Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message| ()  

Executives

Tony Ebersole - Director of Corporate Communications

Dennis Wheeler - Chairman, President, and Chief Executive Officer

Mitchell Krebs - Senior Vice President and Chief Financial Officer

Richard Weston - Senior Vice President of Operations

Don Birak - Senior Vice President of Exploration

Leon K. Hardy - Senior Vice President

Analysts

Brett Levy – Jefferies

John Tomasal

Jorge Beristain - Deutsche Bank Securities

John Bridges - JP Morgan

Coeur d'Alene Mines Corp. (CDE) Q3 2008 Conference Call October 31, 2008 ET

Operator

Good afternoon. My name is Nakesha, and I will be your conference operator today. At this time, I would like to welcome everyone to the Coeur 2008 Third Quarter and Nine Months Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.(Operator Instructions).

Thank you. Mr. Eversol, you may begin.

Tony Ebersole - Director of Corporate Communications

Thank you, Nakesha. Thank you everyone for joining us today to discuss the company's third quarter and first nine months 2008 results. The call is also being broadcast live on the internet through our website at www.coeur.com, where we've also posted the slides that accompany our prepared remarks. Telephonic replay of the call will be available for one week afterwards on our website.

On the call today are Dennis Wheeler, Chairman, President, and Chief Executive Officer; Mitchell Krebs, Senior Vice President and Chief Financial Officer; Richard Weston, Senior Vice President of Operations; Don Birak, Senior Vice President of Exploration and Leon K. Hardy, Senior Vice President, Coeur d'Alene.

Any forward-looking statements made today by management come under Securities Legislation of the United States and Canada and Australia and involve a number of risks that could cause actual results to differ from our projections. Please see our full cautionary statements on slide 2.

With that, I would like to turn the call over to Dennis.

Dennis Wheeler - Chairman, President, and Chief Executive Officer

Welcome to all of you and thank you for joining us on the call. The number one goal and focus of our call today is to assure you, our shareholders that Coeur is in solid financial condition and is proactively and aggressively executing our growth strategy that dramatically reduces cost, conserves cash, while funding our leading growth profile.

We think 2009 could shape up to be the best year yet for Coeur. As all of you are keenly aware, we're in the midst of an unprecedented time in world markets, including our own industry. There's tremendous uncertainty about how this will all play out for the world economies and particularly any mining companies in our space who enter this period with limited financial resources in a time of significantly lower metals prices. These events have impacted our entire industry, limiting most companies’ access to capital and leading to a rapid and unprecedented sell off in the worldwide metals markets.

Our focus remains on the undisciplined management and execution of our three major growth assets: San Bartolome in Bolivia, Palmarejo in Mexico, and Kensington in Alaska, which added to our existing base of operating properties we believe offers our investors and shareholders a leading growth profile in precious metals at superior value.

Our operations delivered a 25% increase in quarterly silver production over the previous quarter to a total 3.1 million ounces, mostly due to the contribution of new silver production ounces from San Bartolome. We have demonstrated improving and growing production at San Bartolome like we said we would. Plant performance at this largest and new pure silver mine in the world is nearing capacity levels, the bugs having been largely worked out with the mill and we are expecting to produce the 3.2 million ounces of silver we projected on our last call and nine million ounces next year, the first full year of production at this new projected 14 year mine.

At our next and largest growth project, Palmarejo in northern Mexico, the world's largest silver project under construction today, we are proceeding on schedule and on budget toward an expected March 2009 startup.

In Martha, at Argentina, where the new standalone mill is now performing at planned levels, production was up 32% over the prior quarter, while our cost declined 30%. We do expect these improved production and cost levels to continue and reflect the rationale for constructing a mill at Martha, which allows us to process ore at the mine instead of shipping it off site for processing.

Through additional technical work at the Rochester mine in Nevada, we've determined that the mine life there will be extended for another three years to 2014 at very low cost. Rochester, which began production more than 20 years ago is a mine that just keeps on generating cash flow. Meanwhile, against this improving and growing operating performance and despite the challenging and unprecedented worldwide credit environment, we have successfully accessed the capital market to bolster our cash position to insure execution of our growth strategy and protect our shareholder s. To compliment this larger cash position we have implemented an across the board companywide cost reduction plan already in motion which will reduce annual G&A expenses by $10 million or 40%.

In addition, we believe it's in the best interest of our shareholders to preserve the valuable silver and gold reserves and resources at Cerro Bayo and not continue selling the current production at a loss at these lower metal prices. So, we made the decision to temporarily suspend operations there in order to focus on developing a sustainable three year mine plan which will be concluded over the next 12 months.

Cerro Bayo continues to hold significant resource and reserve growth potential and our focus now is on returning the mine to sustainable low cost, silver and gold production. Thanks to the efforts of the entire team, Coeur has implemented its streamlined organizational plan to reduce companywide costs by 40% annually. The first results of which will be seen beginning in the fourth quarter. The plan is achievable because our sole focus is San Bartolome, Palmarejo and Kensington.

Consequently, in addition to headcount reductions, downsizing of offices, and elimination of some departments, we've taken an aggressive approach to reducing cost in areas such as travel, use of third party consultants, the rescheduling of several planned capital out lies without impacting various projects. Additional cost reduction initiatives include a 60% reduction in expenses at the Kensington mine in Alaska as we await the Supreme Court decision in the first half of next year on our previously permitted tailings facility. The workforce has been reduced to half at Kensington and several third party services have been eliminated to conserve financial resources until the mine is moving again towards production. In addition, our Santiago office staff has been reduced by 60% and our staff at our La Pas office was reduced 25%. These two programs are basically complete.

We'll go into more detail with some of these initiatives in a few minutes but now I'm going to ask Mitch to discuss some of the financial metrics for the third quarter and year-to-date. Mitch?

Mitchell Krebs - Senior Vice President and Chief Financial Officer

Thank you, Dennis. For the first nine months of the year, Coeur produced approximately 8 million ounces of silver at an average cash cost of 4.99 per ounce. These costs compare quite favorably the last year’s first nine months given the startup at San Bartolome and overall cost pressures that have been felt by all operations this year.

Metal sales for the first nine months totaled $147 million and on the bottom line adding back one-time expenses relating to pre-development costs and mark-to-market adjustments which totaled $23.3 million to the company’s net loss of $4.3 million, the company report positive earnings of approximately $19 million or $0.03 per share.

Operating cash flow before working capital changes were $26.8 million for the first nine months. Year-to-date to capital expenditures at Coeur totaled $230 million with $97 million being spent at San Bartolome and$ 89 million of that amount being spent at Palmarejo, which excludes the $17.2 million that have been expensed to our income statement as pre-development expenses during the first nine months of the year. As a result year-to-date about a $106 million in total has been spent at Palmarejo.

During the first nine month, the average realized metals prices for Coeur were $17.17 for silver and $952 per ounce for gold. In the third quarter as Dennis mentioned our silver production was up 25% from the prior quarter to a total of 3.1 million ounces due primarily for the new productions being contributed from San Bartolome.

For the quarter, metal sales totaled just under $40 million and again adding back the one-time expenses of pre-development costs and mark-to-market adjustments which totaled $6.9 million in the quarter, the company’s net income would have been approximately $3.4 million or $0.01 per share. In terms of operating cash flow before working capital changes, the company reported $4.9 million for the quarter ,which is 133% higher than the second quarter of this year.

Capital expenditures in the quarter totaled $88 million, which included $42 million at Palmarejo and $30 million at San Bartolome. The third quarter marks the point at which San Bartolome CapEx has begun to drop off and ramp up and Palmarejo CapEx is accelerating as we advance toward completion of construction early next year.

Our average metals prices realized in the third quarter were $14.47 per ounce to silver and $886 per ounce to gold, these prices were 23% and 10% lower than the second quarter respectively. Our 10-Q report and Press Release have both been posted on our website with detailed cost and production breakdowns for each of our properties.

And as Dennis mentioned, we are executing a disciplined financial plan that provides sufficient financial flexibility for the company based on current silver and gold prices. We are looking at a fourth quarter CapEx profile of approximately $100 million, which marks the most intensive quarter in terms of CapEx spending in the companies overall growth strategy.

This quarter will include an expected $80 million to be spent at Palmarejo as we near completion of construction. With current cash of over $120 million, an additional $25 million to come from the exercise of a warrant relating to our recent financing, proceeds from $20 million to $25 million of sale lease back transactions that will be completed in the fourth quarter and positive operating cash flow from our existing operations, Coeur is adequately funded through the commencement of production at Palmarejo.

I’ll now turn the call over to Leon Hardy, who along with Don Gray has been instrumental in directing the operational progress we're seeing at San Bartolome in Bolivia. Leon?

Leon K. Hardy - Senior Vice President

Thanks, Mitch. We've been very pleased with the progress at San Bartolome. The mill, which you might recall have some startup issues in July and August, is now functioning well and is reaching design capacity in the current quarter. Production in the entire third quarter was over 706,000 ounces. Already in October we had seen production of nearly 600,000 ounces, a 55% increase over September levels with cash costs now declining as full capacity is achieved.

As you can see from the chart on Slide 10 production has been steadily ramping up at San Bartolome since production began in June. We are now expecting production for the year to reach 3.2 million ounces and 9 million ounces in the full year next year. And having a high confidence level of achieving these targets due to the progress we’ve seen and continue to see at San Bartolomé.

We have also began a working relationship with a local newly formed company called Cerminco, which will conduct hauling operations from certain levels of Cerro Rico Mountain to the processing plant. Cerminco was made up of mining cooperatives at Cerro Rico which represent the most important workforce in the area. Their participation in the project is yet another example of how Coeur (inaudible) is working with local groups to provide employment and new business opportunities for community as well as fortify the strong local support for San Bartolome that we have in the region.

I’ll turn the call over to Richard now for an overview of Palmarejo.

Richard Weston – Senior Vice President of Operations

Thanks Leon. I've just returned from Palmarejo where activities are proceeding as planned towards our first quarter startup. It is important to emphasize the significance and impact of Palmarejo to Coeur. Once in full production, Palmarejo will immediately double our production base and more than double the company’s annual cash flow. Despite only contributing a partial year of production in 2009, Palmarejo will be the company’s largest cash flow contributor. This contribution will only grow going forward.

We have made significant construction progress, the crusher is expected to be completed in December and work on the sag and bore mill and all other areas are well advanced. Installation of the generators at the power station is due to completion during the fourth quarter and water supply and dialing team work remains on schedule for the start of operation in the first quarter of 2009.

Progress on the mining side remains as planned. Pre-dripping activities required to uncover ore in the (inaudible) pit is progressing well with over 1.4 million tons of waste removal being achieved for the month. In the underground, development of the mine tunnel which is being driven from two ends is ahead of schedule and due for completion during the first quarter. The next few slides show the photographs of the construction progress.

On Slide 13, we have the crusher area which is due to completion by December and Slide 14, we have the Ball and SAG mill and that’s on schedule. Slide 15, a general view of the plant showing the flotation area and the flotation area is for the recovery of concentrates. The next slide, Slide 16, shows the power station in the foreground and the balance of the process plant in the background.

I'll let Don Birak go into more detail on exploration activities at Palmarejo.

Don Birak - Senior Vice President of Exploration

Thanks Richard. This quarter Coeur's exploration program at Palmarejo district concentrated on expanding and defining the large Guadalupe base silver and gold deposit located about five kilometer of south of the Palmarejo mine. We still expect to report the first proven and probable reserves from Guadalupe when our year-end results come out.

Over 7,800 meters of core drilling was completed this quarter at Guadalupe, bringing the total for the year to nearly 11,000 meters on this important new component of the Palmarejo as well as Coeur’s growth strategy. You'll recall at mid year we presented a new model of the metal resources at Guadalupe which now totals nearly 25 million ounces of silver in the measured and indicated category and 16.5 million ounces of inferred. And in addition to this large store resources Guadalupe based the measured and indicated goal resources are over 308,000 ounces and it’s inferred over 270,000 ounces. This significant mineral resource is contained within four major zones shown on the long section here on Slide 18. Guadalupe has now over two kilometers long and 200 meters vertical. All zones are open on strike and depth and currently drilling is under way to both tighten the drill spacing and expand the deposit.

To put the Palmarejo project in perspective, it is a large and growing silver and gold district that currently represents about 30% of the Coeur’s silver reserves and resources and over 40% of its gold. The current proven and probable reserves at Palmarejo are over 62.4 million ounces in sliver and 750,000 ounces of gold. The district also contains an additional 35 million ounces of measure and indicated silver and an additional 490,000 ounces to gold. Large mineral inventory represents our position after owning the project for only 10 months. We have not yet defined limits of Palmarejo or Guadalupe and we have many other targets in the district yet to explore. Because these large sliver and gold bearing zones remain open for expansion, you can see why we expect the reserve and resource numbers to continue to grow at Palmarejo. Richard.

Richard Weston - Senior Vice President of Operations

Yeah, thanks. Don. At Martha, the standalone mill is performing as planned. Cash costs declined 30% this quarter to $6.68 per ounce and silver production increased 32% to approximately 816,000 ounces compared to the second quarter. We expect this higher production levels and lower cost to continue during the fourth quarter.

Rochesters mine life has just been extended an additional three years from 2011 to 2014. We now expect an additional $5.4 million ounces of silver to be generated during the three more years of operation at extremely lower operating cost.

During, the third quarter, Rochester produced approximately 795,000 ounces of silver and approximately 5,000 ounces of gold at a cash cost of $0.72 per ounce. For all of 2009, we’re expecting 3 million ounces of silver production with cash costs well below $1 per ounce.

As Dennis, previously mentioned, we have placed mining activities at Cerro Bayo on standby. So, our immediate focus can shift to expanding and upgrading the mines mineral reserves and develop a minimum three year sustainable mine plan with low costs and higher production rates.

We are confident based on recent drill results that Cerro Bayo continues to hold significant reserve and resource potential and over the next 12 months we’ll focus on returning the mine to a sustainable low cost operation. I will let Don describe some of the exploration activities that are underway and that will continue during this period.

Don Birak - Senior Vice President of Exploration

Thanks again, Richard. The map on Slide 21 shows the current major silver and gold bearing structures and veins –at Coigues Este and the surrounding area located just east of the Cerro Bayo mill. We have over six main veins defined by drilling at Coigues Este verus the initial three that we discussed in mid 2007. Drilling is at a very advanced stage on the Dagny,Fabiola, and Yasna veins for which we expect to report new mineral reserves at year end.

Just west of the exciting Coigues Este discovery, we have discovered a new vein called Delia. Here on Slide 22 you can see a recent long section that shows ore intercepts on Delia. This new vein is nearly 1 kilometer long, up to 4 meters white and remains open for expansion.

Note that Delia is mostly blind, masked by post-mineral sediment. We believe the discovery Delia poses great promise for the discovery of more high grade veins and similar and under explored terrain at Cerro Bayo.

Delia and Coigues Este veins and potential across the district is the foundation for the new mine plant at Cerro Bayo. We are committing over $4.5 million in 2009 to discover and define new ore reserves to Cerro Bayo.

I’ll now turn the call back to Dennis for some concluding comments.

Dennis Wheeler - Chairman, President, and Chief Executive Officer

We believe the favorable fundamentals for silver and gold long term; growing demand, shrinking production and reserve basis, remain fundamentally intact, and we definitely expect that prices will move upward because of these pressures.

Meanwhile, in the near term, the US dollar has strengthened which has impacted gold prices clearly and to a certain extent silver. But overall, we continue to see a positive supply/demand fundamental picture, particularly on the supply side. When you think that 75% of silver production is a by-product of base metal mining, the recent dramatic drops in copper, lead, and zinc prices, we believe you will keep some new projects from coming on stream.

In addition, there are some projects that currently suffer from lack of access to capital to fund development while there are actually very few new projects in fact in the stable.

We think that inflationary pressures are likely to increase based on recent Federal Government actions, including this week’s rate cut to stimulate the credit markets and overall economic activity. This could become very positive for precious metals prices.

We believe that Coeur’s stock price, I’ll say in this current marketplace, has not reflected yet the underlying fundamental strength and growth prospects for the company that we’ve talked about today, but as with other mining companies in this period, we've clearly been impacted by the global fall off of commodities as well as equities in this widespread environment.

We've seen some strengthening in our share price this past week. We are optimistic, however, that as the markets settle and economies stabilize, that the underlying fundamentals of your company, a strong asset base and the growth plan at Coeur will be clearly recognized in a more orderly marketplace.

I'd like to take you back to last quarter’s call. On last quarter’s call, we told you we were going to ramp up production at San Bartolome and would generate a strong third quarter and second half performance there and the Coeur team has done that.

We told you we expected Palmarejo construction and development would accelerate and remain on schedule and on budget, and the Coeur team has done that. We set up Martha. We expected to deliver increased silver production at lower cost due to mill related issues that were being resolved and we've done that.

We said that we expected that Rochester would continue to outperform and our team has done that as well. So, as we look forward today we see continued developments on these fronts for you to watch. San Bartolome is now achieving capacity levels. Palmarejo remains on schedule for its first quarter startup adding an estimated 5.1 million ounces of silver and 67,000 ounces of gold in 2009. Low cost production that is expected to provide strong cash flow growth.

Martha and Rochester are expected to continue adding low cost ounces of silver production and we've streamlined the company to reduce G&A expenses by $10 million or 40%. In addition to focus on cash conservation and cost reductions, the Coeur team continues to execute a financial plan to provide the company with sufficient flexibility for our shareholders.

Our 2009 estimated production of 20 million ounces represents a 55% growth in production over this year and we look forward to continuing to report to you timely our progress on these initiatives with our year end results.

Thanks and we'll be glad now to answer your questions.

Question-and-Answer Session

Operator

(Operator instructions). Your first question is from the line of Brett Levy.

Brett Levy - Jefferies

Hi, guys I'm with Jeffries. I wanted to get a sense from you what you thought perhaps first quarter ’09 CapEx would be, that seems to be the critical point. And also as you are using 10 bucks over and a little over 700 bucks gold, what do you find to be the point which the liquidity will be tightest and as you look at that now, how much liquidity will you have?

Mitchell Krebs

Yeah, sure, hi. This is Mitch. I can answer that. As I said in my comments, the fourth quarter is the most significant outlay of capital in our plan and that will then trend lower given the fact that San Bartolome CapEx is basically finished by the end of this year, so by the first quarter of next year, the CapEx for the company will really only be targeted at Palmarejo, which will be approximately the same as what we're looking at for the fourth quarter.

Brett Levy - Jefferies

80 million?

Mitchell Krebs

Yeah.

Brett Levy - Jefferies

All right. And then, in terms of the liquidity, I'm adding up all of the cash in. You got sort of 120 in total cash, the warrants for 25, 20 or 25 of sale lease backs. But your spending, it looks like almost that exact amount in CapEx in the next two quarters on Palmarejo alone. So, it looks to me like it's still a very tight situation by round about March or April of 2009. Am I reading that wrong or am I underestimating the cash flow from San Bartolome and your other Mines during the intervening period?

Mitchell Krebs

Yeah, that's really the X factor there in the equation that will provide the cushion that we see looking forward in the fourth quarter and into the first quarter up through commencement of production of Palmarejo.

Brett Levy - Jefferies

And are you guys giving any revenue or earnings guidance for the fourth quarter?

Mitchell Krebs

No.

Brett Levy - Jefferies

How about production guidance?

Mitchell Krebs

I'm sorry, was there another question, I didn't hear.

Brett Levy - Jefferies

Production guidance?

Mitchell Krebs

No. We don't have any quarterly production guidance other than what we have in the release today.

Brett Levy - Jefferies

Okay, thanks very much guys.

Operator

Your next question is from John Tomasal.

John Tomasal

Two questions, if I may. Concerning the 5.4 million ounces to come at Rochester through 2014, that implies a little different progression from 3 million ounces in ’08. Will there be a big output in ’09 and then a less than million ounce output or would it be more steady toward 1 million ounces? And secondly, with the severe deflation of the last three months, just taking an example, prime steel scrap has fallen from 890 to 200, which is course is before the food chain to a finish machine, but it's the driver of the steel input, is there opportunity for the capital budget at Palmarejo to come in below your budgeted numbers and are your contracts written so those last minute steel savings go to the supplier or go to Coeur?

Mitchell Krebs

In terms of Rochester first, John, this is Mitch.

John Tomasal

Hi, Mitch.

Mitchell Krebs

The profile there between now and 2014 will show continued gradual decline with the 3 million ounces this year being the high points between now and that last expected year. And, as far as your second question, in terms of budget at Palmarejo, most of the money is obviously committed and we're pretty confident that the numbers that we have currently will hold and we aren't likely to see a big variation as a result of any of the recent deflation that you referred to but we're confident that we'll stay on our budget as we have since we put it out in June, the feasibility study.

John Tomasal

Thank you.

Operator

The next question is from the line of Jorge Beristain.

Jorge Beristain - Deutsche Bank

Hi, Mitch. Jorge Beristain here with Deutsche Bank. Just again picking up on the cash flow questions. Can you just clarify again Palmarejo, that will start to go back to CapEx run rate if I understood correctly of 20 million per quarter starting in Q1 09?

Mitchell Krebs

No, we're showing 80 million for the fourth quarter and about the same for the quarter in the first quarter and then at that point, a drop off as production ramps up.

Jorge Beristain - Deutsche Bank

Oh, okay, so Q1 ‘09 will be $80 million, okay. And then after that, what would be the pending CapEx for the rest of the year both for Palmarejo and your sort of stay in business CapEx?

Mitchell Krebs

Well the stay in business CapEx profile for this company is right around $30 million bucks to 25 million. And as far as remaining CapEx post production commencement at Palmarejo we really haven't put anything out on that but it will just be a continued mine development, underground development for the most part of a couple $3 million bucks a month.

Jorge Beristain - Deutsche Bank

So, about $30 million a year?

Mitchell Krebs

That’s right. That’s kind of the going run rate.

Jorge Beristain - Deutsche Bank

So you’re stay in business, sorry, just to clarify this point, your stay in business CapEx that you quoted was excluding Palmarejo, once Palmarejo was up and running, kind of your stay in business CapEx would probably go to at least $45 maybe $50 million?

Mitchell Krebs

No, that $30 million steady state includes all assets.

Jorge Beristain - Deutsche Bank

Okay. And, then sort of the $3 million a month on Palmarejo is that discretionary, once Palmarejo has ramped up or would you still be committed to a $3 million a month spend rate in the second quarter?

Mitchell Krebs

Well, assuming anything past the second quarter we really haven’t gotten anything publicly and I can get back to you later, Jorge, a little more detail there but--.

Jorge Beristain - Deutsche Bank

Sure. Could you also update us then, where is your fully diluted share count at now in light of the convertible debenture?

Mitchell Krebs

I’m sorry could you repeat that question?

Jorge Beristain - Deutsche Bank

Yeah, where is your fully diluted share count now at October taking into account the recent convertible debenture?

Mitchell Krebs

Yeah, sure. We have 551 million outstanding, there are 26 million outstanding or sorry, reserved for issuance under the one in a quarter convert. There’s about 32 million outstanding under the or sorry, reserved under the three in a quarter converts and there’s about 50 million reserved under the recent issuance of notes.

Jorge Beristain - Deutsche Bank

Okay. So, basically all of the recent convertibles add about 108 million shares fully diluted on top of your 550 base? 550 outstanding base?

Mitchell Krebs

Yes. That’s right. And that’s in our registration statement we filed last week.

Jorge Beristain - Deutsche Bank

Okay. And, in terms of the Rochester mine, do you have any visibility there as to the rate of the drop off in the silver output there because the guidance you had seem have given six months ago indicated this mine was literally on its last legs and you were willing to sell it to somebody who could just get, leaching silver out of there. Is there any kind of update to believe that maybe the mine life there is looking a little more sustainable?

Dennis Wheeler

Jorge, this is Dennis speaking. Your comments about the mine I’d like to clarify. We have not made a clear decision to sell Rochester. We were evaluating it as to what we thought the market might bring the company versus what we analyze to be the potential for the mine going forward and the remaining production there and we decided not to sell it because we felt the future was brighter at Rochester and we’ve seen the results of that.

Jorge Beristain - Deutsche Bank

Okay, and could you also just clarify on this recent lease backs or sales and lease backs what exactly are you selling there and what kind of terms they’re under?

Mitchell Krebs

It just some equipment, we’ll have more to say about that in the fourth quarter when they are completed.

Jorge Beristain - Deutsche Bank

Is that a further potential source of cash in the near term? In other words could we see another $25 million sale leaseback in the fourth?

Mitchell Krebs

Well, what we’ve got now is what we said in the press release, which are two sale leasebacks that will close in the fourth quarter and provide us with $20 to $25 million.

Operator

Your next question is from line of John Bridges

John Bridges - JP Morgan

Afternoon, Dennis, everybody.

Mitchell Krebs

Hello, John.

John Bridges - JP Morgan

Just coming back to the Rochester thing, presumably the extension is that you’ll run the pumps longer because of the economics of the leach operation have improved, is that correct?

Mitchell Krebs

John, would you repeat that question?

John Bridges - JP Morgan

You’ve said you’re extending the life of Rochester?

Mitchell Krebs

Yes.

John Bridges - JP Morgan

Now, is that related,doesn’t it appear as if it’s new ore that you found. It’s extending the life of the leaching?

Dennis Wheeler

Yes, that’s correct and of course, we’re still evaluating on some additional mineralized areas at the mine as we go forward but that's not our present focus.

John Bridges - JP Morgan

Okay and just remind us how many ounces did you expect to get out of there based upon your assumed recoveries?

Mitchell Krebs

Well this year would be 30 million John what were quoted in historical recoveries there are 65% on silver and about 90% on gold but the 5.3 million ounce number that we quoted as additional production is obviously already net of the recovery rates, now this spread out over those three years.

John Bridges - JP Morgan

Okay so based upon what you put on the pad and your recovery, your assumed recovery then, you should know how much is supposed to come out of that. I know I've tried to model that and I'd just like to get a fix on that?

Mitchell Krebs

You kind of broke up there, John. We couldn't quite hear your question.

John Bridges - JP Morgan

And you know based upon your published recoveries and the metal you've put on the pad then you should be able to pin down reasonably what's still there to come off. I know I've tried to model that and I'd just like to get a fix on that if possible?

Richard Weston

John, its Richard here. We've done a technical review of the leaching and there is a slight increase in long term recovery rates. And that results in that increase of silver over those additional three years.

John Bridges - JP Morgan

Okay, with have you got a number for what supposed to come out of the next few years?

Mitchell Krebs

Yeah we’ll get back to you on that one if thats okay.

John Bridges - JP Morgan

Okay let me try another question. The CapEx at San Bartolome ,the remaining 20 million whats that related to?

Richard Weston

That’s all savings infrastructure related.

John Bridges - JP Morgan

Okay, and then, finally Cerro Bayo, it's a very prospective area I seem to remember Don has been telling us over the years. I'm just wondering why did you have to, would you get into a situation where you run out of reserves and have to go looking for more. Did anything particular happen there?

Dennis Wheeler

John, we had some in fact lower grade ores for production than were projected by our model due to some thinner vein structures than we had anticipated and that resulted in our production in higher cost. We were nailing that down and expect to come back as we mentioned with a very solid plan.

John Bridges - JP Morgan

Okay. That helps okay. Many thanks, Dennis. Good luck.

Dennis Wheeler

Thank you. John.

Operator

There are no further questions Mr. Wheeler you have any closing remarks sir.

Dennis Wheeler - Chairman, President, and Chief Executive Officer

We just to thank you all for joining us on today’s call. We look forward to continue to report to you Coeur’s progress and if you have any questions in furtherance of today’s call, please get back to Tony Ebersole, the Head of Investor Relations. Thanks again.

Operator

This concludes today’s conference call. You may now disconnect.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Coeur d'Alene Mines Corp.Q3 2008 Earnings Call Transcript
This Transcript
All Transcripts