
-------- --------
TOTAL CURRENT LIABILITIES 30,573 38,461
LONG-TERM LIABILITIES
6% subordinated convertible debentures
due 2002 45,803 49,840
6 3/8% subordinated convertible debentures
due 2004 93,372 95,000
7 1/4% subordinated convertible debentures
due 2005 107,277 43,750
Long-term borrowings - 1,159
Other long-term liabilities 11,888 8,403
-------- --------
TOTAL LONG-TERM LIABILITIES 258,340 98,152
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 379,180 389,648
Accumulated deficit (318,796) (84,542)
Repurchased and nonvested shares (13,190) (13,190)
Accumulated other comprehensive income (loss):
Unrealized gains (losses) on short-term
Investments (163) 145
-------- --------
77,067 322,089
-------- --------
$386,980 $658,702
-------- --------
-------- --------
CONSOLIDATED STATEMENTS OF OPERATIONS
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
Year Ended December 31,
1998 1997 1996
--------- --------- ---------
(In Thousands Except Per Share Data)
INCOME
Sale of concentrates and dore' $102,505 $131,161 $ 90,724
Less cost of mine operations 97,878 134,565 81,464
--------- --------- ---------
GROSS PROFIT (LOSS) 4,627 (3,404) 9,260
OTHER INCOME
Interest, dividends, and other 11,286 19,956 11,954
Earnings (loss) from unconsolidated
Subsidiaries (2,130) 783 1,393
--------- --------- ---------
TOTAL INCOME 13,783 17,335 22,607
EXPENSES
Administration 3,966 4,430 3,716
Accounting and legal 2,521 2,230 1,753
General corporate 6,564 6,792 7,147
Mining exploration 9,391 7,955 7,695
Interest 13,662 10,253 3,635
Writedown of mining properties 223,172 - 54,415
--------- --------- ---------
TOTAL EXPENSES 259,276 31,660 78,361
--------- --------- ---------
NET LOSS FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES (245,493) (14,325) (55,754)
Provision (benefit) for income taxes 919 (242) (1,184)
--------- --------- ---------
NET LOSS BEFORE EXTRAORDINARY ITEM (246,412) (14,083) (54,570)
Gain on early retirement of debt
(net of tax effect of $0) 12,158 - -
--------- --------- ---------
NET LOSS (234,254) (14,083) (54,570)
Unrealized holding gain (loss) on
Securities (308) 497 (713)
--------- --------- ---------
COMPREHENSIVE LOSS (234,562) (13,586) (55,283)
--------- --------- ---------
--------- --------- ---------
NET LOSS ATTRIBUTABLE TO COMMON
SHAREHOLDERS
Net loss (234,254) (14,083) (54,570)
Preferred stock dividends (10,532) (10,532) (8,397)
--------- --------- ---------
NET LOSS ATTRIBUTABLE TO
COMMON SHAREHOLDERS $(244,786) $(24,615) $(62,967)
--------- --------- ---------
--------- --------- ---------
BASIC AND DILUTED EARNINGS PER SHARE DATA
Weighted average number of shares
of Common Stock (in thousands) 21,899 21,890 21,465
--------- --------- ---------
--------- --------- ---------
Net loss attributable to
Common Shareholders:
Net loss before extraordinary item $ (11.73) $ (1.12) $ (2.93)
Extraordinary item - Early retirement
of debt (net of taxes) .55 - -
--------- --------- ---------
Net loss per share attributable to
common shareholders $ (11.18) $ (1.12) $ (2.93)
--------- --------- ---------
--------- --------- ---------
CASH DIVIDENDS PER COMMON SHARE - - $ .15
--------- --------- ---------
--------- --------- ---------
CONSOLIDATED STATEMENTS OF CASH FLOWS
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
Year Ended December 31,
1998 1997 1996
--------- --------- ---------
(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(234,254) $ (14,083) $(54,570)
Add (deduct) noncash items:
Depreciation, depletion, and
amortization 31,011 34,775 12,159
Gain on early retirement of debt (12,158)
Deferred income taxes - (594) (1,402)
(Gain) loss on disposition of property,
plant and equipment 461 (102) (985)
Loss on foreign currency transactions 482 985 155
(Gain) loss on disposition of
marketable securities (7) 947 (1,262)
Writedown of mining properties 223,172 - 54,415
Undistributed (earnings) loss of investment
in unconsolidated subsidiary 2,130 (783) (1,393)
Changes in Operating Assets and Liabilities:
Receivables (2,946) 1,907 3,493
Inventories (10,176) (3,256) 1,824
Accounts payable and accrued
Liabilities (11,408) (4,426) (5,360)
--------- --------- ---------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (13,693) 15,370 7,074
CASH FLOWS PROVIDED BY (USED IN)
INVESTING ACTIVITIES
Purchases of short-term investments (17,886) (180,511) (148,952)
Proceeds from sales of
short-term investments
and marketable securities 114,276 204,981 92,167
Acquisition of Gasgoyne Gold Mines NL - (14,643) (19,301)
Investment in unconsolidated
Subsidiaries (4,868) (3,570) (3,416)
Purchases of property, plant and
Equipment (3,209) (2,741) (4,799)
Proceeds from sale of assets 7,944 505 2,372
Proceeds from collection of
notes receivable 1,821 1,363 2,566
Expenditures on operational
mining properties (9,619) (9,436) (40,306)
Expenditures on developmental properties (17,558) (14,487) (13,066)
Other (601) (3,400) 2,148
--------- --------- ---------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 70,300 (21,939) (130,587)
CASH FLOWS FROM FINANCING ACTIVITIES
Retirement of obligations under
capital leases 31 (501) (2,041)
Payment of cash dividends (10,532) (10,532) (11,028)
Proceeds from MARCS issuance - - 144,626
Proceeds from 7 1/4% debentures issuance - 138,090
Proceeds from (payment of)
bank borrowings (3,610) - 19,186
Payment of debenture costs (644) - -
Retirement of long-term debt (28,477) (49,513) -
Retirement of other long-term
Liabilities (244) (226) (260)
--------- --------- ---------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (43,476) 77,318 150,483
--------- --------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 13,131 70,749 26,970
Cash and cash equivalents at beginning
of year 114,204 43,455 16,485
--------- --------- ---------
Cash and cash equivalents at end
of year $ 127,335 $ 114,204 $ 43,455
--------- --------- ---------
--------- --------- ---------
CONTACT: Gordon Bigler
Director of Investor Relations
Coeur d'Alene Mines Corporation
(208) 665-0992