Coeur d’Alene Mines announced today that as part of the ongoing operational improvement program at its Cerro Bayo mine in southern Chile, the mine will be upgrading its electrical infrastructure, which will result in a temporary suspension of mining operations for approximately six weeks. Earlier this year, Coeur implemented a recovery plan at Cerro Bayo to address the higher costs and lower production rates experienced at the mine in 2007. Key components of this plan include increased underground mine development to provide more operational flexibility, reducing the size of the workforce, improving the training of the workforce using new, more efficient mining methods, an organizational restructuring, and a cost improvement program. The temporary suspension of mining operations is to allow the improvements of the contractor installed electrical distribution systems for both the surface and underground facilities to be undertaken to further improve operational reliability and performance.
The initiatives begun late last year have begun to be reflected in the mine’s operational and financial results:
- No lost time accidents year-to-date
- $5.14/oz cash costs of silver this year through the end of February–a 34% decline compared to the 4th quarter 2007
- A 50% increase in the average silver grade and a 20% increase in the average gold grade this year through February compared to full year 2007.
Previously, the company had projected that production at Cerro Bayo during 2008 would be approximately 2.5 Moz of silver and 40,000 oz of gold–47% and 8% increases over 2007 levels, respectively. Coeur now anticipates these production targets to be reduced by approximately 180,000 oz of silver and about 4,000 oz of gold due to this temporary suspension of mining activities to upgrade the electrical systems.
Production and costs at Cerro Bayo are expected to show significant improvement over 2007, particularly during the third and fourth quarters of this year. Cash costs for 2008 are still expected to be approximately $3.14/oz of silver–62% lower than 2007 cash costs.
As of December 31, 2007, Cerro Bayo contained an estimated 7.2 Moz of Proven and Probable silver mineral reserves and 112,000 oz of Proven and Probable gold reserves. Silver mineral reserves increased 18% from December 31, 2006 levels. In addition to these reserves, Cerro Bayo contains an estimated 10.2 Moz of Measured and Indicated silver mineral resources and 180,000 oz of Measured and Indicated gold mineral resources and 16.3 Moz of Inferred silver mineral resources and 217,000 oz of Inferred gold mineral resources.
Active exploration activities will continue at the mine during the upgrade work, with continued focus on the five new vein systems discovered in the second half of 2007 near the Cerro Bayo mill facility to expand the known mineralisation and define new mineral reserves.
