Coeur Mining Inc (CDE) 2007 Q4 法說會逐字稿

Good afternoon. My name is Darlene, and I will be your conference Operator today. At this time, I would like to welcome everyone to the fourth quarter and 2007 results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question and answer session. (OPERATOR INSTRUCTIONS) Thank you. I will now turn the call over to Mr. Tony Ebersole, Director of Investor Relations. You may begin your conference.

Thank you, Darlene, and good day, everyone. This is Tony Ebersole, Director of Investor Relations for Coeur. Thank you for joining us today and today's call to discuss the companies results for the fourth quarter and 2007. In accordance with our standard practice, this call is also being broadcast live on the internet through our website at www.Coeur.Com, where we have also posted the slides that accompany our prepared remarks. Telephonic replay of the call will be available for one week afterward on our website. Today's presenters include: Dennis Wheeler, Chairman, President, and Chief Executive Officer; Jim Sabala, Executive Vice President, Chief Financial Officer; Don Birak, Senior Vice President of Exploration; Richard Weston, Senior Vice President of Operations. Any forward-looking statements made today by Management come under securities legislation and the United States, Canada and Australia, and involve a number of risks that could cause actual results to differ from oper -- projections. With that I'd like to turn the call over to Dennis.

Thanks, Tony, and welcome to everyone. It's particularly gratifying to us to be on this call today highlighting Coeur's progress in the fourth quarter and for the year 2007, as the Company is coming off one of its most significant and defining years in its 80-year history. We completed the largest transaction in the history of the silver industry at the end of December with the acquisition of Bolnisi Gold and Palmarejo silver and gold, bringing to the Company the exciting Palmarejo silver and gold project in northern Mexico, one of the newest largest and highest grade silver/gold projects in the world where our team is well under way. Combined with our San Bartolome pure silver line in Bolivia which has already started its pre-commissioning and is nearing production, Coeur is beginning to deliver on its dynamic growth profile in silver production, accelerating in 2008 and heading towards a near tripling of our silver production in 2009, with expected substantial reductions in our company-wide cash cost.

We produced 11.5 million ounces of silver and 92,000 ounces of gold in 2007. We're looking this year to increase silver production by as much as 40% over last year with the addition of a partial year of San Bartolome production. Cash costs for the year were under $4 an ounce of silver providing a healthy margin at current prices. In 2007, Coeur's total silver reserves and resources with our fine exploration group increased by 40% from the previous year to 530 million ounces today and our total gold reserves and resources increased 60% from 2006 levels to 4.6 million ounces. We're nearing completion of the first feasibility study at Palmarejo with construction accelerating this year towards start up in the first half of 2009.

We also completed construction of the new mill at Martha in Argentina in 2007. The decision to construct this stand-alone mill at Martha was made after we continued to increase the mines reserves and resources through our mine exploration efforts. We expect to continue to add to Martha's mine life with our team there through additional increases in reserves and resources going forward. In addition, processing at Martha rather than trucking it to Cerro Bayo reduces cost. At Kensington, our gold project in Alaska, we are moving forward with a plan for an alternate tailings facility and have submitted a modified plan of operations for pace tailings alternative. With the mine construction now essentially 100% complete, with only the tailings facility remaining, we are optimistic that this alternate permitting process, which is well supported, can be realized this year with the potential for operations to begin in the second half of 2009.

At our existing mines, our number one priority has been and will be to get Cerro Bayo back on track in southern Chile , reducing the mines operating cost and increasing its silver and gold production. Richard Weston and his team have made a number of changes and improvements on site and we believe we now have the right people and the right plan in place to address the mine's issues. This includes a recovery plan for improved mining methods and productivity, and we expect steady improvement in the performance each quarter this year, particularly in the third and fourth quarters, and Richard is going to speak to you more about the plan that the we've implemented at Cerro Bayo in a few minutes.

Our two Australian assets at Broken Hill and Endeavor are performing very well, generating a significant return on the investments we made there in 2005. Since we acquired these properties just three years ago, we have already recouped almost 90% of our original investment at Broken Hill and nearly 60% of our investment in Endeavor. We've just recently announced plans to look at alternatives for our Rochester mine in Nevada, which is in its residual leaching phase of mining. We've already received interest from several parties to acquire our wholly-owned subsidiary, and we plan to apply any proceeds from the sale of the Rochester to our companies long-term growth plan. We've strengthened our operations management team significantly. We've had a real emphasis on people this year, and this effort has been headed up by Senior Vice President of Operations, Richard Weston, who leads a group of new operating Vice Presidents now at all of our growth projects. We have also added significant numbers of people to our environmental and safety groups and exploration.

In the critical area of community relations, where we feel Coeur is strong and our operations in Argentina, Chile, Bolivia, and Alaska, we have further strengthened our team with the addition just announced of [Bibiana Bettencort], a Columbian and former care Director largely responsible for the execution of the international organizations care programs in Bolivia. [Bibiana] has recently joined us to enhance our companywide program of corporate social responsibility, so essential in today's international mining environment where we believe Coeur has excelled.

This morning, I talked to Ambassador Guzman from Bolivia, who expressed his appreciation to Coeur for our assisting Bolivia's secure extension of its free-trade agreement, which yesterday was enacted following its approval by the United States Senate. We continue to do what the we can in the countries where we work, to carry out responsibility of the communities where we are located. In short, I think that I can can say that we continue to position Coeur on the management side, where we are accelerating production with sustainable, lower cost assets at a time when silver prices are not only at their strongest level since 1980, but we believe have demonstrated that there continued to be poised for even stronger markets. I'll have a few comments about how we see the silver markets in a few minutes, but first I'm going to ask my colleague, Jim Sabala, to go through the financial results for the quarter and then Richard Weston can talk about our individual property performances.

Thank you, Dennis. Slide six through nine gives a snapshot of the financial performance for both the fourth quarter and full year 2007 as compared to the previous year. We saw slightly lower metal sales due to lower production compared to the previous year, and Cerro Bayo, Broken Hill and Rochester where the metals production is lower than planned due to cessation of mining activity and a transition to residual mining, leaching, excuse me. There were also increased production costs at Cerro Bayo and Martha, which offset production cost productions at nearly all other operations. Earnings before interest, taxes, depreciation and amortization in the quarter were $21.9 million compared to $29.3 million of EBITDA in the same period of 2006. EBITDA for the full year 2007 was $65.7 million, compared to $93.7 million in 2006. Net income for the recent fourth quarter was $14.3 million compared to $23.2 million in the fourth quarter of 2006. For the full year 2007, net income was $43.9 million, compared to $88.5 million in 2006. The 2006 net income was positively impacted by an $11.1 million gain from the sale of Coeur's Silver Valley as well as some production from that operation during the course of the year.

Slide nine illustrates the dramatic decline in operating cost during the fourth quarter with company-wide cash cost declining to an average of $2.73 per ounce in the period, compared to $3.41 per ounce in the fourth quarter a year ago. And for the full year, operating costs were $3.97 for silver compared to $3.33 per ounce in 2006. As depicted in slide ten, our operating costs have remained consistently low over the past five years. This is the benefit of our diversified production portfolio and overall cost of discipline in an area of rising fuel and labor cost that have impacted the mining industry in general and is also a reflection of the gold component of our production which is deducted as a by-product credit.

Slide 11 shows the company's gross margin. Metal sales less production cost by quarter. You can see we rebounded during the fourth quarter compared to the third quarter, and assuming current metal prices, expect this upward trend to continue during 2008 and in the year when the margins similar to what we experienced in the first quarter of 2007. Slide 12 shows how we compared to our peers in terms of this metric which eliminates the type an amount of by-product between different companies. Despite a disappointing operating performance of Cerro Bayo in particular, and a disappointing third quarter, Coeur remains in line with its peers.

Slight 13 shows a breakout of our CapEx spending in the fourth quarter and also during the entire 2007. Total CapEx in the fourth quarter was $57 million, and $226 million for the full year. Most of the expenditures in recent quarter and for the year were for construction in San Bartolome, fourth quarter expenditures of Kensington was principally for legal and engineering studies for new tailings and pace facilities and for ongoing expenditures at the plant. And with that I'd now like to turn the call over to Richard for an overview of operations. Richard?

Thanks, Jim. On slide 15, is a table showing the production of each of our operating properties, which showed the 2007 totals of 11.5 million ounces of silver and 92,000 ounces of gold. A major focus of our operations in 2007 has been the strengthening of the operations management team as we prepare for our new growth. At Cerro Bayo, we now have is in place a reorganized Management team headed by recently appointed Vice President of Operations, Don Gray, and engineering graduate from MIT with more than 27 years of mine, operational and development experience, much of it in South America. We have been implementing a recovery plan which includes improvement in mining methods and productivity and organization restructure with a smaller workforce and a cost improvement program. We expect to see positive results from this recovery play during the second half of 2008 with improvement in both cost and production. For the year we are expecting production to be 2.5 million ounces of silver and 40,000 ounces of gold, cash costs of $3.15 per ounce of silver.

The new vein systems discovered in 2007 in Cerro Bayo mill will play a role in this improved performance. At Martha, we're completed the new mill and with the additional reserves, we continue to see the long term benefits of this new facility. Production levels have more than doubled at Martha since we purchased the property, and with the new mill operational in January we expect to realize lower production costs below the $5 per ounce level in 2008. Production at Martha this year is expected to be about three million ounces of silver, which is about 10% higher than last year. At Rochester, on slide 17, the transition to residual leaching resulted in declining costs and increased cash flow. The mine produced 1.1 million ounces of silver and almost 10,000 ounces of gold in the fourth quarter and 4.6 million ounces of silver and just over 50,000 ounces of gold for the full year.

With all set aside, Rochester is in the best interest of core shareholders, and confidently conducting prices which we expect to be completed by the end of the second quarter. Proceeds received from the sale of Rochester will be redeployed to our newer and longer life Company plans. We have been very pleased with the performance at the Endeavor and Broken Hill assets in Australia. The quarter cash costs were 33% lower at Endeavor compared to the previous year, a result of silver grades that was 142% higher. We expect 2008 production at Endeavor to be approximately 850 ounces of silver at cash costs of about $3.70 per ounce. Cash costs for Endeavor will be higher going forward due to a price participation component to the terms of the acquisition and higher smelting and refining costs due to high silver prices. At Broker Hill, we expect operations to resume to normal levels this year, with projected production of two million ounces of silver and steady cash costs of approximately $3.75 per ounce of silver.

Mine construction is nearing completion at the San Bartolome and we've started pre-commissioning activities. Processing of oil will begin in March. Production and plant utilization will then steadily increase with with full plant capacity to be reached in July. We're looking to produce over six million ounces of silver this calendar year and ten million ounces during the first 12 months of full production. Operating cash costs, once the plant reaches full scale operations, are expected to be $4.10 per ounce in the August-December time frame, with additional royalties and production taxes of $2.03 per ounce.

Very noteworthy that the 1,600 man construction workforce, made up of mostly Bolivian nationals have surpassed more than four million man hours without a loss of time accident, a really great achievement. Four people continue to excel at mine safety. Slide 19 has some construction at San Bartolome showing the first class facilities that we have constructed. At Palmarejo, our newest major silver and gold project in Mexico, the feasibility study, construction and stripping activities are well under way. The internal feasibility study due for completion during the second quarter has been focused on the Palmarejo ore body with high quality resources. The feasibility study will indicate estimated production schedules, operating and capital cost for the project and these will be reviewed by third party to ensure accuracy of these capital and operating costs. The inclusion of the other ore bodies of Guadalupe and La Patria may be included into operational planning when ore body reserves are determined. There are currently 100 operating personnel on site, headed by the new Vice President and General Manager, Stuart Matthews. There are also 300 construction personnel on the ground now as well.

Capital costs to achieve commercial production at Palmarejo currently estimated at $225 million. This represents an increase from $204 million and reflects costs associated with earlier subsidies issues that have now been resolved, higher costs and increases in costs of cash, excuse me, and increases in costs associated with road work, surface, and tailing storage facilities. At present, life of mine production is expected to average approximately ten million ounces of silver per year and 115,000 ounces of gold per year. Needless to say, we are very excited about Palmarejo, its impact on core and the projects potential.

Slide 22 shows a recent slide of construction activities at the site. Previously mentioned was the completion of the new stand-alone mill at Martha. Slide 23 shows photos of the new 240 ton per day facility. The new mill is expected to lower operating costs, since it will no longer be necessary to transport ore to Cerro Bayo for processing. This is also expected to have a beneficial impact on the ore reserve upgrade and overall ore reserves. At Kensington, as we previously reported, we have completed the mill construction, as well as related surface facilities and the 2.5 mile tunnel connecting the Kensington and the Jualin properties.

In the first quarter of this year a modified plan of operation was submitted to the U.S. Forest Service for an alternative site for disposal of the mines tailings using paste technology, and our expectation is that this submission to the Forest Service will pave the way for final permit applications, review and approval of construction of the tailings disposal facility can begin. We're also seeking an approval -- we're also seeking an appeal to the Ninth Circuit decision that the affected our original tailings permit. On the management team, we have named Tom Henderson as the new Vice President and General Manager at Kensington. Tom has had a title of 29 years large scale underground mining operations experience. I'll turn the call over now to Don Birak, who will review our recent exploration activities.

Thanks, Richard. In 2007, we continued to devote a major part of our global exploration to discovery and definition of resources and reserves at our large prospective operating properties and advancing our Greenfield activities to find new mining opportunities. On slide 25, you could see the results of this Brownfield focus. Year-end 2007 reserves are essentially the same as year-end 2006, even after producing nearly 11.5 million silver ounces last year. The next slide shows the tabulated data in graph form.

Our silver mineral reserves remain over 260 million total contained ounces. During the year, we realized significant reserve gains at San Bartolome, Cerro Bayo, and Martha, and the Palmarejo feasibility study is expected to add significantly to both silver and gold reserves. 2008, we are committing a record of over $27 million to both Brownfields and Greenfields exploration, portable operations and to help growth the Company. Next, let's take a look at the new exploration developments. During the past year, we invested nearly $15 million in exploration with about 41% devoted to Greenfields and 59% to Brownfields around our existing mines, where we control significant highly prospective properties.

At Cerro Bayo, we achieved an 18% gain in silver reserve ounces relative to year-end 2006. You may recall our announcement of the discovery of five new veins in the second half of 2007 which occur about one kilometer east of the mill facility. Drilling on just two of the new veins, Dagny and Fabiola, added over 10.8 million ounces to Cerro Bayo's total silver mineral resource. We're currently drilling under the five new veins in other targets in the district which we expect to add to our resources and reserves this year. At Martha, silver mineral reserves increased by 36% and we also discovered two new high grade veins called Isabel and [Betty Sur]. High grade silver in these two discovery which is occurred just north of the new Martha mill is hosted in the same volcanic rocks that host the Martha mine.

Other parts of South America are Greenfields exploration and Patagonia focused on five properties: El Aguila, Sol de Mayo, Cisne, Sascha and Joaquin. Additional drilling is planned for 2008 on all five properties and on our wholly-owned Lejano properties which is joined Cisne on the east. The map of these properties included later in the presentation. At our new Palmarejo property in the Sierra Madre of northern Mexico, we are progressing on the first fully engineered mineral reserves for this world class district which we based on a combined open pit and underground mind tunnel. As Richard mentioned the analysis considers just the Palmarejo deposit and there's significant expansion potential by conversion of other resources in the district with new drilling.

Guadalupe deposit, which occurs on a major structure parallel two and south of the Palmarejo deposit, is a good example of this growth potential. A new estimate of mineral resources in Guadalupe will be completed this year, incorporating the results from a large number of drill holes completed in the second half of 2007 and just this year. Some of the newest results are shown in the appendix. Los Bancos is another new high priority target north of Guadalupe that sits on the southeast extension of the Palmarejo trend, and we're excited about this in which we recently discovered new results from the discovery hole which cut over 36 drill meters grading 1.5 grams of gold and 250 grams per silver, and a true width of this intercept is estimated to be about 19 meters.

On slide 29, we show a chart of the break down of the mineral resources for the Palmarejo district and you can see the large inventories that this brings to Coeur. Of our 2008 exploration budget over $8.3 million is dedicated to Palmarejo where be will focus on the full spectrum from the new target toss reserve development. We expect as a result of this program we will continue to grow our reserves and resources. On slide 30 we show general map of the district and targets with the Guadalupe and Los Bancos targets in an expanded view. We use a variety of tools to help visualize exploration drill results and the impact on slide 31 is a product of some of that work. Here you can see a three dimensional model of the contour drilling upgrades at Guadalupe where we have 3.7 million ounces of indicated silver mineral resources and a 35 million ounces of inferred. This deposits still open at depth and to the north.

Turning to Cerro Bayo, on slide 32, you can see many vein systems in district and our exploration target areas. To date we found more than 100 veins and have produced more than 26 million ounces of silver and nearly .5 million ounces of gold. The new discovery area at Coigues Este is shown here and on slide 33. At Coigues we drilled over 16,000 meters in 2007, most of that on Dagny and Fabiola. On surface, these new veins appear only as thin, veinless faults and unfavorable rock essentially barren at the surface.

Moving now to Martha, on lide 34, we highlight some of the veins in the district and recent exploration areas. Over 15 million silver ounces have been produced from this district from the high grade Martha a quarter that you can see on the map. And you can see our new discovery areas, Betty Sur, Martha Oeste and Isabel on the same map all within a short distance of the new mill. Focus for 2008 at Cerro Bayo and Martha is on development of new target areas and aggressive drilling of the new discoveries. We've also been exploring some of our other tenements in Patagonia with upwards of 7,800 meters of drilling on five process as I mentioned earlier and our total land position is now over 560 square miles in size. Exploration is planned for this year on all of the properties. Recently we completed a new drilling program at our Lejano silver and base level property and we added new property eastern part of the province called Satellite. Now I'll turn the call back to Dennis for comments on silver market and the summary.

Thanks, Don, for your exploration report today. As you know, we are in the midst of the strongest metals market we've seen for a number of years. Silver prices are at their highest level since 1980 recently exceeding $19 per ounce, and gold prices seem to be edging up to $1,000 an ounce. This time a year ago, silver prices were $13, so we've seen an appreciation of almost 50% in the last year. The undergrowing macro drivers continue to be very positive for the metal in Coeur's opinion, underpinned by a strong investor demand, continued growth in industrial demand, the weak U.S. dollar, and inflation concerns with strong economic growth particularly in China and in Asia, continue to bode well for our product. Overall, there indeed is new supply coming online from new operations like San Bartolome, according to published plans, but we do not expect this increase in supply to exceed the ongoing growth in total demand, especially after netting out supply reductions from mature or closing mines going forward.

At Coeur, we think these dynamic markets bode well for us with its new growth projects coming on stream this year and next. With a little luck, the timing at San Bartolome seems to be coinciding perfectly with these record high prices. This year, as San Bartolome comes fully on stream, we are expecting nearly a 40% increase in silver production to nearly 16 million ounces in 2008. And in addition, we plan to generate nearly 67,000 ounces of gold. Through the first full year, following commissioning of the plant at San Bartolome, this long life mine is expected to produce more than six million ounces of silver in 2008. I should also mention that we're very proud of the relationships the people of Coeur have developed with the people of Potosi and greater Bolivia and the numerous government and community groups there. I briefly mentioned our relationship with the national government and our relationship with the Ambassador Guzman in the United States in assisting the country of Bolivia in seeking the extension of the Bolivian free-trade agreements with the United States.

In addition, the major party Governor of Potosi, recently publicly announced his support for the San Bartolome mine, stating that San Bartolome was precisely the type of project that the government of Bolivia wanted to see within the country, and that San Bartolome was aligned with the goals and philosophy of the national and regional governments. This has truly been a cooperative effort, and one that will benefit Potosi, Bolivia, and Coeur shareholders for years to come.

In addition to the contributions from San Bart, we're very proud of the new mill at Martha, which will be inaugurated this month. It's further going to enhance the reserve growth at Martha and we expect to continue to capitalize on our focus in successful exploration projects in that region. We're making good progress with regard to the construction and feasibility study at Palmarejo where we're expecting to see operations commence in the first half of 2009, and at Kensington, we are seeing measured progress and expect to have a response soon from the United States Forest Service to the revised plan of operations we recently submitted. As Don Birak, the Head of Exploration, mentioned, our reserve replacement program success has lead to our increasing our exploration budget this year to a record $27.5 million, justifiably with the largest percentage going to Palmarejo, where we're very excited and optimistic about the reserve and resource growth we're seeing at our newest project. And with our expectations for silver, the world's leading metal, we'll continue to exhibit itself well in the marketplace, we really are looking forward to a challenging but exciting year at Coeur in 2008. I'd like to close by thanking you all for joining us today, and we'll now be happy to take your questions.

(OPERATOR INSTRUCTIONS) We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of John Bridges.

Good afternoon, Dennis, everybody.

John.

Hi. You gave us some guidance on Palmarejo, but at Kensington, once you get some sort of go ahead, hopefully on the new project, what sort of timeline are we looking for to get the new paste equipment?

I would approximately six months, John.

So there's no big lead time on that sort of equipment?

We're not expecting a -- you remember that most of the plant is built.

Right.

We wouldn't see a delay in terms of the equipment. I think our group is well ready to execute once we received the approvals.

Okay, great. And Rochester, there was some interesting exploration results that you published yesterday for that. I just wondered, are you hoping to keep a backing on that in case something interesting develops?

Well, I don't think right now we've got an alternate plan except to go ahead and pursue the sale process that we have under way now, John. We're really looking to focus on a long range growth plan for the Company which has been our strategy. Rochester has been a great mine, and certainly, these recent exploration results are encouraging, but we've had a strong response so far to the indicated sale of Rochester and [a room] has been set up and we'll soon be having visitors.

Okay. And then at Palmarejo, you mentioned moving the mill from the lower level. I remember when I saw it, it was split between the two levels. What's going on there?

Richard?

Yes, hi, John.

Hi.

The -- we identified some issues with settlement at the lower plant side, so we made a decision late last year to relocate that to the upper plant side,that process is well under way.

So it's very cramped now on the upper side?

Beg your pardon?

Is it very cramped now on the upper side?

It's tight, but it will all work.

I look forward to seeing it. Well done, guys, thank you.

Thanks, John.

Your next question comes from Michael Dudas.

Good morning, gentlemen.

Good morning, Michael.

I wouldn't have guessed years ago that the Bolivian mine would be producing silver before the Alaskan mine produces gold. That was an editorial comment I guess.

Well that makes two of us.

I figured as such. Expand a little bit on Martha, remind us about the mill throughput capacity. What kind of potential do you see there with the exploration and the opportunities for throughput and production at that operation?

We'll break this down into two parts. Richard's going to talk to you about the mill itself, and then I'm going to ask Don to talk a little bit about the exploration potential going forward.

Terrific, thank you.

Yes, the mill has got the a capacity of about 240 tons per day.

Mike, this is Don Birak. On the exploration front, if you look at the track record of what we've been doing at Martha since we acquired it, it's been a steady success rate with additions to reserves and resources, and I'm very excited about this. These new things that we see here that we announced north of the mill, I think it bodes quite well for that and we'll continue to devote a lot of our effort towards increasing both reserves and resources.

Thank you. My second question for Jim, could you give us a bit of a guidance on capital flows -- capital spending in 2008 given delays in Kensington, potential ramp-ups in Mexico and given where your cash flow and cash balances are at the end of the 2007?

Sure, Mike. With regard to Palmarejo, we've said that CapEx spending to the point of commercial production is about $225 million. That point is expected in the first quarter of next year and so CapEx will start out lower but will ramp up to that level during the course of '08. At Kensington, we don't have a large CapEx guidance simply because we have to resolve the permitting issue, that's on a current maintenance holding plan of about $2 million a month. And at San Bartolome, I think it's about $90 million we have to wrap up total development there, which will be spread out over the course of '08. We finished the year with about $150 million in cash and investments. We'll have the proceeds coming in, assuming completion of the sale of the Rochester property. There is a potential gap there, but we'll take a look at our CapEx spending and other alternatives to the extent that gap exists after we formalize our plan.

Any sense on what you -- any initial range on what you have to spend for the tailings up in Alaska?

It's in line with the previous estimate. I believe it was about $40 million was the number I've got in my mind, Mike. I think it's likely that that could be some money spent on this year, but I think it's more likely that that will come next year.

'09, terrific. Thank you, gentlemen.

Yes.

Your next question comes from the line of Mike Curran.

Hi, guys, yes. Mike just hit on a couple of them on CapEx, but just want to make sure I'm clear on the capital for Palmarejo. The number of $225 million, a chunk of that has been spent already, or is that from now to production start up, another $225 million to spend?

Not a whole bunch to the end of December, remembering that we never got the keys to the car until December 21st, so the $225 million is our estimate of capital.

Okay, so that's over the next 18 months basically?

Yes, correct.

Got you. Thank you.

Your next question comes from the line of John Tumazos.

Congratulations on all of the progress. Is the [paste] to be used at Kensington a cement at tailings to stabilize them, and where would the site be first? Second, are you -- would you consider borrowing some money to buy your stock, and given that it's risen so little as silver has risen? Third, with the various projects would 30 million ounces of silver and 330,000 ounces of gold be a reasonable estimate for 2010 output?

I can answer the -- your first question. In relation to the paste, we're looking at noncemented paste for all the tailings and that would be at the Cerro Bayo. And Jim will answer the balance.

Turn it over to Dennis, who will take care of the others.

Yes. John, with regard to your comments, share buyback, I don't think we have any present plans to buy back the shares of the Company. In fact, since we were able to make public the documents and complete the Palmarejo, Bolnisi acquisitions, we're quite pleased with the trends of the stock chart over the last three months. And again here today, I think the direction for Coeur shares is we continue to exhibit and execute our growth plan that we've announced, we'll continue to result in increased shareholder value. With regard to your questions of projections of forward-looking statements I think we've announced all we intend to here today, so keep looking at us in the future.

Thank you.

Your last question comes from the line of Pierre Vaillancourt.

Hi, Dennis, I just want to get a little bit of clarification on production at San Bartolome. So you'll get a partial year this year, so how is that looking this year and then next year and beyond in its steady state?

Yes, we expect to produce about six million ounces of silver this year. That is because of the ramp-up period starting with the March, and then we expect to have our first 12 months of production of 10 million ounces as planned, and you'll continue to see the mine produce at a pretty level state after that.

So you'll be able to maintain 10 million ounces annually for the -- for as far as you can, I mean, as far as you can see basically?

Well we've got a 14-year mine life I think there, and we've got some additional resources, so we'll continue to work on that steady state production level of 10 million ounces.

Okay, and any plans for tin recovery or anything?

No, we don't have any present plans for the tin recovery --

Okay.

-- at this time.

All right, now what about costs there? How is that looking?

I think we set that fourth in the press release, Pierre, and that would be the guidance that the we have going forward.

Okay, okay, so same thing on Palmarejo, can you just give me an idea for next year and then 2010, in terms of production?

Yes, Pierre, the only guidance I can give you there, we've given you the construction buildout for production guidance, I'd refer back to the documents that we did in accordance with the acquisition, and we were looking at a production throughput there at steady state of about 10 million ounces of silver and I think it was about 110,000 to 115,000 ounces of gold, and the overall cash cost after by-product credits was about a negative $0.40 if I recall, but I'd refer you back to the proxy statement that was filed and executed on just last month.

Okay. So now with respect to Kensington, just give me a sense of the process and the whole appeal with respect to the ninth circuit court. How does this whole thing proceed?

Okay, there are actually two separate paths. The application the Company has made with regard to the Forest Service for a modified plan of operations, that's the lead agency there, Pierre, and we are hopeful that let's say within the next 30 days the Forest Service will have acted on the initial idea of the modified plan of operations. Get back to -- John Tumazos asked one question we didn't answer, we're actually siding this dry stack or new stack tailings facility down in the area called Common Beach, which is where one of our earlier plans for tailings location was, we know that area well and the dynamics of it. So we are still projecting a process that can be concluded in the fall of this year with a production start in 2009.

Now, from a litigation standpoint, we have of course appealed to the Supreme Court of the United States. Recently, several entities, such as the Alaskan Miners Association, the National Mining Association, the Pacific Legal Foundation, the State of Alaska, the Mountain States Foundation, have all filed briefs supporting the position of Coeur and the Corps of Engineers in the litigation. So we've had very strong support for our positions. There's no certainty in terms of when the U.S. Supreme Court will act on that petition, but we are maintaining both the legal front with that appeal and pursuing the modified plan.

Is there still public opposition to the dry tailings or --

Is there what?

Is there still public opposition, or --

Oh, there never has really been public opposition --

Well whatever --

excuse me, to our modified plan, and we have received the public announced support environmental plaintiffs to working with Coeur on this modified plan, and we are strongly supported by the community of Juneau, the native groups in Alaska, the business community, and the City of Juneau with regard to -- and with regard to the modified plan, so I would describe our support through that approach is very strong.

Okay. Last, maybe if you can just give me a sense, given the variability and production from Endeavor and Broken Hill, what we can expect there on a steady state basis going forward?

I think the guidance we have going forward is a pretty good indication for that, Pierre. As you know, there were some issues on that in the past. I think we've seen improvement in both of those assets over the course of '07, and I would project our '08 guidance forward.

All right, thanks.

And there are no questions at this time.

Again, we would like to thank our shareholders and interested parties and analysts for joining us on today's call, for your continued interest in Coeur. We remain very excited about the direction of the Company this year. We'll certainly keep you very timely and candidly apprized about our new pipeline of sustainable projects coming on stream, we believe confirms our committment to remaining the leading primary silver producer in the world, and we remain focused and totally dedicated to the continued execution of this long-term growth strategy to maximize the value for our shareholders. So, thanks to all of you, and have a great the day.

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