Coeur d'Alene Mines: Some Risk, But Big Reward Is Possible

Coeur d'Alene Mines (CDE) is a US-based mining company focused on silver. The company operates three silver mines (USA, Argentina, and Bolivia) and receives silver output from two lead-zinc mines in Australia. Attributable 2008 silver production was 12 million ounces (and minor gold). Coeur has two mines under construction in Mexico (silver-gold), and Alaska (gold). (Source: RBC Capital Markets.)

Coeur d’Alene’s production growth profile is driven mainly by the ramp up at San Bartolome, the start-up at Palmarejo (H1/09), and contributions from Kensington (late 2010). The Company has been actively carrying out debt-to-equity exchanges to de-leverage its balance sheet, which has been a major concern for investors. Although a large portion of the convertible debt remains to be addressed, Coeur is showing that it is being proactive. I believe that the Company will generate cash from operations in 2009 and our estimates remain conservative during the Palmarejo commissioning and start-up period.