ITEM 1. BUSINESS
Coeur d'Alene Mines Corporation ("Coeur" or the "Company") is principally engaged in the exploration, development, operation and/or ownership of gold and silver mining properties located within the United States in Nevada, Idaho and Alaska and abroad in New Zealand and Chile. The Company's most significant properties are: (i) the Rochester Mine, a silver and gold surface mining operation located in northwestern Nevada, which is owned and operated by Coeur and which is believed to be one of the largest and lowest cost of production primary silver mines in the United States and is a significant gold producer as well; (ii) the Golden Cross Mine, an underground and surface gold mining operation located near Waihi, New Zealand, which is operated by Coeur and in which it has an 80% operating interest acquired on April 30, 1993; (iii) the Galena Mine and the Coeur Mine, underground silver mines in the Coeur d'Alene Mining District in Northern Idaho at which mining operations were suspended in July 1992 and April 1991, respectively, due to then prevailing silver prices, and in which the Company has an indirect 50% ownership interest through its ownership of 50% of the capital stock of Silver Valley Resources Corporation, a Delaware corporation formed by the Company and ASARCO Incorporated ("Asarco") in January 1995; (iv) the Kensington Property, located north of Juneau, Alaska, which was acquired in 1987 and is being developed as an underground gold mine jointly by Coeur and its 50% joint venture partner; (v) the Fachinal Property, located in southern Chile, South America, which Coeur acquired in 1990, at which construction commenced on an open pit and underground mine and processing plant in November 1994, with completion scheduled for the fourth quarter of 1995; and (vi) the El Bronce Mine, a Chilean gold mine of which the Company acquired operating control in October 1994. In addition, in September 1994, the Company entered into an agreement under which it has the right to acquire up to a 51% operating interest in another Chilean gold mine, the Faride Mine. Coeur also has interests in other properties which are the subject of silver or gold exploration activities and on which no commercially mineable ore bodies have been identified.
Through The Flexaust Company ("Flexaust") division of the Company's wholly-owned subsidiary Callahan Mining Corporation ("Callahan"), Coeur is also engaged in the manufacture and sale of lightweight flexible hose and duct and metal tubing. Flexaust's products are used in a wide variety of industrial and commercial applications for conveying air, dust, fumes and materials.
The Rochester Mine, the Golden Cross Mine and the El Bronce Mine, which are operated by the Company, currently constitute the Company's sources of mining revenues. The Rochester Mine accounted for approximately 67.9%, 56.2% and 50.4% of the Company's total revenues in 1992, 1993 and 1994, respectively. The Golden Cross Mine accounted for 23.9% of the Company's total revenues for 1993, 35.3% of total revenues for the eight-month period subsequent to its acquisition on April 30, 1993 and 26.2% of total revenues in 1994. Flexaust revenues accounted
for approximately 17.9%, 12.2% and 11.0% of the Company's total revenues in 1992, 1993 and 1994, respectively. The El Bronce Mine accounted for approximately 1% of the Company's total revenues in 1994 and 4% of total revenues for the three-month period subsequent to its acquisition on October 3, 1994. The balance of revenues was attributable to interest, dividend and other income.
The following sets forth definitions of certain important mining terms used in this report. "Ore reserve" means that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. "Proven reserves" means reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspections, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established. "Probable reserves" means reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation. References herein to "silver" mean an alloy with a minimum fineness of 999 parts per 1000 pure silver; references to "gold" mean an alloy with a minimum fineness of 995 parts per 1000 pure gold; and references to an "ounce" mean a troy ounce, which is 31.10348 grams. References to "dore" mean a bullion produced by smelting, containing gold, silver and minor amounts of impurities. "Mineralized material" is a mineralized underground body which has been intersected by sufficient closely spaced drill holes and/or underground sampling to support sufficient tonnage and average grade of metal(s) to warrant further exploration-development work. Such material does not qualify as an "ore reserve" until a final and comprehensive economic, technical and legal feasibility study based upon the test results is concluded. References to a "ton" mean a short ton, which is 2,000 pounds.
ROCHESTER MINE
The Rochester Mine is a silver-gold, surface mine located in Pershing County, Nevada, approximately 25 road miles northeast of Lovelock. The Rochester orebody consists of disseminated precious-metals mineralization hosted in Triassic volcanic rocks. The mine, which is accessible by road, utilizes the heap-leaching process to extract both silver and gold from ore mined using open-pit methods. The property consists of 16 patented and 552 unpatented contiguous mining claims and 74 mill-site claims totaling approximately 10,000 acres. The Company owns 100% of the Rochester Mine by virtue of its 100% ownership of its subsidiary, Coeur Rochester, Inc. Asarco, the prior lessee, has a net smelter royalty interest which varies from 0 to 5% provided the market price of silver equals or exceeds $17.00 per ounce.
Based on the reserve-review report dated January 1995, of Independent Mining Consultants, Inc., and accounting for production through December 31, 1994, in-place, proven and probable ore reserves, as of January 1, 1995, total approximately 80.7 million tons averaging 1.259 ounces per ton silver and 0.0108 ounces per ton gold. The reserve estimate is based on a 1.20 ounce per ton silver-equivalent, breakeven-design cutoff grade and a silver and gold price of $5.50 and $385, respectively. The average grades do not reflect losses in the recovery process nor any allowance for extractive dilution during the mining process. The amount of proven and probable reserves will vary depending on the relative price of silver and gold. A reserve estimate calculated at various silver and gold prices are outlined as follows:
Based upon its experience and certain metallurgical testing, the Company estimates recovery rates at 55% for silver and 85% for gold. Although, as shown in the preceding table, the average strip ratio for the remaining life of the mine will vary based primarily on future gold and silver prices. The actual strip ratio may vary significantly from year-to-year during the remaining life of the mine. The realization of the Company's production estimates is subject to actual rates of recovery, continuity of ore grades, mining rates, the levels of silver and gold prices and other uncertainties inherent in any mining and processing operation.
The following table sets forth information for the periods indicated relating to Rochester Mine production. Production may decrease during the winter due to slower solution flow from the heaps. Such conditions are not expected to effect annual production levels since mining, crushing and heap construction are expected to continue during those months at normal rates, resulting in increased dore' production during warmer weather. Also, production will vary from time to time depending upon the area being mined.
The following table sets forth the costs of production per ounce of silver and goldon a silver equivalent basis during the periods indicated at the Rochester Mine. Such costs include mining, processing and direct administration costs, financing costs, royalties and exploration expenses. To obtain the silver equivalent, each ounce of gold produced is multiplied by the same ratio as the then current ratio of the price of gold to the price of silver. This silver equivalent gold production is then added to actual silver production to determine total silver equivalent production.
A new life-of-mine leach pad and conveyor system commenced operations in September, 1994. Initially, the new pad is expected to permit faster metals recovery than the previous pad. The leach cycle at the Rochester Mine requires approximately five years from the point ore is mined until all recoverable metal is recovered. The above costs are based upon actual operating experience at the mine. There can be no assurance that these costs will remain at the same level for future operations.
GOLDEN CROSS MINE
Effective April 30, 1993, a wholly-owned subsidiary of the Company acquired from a wholly-owned subsidiary of Cyprus Minerals Company all of the outstanding capital stock of Cyprus Gold New Zealand Limited ("Cyprus NZ"), the name of which was changed by the Company to Coeur Gold New Zealand Limited ("Coeur NZ"). The principal asset of Coeur NZ is its undivided 80% participating joint venture interest in the Golden Cross Mine located near Waihi on the North Island of New Zealand, approximately 100 miles southeastof Auckland, and certain other exploration properties in New Zealand. The remaining undivided 20% joint venture interest is owned by a subsidiary of The Todd Company Limited, a New Zealand corporation.
In addition to all the capital stock of Cyprus NZ, the Company also acquired from the former parent of Cyprus NZ a term loan receivable from Cyprus NZ in the principal amount of approximately $53.2 million which was owed by Cyprus NZ to its former parent and is now owed by Coeur NZ to the Company. A cash purchase price of approximately $54 million was paid by the Company for the Cyprus NZ capital stock and term loan. The Company accounted for the acquisition as a purchase transaction.
The Golden Cross Mining License covers an area of approximately 961 acres of which 274 acres are occupied by the current Golden Cross Mine operation. The mine property includes the open-pit and underground mine facilities, process plant, tailings pond, water treatment plant and mine
offices which are all accessible by road from the town of Waihi. Construction of the Golden Cross Mine began in April, 1990, and commercial production commenced in December, 1991. Ore is mined from an extensive precious-metals bearing, epithermal vein system hosted in Tertiary volcanic rocks.
Based upon reserve reports dated September 1, 1994 (open-pit reserve) and December, 1994, (underground reserve) by Snowden Associates Pty Ltd, an independent consulting firm, in-place, open-pit and underground, proven and probable ore reserves less actual production through December 31, 1994, total 7.565 million tons averaging 0.079 ounces per ton gold. The open-pit reserve estimate, totaling 6.642 million tons averaging 0.065 ounces per ton gold, is based on a 0.029 ounce per ton gold cutoff, $400 per ounce gold price and a currency exchange rate of US$ = 0.58 NZ$. The underground-reserve estimate, totaling 924,000 tons averaging 0.182 ounces per ton gold, is based on a 0.117 ounce per ton cutoff, gold and silver prices of $385 and $5.50, respectively and a currency exchange rate of $US = 0.61 NZ$. The reserve estimate reflects an allowance for extractive dilution during the mining process, but does not reflect losses during the recovery process. In addition, the reserve estimate has identified 404,000 tons of mineralized material averaging 0.05 ounce per ton gold which is insufficiently defined to be included in the reserve, but may be mineable given additional definition or changes in economic parameters.
Silver reserves are empirically estimated using past production/recovery ratios for silver:gold. Open pit and underground silver:gold ratios have historically averaged 4:1 and 5:1, respectively. Total contained silver ounces are estimated at 2,572,000 ounces, with an average grade of 0.34 ounces of silver per ton, for open pit and underground proven/probable reserves. No mineralized material grades for silver were estimated.
The following table sets forth Golden Cross Mine production data. Information relating to production prior to April 30, 1993 was obtained from the former owner of Cyprus NZ. Because the Company's acquisition of Cyprus NZ was accounted for as a purchase, results of its operations prior to April 30, 1993 are not included in the Company's reported results of operations. The following data reflects the amount of production attributable to Cyprus NZ's 80% interest in the mine:
The following table sets forth the costs of production per ounce of gold and silver on a gold equivalent basis during the periods indicated at the Golden Cross Mine. Such costs include mining, processing and direct administration costs, royalties and exploration expenses, but do not include financing costs associated with the term loan formerly owed by Coeur Gold NZ to its parent. The production costs per ounce of gold for any period is computed on a gold equivalent basis. Each ounce of silver produced is multiplied by the same ratio as the then current silver-to-gold price ratio. This gold equivalent silver production is then added to actual gold production to determine the total gold equivalent production.
The above-reported Golden Cross Mine production and cost data relating to operations subsequent to the commencement of commercial production in December 1991 reflect an initial under-utilization of the mine's productive capacity associated with commencement of operations as well as other start-up costs expected to be nonrecurring in nature. The 1994 increase in the cash costs of production per ounce of gold was primarily attributable to the presence of a harder grinding ore in the open pit requiring more milling and chemicals in the processing and a lower grade of ore being provided from the underground portion of the mine. The increase in ore reserves during 1994 enabled the Company to lower the depletion at the mine, which had the effect of reducing non-cash costs per ounce.
The Company estimates the current waste-to-ore strip ratio to be approximately 4.32 to 1. Approximately 1550 tons per day of ore is currently being mined at the open pit operation. The underground mine is a trackless operation with a declining access from the surface, currently mining approximately 700 to 850 tons per day of ore and utilizing mechanized cut and fill and long hole benching methods. A 2,000 ton per day mill processes ore from both the open pit and underground operations and Coeur NZ estimates that approximately 89% of the gold and 60% of the silver contained in the ore mined is recovered. The production of gold and silver is subject to the risks of actual rates of recovery, continuity of ore grades, mining rates, the levels of gold and silver prices and other uncertainties inherent in any mining and processing operation. Tailings are treated by a proprietary process that removes and recycles cyanide used in the milling process.
The Company obtained favorable variances to the Golden Cross Mine's effluent discharge permit by a decision from the Waikato Regional Council issued in August 1993. While this decision has been appealed to the Planning Tribunal by environmental organizations, and while the environmental organizations filed a petition for enforcement of the permit in November 1993 with the Planning Tribunal which raises issues related to the permit, the Company nevertheless believes that environmental issues will not hamper operations of the Golden Cross Mine and that the appeal and petition will be resolved favorably to the Company.
Coeur NZ expended approximately $579,313 during 1994 to explore properties adjacent to the Golden Cross Mine and various other properties in the eastern portion of the North Island of New Zealand. Such exploratory activities included drilling, sampling and assaying. Coeur NZ plans during 1995 to expend approximately $1.4 million to explore Waihi East, Waitekauri and three other New Zealand licenses on the north island.
In addition to significantly increasing the Company's total gold production capability, the acquisition of Coeur NZ geographically diversified the Company's operations, may contribute to further expansion in the Pacific Rim and may widen the Company's potential investor base.
COEUR D'ALENE MINING DISTRICT - SILVER VALLEY RESOURCES CORPORATION
In late 1994, the Company, Callahan and Asarco formed Silver Valley Resources Corporation, a Delaware corporation ("Silver Valley"), and effective January 1, 1995, the Company, Callahan and Asarco transferred certain assets, including their interests in the Coeur Mine and the Galena Mine in the Coeur d'Alene Mining District of northern Idaho, to Silver Valley. Specifically, Asarco contributed to Silver Valley Asarco's (i) ownership interest in the Joint Venture Agreement, dated August 31, 1964, related to the Coeur Mine property; (ii) interest in the lease, dated January 15, 1947, relating to the Galena Mine property; (iii) ownership interest in the Osburn tailings pond; (iv) 75% interest in the royalty deficit related to the Galena Mine property; and (v) ownership interest in certain other assets located in the Coeur d'Alene Mining District. Coeur and Callahan contributed to Silver Valley Coeur's or Callahan's (i) ownership and lease interest in the Coeur Mine property; (ii) ownership and lease interest in the Galena Mine property; (iii) ownership interest in the Caladay operating agreement; (iv) ownership interest in certain properties surrounding the above properties; and (v) 25% interest in the royalty deficit related to the Galena Mine property.
The Board of Directors of Silver Valley consists of six directors, three of whom, including the Chairman of the Board, are appointed by Asarco and three of whom, including the President, are appointed by Coeur. Pursuant to a Shareholders' Agreement between the parties, certain specified corporate actions may not be taken without the approval of at least 80% of the members of Silver Valley's Board of Directors. Such actions include certain major capital expenditures and
asset sales, the commencement of mining operations and approvals of certain operating plans and budgets, substantial borrowings, issuances of capital stock and other specified significant actions. Certain other specified matters require approval by a majority of the members of the Board. As to matters requiring a majority vote, if the voting results in a tie at any Board Meeting, the Chairman of the Board of Silver Valley, who also is the Chairman of the Board of Asarco, will decide the issue. The President of Coeur also is the President of Silver Valley and serves on its Executive Committee. Certain other officers of Silver Valley are officers of Coeur or Asarco, which companies may provide management and other services to Silver Valley upon the request of its Board of Directors. Asarco and Coeur furnish certain management and other services to Silver Valley pursuant to a Management Services Agreement between them and Silver Valley.
It is expected that under a two-year plan of development, improving infrastructure and diamond drilling to extend reserves and mine life, Silver Valley will invest approximately $25 million in the further development and exploration at its properties. The reopening of the Galena and Coeur Mines is dependent upon the favorable action of the Board of Directors of Silver Valley, which will base its decision on several factors, including silver prices.
GALENA MINE
Callahan, which became a wholly-owned subsidiary of the Company on December 31, 1991, owned the Galena Mine located in the Coeur d'Alene Mining District of northern Idaho, prior to the transfer of such ownership to Silver Valley, effective January 1, 1995. The Galena Mine property consists of approximately 1,100 acres lying immediately west of the City of Wallace, Shoshone County, Idaho adjoining the Coeur Mine's eastern boundary. The property consists of 52 patented mining claims in which Callahan owns a fee title, and 25 unpatented mining claims, paramount title to which is vested in the United States. The Galena Mine is an underground silver-copper mine which is served by two vertical shafts.
On July 26, 1992, Asarco, which was the Galena Mine operator, suspended operations at the Galena Mine due to then prevailing silver prices and placed the property on a care and maintenance basis to conserve ore reserves. Silver Valley has the power to make a decision as to the resumption of production at the mine. Coeur cannot predict whether or when operations will resume there.
Operating losses were incurred at the Galena Mine throughout 1990, 1991 and 1992. As a result, Callahan's revenues from the Galena Mine were limited to minimum royalty payments of $87,000 in 1990, $91,418 in 1991 and $45,809 in 1992.
Based on the ore-reserve estimate, dated July 1, 1992, of Asarco, proven and probable ore reserves at the Galena Mine total 951,000 tons averaging 15.07 ounces per ton silver, 8.80% lead and 0.49% copper. The Asarco reserve estimate is based on a minimum diluted mining width of 5.0
feet for most silver-copper and silver-lead veins and 5.5 feet for lead-zone veins. Cutoff grade is based on the cost of breaking and producing ore from a stope, but do not include development costs and administrative overhead. The cutoff grade varies from area-to-area within the mine due to changing silver-copper ratios of the ore.
The reserve estimate has also identified an additional 856,000 tons of mineralized material which has not been included in the reserve, but given additional definition drilling or more favorable silver prices, may become mineable. This material averages 8.84 ounce per ton silver, 5.73% lead and 0.43% copper.
The following table sets forth information, for the periods indicated, relating to total Galena Mine production:
The Company's previous ownership interest in the above production, giving retroactive effect to Coeur's acquisition of Callahan on December 31, 1991, amounted to 50% through June 11, 1992, and 62.5% thereafter until such ownership was transferred to Silver Valley effective January 1, 1995.
The total cost of production per ounce of silver (net of credit for copper byproduct), including mining, processing, direct administrative costs and exploration expenses, but not including financing costs, royalties and smelter charges, amounted to $4.50 in 1988, $4.35 in 1989, $4.19 in 1990, $3.94 in 1991 and $4.23 in 1992 prior to the temporary discontinuation of operations at the Galena Mine on July 26, 1992. Such costs are not necessarily indicative of actual costs that would be incurred if and when mining operations resume at the mine.
COEUR MINE
The Coeur Mine is an underground silver mine located in the Coeur d'Alene Mining District of Shoshone County in northern Idaho, and consists of approximately 868 acres comprised of 38 patented mining claims, and four unpatented mining claims paramount title to which is vested in the United States. Commercial production began in 1976, and total pre-production expenditures of approximately $20 million were recovered by April 1979, at which time the Company commenced receiving revenues from its non-operating joint venture interest in the mine. Asarco is the operator of the Coeur Mine pursuant to a joint venture agreement with the Company, Callahan and, prior to November 30, 1990, Hecla. Until November 30, 1990, the Company owned 40% of the ores
produced from the Coeur Mine and was obligated to pay 40% of the costs. On November 30, 1990, the Company purchased Hecla's 5% interest thereby increasing the Company's interest to 45%. Effective December 31, 1991, Coeur increased its non-operating joint venture interest in the mine to 50% as a result of Coeur's acquisition of Callahan, which had acquired a 5% interest in the mine in March,1968. Effective January 1, 1995, Coeur and Asarco transferred their interests in the Coeur Mine to Silver Valley.
Asarco suspended operations at the Coeur mine on April 3, 1991 due to then prevailing silver prices and placed the property on a care and maintenance basis to conserve ore reserves. Silver Valley has the power to make a decision as to the resumption of production at the mine. Coeur cannot predict whether or when operations will resume there.
The following table sets forth information, for the periods indicated, relating to total Coeur Mine production:
The Company's ownership interest in the above production, giving retroactive effect to Coeur's acquisition of Callahan's 5% interest on December 31, 1991, amounted to 45% prior to November 30, 1990 and 50% thereafter until such ownership was transferred to Silver Valley Resources effective January 1, 1995.
The total cost of production per ounce of silver (net of credit for copper byproduct), including mining, processing, direct administration costs and exploration expenses, but not including financing costs, royalties and smelter charges, amounted to $4.71 in 1988, $4.36 in 1989, $4.68 in 1990 and $5.38 in 1991 prior to the suspension of operations at the Coeur Mine on April 3, 1991. Such costs are not necessarily indicative of actual costs that would be incurred if and when mining operations resume at the mine.
Based on the ore-reserve estimate, dated January 1, 1991, of Asarco, proven and probable ore reserves in the Coeur Mine total 377,000 tons averaging 17.33 ounces per ton silver and 0.80% copper. The Asarco reserve estimate is based on a minimum mining width of 4.5 to 5.0 feet with a minimum dilution of 1.0 foot from each margin of the vein. Cutoff grades used in the reserve estimate are estimated from costs based on the unit superintendent's forecast for 1991. The reserve estimate has also identified an additional 172,000 tons of mineralized material which has not been included in the reserve, but given additional definition drilling or more favorable precious silver prices, may become mineable. This material averages 14.21 ounce per ton silver and 0.64% copper.
KENSINGTON PROPERTY JOINT VENTURE
On August 5, 1987, Coeur purchased certain patented and unpatented claims located approximately 50 miles north of Juneau, Alaska known as the Kensington gold property (the "Kensington Property") from Placid Oil Company of Dallas, Texas ("Placid"). The purchase price paid to Placid for the Kensington Property was $20 million, of which $10 million was paid by Coeur and the $10 million balance was paid by Echo Bay Mines, Ltd., a Canadian corporation ("Echo Bay Parent"). On the same date, Coeur conveyed an undivided 50% interest in the Kensington Property to Echo Bay Exploration, Inc., a Delaware corporation ("Echo Bay") that is a wholly-owned subsidiary of Echo Bay Parent, and the remaining undivided 50% interest in the Kensington Property to Coeur-Alaska, Inc., a Delaware corporation ("Coeur-Alaska") that is a wholly-owned subsidiary of the Company.
Coeur-Alaska and Echo Bay entered into a joint venture agreement pursuant to which the companies agreed to participate in the exploration, evaluation, development and mining of the Kensington Property. Echo Bay is the operator of the Kensington Property under programs that must be approved by a management committee composed of an equal number of members from both Echo Bay and Coeur-Alaska. The joint venture agreement permits either party, under certain circumstances, to increase its ownership interest in the venture by paying the other party's appropriate share of exploration and development costs in the event the other party declines or is unable to fund its share.
The Kensington orebody consists of an extensive, precious-metals bearing, mesothermal, quartz-stockwork vein system hosted in Cretaceous intrusive rocks. Based on Echo Bay's ore-reserve study, as audited during January 1995, by Woollett Consulting Ltd., independent consulting geologists, Kensington Property proven and probable ore reserves, as of December 31, 1994, are estimated to be 13.641 million tons averaging 0.143 ounce of gold per ton totaling 1.946 million ounces of gold. An additional 3.188 million tons of mineralized material averaging 0.147 ounce per ton gold has been identified, but is insufficiently defined to be included in the reserve. The Kensington ore zone has not been fully defined and several peripheral veins remain to be explored. The reserve estimate reflects the effects of extractive dilution during the mining process, but not losses during the recovery process. A gold price of $375 per ounce was used in calculating the reserve estimate. Based upon metallurgical testing work, the Company expects that 92% of the gold contained in ores milled will be recovered. The joint venture has completed metallurgical testing primarily consisting of bench-scale test work, including grinding, flotation, cyanide leaching, carbon recovery and other tests, and a subsequent pilot scale test conducted on a bulk ore sample to simulate full-scale plant operations and to confirm selected operating parameters.
During 1994, the activities at Kensington were directed toward the permitting process. As of December 31, 1994, the Company had invested a total of $52,139,488 (including capitalized interest of $11,796,897) in the Kensington Property.
Based on a comprehensive feasibility study prepared by an independent engineering firm engaged to perform detailed design and engineering at the Kensington Property, Coeur estimates that in the event it is decided to proceed with the construction of the Kensington facility, approximately $180 million (in addition to monies previously expended), 50% of which will be the responsibility of Coeur, will be required in order to place the property into commercial production. That estimate is based upon the engineering firm's completion of 30% of the engineering upon the project to date.
Further development of the Kensington Property is contingent upon several factors, including gold prices and the ability of the joint venture to obtain valid permits. The Kensington feasibility study contemplates a gold price of $400 per ounce and it is unlikely that the project facility will be constructed unless the venturers are able to satisfy themselves that this gold price is reasonably achievable. The construction of the project cannot commence until all necessary permits are obtained. The major permits necessary for the construction and operation of the facility have been obtained with the exception of two, the Army Corps of Engineers Section 404 Permit and the Environmental Protection Agency National Pollutant Discharge Elimination System Permit. Kensington is intensively regulated under various local laws and regulations. Numerous permits are required by government agencies which authorize construction and operations.
The United States Forest Service ("USFS") approved the environmental impact statement ("EIS") in February 1992. Thereafter, administrative appeals were filed by parties opposed to the project. The appeals alleged that the EIS did not satisfy the requirements of the National Environmental Policy Act due to, among other alleged reasons, inadequacy of baseline data used to analyze environmental impacts and failure to adequately consider alternative methods of mining and waste disposal. The appellants sought to prevent USFS approval of an operating plan for the project pending completion of EIS meeting all legal requirements. On July 7, 1992, the USFS approved the Company's proposed Plan of Operations for the project. On July 28, 1992, the USFS ruled against the appellants upon their appeal. While Coeur believes a court would uphold the USFS determination in the event it were to be further appealed, no assurance can be given as to the outcome of any such appeal if filed. On September 16, 1992, parties opposed to the project requested that the USFS withdraw its decision to approve the operating plan on the grounds that the plan was not complete at the time it was approved. The USFS decided not to withdraw the July 7, 1992 approval of the Plan of Operations on November 10, 1992.
In addition to the USFS decision to permit operation, other key permits are required by the U.S. Environmental Protection Agency (the "EPA"), the U.S. Army Corps of Engineers, the State of Alaska and the City and Borough of Juneau. In November 1992, the project's Large Mine Permit was approved bythe City and Borough of Juneau. On April 30, 1993, a group opposed to the project filed an appeal in state court to that approval, which has been denied. The motion is now pending before
the Alaska Supreme Court. Additional permitting requirements include the EPA National Pollutant Discharge Elimination System ("NPDES") permit for discharge of effluent from the tailings impoundment and the U.S. Army Corps of Engineers "fill" permit.
In November 1994, the EPA issued a draft of its Technical Assistance Report ("TAR") calling for the redesign of portions of the project and certain additional data and recommending that certain specific actions should be taken in order for the Kensington project to meet environmental requirements and comply with the Clean Water Act. These actions include providing additional waste water treatment, a redesign to address peak flow information, further analysis of avalanche hazard, a movement of the outfall into deeper water to assure adequate mixing, additional testing for potential acid generation and the performance of additional analysis on ore samples to project effluent quality. Compliance with the TAR should enable the U.S. Army Corps of Engineers to complete its work for issuance of a federal permit for construction of a water treatment facility at the Kensington property pursuant to Section 404 of the Clean Water Act. If, in the final TAR, the EPA adheres to the recommendations in the draft, the Company believes it is feasible to make design changes and furnish necessary data. It is anticipated that a final TAR will be furnished by the EPA to the Army Corps of Engineers in the second quarter of 1995. However, no assurance can be given as to when or whether the required federal permit will be issued.
December 20, 1993, a coalition of environmental and citizen groups, including the National Wildlife Federation and the Sierra Club, filed a complaint in the Federal District Court of Alaska against the EPA and the U.S. Army Corps of Engineers challenging the two federal agencies' interpretation of the Clean Water Act regulations as they relate to the Kensington Property and another mining project near Juneau, Alaska. Under that interpretation, announced in October 1992, NPDES permits would not be required for discharge of tailings from process facilities into proposed tailings impoundment ponds constructed in "waters of the United States." The suit was dismissed by the court on July 15, 1994, on the grounds that it was not ripe for decision.
On July 15, 1993, the Company acquired a 66 2/3% interest, and in August, 1994 the Company acquired the remaining 33 1/3% interest in the Jualin property, an exploratory property located adjacent to the Kensington Property, and an exploratory property in Mexico. The Jualin property consists of approximately 9,400 acres, of which approximately 345 acres of patented claims. The Company's initial 66 2/3% interest in the Jualin property was acquired in connection with the Company's purchase of 26% of its capital stock of International Curator Resources, Ltd.(ICR), a Canadian corporation. The 33 1/3% interest in the property was acquired by the Company from ICR in connection with the Company's sale of ICR shares between August 1994 and February 1995.
FACHINAL PROPERTY
In January 1990, the Company acquired, through its wholly-owned subsidiary, CDE Chilean Mining Corporation, ownership of the Fachinal
gold and silver project (the "Fachinal Property") and six exploration projects located in Chile. Coeur acquired these properties for $5 million by purchasing a wholly-owned subsidiary of Freeport Minerals Company, which held the exploitation and exploration concessions for this area of known mineralization.
The Fachinal property covers about 90 square miles and is located south of Coihaique, the capital of Region XI in southern Chile, and approximately 10 miles west of the town of Chile Chico. The project lies on the east side of the Andes at an elevation from 600 to 4,500 feet and is serviced by a gravel road from Chile Chico. The Fachinal property is believed to contain at least 67 veins containing gold and silver and at least five zones of mineralization. The Company has been granted exploitation concessions (the Chilean equivalent to a patented claim except that the owner does not have title to the surface which must be separately acquired from the surface owner) covering the mineralized areas of Fachinal property as well as the necessary surface rights to permit mining there.
As of December 31, 1994, the Company had expended a total of $35,945,229 (including capitalized interest of $4,596,960) on the Fachinal Property. Currently, three mineral systems are the primary development targets, namely Laguna Verde, Temer, and Guanaco. To date, the work program at the Fachinal Property has included diamond drilling, underground drifting and cross-cutting at Laguna Verde, Temer and Guanaco, initiation of metallurgical testing, mine modeling, mine planning and cost estimating.
Following the completion by an independent engineering firm of a final feasibility study, the Company announced in July 1994 its decision to proceed with the construction of mining facilities on the Fachinal property. The Company expects that the new mining facilities will be completed in the fourth quarter of 1995 and will include both underground and open pit mining operations, with an estimated 1,650 per ton day throughput. The milling facility will use conventional crush/grind/floatation methods to produce a gold/silver concentrate, which will then be shipped to off site smelters for processing. The total project construction cost is expected to approximate $41.8 million. When completed, the Fachinal Mine will be one of the southern most mining operations in the world, employing approximately 225 workers near the town of Chile Chico, located 800 miles south Santiago at an elevation of approximately 1,200 feet. The Company estimates that the Fachinal Mine will produce approximately 41,000 ounces of gold and 2.6 million ounces of silver during its first full year of production.
Economic, precious metals bearing mineralization at Fachinal occurs in an extensive epithermal, quartz-veins system hosted in Jurassic volcanic rocks. Based on a reserve-review report dated April 1994, by Micon International Limited, total, in-place, open-pit and underground, proven and probable reserves at the Fachinal property are approximately 4.547 million tons averaging 0.07 ounces per ton gold and 3.219 ounces per ton silver. The Fachinal open-pit reserve estimate, totaling 3.562 million tons averaging 0.057 ounces per ton gold and 2.55 ounces per ton
silver, is based on an internal cutoff grade of 0.04 ounces per ton equivalent gold. The underground reserve is based on internal cutoff grades ranging form 0.088 to 0.102 ounces per ton equivalent gold. Both reserve estimates are based on gold and silver prices of $375 per ounce and $5.00 per ounce, respectively. Average grades reflect extractive dilution, but not losses during the recovery process. The Company estimates, based upon thorough metallurgical testing, recovery rates between 86.8 - 94.6% for gold and 82.2 - 92.3% for silver. The open-pit reserve estimate has also identified 872,000 tons of mineralized material, averaging 0.05 ounce per ton gold and 1.14 ounce per ton silver. Likewise, the underground resource estimate has identified an additional 656,000 tons of mineralized material averaging 0.11 ounce per ton gold and 6.01 ounces per ton silver. Confidence in these additional tonnages is insufficient for them to be included in the Fachinal reserve. Numerous other attractive exploration targets with known precious-metals mineralization remain to be evaluated.
Although the government and economy of Chile has been relatively stable in recent years, the ownership of property in a foreign country is always subject to the risk of expropriation or nationalization with inadequate compensation. Any foreign operation or investment may also be adversely affected by exchange controls, currency fluctuations, taxation and laws or policies of particular countries as well as laws and policies of the United States affecting foreign trade, investment and taxation.
EL BRONCE MINE
In July 1994, the Company entered into an agreement with Compania Minera El Bronce de Petorca, a Chilean corporation ("CMEB"), pursuant to which the Company acquired an option exercisable through July 1997 to purchase from CMEB a 51% equity interest in the producing El Bronce Mine. The El Bronce Mine is an underground, gold-silver mine located on approximately 33,000 acres in the Andean foothills about 90 miles north of Santiago, Chile and is accessible by road. The property consists of 64 exploitation concessions and 10 exploration concessions. Surface rights to permit mining on the property are leased from private owners. Ore is produced from an extensive, precious-metals bearing, epithermal, quartz-vein system hosted in Cretaceous volcanic rocks. Pursuant to the agreement, the Company made an initial payment to CMEB of $750,000 on July 25, 1994, an option payment of $4,050,000 on October 14, 1994 and expended $1.2 million during the balance of 1994 for exploration and mine development activities. In order to exercise its option to acquire a 51% equity interest in the mine, the Company will be required to invest an additional $20.4 million and also to invest at least $5 million (including 1994 s expenditures) prior to July 1996 for exploratory and developmental activities designed to increase ore reserves and increased annual gold production to 65,000 ounces from the present level of 40,000 ounces of gold.
In October 1994, the Company assumed operating control of the El Bronce Mine, in which the Company has 51% interest in any operating profits. The Company plans to maintain the 500 to 600 ton per day milling rate at the mine, improve the mining method to increase ore
reserves and to restructure the work force. The mill currently has a 1,200 ton per day capacity. In addition, the Company has commenced exploratory activities at three main exploration sites within the 17,800 acre area surrounding the mine.
Based on a reserve-report review dated January, 1995 by Compania Minera CDE El Bronce, in-place, proven and probable ore reserves on the El Bronce property total 393,000 tons averaging 0.172 ounces per ton gold. An additional 627,000 tons of mineralized material, averaging 0.18 ounce per ton gold, has been identified, but is currently insufficiently defined to be included in the reserve. The reserve is based on an internal cutoff of 0.058 ounce per ton gold. The Company estimates, based on past experience and metallurgical testing, mill recovery rates are 91.5% for gold and 90% for silver. The mineralized system remains geologically open both along strike and down-dip.
The following table sets forth El Bronce Mine production data subsequent to its acquisition on October 3, 1994. As stated above, the Company has a 51% interest in any operating profits from the mine. The Company's 5l% interest in the mine's operating profits from October 3, 1994 through December 31, 1994 amounted to $1,023,537.
The following sets forth the costs of production per ounce of gold and silver on a gold equivalent basis during the period subsequent to October 3, 1994 at the El Bronce Mine. Such costs include mining, processing and direct administration costs, royalties and exploration expenses. The production costs per ounce of gold for the period is computed on a gold equivalent basis. Each ounce of silver produced is multiplied by the same ratio as the then current silver-to-gold price ratio. This gold equivalent silver production is then added to actual gold production to determine the total gold equivalent production.
The Company plans to spend expend approximately $3.9 million during 1995 on exploratory anddevelopmental activities at the El Bronce Mine and surrounding areas.
THE FARIDE MINE
In September 1994, the Company entered into an agreement with Minera Cerro Dominador, a Chilean corporation ("MCD") pursuant to which the Company acquired an option, exercisable through January 15, 1998, to purchase from MCD a 51% operating interest in the fully-developed Faride Mine. The Faride property is located in northern Chile approximately 800 miles north of Santiago in the Andean foot-hills of Region II and is accessible by road. It consists of 36 exploitation concessions covering approximately 7,000 acres. Surface rights to permit mining are under lease from the Chilean government. Mineralization at Faride occurs in an extensive, precious and base-metal bearing, epithermal, quartz-vein system hosted in Tertiary granitic-intrusive rocks.
The Company can acquire its 51% operating interest by paying MCD $4 million over a four-year period and investing $3.5 million in exploration. Upon exercise of that option, the Company also has the right to purchase 51% of the crushing and milling facility at the mine for an additional $8 million.
The Faride property includes the fully-developed, underground Faride Mine, which was built to produce 660 tons of ore per day, and a 46,200 ton per month floatation mill, which is undergoing expansion to 77,000 tons per month capacity. The mine has not been operational since 1988.
The Company expended approximately $542,873 during 1994 to conduct surface and underground drilling in order to define reserves and to increase the resource base at the mine.
Based on a reserve-review report dated July 1990 by Minera Cerro Dominador, in-place, proven and probable ore reserves on the Faride property total approximately 1.075 million tons averaging 0.078 ounce per ton gold, 3.82 ounce per ton silver and 0.88% copper. An additional 566,000 tons of mineralized material, averaging 0.04 ounce per ton gold and 4.5 ounces per ton silver, has been identified during the reserve estimation. This material is insufficiently defined to be included in the reserve. The reserve estimate is based on gold, silver and copper prices of $400 per ounce, $6.20 per ounce and $0.80 per pound, respectively. Average grades reported in the reserve estimate do not reflect losses during the recovery process nor allowance for extractive dilution. Estimated recovery rates based on using a traditional milling process are approximately 80% gold, 75% silver and 25% copper. The vein system remains geologically open both down-dip and along strike.
The mill currently processes copper slag from Chuquicamata on a contract that is expected to terminate between 1996 and 1998. During
late 1994, the Company conducted extensive sampling and completed approximately 3,000 meters of surface and underground drilling to develop and define sufficient reserves.
The Company s work program consists of additional drilling to further delineate the ore body to enable the commencement of a feasibility study late in 1995.
SILVER AND GOLD PRICES
The Company's operating results are substantially dependent upon the world market prices of silver and gold. The Company has no control over silver and gold prices, which can fluctuate widely. The volatility of such prices is illustrated by the following table, which sets forth the high and low prices of silver (as reported by Handy and Harman) and gold (London final) per ounce during the periods indicated:
MARKETING
Coeur has historically sold its gold and silver from its mines both pursuant to forward contracts and at spot prices prevailing at the time of sale to various precious metals firms. As of December 31, 1994, the Company has entered into forward contracts to deliver a total of 115,000 ounces of gold at an average price of $416.20 per ounce through 1996.
EXPLORATORY MINING PROPERTIES
Coeur, either directly or through its wholly-owned subsidiaries, owns, leases and has interests in certain exploration-stage mining properties located in the United States, Mexico, Chile, and New Zealand. Giving retroactive effect to the Company's acquisition of Callahan, exploration expenses of approximately $2.3 million, $2.5 million and $3.9 million were incurred by the Company in connection with exploration activities in 1992, 1993 and 1994, respectively.
MANUFACTURING -- THE FLEXAUST COMPANY
Flexaust manufactures several lines of lightweight flexible hose and duct and metal tubing at plants located in Warsaw, Indiana and Ontario, California. In September 1992, the manufacturing operations previously located in Amesbury, Massachusetts were consolidated at the Flexaust facilities located in Warsaw, Indiana and Ontario, California in order to achieve efficiencies and economies of scale. Flexaust's
major product line consists of Flexaust close-pitch hose for low pressure and suction use as well as severe flexing conditions. A second line consists of Springflex wide-pitch retractable duct. Both lines are made primarily of neoprene-coated synthetic fabrics, wire-reinforced and are approximately one-third the weight of metal duct work of comparable load-carrying capacity. They are used in a wide variety of industrial and commercial applications for conveying air, dust, fumes and other materials.
Flexaust also produces Genesis , which is plastic hose used in industrial markets as well as commercial cleaning and vacuum applications; and Bendway duct, a line of metal tubing made of aluminum or stainless steel which also has a wide variety of industrial applications.
In addition, Flexaust participates in two joint ventures: Flexadux, Incorporated, a 50%-owned U.S. company, formed in partnership with a European producer, which makes and sells plastic industrial hose in the United States and Canada; and Flexaust GmbH, also 50%-owned, located in West Germany, which produces and markets Flexaust's regular line of wire-reinforced neoprene-coated fabric hose in Europe. In both joint ventures, Flexaust and its partner share equally in costs and profits. Each of the joint ventures has an exclusive license to produce and market the respective joint venture's products. These licenses are terminable upon one year's prior notice.
Flexaust's products are sold principally for industrial use through distributors, dealers and Flexaust's own sales force. Approximately 850 stocking distributors and dealers market Flexaust's products, and sales to distributors and dealers have averaged approximately 80% of total sales in the last three years. There are no continuing contracts for the sale of products. Approximately 80% of the products sold are standard while the remaining 20% are made to order or contain variations from standard. U.S. government sales and foreign sales are not material. There are no seasonal aspects to Flexaust's operations. Pre-tax income contributed by Flexaust in 1992, 1993 and 1994 amounted to approximately $1.1 million, $1.1 million and $1.2 million, respectively.
GOVERNMENT REGULATION AND LEGAL PROCEEDINGS
The Company's mining and mineral processing operations and property exploration and development activities are subject to extensive federal, state and local laws governing the protection of the environment, prospecting, development, production, taxes, labor standards, occupational health, mine safety, toxic substances and other matters. Coeur believes it is in substantial compliance with all applicable laws and regulations.
For the years ended December 31, 1992, 1993 and 1994, the Company expended $1,050,015, $2,404,698 and $2,974,438 respectively, in connection with environmental compliance activities at its operating
properties. Furthermore, as discussed under "Bunker Hill Superfund Site" below, the Company agreed in October 1993 to settle an environmental matter for $1,230,000. In addition, as of December 31, 1994, the Company had expended approximately $4.6 million on environmental and permitting activities at the Kensington Property, which expenditures have been capitalized as part of its development cost. Future environmental expenditures will be determined by governmental regulations and the overall scope of the Company's operating and development activities.
Federal Environmental Laws
Among the numerous federal environmental laws to which the Company is subject is the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("Superfund" or "CERCLA"), which is the most important federal program for remediating environmental dangers caused by hazardous substances. CERCLA provides for the possible imposition of joint and several liability upon potentially responsible parties ("PRPs"), including current and past owners and operators at the site involved, persons who generated or otherwise arranged for the disposal of hazardous substances released at the site, and persons who were involved in the transport, treatment or disposal of hazardous substances released at the site. The Resource Conservation and Recovery Act of 1976 ("RCRA") established a comprehensive regulatory framework for the management of hazardous waste at active facilities, complementing the Superfund Program which more often addresses inactive waste sites. RCRA sets up a system for the management of hazardous wastes (including leach spoil waste containing cyanide such as the waste generated by the Rochester Mine), imposing requirements for performance, testing and record keeping upon parties who generate, transport, treat, store or dispose of waste.
The Company's commitment to environmental responsibility has been recognized in eight awards received since 1987, which included the Dupont/Conoco Environmental Leadership Award, awarded to the Company on October 1, 1991 by a judging panel that included representatives from environmental organizations and the federal government and the "Star" award granted on June 23, 1993 by the National Environmental Development Association. The receipt of such awards does not relieve the Company of its obligations to comply with all applicable environmental laws.
Bunker Hill Superfund Site.
The Company knows of no material environmental liabilities to which it currently is subject. During October 1993, the Company and Callahan negotiated a tentative settlement agreement with the U.S. Environmental Protection Agency (the "EPA") and a group of other companies that are potentially responsible parties ("PRPs") in connection with the Bunker Hill Superfund site. The Company and Callahan were notified in February 1990 by the EPA that they were PRPs in connection with that site, where the EPA claims there is a need for cleanup action under CERCLA. The negotiated settlement agreement called for the Company and
Callahan to pay a total of $1,230,000 to a group of other PRPs in order to remove the Company and Callahan from any additional cleanup liability relating to the site. Accordingly, the Company recorded a non-recurring environmental settlement expense of $1,230,000 during the third quarter of 1993. An order approving the settlement was issued by the Unites States District Court for the District of Idaho on November 17, 1994 and the settlement amount was paid on December 16, 1994.
Mining Act of 1872.
Legislation is presently pending in the U.S. Congress to change the Mining Law of 1872 (the "Mining Act") under which the Company holds mining claims on public lands. It is considered possible that the Mining Act will be amended or be replaced by stricter legislation in 1995. Some of the legislation being discussed contains strict new environmental standards and conditions, additional reclamation requirements and extensive new procedural steps which would likely result in delays in permitting. The legislation may also impose an 8% gross royalty on the value of minerals mined on public lands, payable to the U.S. Government. Whether changes will be enacted or the extent of any changes is not presently known and the potential impact on the Company's United States activities is difficult to predict.
New Zealand and Chile Government Regulations
The mining properties located in New Zealand and Chile are subject to various government laws and regulations pertaining to the protection of the air, surface water, ground water and the environment in general, as well as the health of the work force, labor standards and the socioeconomic impacts of mining facilities upon the communities. The Company believes it is in substantial compliance with all applicable laws and regulations in both Chile and New Zealand, and believes that it can comply with the laws in Chile which will govern operations at Fachinal.
EMPLOYEES
At March 1, 1995, the Company employed a total of 1,007 full-time employees, of which 46 are located at the Company's executive offices in Coeur d'Alene, Idaho, 307 are employed at the Rochester Mine, 169 are employed at the Golden Cross Mine in New Zealand, 82 are employed by Flexaust, 400 are employed in Chile and 3 are employed in other various activities. The Company maintains labor agreements under country statutes in New Zealand at the Coeur Golden Cross Mine and in Chile at the El Bronce Mine. Both agreements are for three years and currently are being proactively administered. In the opinion of the Company, its labor relations have been satisfactory. The personnel developing the Kensington property are employees of Echo Bay Mines Alaska, Inc. and the employees of Silver Valley Resources are employees of that company.
ITEM 2.
ITEM 2. PROPERTIES.
Information regarding the Company's properties is set forth under Item 1 above.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
Promissory Note Suit
On September 22, 1994, a judgment was entered against the Company in the United States District Court for the District of Idaho in a case entitled Goldberg v. Coeur d'Alene Mines Corporation in the amount of $725,688. The action involves an alleged claim by the plaintiff to recover on four promissory notes made by a predecessor of the Company. The notes are claimed to be the obligation of the Company by virtue of successive mergers which occurred in 1974 and 1988. The plaintiff filed with the court a cost bill in the approximate amount of $225,000. The claim was settled on January 11, 1995 by the payout of $800,000.
Internal Revenue Service Audit
In December 1993, the IRS completed an audit of the Company for the years 1990 and 1991. In November 1994, the IRS also initiated their audit of the Company for the years 1992 and 1993. For all such years, the IRS has advised the Company that three material issues remain unresolved. All issues involve the deductibility of costs previously claimed by the Company.
On February 7, 1995, the IRS issued its thirty-day letter assessing tax deficiencies of $738,806. If resolved in favor of the IRS, the Company would be subject to the deficiency, net operating loss carryforwards would be decreased by $28.2 million, and approximately $2 million of pending tax refunds would be forfeited. The Company believes it has treated each issue in question in a manner that is consistent with applicable law and prevailing industry practice and is in the process of filing a petition with the United States Tax Court to contest the assessment.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth certain information regarding the Company's current executive officers:
Messrs. Wheeler, Sabala and Angelos have been principally employed by the Company for more than the past five years. Prior to his employment with the Company in October 1992, Mr. Clark had served as the Executive Vice President and Chief Operating Officer of Pegasus Gold, Inc. since 1990 and as the Vice President-Operations and Chief Operating Officer of that company since 1986. Mr. Boyd was a partner in the law firm of Evans, Keane, Koontz, Boyd, Simko & Ripley for more than five years prior to his employment with the Company in April 1990. Mr. Alan L. Wilder was Process Plant Superintendent at Coeur Rochester in 1986, Project Manager for Newmont Mining Corporation until 1989, a consultant in 1990 and 1991, and Manager of Engineering and Construction for the Company in 1991 until his appointment as an executive officer effective January 1, 1992.
Part II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS.
The Company's Common Stock is listed on the New York Stock Exchange ("NYSE") and the Pacific Coast Exchange. The following table sets forth, for the periods indicated, the high and low closing sales prices of the Common Stock as reported by the NYSE:
The Company paid per share cash dividends of $.15, $.15, $.15, $.12, $.11, and $.11 on its Common Stock on April 15, 1994, April 16, 1993, April 15, 1992, April 12, 1991, April 20, 1990 and April 21, 1989 respectively. Future dividends on the Common Stock, if any, will be determined by the Company's Board of Directors and will depend upon the Company's results of operations, financial conditions, capital requirements and other factors.
At March 21, 1995, there were 8,859 record holders of the Company's outstanding Common Stock.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The following table summarizes certain selected consolidated financial data with respect to the Company and its subsidiaries and should be read in conjunction with the Consolidated Financial Statements and Notes thereto appearing elsewhere in this report. The information has been restated to give effect to a business combination with Callahan Mining Corporation. (See Note C to the consolidated financial statements.)
(1) Effective January 1, 1993, the Company changed its method of accounting for income taxes by adopting Statement of Financial Accounting Standards (FAS) 109, "Accounting for Income Taxes." FAS 109 requires an asset and liability approach to accounting for income taxes and establishes criteria for recognizing deferred tax assets. Accordingly, the Company adjusted its existing deferred income tax assets and liabilities to reflect current statutory income tax rates and previously unrecognized tax benefits related to federal and certain state net operating loss carryforwards. FAS 109 also contains new requirements regarding balance sheet classification and prior business combinations. Hence, the Company adjusted the carrying values of an incremental interest in the Rochester Property acquired in 1988 and CDE Chilean Mining Corp. acquired in 1990 to reflect the gross purchase value previously reported net-of-tax. The cumulative effect of the accounting change on prior years at January 1, 1993 is a nonrecurring gain of $5,181,188, or $.34 per share, and is included in the Consolidated Statement of Operations for the year ended December 31, 1993. Other than the cumulative effect, the accounting change had no material effect on the results of operations for the year ended December 31, 1993.
As of January 1, 1993, after giving effect to the implementation of FAS 109, the significant components of the Company's net deferred tax liability were as follows:
As permitted by FAS 109, prior year financial statements have not been restated to reflect the change in accounting method.
(2) Earnings per share are calculated based on the weighted average number of common shares outstanding and those Common Stock equivalents that are deemed to be dilutive. The 6% Convertible Subordinated Debentures Due 2002 are considered to be Common Stock equivalents. Accordingly, such debentures are assumed to be converted, and interest expense on such debentures, net of tax expense, has been considered in the computation of earnings per share, except in those instances where the effects of conversion would be antidilutive.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
GENERAL
The results of the Company's operations are significantly affected by the market prices of gold and silver which may fluctuate widely and are affected by many factors beyond the Company's control, including interest rates, expectations regarding inflation, currency values, governmental decisions regarding the disposal of precious metals stockpiles, global and regional political and economic conditions, and other factors. The Company's currently operating mines are the Rochester Mine in Nevada, which it wholly owns and operates; the Golden Cross Mine in New Zealand, in which the Company has an 80% operating interest; and the El Bronce Mine, a Chilean gold mine of which the Company acquired operating control in October 1994. In addition, in September 1994, the Company entered into an agreement under which it has the right to acquire up to a 51% operating interest in another Chilean gold mine, the Faride Mine.
Effective January 1, 1995, the Company, Callahan and Asarco contributed to Silver Valley their interests in and relating to the Galena and Coeur Mines in Idaho, at which mining activities were suspended in July 1992 and April 1991, respectively, due to then prevailing silver prices, and the adjoining Caladay property, a silver exploration property. It is contemplated that Silver Valley, of which Asarco owns 50% and the Company and Callahan own 50%, will invest approximately $25 million in development and exploration at the properties under a two-year plan of lengthening the existing workings, improving infrastructure and diamond drilling to increase reserves and mine life. The reopening of the Galena and Coeur Mines is dependent upon the favorable action of the Board of Directors of Silver Valley, which will base its decision upon several factors, including silver prices.
The Company has an option until July 1997 to increase its ownership interest in the El Bronce Mine to 51% if it invests $20.4 million and also invests a minimum of $5 million over a two-year period for exploration and mine development designed to expand ore reserves and increase annual gold production above the current level of 40,000 ounces per year. The Company also has an option until January 15, 1998 to acquire up to a 51% operating interest in the Faride Mine by paying the current owner $4 million over a four-year period and investing $3.5 million in exploratory activities.
In July 1994, the Company's Board of Director's approved construction of the Fachinal Project. Construction of the new mine is expected to be completed in the fourth quarter of 1995 at a total estimated cost of approximately $41.8 million. The mine presently is expected to produce approximately 41,000 ounces of gold and 2.6 million ounces of silver in its first year.
A production decision at the Kensington Property is subject to the approval by the Company and its joint venture partner, a market price of gold of at least $400 per ounce and the receipt of certain required permits. The market price of gold (London final) on March 9, 1995 was $381.50 per ounce. With respect to the permits, the Company is unable to
control the timing of their issuance. On November 8, 1994 EPA issued a draft of its Technical Assistance Report which calls for the Kensington venture to redesign portions of its project and furnish additional data, in order to satisfy certain environmental requirements. If, in its final report, the EPA adheres to the recommendations in the draft, the Company believes it is feasible to make design changes and furnish necessary data. It is anticipated that a final EPA Technical Assistance Report will be furnished by the EPA to the Army Corps of Engineers in the second quarter of 1995, which should lead to the issuance by the Corps of its Section 404 permit in due course. However, the Company is not able to control the timing of such regulatory issues.
The Company's business plan is to continue to acquire mining properties and/or businesses that are operational or expected to become operational in the near future so that they can reasonably be expected to contribute to the Company's near-term cash flow from operations and expand the Company's gold and/or silver production.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993
SALES AND GROSS PROFITS
Sales of concentrates and dore' in 1994 increased by $11,616,272, or 17%, over 1993. The increase is primarily attributable to an increase in gold production and increases in metal prices. Silver and gold prices averaged $5.28 and $384.01 per ounce, respectively, in 1994 compared to $4.30 and $359.77 per ounce, respectively, in 1993. During 1994, the Company produced 6,180,215 ounces of silver and 129,239 ounces of gold compared to 6,119,219 ounces of silver and 123,310 ounces of gold in 1993. The increase in gold production is due to the Company's acquisition of an 80% interest in the Golden Cross Mine effective April 30, 1993. The Company's 80% interest in Golden Cross production in 1994 amounted to 67,400 ounces of gold and 222,246 ounces of silver compared to 56,898 ounces of gold and 175,325 ounces of silver in 1993.
The cost of mine operations in 1994 increased by $7,998,962, or 13%, over 1993. Gross profit from mine operations increased by $3,617,310, or 44%, over 1993. Mine operations gross profit as a percent of sales increased to 15% in 1994 compared to 12% in 1993. The increase was primarily attributable to the increases in silver and gold prices in 1994 over the prior year.
The cash costs of production per ounce of gold at the Golden Cross Mine amounted to $277 per ounce in 1994, compared to $245 per ounce during the four months ended April 30, 1993 and $220 per ounce during the eight months ended December 31, 1993. The increase was primarily attributable to the presence of a harder grinding ore in the open pit requiring more milling and chemicals in the processing and lower grade of ore being provided from the underground portion of the mine. The cash costs of production per ounce of silver on a silver equivalent basis at the Rochester Mine amounted to $3.57 per ounce in 1994, compared to $3.55 per ounce in 1993.
Sales of industrial products in 1994 increased by $1,224,646, or 12%, compared to 1993. Cost of manufacturing increased by $1,175,157, or 13%, in 1994 compared to 1993. As a result, gross profit from manufacturing in 1994 increased by $49,489, or 4%, compared to 1993.
OTHER INCOME
Interest and other income in 1994 increased by $7,320,550, or 132%, over 1993. The increase is primarily due to an increase in the level of the Company's cash and securities portfolio and a gain of $2.7 million arising from the sale by the Company of common shares of International Curator in the third quarter of 1994.
EXPENSES
Total expenses in 1994 decreased by $2,054,213, or 7%, from 1993. The decrease is primarily due to the non-recurring write-offs of $9,374,000, or $.61 per share, effected in the third quarter of 1993. Those write-offs are discussed below and included one-time provisions for litigation settlement of $5,875,000, environmental settlement of $1,230,000 and the write-off of uncollectible notes receivable of $2,268,564. A non-recurring write-off of $800,000 was recorded in 1994 as a result of an adverse judgment in a lawsuit described below relating to four promissory notes made by a predecessor of the Company.
On September 22, 1994, a judgment was entered against the Company in the United States District Court for the District of Idaho in a case entitled Goldberg v. Coeur d'Alene Mines Corporation in the amount of $725,688 plus attorney fees. The action involves an alleged claim by the plaintiff to recover on four promissory notes made by a predecessor of the Company. The notes are claimed to be the obligation of the Company by virtue of successive mergers which occurred in 1974 and in 1988. Plaintiff filed with the court a cost bill in the approximate amount of $225,000. The claim was settled on January 11, 1995 by payout of $800,000.
On November 12, 1993, the Company's Board of Directors approved the proposed settlement of Kassover v. Coeur d'Alene Mines Corporation, the class action originally filed in November 1990 and amended in March 1991 alleging violations of the federal securities laws and common law primarily in connection with the Company's public offering of Common Stock in September 1990. The proposed settlement called for the Company to (i) issue to the class members Common Stock of the Company having a fair market value of $4 million based on the average closing sale price of the Common Stock on the New York Stock Exchange during the five trading days immediately preceding the court hearing to be held in connection with the settlement and (ii) pay $1,875,000 in cash. On June 24, 1994, the U.S. District Court for the District of Idaho approved the settlement and prior to the end of 1994, a total of 220,083 shares of Common Stock were issued in connection with the settlement. The Board's decision reflected its desire to avoid the continuing substantial costs and expenses associated with the lawsuit and the inherent uncertainties
of litigation. The Company recorded a litigation settlement expense of $5,875,000 in the third quarter of 1993.
During October 1993, the Company and Callahan negotiated a tentative settlement agreement with the U.S. Environmental Protection Agency (the "EPA") and a group of other companies that are potentially responsible parties ("PRPs") in connection with the Bunker Hill Superfund site. The Company and Callahan had been notified in February 1990 by the EPA that they were PRPs in connection with that site, where the EPA claimed there was a need for cleanup action under the Comprehensive Environmental Response Compensation and Liability Act of 1980. The negotiated settlement agreement called for the Company and Callahan to pay a total of $1,230,000 to a group of other PRPs in order to remove the Company and Callahan from any additional cleanup liability relating to the site. Accordingly, the Company recorded a non-recurring environmental settlement expense of $1,230,000 during the third quarter of 1993. An order approving the settlement was issued by the United States District Court for the District of Idaho on November 17, 1994, and the settlement amount was paid on December 16, 1994.
During September 1993, the Company commenced foreclosure proceedings upon the collateral underlying two delinquent collateralized promissory notes, the recorded principal and accrued interest on which amounted to $2,268,564. The notes originally were acquired by a corporation that merged with the Company in 1988. Demand for payment had been made without satisfaction and the Company discontinued accruing interest on the notes in October 1991. As a result of the institution of the foreclosure proceedings and the Company's inability to ascertain what amounts, if any, could be realized therefrom, the Company effected a non-recurring write-off of uncollectible notes receivable of $2,268,564 in the third quarter of 1993.
The above-described decrease in non-recurring expenses in 1994 from 1993 was partially offset by an increase in interest expense of approximately $6.0 million in 1994, which was related to the issuance of $100 million principal amount of 6-3/8% Convertible Subordinated Debentures in the first quarter of 1994, and increases in administrative expenses of approximately $.2 million and mining exploration of approximately $1.3 million.
INCOME (LOSS) BEFORE TAXES AND ACCOUNTING CHANGE
As a result of the above, the Company's loss before income taxes and the cumulative effect of a change in accounting amounted to $3,679,258 in 1994 compared to $16,720,820 in 1993. The provision for income taxes amounted to $263,306 in 1994, compared to a benefit of $3,430,760 in 1993. As a result, the Company reported a net loss before the cumulative effect of a change in accounting of $3,942,564, or $ .26 per share, in 1994, compared to a net loss of $13,290,060, or $.87 per share, in 1993.
CHANGE IN ACCOUNTING
Effective January 1, 1993, the Company changed its method of accounting for income taxes by adopting the mandatory Statement of Financial Accounting Standards (FAS) 109, "Accounting for Income Taxes." FAS 109 requires an asset and liability approach to accounting for income taxes and establishes criteria for recognizing deferred tax assets. Accordingly, the Company adjusted its existing deferred income tax assets and liabilities to reflect current statutory income tax rates and previously unrecognized tax benefits related to federal and certain state net operating loss carry forwards. The cumulative effect of the accounting change on prior years at January 1, 1993, resulted in a non-recurring gain of $5,181,188, or $.34 per share, and is included in the results of operations for 1993.
NET INCOME (LOSS)
As a result of the above, the Company reported a net loss of $3,942,564, or $.26 per share, in 1994, compared to a net loss of $8,108,872, or $.53 per share, in 1993.
RESULTS OF OPERATIONS - 1993 COMPARED TO 1992
SALES AND GROSS PROFIT
Sales of concentrates and dore in 1993 increased by $26,575,500, or 64%, over 1992. The increase is primarily attributable to an increase in gold production and increases in metal prices. Silver and gold prices averaged $4.30 and $359.77 per ounce, respectively, in 1993 compared to $3.94 and $343.73 per ounce, respectively, in 1992. During 1993, the Company produced 6,119,219 ounces of silver and 123,310 ounces of gold compared to 6,254,273 ounces of silver and 56,638 ounces of gold in 1992. The decrease in silver production is due to the temporary closure of the Galena Mine in July 1992. The Galena Mine contributed 822,904 ounces of silver production during 1992. The increase in gold production is due to the Company's acquisition of an 80% interest in the Golden Cross Mine effective April 30, 1993. The Company's 80% interest in Golden Cross Mine production in 1993 amounted to 56,898 ounces of gold and 175,325 ounces of silver.
The cost of mine operations in 1993 increased by $21,974,182, or 58%, over 1992 and is primarily due to the acquisition of the Golden Cross Mine in 1993. Gross profit from mine operations increased by $4,601,318, or 128%, in 1993 from 1992. Mine operations gross profit as a percent of sales increased to 12.0% in 1993 compared to 8.7% in 1992. The increase was primarily attributable to the increases in silver and gold prices in 1993 from the prior year.
Sales of industrial products in 1993 increased by $84,116, or .8%, compared to 1992. Cost of manufacturing increased by $101,134, or 1.1%, in 1993, compared to the prior year. As a result, gross profit from manufacturing for 1993 decreased by $17,018, or 1.5%, compared to 1992.
EXPENSES
Total expenses in 1993 increased by $17,429,334, or 123%, over the prior year. The increase is primarily due to non-recurring write-offs of $9,373,564, or $.61 per share ($.49 per share net of taxes), effected in the third quarter of 1993. The write-offs include a one time provision for litigation settlement of $5,875,000, resolution of an environmental matter of $1,230,000 and the write-off of uncollectible notes receivable of $2,268,564. The increase is also attributable to an increase in interest expense of $4,267,802, which is related to the issuance of $75 million principal amount of 7% Convertible Subordinated Debentures in December 1992, and increases in accounting and legal expenses of $1,641,235, idle facilities expense of $769,902, corporate expenses of $617,067 and administrative expenses of $485,501.
NON-RECURRING CHARGES
As described above, non-recurring expenses recorded by the Company during 1993 included (i) a litigation settlement expense of $5,875,000 in connection with the settlement of the Kassover class action lawsuit, (ii) an environmental expense of $1,230,000 in connection with the settlement relating to the Bunker Hill Superfund site and (iii) a write-off of uncollectible notes receivable of $2,268,564.
INCOME (LOSS) BEFORE TAXES AND ACCOUNTING CHANGE
As a result of the above, the Company's loss before income taxes and the cumulative effect of a change in accounting amounted to $16,720,820 in 1993, compared to $4,506,391 in 1992. The benefit for income taxes amounted to $3,430,760 in 1993, compared to $3,747,136 in 1992. The Company reported a net loss before the cumulative effect of a change in accounting of $13,290,060, or $.87 per share, in 1993, compared to $759,255, or $.05 per share, in 1992.
CHANGE IN ACCOUNTING
Effective January 1, 1993, the Company changed its method of accounting for income taxes by adopting the mandatory Statement of Financial Accounting Standards (FAS) 109, "Accounting for Income Taxes." FAS 109 requires an asset and liability approach to accounting for income taxes and establishes criteria for recognizing deferred tax assets. Accordingly, the Company adjusted its existing deferred income tax assets and liabilities to reflect current statutory income tax rates and previously unrecognized tax benefits related to federal and certain state net operating loss carry forwards. The cumulative effect of the
accounting change on prior years at January 1, 1993, results in a non-recurring gain of $5,181,188, or $.34 per share, and is included in the results of operations for 1993.
NET INCOME (LOSS)
The Company reported a net loss of $8,108,872, or $.53 per share, in 1993, compared to a net loss of $759,255, or $.05 per share, in 1992.
LIQUIDITY AND CAPITAL RESOURCES
Working Capital; Cash and Cash Equivalents
The Company's working capital at December 31, 1994 was approximately $173.5 million compared to $107.6 million at December 31, 1993. The ratio of current assets to current liabilities was 10.4 to one at December 31, 1994 compared to 6.0 to one at December 31, 1993.
The increase in the Company's working capital at December 31, 1994 compared to December 31, 1993 is primarily attributable to the Company's sale in January and February 1994 of an aggregate of $100,000,000 principal amount of 6-3/8% Convertible Subordinated Debentures Due 2004 (the "6 3/8% Debentures"). The 6 3/8% Debentures were sold by the Company to Kidder, Peabody & Co. Incorporated ("Kidder") pursuant to a Purchase Agreement, dated January 18, 1994, at a price equal to 96.75% of the principal amount sold and were issued by the Company in connection with an offering to "qualified institutional buyers" as defined in Rule 144A under the Securities Act and to certain non-U.S. persons in reliance upon Regulation S under the Securities Act of 1933 (the "Securities Act"). The 6 3/8% Debentures were issued pursuant to an Indenture, dated as of January 26, 1994 (the "Indenture"), between the Company and Bankers Trust Company, as trustee. The 6 3/8% Debentures are convertible into shares of Common Stock on or before January 31, 2004, unless previously redeemed, at a conversion price of $26.20 per share, subject to adjustment in certain events. The 6 3/8% Debentures are redeemable, in whole or in part, at any time on or after January 31, 1997, at redemption prices declining from 103.643% of the principal amount during the year beginning January 31, 1997, to 100% of the principal amount during the year beginning January 31, 2001 and thereafter. The 6 3/8% Debentures are required to be repurchased at the option of the holder if a Designated Event (as defined in the Indenture) occurs, at 100% of the principal amount thereof plus accrued interest. The Debentures are unsecured and subordinate in right of payment to all Senior Debt (as defined in the Indenture). The Indenture, Purchase Agreement and Registration Rights Agreement are filed as exhibits to this Report.
Pursuant to a Registration Rights Agreement, dated January 26, 1994, ("Registration Rights Agreement") between the Company and Kidder, the Company filed a shelf registration statement under the Securities Act in April 1994 for the purpose of registering the 6 3/8% Debentures and underlying shares of Common Stock issuable upon the conversion thereof under the Securities Act. The Company plans to use the approximately $95.5 million net proceeds from such offering for general corporate purposes, including the possible acquisition of, or investment in,
additional precious metals mines, properties or businesses, and for possible developmental activities on new or existing mining properties. The Company's acquisition efforts are primarily focused upon operating precious metals mines and precious metals properties or businesses that are expected to become operational in the near future. The Company currently is engaged in the review and investigation of opportunities for expansion of its business through acquisitions, investments or other transactions. While preliminary agreements have been entered into with respect to certain proposed acquisitions, the consummation of such acquisitions is subject to significant contingencies. The Company invested the proceeds of the above offering in interest-bearing marketable securities and money market obligations, and plans to continue such investments pending the use of the proceeds of that offering as discussed above.
Net cash provided by operating activities in 1994 was $6,403,007 compared to $4,202,377 in 1993. Net cash used in investing activities in 1994 was $97,244,073 compared to $119,558,375 in 1993. Net cash provided by financing activities in 1994 was $91,310,877 compared to$4,072,853 net cash used in financing activities in 1993. As a result of the above, cash and cash equivalents increased by $469,811 in 1994 compared to a $119,428,851 decrease in 1993.
Construction of Fachinal Mine
In July 1994, following completion by an independent engineering firm of a detailed feasibility study regarding the Company's Fachinal property, the Company's Board of Directors approved the construction of the project. Based on that study, the Company estimates that the cost to complete the Fachinal mining facilities will be approximately $41.8 million. The Company is funding that construction on a project financing basis. The Company expects to enter into a financing agreement with N.M. Rothschild and Sons, Ltd. under which the bank will provide $24 million for project development. The agreement requires Coeur d Alene Mines to guarantee repayment of the facility until the project reaches a defined completion after which the project alone is liable for repayment. The agreement has numerous financial covenants. The interest rate prior to completion is equal to LIBOR plus 1.5% and increases to LIBOR plus 2.75% after completion. The facility is repayable in eight equal semiannual installments after project completion.
Environmental Compliance Expenditures
For the years ended December 31, 1994, 1993 and 1992, the Company expended $2,974,438, $2,404,698, and $1,050,015, respectively, in connection with environmental compliance activities at its operating properties. At December 31, 1994, the Company had expended a total of approximately $4.6 million on environmental and permitting activities at the Kensington Property, which expenditures have been capitalized as part of its development cost.
The Company estimates that its environmental compliance expenditures at its operating properties during 1995 will approximate $2,071,000. Such activities at the Rochester and Golden Cross Mines include monitoring, bonding, earth moving, water treatment and revegetation activities. The Company estimates that environmental compliance expenditures at its Kensington and Fachinal developmental properties during 1995 will approximate $542,904 and relate to activities associated with obtaining permits required for construction. Such expenditures would significantly increase in the event a decision is made to proceed with the construction of production facilities at the Kensington property. The Company established a $585,000 reserve in 1991 for future costs relating to the closure of the Ropes Mine previously owned by Callahan; the Company is currently reviewing the adequacy of that reserve to cover expenditures required to comply with environmental regulations. Future environmental expenditures will be determined by governmental regulations and the overall scope of the Company's operating and development activities. The Company places a very high priority on its compliance with environmental regulations.
Exploration and Development Expenditures
During 1994, the Company expended approximately $2.2 million (excluding capitalized interest) for its share of the developmental costs at the Kensington Property, approximately $5.8 million for leach pad construction at the Rochester Mine, $7.5 million (excluding capitalized interest) for the development of the Fachinal Property, $4.8 million representing investment in the El Bronce Mine and $1.2 million to continue its planned development exploration programs. During 1995, the Company presently plans to expend approximately $1.7 million (excluding capitalized interest) for its share of Kensington Property development costs, approximately $38.3 million (excluding capitalized interest) for development at the Fachinal Property, and $3.9 million for developmental and exploration activities at the El Bronce Mine. Construction of the new Fachinal mining facilities is expected to be completed in the fourth quarter of 1995. No decision has been made as to when or whether the Kensington Property will be placed into commercial production.
Internal Revenue Service Audit
In December 1993, the IRS completed an audit of the Company for the years 1990 and 1991. The IRS has advised the Company that two issues remain unresolved, and that the IRS will issue a proposed assessment. One issue involves the alternative minimum tax, which, if resolved in favor of the IRS, would require payment by the Company of approximately $1.2 million. The other issue involves the deductibility of costs previously claimed by the Company. If resolved in favor of the IRS, the Company's net operating loss carryforward would be decreased by $8.2 million. The Company believes it has treated both issues in a manner that is consistent with applicable law and prevailing industry practice and will contest any such assessment.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General Instruction G(3) of Form 10-K, the information called for by this item regarding directors is hereby incorporated by reference from the Company's definitive proxy statement to be filed pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report. Information regarding the Company's executive officers is set forth above under Item 4A of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
Pursuant to General Instruction G(3) of Form 10-K, the information called for by this item is hereby incorporated by reference from the Company's definitive proxy statement to be filed pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Pursuant to General Instruction G(3) of Form 10-K, the information called for by this item is hereby incorporated by reference from the Company's definitive proxy statement to be filed pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to General Instruction G(3) of Form 10-K, the information called for by this item is hereby incorporated by reference from the Company's definitive proxy statement to be filed pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report.
Part IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements and Financial Statement Schedules:
(1) The following consolidated financial statements of Coeur d'Alene Mines Corporation and subsidiaries are included in Item 8.