UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   For the fiscal year ended December 31, 2004

OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   For the transition period from __________ to

Commission File Number 1-8641

COEUR D'ALENE MINES CORPORATION
(Exact name of registrant as specified in its charter)

Idaho
82-0109423
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

505 Front Ave., P. O. Box "I"
Coeur d'Alene, Idaho
83816
(Address of principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (208) 667-3511

Securities Registered pursuant to Section 12(b) of the Act:

Title of Each Class
Name of Each Exchange on Which Registered

Common Stock, par value $1.00 per share
New York Stock Exchange/Toronto Stock Exchange/Pacific Stock Exchange

1 1/4% Convertible Senior Notes due January 15, 2024
New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

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        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes     X     No        .

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

Yes     X     No        .

        State the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant. (The aggregate market value is computed by reference to the price at which the common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter.)

$866,530,918

        Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of March 15, 2005.

240,015,206 shares of Common Stock, Par Value $1.00

DOCUMENTS INCORPORATED BY REFERENCE

        The information called for by Part III of the Form 10-K is incorporated by reference from the registrant’s definitive proxy statement which will be filed pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report.







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TABLE OF CONTENTS

PART I  
         Item 1. Business
         Item 2. Properties.
         Item 3. Legal Proceedings.
         Item 4. Submission of Matters to a Vote of Security Holders.
         Item 4A. Executive Officers of the Registrant.
PART II
         Item 5. Market for Registrant's Common Equity Related Stockholder Matters and Issuer Purchases of
   Equity Securities
         Item 6. Selected Financial Data
         Item 7. Management's Discussion and Analysis of Financial Condition and Results of
   Operations
         Item 7A. Quantitative and Qualitative Disclosures About Market Risk
         Item 8. Financial Statements and Supplementary Data
         Item 9. Changes in and Disagreements With Accountants on Accounting and Financial
   Disclosure
         Item 9A. Controls and Procedures
         Item 9B. Other Information
PART III
         Item 10. Directors and Executive Officers of the Registrant
         Item 11. Executive Compensation
         Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
   Matters
         Item 13. Certain Relationships and Related Transactions
         Item 14. Principal Accountant Fees and Services
PART IV
         Item 15. Exhibits and Financial Statement Schedules
SIGNATURES
CERTIFICATIONS OF CEO AND CFO






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PART I

Item 1. Business

INTRODUCTION

        Coeur d’Alene Mines Corporation is the largest primary silver producer in North America and is engaged, through its subsidiaries, in the operation and/or ownership, development and exploration of silver and gold mining properties and companies located primarily within the United States (Nevada, Idaho and Alaska) South America (Chile, Argentina and Bolivia) and Africa (Tanzania). Coeur d’Alene Mines Corporation and its subsidiaries are hereinafter referred to collectively as “Coeur” or the “Company.”

OVERVIEW OF MINING PROPERTIES AND INTERESTS

        The Company’s most significant operating and development-stage mining properties and interests are:

  The Rochester Mine is a silver and gold surface mining operation located in northwestern Nevada and is 100% owned and operated by Coeur. It is one of the largest primary silver mines in the United States. During 1999, the Company acquired the mineral rights to the Nevada Packard property, which is located one and one-half miles south of the Rochester mine, and commenced mining there in the first quarter of 2003.

  Coeur owns 100% of the Cerro Bayo Mine in southern Chile, which is a high grade gold and silver underground mine. The Cerro Bayo deposit was discovered during 2000. Initial mining operations commenced in late 2001 and processing started in April 2002. The Company carries on an active exploration program on the 103 mile property package.

  Coeur owns 100% of the capital stock of Compania Minera Polimet, S.A. (“Polimet”) in Argentina, which owns and operates the high-grade Martha silver mine located 270 miles southeast of the Cerro Bayo Mine in Chile. Mining operations commenced at the Martha Mine in June 2002.

  Coeur owns 100% of the capital stock of Coeur Silver Valley (“Silver Valley”), which owns and operates the Galena underground silver mine and owns the adjacent Coeur underground silver mine that discontinued operations on July 2, 1998. In addition, Silver Valley owns the Caladay property that adjoins the Galena Mine and has operating control of several contiguous exploration properties in the Coeur d’Alene Silver Mining District of Idaho.

  Coeur owns 100% of Empressa Minera Manquiri S.A. (“Manquiri”), a Bolivian company that controls the mining rights for the San Bartolome project, which is a silver property in Bolivia where an updated feasibility study was completed in 2004 and construction activities have commenced. It is estimated that the San Bartolome project will commence production in the second half of 2006.

  The Company owns 100% of the Kensington Property, located north of Juneau, Alaska, which is a development-stage property where an updated feasibility study was completed during 2004. In the fourth quarter of 2004, the US Forest Service issued its Record of Decision for the Final Supplemental Environmental Impact Statement (“FSEIS”) which was appealed by an environmental group. The appeal was denied by the U.S. Forest Service on March 23, 2005. It is expected that the remaining permits will be received in the first half of 2005 and that construction could commence and that the project may begin commercial production in 2006.

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        Coeur also has interests in other properties which are subject to silver or gold exploration activities at which no mineable ore reserves have yet been delineated.

EXPLORATION STAGE MINING PROPERTIES

        The Company, either directly or through wholly-owned subsidiaries, owns, leases and has interests in certain exploration-stage mining properties located in the United States, Chile, Argentina, Bolivia and Tanzania. In keeping with its overall efforts to focus its resources, the Company conducted the majority of its exploration activities during 2004 on or near existing properties where infrastructure and production facilities are already in place. During 2004, the Company significantly increased its exploration activities. During 2005, the Company expects exploration expenses of approximately $10.8 million.

SIGNIFICANT DEVELOPMENTS IN 2004

Our recent performance results include:

  silver production of 14.1 million ounces in 2004 compared to 14.2 million ounces in 2003;
  gold production of 129,332 ounces in 2004 compared to 119,518 ounces in 2003;
  cash cost per silver ounce of $3.66 in 2004, compared to $3.27 in 2003;
  realized silver prices of $6.82 per ounce in 2004 compared to $4.89 per ounce in 2003 (the market price for silver (according to Handy & Harman) on March 15, 2005 was $7.40 per ounce);
  realized gold prices of $410 per ounce in 2004 compared to $345 per ounce in 2003 (the closing market price for gold (according to London Gold Market Fixing Ltd.‘s “London Final”) on March 15, 2005 was $441 per ounce);
  total year-end ore reserves measure 196.2 million ounces of silver, a 12% increase over 2003‘s level, and 1.4 million ounces of gold;
  completed an updated feasibility study at the San Bartolome project and commenced construction activities;
  completed an updated feasibility study at the Kensington gold project and obtained a Record of Decision from the lead government agency, the U.S. Forest Service; and
  completed a public underwriting of $180 million of 1 ¼% Convertible Senior Notes due January 2024 and the underwriting of 26.6 million common shares, thereby increasing the Company’s cash, cash equivalents and short-term investments to $322 million at December 31, 2004.

BUSINESS STRATEGY

        The Company’s business strategy is to capitalize on the ore reserve/mineralized material bases located at its operating mines and the expertise of its management team to continue as the world’s leading primary silver production company through long-term, cash flow generating growth. The principal elements of the Company’s business strategy are to: (i) increase the Company’s silver production and reserves in order to remain the nation’s largest primary silver producer and one of the world’s larger primary silver producers; (ii) decrease cash costs and increase production at the Company’s existing silver mining operations; (iii) transform development-stage properties into producing mines; (iv) acquire operating mines, exploration and/or development properties with a view to reducing the Company’s cash and total costs, provide short-term positive cash flow return and expand its silver production base and reserves; and (v) continue to explore for new silver and gold discoveries primarily near its existing mine sites and evaluate new opportunities to expand its production through acquisitions and exploration.

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SOURCES OF REVENUE

        The Rochester Mine, Cerro Bayo/Martha Mine and Silver Valley’s Galena Mine, each operated by the Company, constituted the Company’s principal sources of mining revenues in 2004. The following table sets forth information regarding the percentage contribution to the Company’s total revenues (i.e., revenues from the sale of concentrates and doré plus other income) by the sources of those revenues during the past five years:

Mine/Company
Coeur Percentage
Ownership at
December 31, 2004

Percentage of Total Revenues
in Years Ended December 31,

2004
2003
2002
2001
2000
Rochester Mine      100 %  47.2 %  39.9 %  54.1 %  68.2 %  51.3 %
Cerro Bayo/Martha Mines(1)    100    33.1    43.7    15.2    0.2    9.6  
Galena Mine    100    17.6    14.9    26.4    22.0    17.0  
Petorca Mine(2)    --    --    --    --    7.0    6.5  
Yilgarn Star Mine(3)    --    --    --    --    (1.2 )  9.2  
Other    --    2.1    1.5    4.3    3.8    6.4  






      100 %  100 %  100 %  100 %  100 %






(1) The Company closed the original Fachinal Mine in 2000 and subsequently commenced operations at the Cerro Bayo Mine, located within the same property package but to the east of Fachinal, in April 2002. Revenues include the sale of production from the Martha mine.

(2) The Company closed the Petorca Mine in August 2001 and sold its interest on August 30, 2002. The Company’s interest in the Petorca Mine was 100% prior to the sale.

(3) Coeur’s interest in Gasgoyne’s revenue was 50% during the above periods prior to the Company’s sale of Gasgoyne on February 7, 2001. The Company’s interest in Gasgoyne was reported in accordance with the equity method.

DEFINITIONS

        The following sets forth definitions of certain important mining terms used in this report.

“Cash Costs” are costs directly related to the physical activities of producing silver and gold, and include mining, processing and other plant costs, third-party refining and smelting costs, marketing expense, on-site general and administrative costs, royalties, in-mine drilling expenditures that are related to production and other direct costs. Sales of by-product metals, including gold, are deducted from the above in computing cash costs per ounce. Cash costs exclude depreciation, depletion and amortization, corporate general and administrative expense, exploration, interest, and pre-feasibility costs and accruals for mine reclamation. Cash costs are calculated and presented using the “Gold Institute Production Cost Standard” applied consistently for all periods presented.

“Concentrate” is a product containing the valuable metal and from which most of the waste material in the ore has been eliminated.

“Cut-off Grade” is the lowest grade of mineral resource considered economic; used in the calculation of reserves in a given deposit.

“Cyanidation” is a method of extracting gold or silver by dissolving it in a weak solution of sodium or potassium cyanide.

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“Dilution” is an estimate of the amount of waste or low-grade mineralized rock which will be mined with the ore as part of normal mining practices in extracting an ore body.

“Doré” is unrefined gold and silver bullion bars which contain gold, silver and minor amounts of impurities which will be further refined to almost pure metal.

“Gold” is a metallic element with minimum fineness of 999 parts per 1000 parts pure gold.

“Heap Leaching Process” is a process of extracting gold and silver by placing broken ore on an impermeable pad and applying a diluted cyanide solution that dissolves a portion of the contained gold and silver, which are then recovered in metallurgical processes.

“Mineralized Material” is gold and silver bearing material that has been physically delineated by one or more of a number of methods including drilling, underground work, surface trenching and other types of sampling. This material has been found to contain a sufficient amount of mineralization of an average grade of metal or metals to have economic potential that warrants further exploration evaluation. While this material is not currently or may never be classified as reserves, it is reported as mineralized material only if the potential exists for reclassification into the reserves category. This material cannot be classified in the reserves category until final technical, economic and legal factors have been determined. Under the United States Securities and Exchange Commission’s standards, a mineral deposit does not qualify as a reserve unless the recoveries from the deposit are expected to be sufficient to recover total cash and non-cash costs for the mine and related facilities and make a profit.

“Noncash Costs” are costs that are typically accounted for ratably over the life of an operation and include depreciation, depletion and amortization of capital assets, accruals for the costs of final reclamation and long-term monitoring and care that are usually incurred at the end of mine life, and the amortization of the economic cost of property acquisitions, but exclude amortization of deferred tax purchase adjustments relating to property acquisitions.

“Ore Reserve” is the part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.

“Probable Reserve” is a part of a mineralized deposit which can be extracted or produced economically and legally at the time of the reserve determination. The quantity and grade and/or quality of a probable reserve is computed from information similar to that used for a proven reserve, 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. Mining dilution has been factored into the estimation of probable reserves. The Company used a price estimate of $6.00 per ounce for silver, and $390 per ounce for gold (except for Kensington which used $375 per ounce for gold) in estimating probable reserves at December 31, 2004.

“Proven Reserves” are a portion of a mineral deposit which can be extracted or produced economically and legally at the time of the reserve determination. The quantity of a proven reserve 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 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 a proven reserve is well-established. Mining dilution has been factored into the estimation of proven reserves. The Company used a price estimate of $6.00 per ounce for silver and $390 per ounce for gold (except for Kensington which used $375 per ounce for gold) in estimating proven reserves at December 31, 2004.

“Run-of-mine Ore” is mined ore which has not been subjected to any pretreatment, such as washing, sorting or crushing prior to processing.

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“Silver” is a metallic element with minimum fineness of 995 parts per 1000 parts pure silver.

“Stripping Ratio” is the ratio of the number of tons of waste material to the number of tons of ore extracted at an open-pit mine.

“Ton” means a short ton which is equivalent to 2,000 pounds, unless otherwise specified.

“Total Cash Costs per Ounce” are calculated by dividing the cash costs computed for each of the Company’s mining properties for a specific period by the amount of gold ounces or silver ounces produced by that property during that same period. Management uses cash costs per ounce produced as a key indicator of the profitability of each of its mining properties. Gold and silver are sold and priced in the world financial markets on a US dollar per ounce basis. By calculating the cash costs from each of the Company’s mines on the same unit basis, management can easily determine the gross margin that each ounce of gold and silver produced is generating. While this represents a key indicator of the performance of the Company’s mining properties you are cautioned not to place undue reliance on this single measurement. To fully evaluate a mine’s performance, management also monitors US GAAP based profit/(loss), depreciation and amortization expenses and capital expenditures for each mine as presented in Note P – Segment Information in the Notes to the Company’s Consolidated Financial Statements. Total cash costs per ounce is a non-GAAP measurement and investors are cautioned not to place undue reliance on it and are urged to read all GAAP accounting disclosures presented in the consolidated financial statements and accompanying footnotes.

“Total production costs” are the sum of cash costs and noncash costs.

IMPORTANT FACTORS RELATING TO FORWARD-LOOKING STATEMENTS

        This report contains numerous forward-looking statements relating to the Company’s gold and silver mining business, including estimated production data, expected operating schedules, expected capital costs and other operating data and permit and other regulatory approvals. Such forward-looking statements are identified by the use of words such as “believes,” “intends,” “expects,” “hopes,” “may,” “should,” “plan,” “projected,” “contemplates,” “anticipates” or similar words. Actual production, operating schedules, results of operations, ore reserve and resource estimates and other projections and estimates could differ materially from those projected in the forward-looking statements. The factors that could cause actual results to differ materially from those projected in the forward-looking statements include (i) the risk factors set forth below under this Item 1, (ii) the risks and hazards inherent in the mining business (including environmental hazards, industrial accidents, weather or geologically related conditions), (iii) changes in the market prices of gold and silver, (iv) the uncertainties inherent in the Company’s production, exploratory and developmental activities, including risks relating to permitting and regulatory delays, (v) the uncertainties inherent in the estimation of gold and silver ore reserves, (vi) changes that could result from the Company’s future acquisition of new mining properties or businesses, (vii) the effects of environmental and other governmental regulations, and (viii) the risks inherent in the ownership or operation of or investment in mining properties or businesses in foreign countries. Readers are cautioned not to put undue reliance on forward-looking statements. The Company disclaims any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.

Item 2. Properties.

SILVER AND GOLD MINING OPERATIONS

North America

        Rochester Mine

        The Rochester Mine is a silver and gold surface mine located in Pershing County, Nevada, which is located approximately 25 road miles northeast of Lovelock. The mine commenced operations in 1986. The Company owns 100% of the Rochester Mine by virtue of its 100% ownership of its subsidiary, Coeur Rochester, Inc. (“Coeur Rochester”). The property consists of 22 patented and 580 unpatented contiguous mining claims and 54 mill-site claims totaling approximately 11,000 acres.

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        Production at Rochester in 2004 was approximately 5.7 million ounces of silver and 69,456 ounces of gold, compared to 5.6 million ounces of silver and 52,363 ounces of gold in 2003. Cash costs per ounce of silver decreased by 16% to $3.93 per ounce in 2004, compared to $4.67 per ounce in 2003.

        During 2003, we relocated and upgraded our existing crushing facility to access a portion of the reserves contained underneath the existing crusher and to expand our leach pad at a cost of approximately $11.3 million. As a result, during 2003, production was lower and per ounce operating costs were higher than historically experienced. We completed the crusher relocation project during the fourth quarter of 2003 and commenced loading higher-grade ores on the leach pad.

        The mine utilizes the heap leaching process to extract both silver and gold from ore mined using conventional open pit methods. Approximately 52,925 tons of ore and waste per day were mined in 2004, compared to 50,075 tons per day in 2003. The average ore to waste strip ratio for the remaining life of the mine will vary based primarily on future gold and silver prices; however, it is anticipated to be less than 1:1.

        Ore is crushed and transported by conveyor to a loadout facility where it is transferred to 150 ton trucks which transport the crushed ore to leach pads where solution is applied via drip irrigation to dissolve the silver and gold contained in the ore. Certain low-grade ores are hauled directly, as run-of-mine, by 100 ton haul trucks to leach pads where solution is applied to dissolve the silver and gold contained in the ore. The solutions containing the dissolved silver and gold are pumped to a processing plant where zinc precipitation is used to recover the silver and gold from solution.

        Based upon actual operating experience and certain metallurgical testing, the Company estimates ultimate recovery rates of between 59% and 61.5% for silver, depending on the ore being leached, and 93% for gold on crushed ore. The leach cycle at the Rochester Mine requires leaching to the year 2011 for all recoverable metal to be recovered. However, a significant proportion of metal recovery occurs in the early years.

        At the Nevada Packard satellite deposit, located south of the Rochester deposit, the Company commenced mining of this silver deposit in the first quarter of 2003.

        The Company’s capital expenditures at the Rochester Mine totaled approximately $3.5 million in 2004. During 2003, the Company relocated and upgraded its existing crushing facility, at a capital cost of $9.2 million, in order to access a portion of the reserves contained underneath the existing crusher. The Company plans capital expenditures at the Rochester Mine of $1.4 million in 2005.

        Asarco Incorporated (“Asarco”), the prior lessee, had a net smelter royalty interest which is payable only when the market price of silver equals or exceeds $19.92 per ounce up to maximum rate of 5%. No royalties were required to be paid by the Company during the three years ended December 31, 2004.

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Year-end Proven and Probable Ore Reserves(1) - Rochester Mine
(includes Nevada Packard)

2004
2003
2002
Tons (000's)      23,998    32,563    46,946  
Ounces of silver per ton    0.86    0.91    0.85  
Contained ounces of silver (000's)    20,731    29,596    39,717  
Ounces of gold per ton    0.009    0.009    0.008  
Contained ounces of gold    213,000    283,000    365,000  

Year-end Mineralized Material

2004
2003
2002
Tons (000's)      35,064    40,328    33,756  
Ounces of silver per ton    0.86    0.77    0.77  
Ounces of gold per ton    0.005    0.006    0.009  

Operating Data

2004
2003
2002
Production                
    Tons ore mined (000's)    10,751    6,626    6,310  
    Tons crushed/leached (000's)    8,976    7,324    9,185  
    Ore grade silver (oz./ton)    0.74    0.94    0.83  
    Ore grade gold (oz./ton)    0.009    0.005    0.006  
    Silver produced (oz.)    5,669,074    5,585,385    6,417,792  
    Gold produced (oz.)    69,456    52,363    71,905  

Cost per Ounce of Silver
  
    Cash costs(2)   $ 3.93   $ 4.67   $ 2.99  
    Noncash costs    1.73    0.91    0.76  



    Total production costs   $ 5.66   $ 5.58   $ 3.75  

  (1) Metal prices used were $6.00 per ounce of silver and $390 per ounce of gold in 2004.

  (2) Total cash costs per ounce of silver or gold represent a non-U.S. GAAP measurement that management uses to monitor and evaluate the performance of its mining operations. See “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations; Total Production and Reserves” for reconciliation of this non-GAAP measure to GAAP production costs.

        Coeur Silver Valley

        The Coeur d’Alene Mining District of Idaho is one of the richest silver mining districts in the world. Coeur Silver Valley is a wholly-owned subsidiary of the Company which owns and operates the Galena underground silver mine, an operating mine, and the Coeur and Caladay properties, that adjoin to the Galena mine, located in the heart of the Coeur d’Alene Mining District. Coeur Silver Valley’s property consists of 6,131 acres of Company-owned fee land, patented mining claims and unpatented claims in addition to 4,800 acres of leased claims. Silver Valley recommenced operations at the Coeur mine in June 1996 and continued mining existing reserves there through July 2, 1998 when known reserves were depleted. Silver Valley resumed production at the Galena Mine in May 1997 and operations continue. We believe that there are significant opportunities in the exploration of Silver Valley and the surrounding area, in addition to site expansion and consolidation. During the second half of 2003, we commenced a three-year optimization plan designed to locate, develop and mine additional resources believed to exist on the property which, if successful, could result in an annual production level of approximately seven million ounces of silver.

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        Silver Valley plans to continue exploration and development activities at the Galena, Coeur and Caladay Mines as well as at several contiguous properties in the Coeur d’Alene Mining District with a view toward the development of new silver reserves. During 2004, we spent $1.6 million for exploration activities at the Galena mine. Initially, we selected seven exploration targets for testing and added four additional targets in the year. At mid-year we announced the discovery of new mineralization at the 4000 Level of the Polaris Fault and the 2400 Upper Country Silver Vein. In the third quarter, we commenced definition drilling at the 4300 to 4600 Silver vein target. In the third quarter of 2004 our initial drilling on the Deep Coeur target intersected an extension of the 483 vein in five of eight holes with thin, high-grade silver (0.9 feet at 51.3 ounces of silver per ton) intersected in one hole. In addition, based on our analysis of the existing Galena mine underground workings and drilling results on the Galena mine property, we believe that geologic conditions similar to those at the Galena mine may extend into the adjacent Caladay property providing future exploration opportunities. During 2004, drilling at the Galena mine succeeded in identifying approximately 3.4 million new ounces of reserves and mineralized material. Overall, reserves decreased at Galena due to mining depletion, higher operating costs and external smelter and refinery costs which resulted in an overall increase in the ore reserve cutoff grade.

        Galena Mine

        The Galena Mine property is located immediately west of the City of Wallace in Shoshone County in northern Idaho. The property consists of 52 patented mining claims and 25 unpatented mining claims totaling approximately 1,100 acres.

        The Galena Mine is an underground silver-copper mine and is served by two vertical shafts. The No. 3 shaft is the primary production shaft and is 5,800 feet deep. The Galena shaft primarily provides utility access for water, electrical power and sand backfill for underground operations down to the 2,400 level.

        The mine utilizes conventional and mechanized cut and fill mining methods with sand backfill to extract ore from the high grade silver-copper vein deposits that constitute the majority of the ore reserves. Silver and copper are recovered by a flotation mill that produces a silver rich concentrate which is sold to third-party smelters in Canada. Silver recovery through the mill averaged 97% in 2004 and 96% in 2003.

        Waste material from the milling process is deposited in a tailings pond located approximately two miles from the minesite. The tailings containment pond, which is expanded on an as needed basis, has capacity for approximately eight additional years at current production rates.

        Silver production at the Galena Mine in 2004 was approximately 3.5 million ounces of silver compared to 3.7 million ounces in 2003. During 2004, silver production was adversely affected by lower production grades in the third and fourth quarters as mining operations adjusted to changing geological ground conditions in the more productive mining areas.

        Total cash costs for 2004 increased to $5.46 per ounce compared to $4.66 per ounce in 2003. The higher cash costs are the result of lower-grade ore and the conversion to higher-cost mining methods needed to accommodate ground conditions in certain mining areas during 2004. Also contributing to the higher costs were increased development and mine repair in connection with the ongoing optimization plan.

        Total capital expenditures by Silver Valley at the Galena Mine in 2004 were $2.2 million and the Company plans for capital expenditures of approximately $3.8 million for the Galena Mine during 2005.

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Year-end Proven and Probable Ore Reserves -- Galena Mine (1)

2004
2003
2002
Tons (000's)      718    717    952  
Ounces of silver per ton    18.84    21.54    23.09  
Contained ounces of silver (000's)    13,518    15,432    21,987  

Year-end Mineralized Material (2)

2004
2003
2002
Tons (000's)      2,169    2,252    2,259  
Ounces of silver per ton    10.92    10.94    11.56  

Operating Data (Coeur's interest)

2004
2003
2002
Production                
    Tons ore milled    169,413    164,732    238,780  
    Ore grade silver (oz./ton)    21.43    23.61    23.34  
    Recovery (%)    97    96    95  
    Silver produced (oz.)    3,521,813    3,735,663    5,302,721  

Cost per Ounce of Silver
  
    Cash costs(3)   $ 5.46   $ 4.66   $ 4.25  
    Noncash costs    0.56    0.37    0.75  



    Total production costs   $ 6.02   $ 5.03   $ 5.00  

  (1) The Galena Mine reserve estimate is based on a minimum mining width of 4 to 4.5 feet diluted to 5.0 feet minimum width for most silver-copper and silver-lead veins. Metal prices used in 2004 were $6.00/ounce of silver, $390/ounce of gold, $0.92/pound of copper, and $0.27/pound of lead.

  (2) Mineralized material includes both the Galena and Coeur mines.

  (3) Total cash costs per ounce of silver or gold represent a non-U.S.-GAAP measurement that management uses to monitor and evaluate the performance of its mining operations. See “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations; Total Production and Reserves” for reconciliation of this non-GAAP measure to GAAP production costs.

        Coeur Mine

        The Coeur Mine is an underground silver mine located adjacent to the Galena Mine in the Coeur d’Alene Mining District in Idaho, and consists of approximately 868 acres comprised of 38 patented mining claims and four unpatented mining claims.

        The Coeur Mine operated until mid-1998 when the property was placed on care and maintenance. While there was no mining activity at the Coeur mine in 2004, the Company believes that significant potential exists to discover additional high grade silver veins beneath the current limit of the underground workings. In addition, the Coeur Mine is connected to the Galena Mine, thus any future discoveries at either mine could be efficiently developed and processed at either facility. This connection is currently being utilized to provide ventilation and secondary access to the Galena Mine.

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        Caladay Property

        The Caladay property adjoins the Galena Mine. Prior to its acquisition by the Company in 1991, approximately $32.5 million was expended on the property to construct surface facilities, a 5,101 ft. deep shaft and associated underground workings to explore the property. Based on Silver Valley’s analysis of existing Galena Mine underground workings and drilling results on the Galena Property, the Company now knows that similar geologic conditions which exist at the Galena mine extend into the Caladay property below the level of the current Caladay workings. In addition, the Caladay facilities are used to benefit the Galena Mine operations, by providing additional ventilation.

        During the fourth quarter of 2002, the Company performed an impairment review on the Silver Valley property and determined that its carrying amount was impaired at December 31, 2002 based on changes to its overall mine plan and a then reduced long-term silver price estimate of $5.00 per ounce. As a result, the Company recorded an impairment loss of $19.0 million as of that date.

South America

        Chile — Cerro Bayo Mine

        The Cerro Bayo property covers about 103 square miles and is located south of Coyhaique, the capital of Region XI in southern Chile, and approximately 17 miles west of the town of Chile Chico. The project lies on the east side of the Andes mountain range at an elevation ranging from 600 to 4,500 feet and is serviced by a gravel road from Chile Chico. The Cerro Bayo property contains multiple epithermal veins containing gold and silver. The Company has been granted exploitation concessions (the Chilean equivalent to an unpatented 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 the property as well as the necessary surface rights to permit mining.

        Construction of two ramps to intersect the high-grade Lucero Vein in the Cerro Bayo deposit commenced in November 2001 and was completed in February 2002. Additional mineralized high-grade gold and silver vein systems were discovered, referred to as the Luz Eliana, Celia, Soledad East and Andrea, in addition to a mineralized loop of the main Lucero vein. Completion of the two access ramps provided new geological information which has facilitated new vein discoveries.

        The ore processing mill at the Cerro Bayo Mine uses the standard flotation process to produce a high grade gold and silver concentrate. The concentrate processed at this mill is sold to third-party smelters, primarily in Japan. The mill has a design capacity of 1,650 tons per day. During 2004, the Company experienced recovery rates of approximately 92% for gold and 94% for silver. Electrical power is generated on-site by diesel generators and process water is obtained from a combination of the adjacent General Carrera Lake and from tailings re-circulation.

        During 2004, the Company continued its exploration and development program at the Cerro Bayo vein system, which is located approximately nine miles east of the processing facilities. In 2004, we spent approximately $4.1 million for exploration and completed over 250,000 feet of core drilling. Silver reserves at December 31, 2004, after giving effect to 2005 mine production, increased by 316% to 6.11 million ounces, giving effect to 2004 mine production, and gold reserves increased by 372% to 0.12 million ounces from 2003, giving effect to past production.

        In 2005, we expect to spend $3.9 million for exploration at Cerro Bayo. This investment represents the second year of a three-year exploration plan designed to achieve a reserve and mineralized material level equal to at least three years of production. Developing mineable reserves beyond a three-year time horizon is not practical, nor cost effective, given the nature of our vein deposits, as is the case with other high grade mines.

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        Numerous epithermal veins located within the 118 square mile property package in the Cerro Bayo district offer exploration and development opportunities for us. To date, we have discovered over 100 veins, including a number of veins with strike length, width and grade greater than previously encountered in the district, the majority of which are located within nine miles of our existing ore processing facilities. We have focused our recent exploration efforts to date on those veins within the prospective Cerro Bayo trend. Of particular interest from 2004 exploration was the discovery of the Lourdes Norte and Mercedes veins covered by post-mineral gravel and of the new Celia Este and Myriam veins which are located proximal to existing veins. Discovery of covered (blind) veins will be a significant part of future exploration at Cerro Bayo.

        Total capital expenditures at the Cerro Bayo property in 2004 were $2.5 million and the Company plans approximately $2.7 million of additional capital expenditures there in 2005.

        Mining operations at the previously operated nearby Fachinal Mine, on the west side of the Company’s concessions, which consisted of both surface and underground mining, were discontinued in December 2000. The Company turned its focus on the development of the Cerro Bayo vein deposits, discovered approximately nine miles to the east of Fachinal. The Company changed the name of the property to the Cerro Bayo Mine in late 2001 and re-commenced production in 2002.

        Argentina —Martha Mine

        In April 2002, the Company acquired 145,000 acres of prospective ground including the Martha high-grade underground silver mine located in Argentina, approximately 270 miles southeast of the Cerro Bayo Mine, for $2.5 million. In June 2002, Coeur commenced shipping Martha’s high-grade ore to the Cerro Bayo Mine for processing. Since we commenced production at the Martha Mine, we have mined 64,900 tons of ore with an average grade of 74.5 silver ounces per ton on 0.1 gold ounces per ton. Like Cerro Bayo, silver and gold are hosted in multiple, epithermal veins at the Martha Mine – though Martha ore is of much higher silver grade than Cerro Bayo.

        We transport ore mined at the Martha Mine by truck for processing at the Cerro Bayo mill, which is located 270 miles northwest of the Martha Mine. The transport costs to ship the ore to the Cerro Bayo mill from the Martha Mine have necessitated a focus on the highest grade portions of the veins discovered at the Martha Mine; however, lower grade mineralized material exists, but is not included in reserves.

        In June 2002, we commenced shipping of high-grade Martha Mine ore to the Cerro Bayo mill. All of the production came from the Martha vein, which was one of six known veins on the Martha Mine property prior to our acquisition of the property. Also in 2002, exploration discovered both extensions of the Martha Mine vein and the R4 Zone within the vein, which is located only 300 feet southwest of the main Martha Mine mining areas. During 2004, we spent $2.3 million on exploration at the Martha Mine.

        In 2004, similar to Cerro Bayo, we embarked on the first year of a three-year exploration program to extend the mine life at the Martha Mine to three years. As part of this program we added approximately 20 square miles of land to our concessions. During 2005, we expect to spend $2.7 million on exploration for the discovery of new mineralization and reserve development, across our large land holdings which exceed 530 square miles in size In 2004, we announced the discovery of two new, high-grade veins at Martha named Francisca and Catalina. Work in the coming year will focus on expanding those discoveries and exploration for additional silver and gold mineralized veins and structures. Silver reserves at December 31, 2004 increased by 290% to 3.93 million ounces from 2003. Since the acquisition of the Martha Mine, we have increased ore reserves (including production) by over 320% through focused exploration and evaluation drilling. Based on reserves and mineralized material discovered to date, the mine life at the Martha Mine has been extended to at least mid 2006.

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        The Martha Mine property is large, covering 225 square miles of prospective geology for silver and gold mineralization. To date, we have focused our exploration on the immediate Martha Mine area which covers just 100 acres. In addition, we own about another 305 square miles of exploration stage properties in the Santa Cruz province of southern Argentina which we identified, through our reconnaissance activities as containing good prospective geology.

Year-end Proven and Probable Ore Reserves (1) - Cerro Bayo/Martha Mine

2004
2003
2002
Tons (000's)      919    661    993  
Ounces of silver per ton    10.92    10.18    13.39  
Contained ounces of silver (000's)    10,039    6,726    13,293  
Ounces of gold per ton    0.13    0.14    0.14  
Contained ounces of gold    120,500    95,000    141,000  

Year-end Mineralized Material (1)

2004
2003
2002
Tons (000's)      3,903    3,499    1,067  
Ounces of silver per ton    5.21    5.32    7.94  
Ounces of gold per ton    0.08    0.10    0.12  

Operating Data (2)

2004
2003
2002
Production                
    Tons ore milled    487,217    497,151    346,592  
    Ore grade gold (oz./ton)    0.134    0.151    0.155  
    Ore grade silver (oz./ton)    10.77    10.67    10.02  
    Recovery gold (%)    92    90    87  
    Recovery silver (%)    94    92    90  
    Gold produced (oz.)    59,876    67,155    45,209  
    Silver produced (oz.)    4,944,261    4,868,854    3,112,169  

    Cash costs (3)
   $ 2.07   $ 0.60   $ 0.38  
    Noncash costs    1.26    1.93    1.48  



    Total production costs   $ 3.33   $ 2.53   $ 1.86  

  (1) Production statistics, proven and probable ore reserves and mineralized material include the Martha mine. Metal prices used were $6.00/ounce of Ag and $390/ounce of Au.

  (2) Processing at Cerro Bayo commenced in April 2002 and mining operations at Martha commenced in June 2002. There are no processing facilities at the Martha Mine; therefore the ore is transported to Cerro Bayo. Due to the relationship, the Cerro Bayo and Martha production and financial statements are consolidated for reporting purposes.

  (3) Total cash costs per ounce of silver or gold represent a non-U.S.-GAAP measurement that management uses to monitor and evaluate the performance of its mining operations. See “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations; Total Production and Reserves” for reconciliation of this non-GAAP measure to GAAP production costs.

        Although the governments of Chile and Argentina have been relatively stable in recent years, the ownership of property in a foreign country may be 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.

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        Chile — Petorca Mine

        Prior to Coeur’s sale of the Petorca Mine on August 30, 2002, Coeur owned 100% of the mine which was located on approximately 34,000 acres in the western Andean foothills approximately 90 miles north of Santiago, Chile. Operations at Petorca were terminated in August 2001 and bids were solicited for the sale of Petorca. On August 30, 2002, the Company sold its interest in the Petorca Mine and reported a gain of $1.4 million.

SILVER AND GOLD DEVELOPMENT PROPERTIES

        Bolivia — The San Bartolome Project

        Coeur acquired 100% of the equity in Empressa Miner Manquiri S.A. (“Manquiri”) from Asarco on September 9, 1999. Manquiri’s principal asset is the mining rights in the San Bartolome project, a silver property located near the city of Potosí, Bolivia, on the flanks of the Cerro Rico. The San Bartolome project consists of several distinct silver-bearing gravel deposits, which are locally referred to as pallaco or sucu deposits. These deposits lend themselves to simple, free digging surface mining techniques and can be extracted without drilling and blasting. The deposits were formed as a result of erosion of the silicified silver-rich upper part of the Cerro Rico volcanic dome complex.

        The mineral rights for the San Bartolome project are held through long-term lease agreements with several independent mining cooperatives and the Bolivian State Mining Company (“COMIBOL”). Manquiri controls 67 square kilometers of concessions (16,600 acres). The joint venture lease agreements are subject to a 4% production royalty payable partially to the cooperatives and partially to COMIBOL. During 2003, the Company purchased an additional property known as the Plahipo property which is adjacent to the original property package for $1.3 million. The properties are currently subject to monthly payments totaling approximately $34,700.

        Of the several pallaco deposits which are controlled by Coeur and surround Cerro Rico, three are of primary importance and are known as Huacajchi, Diablo (consisting of Diablo Norte, and Diablo Este) and Santa Rita. During 2000, the Company under took an intensive field program and completed a pre-feasibility study. The field program included detailed exploration, bulk sampling, definition drilling, metallurgical studies and environmental baseline data collection. To assist with the pre-feasibility study, which was completed during 2000, Coeur retained third party engineering and geological consulting firms to examine and verify all data used in the study, including the estimate of mineralized material, process flow sheet design, site plan layout and detailed estimates of all operating and capital costs. The study incorporated a cyanide milling flow sheet with a wet pre-concentration screen circuit. In addition, the study identified a number of optimization opportunities that if successful, could significantly enhance the economic returns of the project.

        We completed a preliminary feasibility study in 2000, which concluded that an open pit mine was potentially capable of producing approximately 6 million ounces of silver annually. In 2003, SRK, an independent consulting firm, was retained to review the reserve/resource estimate to include additional sampling data to incorporate additional resources acquired with the Plahipo property, which lies to the east of Cerro Rico. During the third quarter of 2003, we retained Flour Daniel Wright to prepare an updated feasibility study which was completed at the end of the third quarter of 2004. Based upon the results of this more recent feasibility study, we estimate the capital cost of the project to be approximately $135 million, the annual production to be approximately 6-8 million ounces of silver over an initial mine life of approximately 14 years, and the cash costs per ounce of silver produced to be approximately $3.50. In the second quarter of 2004, we obtained all remaining permits. In the fourth quarter of 2004, we commenced construction activities at the project.

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        We expect construction will take approximately twenty months, meaning that commercial production could commence in the second half of 2006.

        Coeur expended approximately $5.5 million (includes approximately $1.0 million capitalized in the fourth quarter of 2004), $2.0 million and $2.6 million at the San Bartolome project in 2004, 2003 and 2002, respectively, and plans construction costs of approximately $93.1 million in 2005.

        The San Bartolome project involves risks that are inherent in any mining venture, as well as particular risks associated with the location of the project. The estimate of mineralized material indicated by the geologic studies performed to date are preliminary in nature and may differ materially after further metallurgical testing is completed. Also, managing mining projects in the altiplano area of Bolivia, where Cerro Rico is located, presents logistical challenges. The political and cultural differences of a foreign country may also present challenges.

        We have obtained a political risk insurance policy from the Overseas Private Insurance Corporation (“OPIC”) and another private insurer. The policy is in the amount of $155 million and covers 85% of any loss arising from expropriation, political violence or currency inconvertibility. The policy is expected to cost approximately $3.4 million during the course of construction and $0.21 per ounce of silver produced when the project commences commercial production.

Year-end Proven and Probable Ore Reserves (1) - San Bartolome Project

2004
2003
2002
Tons (000's)      46,176    35,274    --  
Ounces of silver per ton    3.29    3.48    --  
Contained ounces of silver (000's)    151,882    122,816    --  

Year-end Mineralized Material -- San Bartolome Project

2004
2003
2002
Tons (000's)      1,166    238    40,297  
Ounces of silver per ton    3.44    4.16    3.14  

  (1) Metal prices used were $6.00 per ounce of silver.

        Alaska —Kensington Gold Project

        On July 7, 1995, Coeur, through its wholly-owned subsidiary, Coeur Alaska, Inc. (“Coeur Alaska”), acquired the 50% ownership interest of Echo Bay Exploration Inc. (“Echo Bay”) in the Kensington property from Echo Bay and Echo Bay Alaska, Inc. (collectively the “Sellers”), giving Coeur 100% ownership of the Kensington property. The Kensington project consists of approximately 6,000 acres, of which approximately 750 acres are patented claims. The property is located on the east side of Lynn Canal between Juneau and Haines, Alaska. Coeur Alaska is obligated to pay Echo Bay a scaled net smelter return royalty on 1.0 million ounces of future gold production after Coeur Alaska recoups the $32.5 million purchase price and its construction and development expenditures incurred after July 7, 1995 in connection with placing the property into commercial production. The royalty ranges from 1% at $400 gold prices to a maximum of 2 1/2% at gold prices above $475, with the royalty to be capped at 1.0 million ounces of production.

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        In the second quarter of 2004, we completed an updated feasibility study based on an alternative operating scenario which would eliminate the need for a man camp, simplify operating logistics and focus mining on higher-grade areas of the deposit (thereby reducing significantly the size of the mill facilities). This plan significantly reduces capital and operating costs while preserving the ability to expand production as market conditions warrant. Based upon the results of the feasibility study, we estimate the capital costs of the project to be approximately $91.5 million, the annual production to be 100,000 ounces of gold over an initial mine life of ten years and the cash cost per ounce of gold produced to be approximately $220. In connection with this study, we retained Snowden Mining Industry Consultants to review and update the mineralization model and produce a new estimate of reserves and mineralized material. The property has been permitted under a previous operating plan. In connection with the updated plan, the Company prepared a Final Supplemental Environmental Impact Statement (“FSEIS”). During the fourth quarter of 2004, a major permitting milestone was reached with the issuance of the Record of Decision (“ROD”) for the FSEIS by the U.S. Forest Service. The Forest Service ROD supports the preferred operating and development plan as set forth by the Company. The ROD is also supported by the Army Corps of Engineers, the State of Alaska and the City and Borough of Juneau. We expect to obtain all required construction permits in the first half of 2005. Upon the receipt of remaining permits, we could make a construction decision in the first half of 2005. We expect construction to take eighteen months, meaning that commercial production could commence during 2006.

        On February 7, 2005, the Southeast Alaska Conservation Council and a group of other community and private environmental groups filed an appeal with the Regional Forester of the U.S. Forest Service in Juneau, Alaska seeking to set aside the ROD for the FSEIS for the Kensington Gold Project. The appellants allege numerous threats to the Berners Bay ecological, cultural and recreational value in violation of the Endangered Species Act, the Alaska National Interest Lands Conservation Act, the National Environmental Policy Act, the National Forest Management Act, the Clean Water Act and other laws and agency regulations. The Company objected to the appellants’ allegations in support of the ROD for the FSEIS issued by the U.S. Forest Service. On March 23, 2005, the US Forest Service upheld the decision to approve the FSEIS.

        The Kensington ore deposit consists of multiple, precious metals bearing, mesothermal, quartz, carbonate, pyrite vein swarms and discrete quartz-pyrite veins hosted in the Cretaceous age Jualin diorite. The gold-telluride-mineral calaverite is associated with the pyrite mineralization.

Year-end Proven and Probable Ore Reserves(1) - Kensington Property

2004
2003
2002
Tons (000's)      4,206    4,113    10,946  
Ounces of gold per ton    0.25    0.24    0.16  
Contained ounces of gold    1,050,000    1,003,000    1,751,000  

Year-end Mineralized Material

2004
2003
2002
Tons (000's)      3,116    7,262    12,014  
Ounces of gold per ton    0.27    0.12    0.12  

  (1) A gold price of $375 was used to determine ore reserves.

        We believe the Kensington property package has excellent exploration potential. Not all Kensington ore zones have been fully delineated at depth and several peripheral zones and veins remain to be explored. During 2005, we plan to commence an exploration program designed to convert 300,000 to 400,000 ounces of gold currently reported as mineralized material to reserves, with potential to increase total gold production and to identify higher grade sections of the deposit that might be mined in the earlier years of the operation. The program is expected to cost approximately $2.6 million. In addition, the Company possesses the right to develop the Jualin property, an exploratory property located adjacent to the Kensington Property. A budget of $0.7 million is allocated for 2005 at Jualin which consists of approximately 9,400 acres, of which approximately 345 acres are patented claims. The Company’s rights to develop the Jualin property are subject to an agreement which must be renewed in May 2007.

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        Total expenditures by the Company at the Kensington property in 2004 were $7.4 million. Such expenditures were used to continue the permitting and updated feasibility activities and included approximately $0.4 million on Jualin exploration. The Company plans approximately $7.0 million for currently planned project expenditures during 2005. Additional expenditures will be dependent upon the receipt of remaining permits which are expected in the first half of 2005.

        Coeur continues to complete the permitting process. No assurance can be given as to whether or when the required regulatory approvals will be obtained or as to whether the Company will place the Kensington project into commercial production.

CANADIAN NATIONAL INSTRUMENT 43-101 DISCLOSURE

        Coeur was listed on the Toronto Stock Exchange on January 11, 2005. As a Canadian publicly listed issuer, the Company must reconcile its reserves and mineralized material to Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) standard definitions.

Proven Reserves (Year-end 2004)

Short Grade (ounces/ton)
Ounces (000s)
Property
Location
Tons (000s)
Silver
Gold
Silver
Gold
Rochester     Nevada, USA      21,453    0.87    0.01    18,662    195  
Silver Valley   Idaho, USA    395    18.58    --    7,346    --  
Cerro Bayo   Chile    336    7.53    0.13    2,533    43  
Martha   Argentina    15    51.90    0.07    801    1  
San Bartolome   Bolivia    --    --    --    --    --  
Kensington   Alaska, USA    --    --    --    --    --  

       22,199            29,342    239  

Probable Reserves (Year-end 2004)

Short Grade (ounces/ton)
Ounces (000s)
Property
Location
Tons (000s)
Silver
Gold
Silver
Gold
Rochester     Nevada, USA      2,545    0.81    0.01    2,069    18  
Silver Valley   Idaho, USA    322    19.15    --    6,172    --  
Cerro Bayo   Chile    526    6.80    0.14    3,576    73  
Martha   Argentina    42    74.70    0.08    3,129    4  
San Bartolome   Bolivia    46,176    3.29    --    151,882    --  
Kensington   Alaska, USA    4,206    --    0.25    --    1,050  

       53,817            166,828    1,144  

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Measured Resource (Year-end 2004)

Short Grade (ounces/ton)
Ounces (000s)
Property
Location
Tons (000s)
Silver
Gold
Silver
Gold
Rochester     Nevada, USA      26,205    8.81    0.01    21,216    144  
Silver Valley   Idaho, USA    577    11.10    --    6,407    --  
Cerro Bayo   Chile    643    5.74    0.10    3,691    65  
Martha   Argentina    21    53.72    0.06    1,125    1  
San Bartolome   Bolivia    --    --    --    --    --  
Kensington   Alaska, USA    --    --    --    --    --  

       27,446            32,439    210  

Indicated Resource (Year-end 2004)

Short Grade (ounces/ton)
Ounces (000s)
Property
Location
Tons (000s)
Silver
Gold
Silver
Gold
Rochester     Nevada, USA      8,551    0.96    0.01    8,243    41  
Silver Valley   Idaho, USA    553    11.93    --    6,603    --  
Cerro Bayo   Chile    1,598    3.3    0.07    5,271    111  
Martha   Argentina    20    38    0.05    754    1  
San Bartolome   Bolivia    70    2.29    --    160    --  
Kensington   Alaska, USA    617    --    0.44    --    269  

       11,409            21,031    422  

Inferred Resource (Year-end 2004)

Short Grade (ounces/ton)
Ounces (000s)
Property
Location
Tons (000s)
Silver
Gold
Silver
Gold
Rochester     Nevada, USA      308    1.73    0.00    533    1  
Silver Valley   Idaho, USA    1,038    10.28    --    10,674    --  
Cerro Bayo   Chile    1,588    4.70    0.08    7,462    133  
Martha   Argentina    33    60.99    0.06    2,017    2  
San Bartolome   Bolivia    1,096    3.52    --    3,851    --  
Kensington   Alaska, USA    2,499    --    0.23    --    584  

       6,562            24,537    720  

(1) Mineral resources are exclusive of or in addition to mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

(2) For additional information relating to the mineral reserve and mineral resource estimates on each property (including pricing assumptions, cut-off grades and other parameters, assumptions and methods used to prepare the estimates), we refer you to its technical report which is electronically available to the public from the Canadian System for Electronic Document Analysis and Retrieval at http://www.sedar.com.

        Donald J. Birak, Coeur’s Senior Vice President of Exploration is the qualified person responsible for the preparation of the scientific and technical information in this Annual Report on Form 10-K. Mr. Birak has reviewed the available data and procedures and believes the calculations of mineral resources and mineral reserves were conducted in a professional and competent manner.

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Classification of Mineral Reserves and Resources

        Definitions of proven and probable mineral reserves and measured, indicated and inferred mineral resources are those prescribed by NI 43-101 and conform to the CIM Standards.

EXPLORATION ACTIVITY

        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, Chile, Argentina, Tanzania and Bolivia. Exploration expenses of approximately $11.1 million, $4.9 million and $3.8 million were incurred by the Company in connection with exploration activities in 2004, 2003 and 2002, respectively.

        Puchuldiza, Chile Joint Venture Property

        On November 28, 2001, the Company signed an exploration agreement with Barrick Gold Corporation (Barrick) relating to Coeur’s Puchuldiza gold property located approximately 155 miles northeast of the port city of Iquique in northern Chile. Under the terms of the agreement, Barrick can earn a 75% interest in the property for exploration expenditures of $2.3 million over the next five years. For an additional $5.8 million in exploration spending, Barrick can increase its property interest to 85%. Coeur, however, can recover its full 25% interest by making a cash payment to Barrick equivalent to 25% of Barrick’s additional expenditure of $5.8 million, plus a 50% penalty.

        Puchuldiza is a large, epithermal, hot spring deposit in a setting very similar to other gold deposits in the USA, New Zealand and Japan. Gold mineralization can be found throughout the property in systems of veins, veinlets and stockworks developed in explosion breccias and silicified zones. Coeur believes that there is considerable potential to expand the current near-surface mineralization.

        During 2004, Barrick spent approximately $0.65 million on geologic mapping, geochemical and geophysical surveys and drilling on the Puchuldiza property which brings their cumulative expenditure to $1.91 million. Barrick drilled 10 core holes in 2004 for a total of 2,123 meters (6,965 feet).

        Cerro Bayo Mine, Chile

        Coeur continued to have exploration success at its 100%-owned Cerro Bayo gold/silver mining operation in southern Chile. Approximately $4.1 million was spent in exploration during 2004. A total of 250,000 feet of drilling was completed primarily during the second half of the year. The goal was to discover new reserves and mineralized material immediately north and south of the Cerro Bayo mine.

        New reserves and mineralized material were successfully discovered in several veins. At December 31, 2004, Cerro Bayo reserves were 0.862 million tons at a grade of 7.09 silver ounces per ton for a total 6.11 million ounces of silver and a grade of 0.134 gold ounces per ton for a total of 115.900 gold ounces. Mineralized material at Cerro Bayo totaled 3.829 million tons at an average grade of 4.29 ounce per ton for silver and 0.082 for gold.

        The exploration potential to discover additional high grade veins within the entire Cerro Bayo trend, which is 2.5 miles east–west by 6 miles north-south, is considered to be excellent. The exploration budget for 2005 is slated for $3.9 million.

        Martha Mine, Argentina

        Coeur had encouraging exploration results at its 100%-owned high-grade silver Martha Mine area located in Santa Cruz Province, Argentina. The underground mine is approximately 270 miles southeast of Coeur’s Cerro Bayo property located in Southern Chile. Coeur acquired the Martha Mine in April 2002 and began transporting high-grade ore from the Martha mine to its Cerro Bayo mill in June 2002. In addition 145,000 acres of exploration stage properties in Santa Cruz Province were also acquired.

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        Coeur continued a mine development and exploration program during 2004 and focused primarily on areas around the 100 acre Martha mine property. The Martha vein, which is exposed for over one mile, is one of six presently known veins that have had very limited exploration prior to Coeur’s acquisition of the property. Coeur’s efforts consisted of mapping, sampling and drilling for a total expenditure of $2.5 million.

        The 2004 program was successful in discovering extensions of high grade ore along the strike of the Martha vein within the mine itself as well as locating several new high-grade ore shoots, including the Francisca and Catalina veins, at the “R4 Zone”.

        During 2004, exploration results on the R4 Zone, and the Del Medio and Del Medio Norte veins extended the Martha mine life through the middle of 2006. At December 31, 2004, reserves at the Martha mine total 57,000 tons averaging 0.085 ounces of gold per ton and 68.56 ounces of silver per ton for a total of 4,600 ounces of gold and 3.9 million ounces of silver. Mineralized material totaled 74,000 tons at an average grade of 52.75 ounces of silver per ton and 0.058 ounces of gold per ton. An ongoing drill program during 2005 is planned to expand the high-grade mineralization discovered in 2004 and to explore for additional high-grade veins.

        Coeur has also initiated ground reconnaissance on its large land package in Santa Cruz Province surrounding the Martha mine as well as 90 miles to the north surrounding its Lejano property. Numerous new epithermal veins were discovered that contain high grade gold and silver mineralization on the surface. The Company plans to continue to map, sample and drill many of these veins during 2005.

        Tanzania, Africa

        During the first quarter of 2004, the Company acquired ten prospecting licenses for properties located in the Victoria Gold Belt of Tanzania, Africa. The prospecting licenses are valid for a period of three years and contain renewal options. During 2004, work consisted of mapping, sampling and acquisition and interpretation of geophysical and remote sensing data. As a result of this work, one of the original licenses were selected for a large soil sampling program which is expected to be completed and expanded in the first half of 2005.

        During 2005, the Company plans to spend approximately $0.3 million on exploration activities which, if successful, could identify targets for drilling later in 2005.

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:


Year Ended December 31,
2004
2003
2002
High
Low
High
Low
High
Low
Silver     $ 8.24   $ 5.57   $ 5.97   $ 4.39   $ 5.12   $ 4.23  
Gold   $ 454.20   $ 375.00   $ 416.25   $319.90   $ 349.65   $ 278.45  



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MARKETING

        The Company markets its metals products and concentrates primarily to bullion trading banks and third party smelters. These customers then sell the metals to end users for use in industry applications such as electronic circuitry, jewelry and silverware production and the manufacture and development of photographic film. Sales of metals to bullion trading banks amounted to approximately 48%, 41% and 60% of total sales of metals in 2004, 2003 and 2002, respectively, and sales of metal concentrates to third party smelters amounted to approximately 52%, 59% and 40% of total metal sales in 2004, 2003 and 2002, respectively. Generally, the loss of a single bullion trading bank customer would not adversely affect the Company in view of the liquidity of the product and availability of alternative trading banks. In 2004, no third party smelter generally purchases concentrates from the Company in an amount equal to 10% or more of the Company’s total metal sales except that sales of concentrates produced by the Cerro Bayo mine, which accounted for approximately 33%, 44% and 17% of the Company’s total metal sales in 2004, 2003, and 2002, respectively, were sold to Dowa Mining Co., Ltd, a Japanese third party smelter, pursuant to a contract that expires on March 31, 2005, if a 12-month advance notice of termination is given by Dowa. Dowa has not given such notice, and the contract is therefore extended to March 31, 2006. Nevertheless, Dowa is urging the company, as a matter of cooperation, to sell a portion of the concentrates which Dowa is obligated to take under the contract to third parties. A significant delay or disruption in the sale of our Cero Bayo concentrates would have a materially adverse affect on our operations.

        The Company has no future silver or gold production hedged at December 31, 2004 and has no plans to hedge its silver in the future. Coeur has historically sold the gold from its mines both pursuant to forward contracts and at spot prices prevailing at the time of sale. Silver has been sold at spot prices prevailing at the time of sale. Entering into forward sale contracts is a strategy which can be used to enhance revenues and/or mitigate some of the risks associated with fluctuating precious metals prices. For further details of the Company’s gold sales program please refer to Note N – Derivative Financial Instruments and Fair Value Financial Instruments of the Company’s Consolidated Financial Statements and Accompanying Notes.

GOVERNMENT REGULATION

General

        The Company’s commitment to environmental responsibility has been recognized in 23 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, the “Star” award granted on June 23, 1993 by the National Environmental Development Association, and the Environmental Waikato Regional Council award for Golden Cross environmental initiative granted on May 15, 1995 and in March 2004 the Habitat Restoration Award from the Nevada Division of Wildlife for developing habitat at the Rochester mine. In 1994, the Company’s Chairman and Chief Executive Officer, and in 1997, the Company’s Vice President of Environmental and Governmental Affairs, were awarded the American Institute of Mining, Metallurgical and Petroleum Engineers’ Environmental Conservation Distinguished Service Award.

        The Company’s 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. Although the Company is usually involved in regulatory proceedings for renewal or reissue of various permits, such regulations have never caused the Company to close any mine. The costs associated with compliance with such regulatory requirements are substantial and possible future legislation and regulations could cause additional expense, capital expenditures, restrictions and delays in the development of the Company’s properties, the extent of which cannot be predicted. In the context of environmental permitting, including the approval of reclamation plans, the Company must comply with known standards and regulations which may entail significant costs and delays. Although Coeur has been recognized for its commitment to environmental responsibility and believes it is in substantial compliance with applicable laws and regulations, amendments to current laws and regulations, the more stringent implementation thereof through judicial review or administrative action or the adoption of new laws could have a materially adverse effect upon the Company.

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        For the years ended December 31, 2004, 2003 and 2002, the Company expended $4.4 million, $4.5 million and $5.3 million, respectively, in connection with routine environmental compliance activities at its operating properties and expects to expend approximately $6.8 million for that purpose in 2005. Future environmental expenditures will be determined by governmental regulations and the overall scope of the Company’s operating and development activities.

Federal Environmental Laws

        Mining wastes are currently exempt to a limited extent from the extensive set of Environmental Protection Agency (“EPA”) regulations governing hazardous waste, although such wastes may be subject to regulation under state law as a solid or hazardous waste. The EPA plans to develop a program to regulate mining waste pursuant to its solid waste management authority under the Resource Conservation and Recovery Act (“RCRA”). Certain processing and other wastes are currently regulated as hazardous wastes by the EPA under RCRA. The EPA is studying how mine wastes from extraction and beneficiation should be managed and regulated. If the Company’s mine wastes were treated as hazardous waste or such wastes resulted in operations being designated as a “Superfund” site under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA” or “Superfund”) for cleanup, material expenditures would be required for the construction of additional waste disposal facilities or for other remediation expenditures. Under CERCLA, any present owner or operator of a Superfund site or an owner or operator at the time of its contamination generally may be held liable and may be forced to undertake remedial cleanup action or to pay for the government’s cleanup efforts. Additional regulations or requirements may also be imposed upon the Company’s tailings and waste disposal in Idaho and Alaska under the Federal Clean Water Act (“CWA”) and state law counterparts, and in Nevada under the Nevada Water Pollution Control Law which implements the CWA. Air emissions are subject to controls under Nevada’s, Idaho’s and Alaska’s air pollution statutes implementing the Clean Air Act.

Proposed Mining Legislation

        Legislation has been introduced, on several occasions, in the U.S. Congress to change the Mining Act under which the Company holds mining claims on public lands. It is possible that the Mining Act will be amended or be replaced by more onerous legislation in the future. The introduced legislation contains new environmental standards and conditions, additional reclamation requirements and extensive new procedural steps which would be likely to result in delays in permitting. The Forest Service and the Bureau of Land Management are considering revising regulations governing operations under the Mining Act on public lands they administer, which may result in additional procedures and environmental conditions and standards on those lands.

        During the last several Congressional sessions, bills have been introduced which would supplant or materially alter the Mining Act. If enacted, such legislation may materially impair the ability of the Company to develop or continue operations which derive ore from federal lands. No such bills have been passed and the extent of the changes, if any, which may be enacted by Congress is not presently known. A significant portion of Coeur’s U.S. mining properties are on public lands. Any reform of the Mining Act or Bureau of Land Management and Forest Service regulations thereunder based on these initiatives could increase the costs of mining activities on unpatented mining claims, and as a result could have an adverse effect on the Company and its results of operations. Until such time, if any, as new reform legislation or regulations are enacted, the ultimate effects and costs of compliance on the Company cannot be estimated.

Foreign Government Regulations

        The mining properties of the Company that are located in Chile and Argentina 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. A recently established State Council for the Environment (CODEMA) has responsibility to define policy, approve plans and programs, control regulatory activities and enforce compliance. The Company believes it is in substantial compliance with all applicable laws and regulations to which it is subject in Chile and Argentina.

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        The Republic of Bolivia, where the San Bartolome project is located, has adopted laws and guidelines for environmental permitting that are similar to those in effect in the United States and other South American countries. The permitting process requires a thorough study to determine the baseline condition of the mining site and surrounding area, an environmental impact analysis, and proposed mitigation measures to minimize and offset the environmental impact of mining operations. The Company has received all permits required to build and operate the San Bartolome mine.

Maintenance of Claims

        At mining properties in the United States, including the Rochester, Kensington, Coeur, Galena and Caladay mines, operations are conducted in part upon unpatented mining claims, as well as patented mining claims. Pursuant to applicable federal law it is necessary, in order to maintain the unpatented claims, to pay to the Secretary of the Interior, on or before August 31 of each year, a claim maintenance fee of $100 per claim. This claim maintenance fee is in lieu of the assessment work requirement contained in the Mining Law of 1872. In addition, in Nevada, holders of unpatented mining claims are required to pay the county recorder of the county in which the claim is situated an annual fee of $3.50 per claim. No maintenance fees are payable for patented claims. Patented claims are similar to land held by an owner who is entitled to the entire interest in the property with unconditional power of disposition.

        In Chile, operations are conducted upon mineral concessions granted by the national government. For exploitation concessions (somewhat similar to a U.S. patented claim), to maintain the concession, an annual tax is payable to the government before March 31 of each year in the approximate amount of $1.14 per hectare. For exploration concessions, to maintain the right, the annual tax is approximately $.30 per hectare. An exploration concession is valid for a five-year period. It may be renewed for new periods unless a third party claims the right to explore upon the property, in which event the exploration concession must be converted to an exploitation concession in order to maintain the rights to the concession.

        Minerals are owned by the Argentine government, which allows individual provinces to impose a maximum 3% mine-mouth royalty on mineral production. The first step in acquiring mining rights is filing a cateo, which gives exclusive prospecting rights for the requested area for a period of time, generally up to 3 years. Maximum size of each cateo is 10,000 hectares; a maximum of 20 cateos can be held by a single entity (individual or company) in any one province.

        The holder of a cateo has exclusive right to establish a Manifestation of Discovery (MD) on that cateo, but MD’s can also be set without a cateo on any land not covered by someone else’s cateo. MD’s are filed as either a vein or disseminated discovery. A square protection zone can be declared around the discovery – up to 840 hectares for vein MD or up to 7,000 hectares for a disseminated MD. The protection zone grants the discoverer exclusive rights for an indefinite period, during which the discoverer must provide an annual report presenting a program of exploration work and investments related to the protection zone. An MD can later be upgraded to a Mina (mining claim), which give the holder the right to begin commercial extraction of minerals.



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EMPLOYEES

        The number of full-time employees at December 31, 2004 of Coeur d’Alene Mines Corporation and its subsidiaries was:

United States Corporate Staff & Office      35  
Silver Valley - Galena Mine 1    182  
Rochester Mine    255  
Kensington Property    9  
Chilean Corporate Staff & Office    8  
Cerro Bayo Mine 1    294  
Mina Martha/Polimet    54  

  Total    837  

  (1) The Company maintains a labor agreement with the United Steelworkers of America at its Coeur Silver Valley mine. The agreement is effective from March 26, 2003 to March 1, 2006. The Company also maintains a labor agreement with Syndicate De Trabayadores De Compania Minera Cerro Bayo LTA at its Cerro Bayo Chile mine. The agreement is effective from December 22, 2003 to December 21, 2005. As of December 31, 2004, the Company had approximately 42% of its labor force covered by collective bargaining.

RISK FACTORS

        The following information sets forth information relating to important risks and uncertainties that could materially adversely affect the Company’s business, financial condition or operating results. References to “we,” “our” and “us” in these risk factors refer to the Company. Additional risks and uncertainties that we do not presently know or that we currently deem immaterial may also impair our business operations.

Risks Relating to our Business

We have incurred losses in the last five years due to several factors, including historically low gold and silver market prices, and may continue to incur losses in the future.

        We have incurred net losses in the last five years, and have had losses from continuing operations in each of those periods. Factors that significantly contributed to our losses are:

  until recently, historically low gold and silver market prices;

  our deliberate pursuit of a growth policy prior to 2003 calling for the acquisition of mining properties and companies and financing such growth principally by incurring convertible indebtedness which had a high coupon rate, thereby increasing our interest expense to $17.0 million in 2000, $14.6 million in 2001, $21.9 million in 2002, $12.9 million in 2003 and $2.8 million in 2004;

  write-offs for impaired assets and other holding costs in 2000 ($12.2 million), 2001 ($6.1 million), and 2002 ($19.0 million); and

  losses on the early retirement of debt of $19.1 million in 2002, and $41.6 million in 2003.

        If silver and gold prices decline and we are unable to reduce our production costs, our losses may continue. If lower silver and gold prices make mining at our properties uneconomical, we may be required to recognize additional impairment write-downs, which would increase our operating losses and negatively impact our results of operations.

We may be required to incur additional indebtedness to fund our capital expenditures.

        We have historically financed our operations through the issuance of common stock and convertible debt, and may be required to incur additional indebtedness in the future. During 2004, we commenced construction at the San Bartolome project and we anticipate that we could reach a final decision to develop the Kensington project in 2005. Construction of both projects would require a total capital investment of approximately $226.5 million. While we believe that our cash, cash equivalents and short-term investments combined with cash flow generated from operations will be sufficient for us to make this level of capital investment, no assurance can be given that additional capital investments will not be required to be made at these or other projects. If we are unable to generate enough cash to finance such additional capital expenditures through operating cash flow and the issuance of common stock, we may be required to issue additional indebtedness. Any additional indebtedness would increase our debt payment obligations, and may negatively impact our results of operations.

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We have not had sufficient earnings to cover fixed charges in recent years and presently expect that situation to continue.

        As a result of our net losses, our earnings have not been adequate to satisfy fixed charges (i.e., interest, preferred stock dividends and that portion of rent deemed representative of interest) in each of the last five years. The amounts by which earnings were inadequate to cover fixed charges were approximately, $47.5 million in 2000, $3.1 million in 2001, $80.8 million in 2002, $63.9 million in 2003, and $22.7 million in 2004. As of December 31, 2004, we are required to make fixed payments on $180 million principal amount of our 1¼% Senior Convertible Notes due 2024, requiring annual interest payments of approximately $2.25 million until their maturity.

        We expect to satisfy our fixed charges and other expense obligations in the future from cash flow from operations and, if cash flow from operations is insufficient, from working capital, which amounted to approximately $350 million at December 31, 2004. In the last five years, we have been experiencing negative cash flow from operating activities. The amount of net cash used in our operating activities amounted to approximately $23.8 million for the year ended December 31, 2000, $29.9 million in 2001, $8.5 million in 2002, $5.1 million in 2003 and $18.6 in 2004. The availability of future cash flow from operations or working capital to fund the payment of interest on the notes and other fixed charges will be dependent upon numerous factors, including our results of operations, silver and gold prices, levels and costs of production at our mining properties and the amount of our capital expenditures and expenditures for acquisitions, developmental and exploratory activities.

The market prices of silver and gold are volatile. If we experience low silver and gold prices it may result in decreased revenues and increased losses, and may negatively affect our business.

        Silver and gold are commodities. Their prices fluctuate, and are affected by many factors beyond our control, including interest rates, expectations regarding inflation, speculation, currency values, governmental decisions regarding the disposal of precious metals stockpiles, global and regional demand and production, political and economic conditions and other factors. Because we currently derive approximately 65% of our revenues from sales of silver, our earnings are primarily related to the price of this metal.

        The market price of silver (Handy & Harman) and gold (London Final) on March 15, 2005 was $7.40 and $441 per ounce, respectively. The price of silver and gold may decline in the future. Factors that are generally understood to contribute to a decline in the price of silver include sales by private and government holders, and a general global economic slowdown.

        If the prices of silver and gold are depressed for a sustained period, our net losses will continue, we may be forced to suspend mining at one or more of our properties until the price increases, and record additional asset impairment write-downs. Any lost revenues, continued or increased net losses or additional asset impairment write-downs would affect our results of operations.

We have recorded significant write-downs of mining properties in recent years and may have to record additional write-downs, which could negatively impact our results of operations.

        Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144) established accounting standards for impairment of the value of long-lived assets such as mining properties. SFAS 144 requires a company to review the recoverability of the cost of its assets by estimating the future undiscounted cash flows expected to result from the use and eventual disposition of the asset. Impairment must be recognized when the carrying value of the asset exceeds these cash flows, and recognizing impairment write-downs has negatively impacted our results of operations in recent years.

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        If silver or gold prices decline or we fail to control production costs or realize the mineable ore reserves at our mining properties, we may recognize further asset write-downs. We also may record other types of additional mining property write-downs in the future to the extent a property is sold by us for a price less than the carrying value of the property, or if liability reserves have to be created in connection with the closure and reclamation of a property. Additional write-downs of mining properties could negatively impact our results of operations.

The estimation of ore reserves is imprecise and depends upon subjective factors. Estimated ore reserves may not be realized in actual production. Our operating results may be negatively affected by inaccurate estimates.

        The ore reserve figures presented in our public filings are estimates made by our technical personnel. Reserve estimates are a function of geological and engineering analyses that require us to make assumptions about production costs and silver and gold market prices. Reserve estimation is an imprecise and subjective process and the accuracy of such estimates is a function of the quality of available data and of engineering and geological interpretation, judgment and experience. Assumptions about silver and gold market prices are subject to great uncertainty as those prices have fluctuated widely in the past. Declines in the market prices of silver or gold may render reserves containing relatively lower grades of ore uneconomic to exploit, and we may be required to reduce reserve estimates, discontinue development or mining at one or more of our properties, or write down assets as impaired. Should we encounter mineralization or geologic formations at any of our mines or projects different from those we predicted, we may adjust our reserve estimates and alter our mining plans. Either of these alternatives may adversely affect our actual production and operating results.

        We based our ore reserve determinations as of December 31, 2004 on a long-term silver price average of $6.00 per ounce and a long-term gold price average of $390 per ounce. On March 15, 2005 silver and gold prices were $7.40 per ounce and $441 per ounce, respectively.

The estimation of the ultimate recovery of metals contained within the heap leach pad inventory is inherently inaccurate and subjective and requires the use of estimation techniques. Actual recoveries can be expected to vary from estimations.

        The Rochester mine utilizes the heap leach process to extract silver and gold from ore. The heap leach process is a process of extracting silver and gold by placing ore on an impermeable pad and applying a diluted cyanide solution that dissolves a portion of the contained silver and gold, which are then recovered in metallurgical processes.

        The key stages in the conversion of ore into silver and gold are (i) the blasting process in which the ore is broken into large pieces; (ii) the processing of the ore through a crushing facility that breaks it into smaller pieces; (iii) the transportation of the crushed ore to the leach pad where the leaching solution is applied; (iv) the collection of the leach solution; (v) subjecting the leach solution to the precipitation process, in which gold and silver is converted back to a fine solid; (vi) the conversion of the precipitate into doré; and (vii) the conversion by a third party refinery of the doré into refined silver and gold bullion.

        We use several integrated steps to scientifically measure the metal content of ore placed on the leach pads during the key stages. As the ore body is drilled in preparation for the blasting process, samples of the drill residue are assayed to determine estimated quantities of contained metal. We estimate the quantity of ore by utilizing global positioning satellite survey techniques. We then process the ore through a crushing facility where the output is again weighed and sampled for assaying. A metallurgical reconciliation with the data collected from the mining operation is completed with appropriate adjustments made to previous estimates. We then transport the crushed ore to the leach pad for application of the leaching solution. As the leach solution is collected from the leach pads, we continuously sample for assaying. We measure the quantity of leach solution with flow meters throughout the leaching and precipitation process. After precipitation, the product is converted to doré, which is the final product produced by the mine. We again weigh, sample and assay the doré. Finally, a third party smelter converts the doré are able to determine final ounces of silver and gold available for sale. We then review this end result and reconcile it to the estimates we developed and used throughout the production process. Based on this review, we adjust our estimation procedures when appropriate.

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        Our reported inventories include metals estimated to be contained in the ore on the leach pads of $43.8 million as of December 31, 2004. Of this amount, $15.0 million is reported as a current asset and $28.8 million is reported as a noncurrent asset. The distinction between current and noncurrent is based upon the expected length of time necessary for the leaching process to remove the metals from the crushed ore. The historical cost of the metal that is expected to be extracted within twelve months is classified as current and the historical cost of metals contained within the crushed ore that will be extracted beyond twelve months is classified as noncurrent.

        The estimate of both the ultimate recovery expected over time, and the quantity of metal that may be extracted relative to such twelve month period, requires the use of estimates which are inherently inaccurate since they rely upon laboratory test work. Test work consists of 60 day leach columns from which we project metal recoveries into the future. The quantities of metal contained in the ore are based upon actual weights and assay analysis. The rate at which the leach process extracts gold and silver from the crushed ore is based upon laboratory column tests and actual experience occurring over approximately eighteen years of leach pad operation at the Rochester mine. The assumptions we use to measure metal content during each stage of the inventory conversion process includes estimated recovery rates based on laboratory testing and assaying. We periodically review our estimates compared to actual experience and revise our estimates when appropriate. The length of time necessary to achieve our currently estimated ultimate recoveries of between 59% and 61.5%, depending on the area being leached, for silver and 93% for gold is estimated to be between 5 and 10 years. However, the ultimate recovery will not be known until leaching operations cease, which is currently estimated for 2011.

        When we began leach operations in 1986, based solely on laboratory testing, we estimated the ultimate recovery of silver and gold at 50% and 80%, respectively. Since 1986, we have adjusted the expected ultimate recovery three times (once in each of 1989, 1997 and 2003) based upon actual experience gained from leach operations. In 2003, we revised our estimated recoveries for silver and gold of between 59% and 61.5%, depending on the area being leached, and 93%, respectively, which increased the estimated recoverable ounces of silver and gold contained in the heap by 1.8 million ounces and 41,000 ounces, respectively.

        If our estimate of ultimate recovery requires adjustment, the impact upon our inventory valuation and upon our income statement would be as follows:







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Positive/Negative
Change in Silver Recovery

Positive/Negative
Change in Gold Recovery

1%
2%
3%
1%
2%
3%
Quantity of recoverable                            
ounces    1.5 million  3.1 million  4.6 million  10,800    21,700    32,500  
Positive impact on  
future cost of  
production per silver  
equivalent ounce for  
increases in recovery  
rates   $0.66   $1.15   $1.54   $0.31   $0.59   $0.83  
Negative impact on  
future cost of  
production per silver  
equivalent ounce for  
decreases in recovery  
rates   $0.91   $2.27   $4.49   $0.36   $0.78   $1.28  

        Inventories of ore on leach pads are valued based upon actual costs incurred to place such ore on the leach pad, less costs allocated to minerals recovered through the leach process. The costs consist of those production activities occurring at the mine site and include the costs, including depreciation, associated with mining, crushing and precipitation circuits. In addition, refining is provided by a third party refiner to place the metal extracted from the leach pad in a saleable form. These additional costs are considered in the valuation of inventory. Negative changes in our inventory valuations and correspondingly on our income statement would have an adverse impact on our results of operations.

Our estimates of current and non-current inventories may not be realized in actual production and operating results, which may negatively affect our business.

        We use estimates, based on prior production results and experiences, to determine whether heap leach inventory will be recovered more than one year in the future, and is non-current inventory, or will be recovered within one year, and is current inventory. The estimates involve assumptions that may not prove to be consistent with our actual production and operating results. We cannot determine the amount ultimately recoverable until leaching is completed. If our estimates prove inaccurate, our operating results may be less than anticipated.

Significant investment risks and operational costs are associated with our exploration, development and mining activities, such as San Bartolome and Kensington. These risks and costs may result in lower economic returns and may adversely affect our business.

        Our ability to sustain or increase our present production levels depends in part on successful exploration and development of new ore bodies and/or expansion of existing mining operations. Mineral exploration, particularly for silver and gold, involves many risks and is frequently unproductive. If mineralization is discovered, it may take a number of years until production is possible, during which time the economic viability of the project may change. Substantial expenditures are required to establish ore reserves, extract metals from ores and, in the case of new properties, to construct mining and processing facilities. The economic feasibility of any development project is based upon, among other things, estimates of the size and grade of ore reserves, proximity to infrastructures and other resources (such as water and power), metallurgical recoveries, production rates and capital and operating costs of such development projects, and metals prices. Development projects are also subject to the completion of favorable feasibility studies, issuance of necessary permits and receipt of adequate financing.

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        Development projects, such as San Bartolome and Kensington, may have no operating history upon which to base estimates of future operating costs and capital requirements. Particularly for development projects items such as estimates of reserves, metal recoveries and cash operating costs are to a large extent based upon the interpretation of geologic data obtained from a limited number of drill holes and other sampling techniques and feasibility studies. Estimates of cash operating costs are then derived based upon anticipated tonnage and grades of ore to be mined and processed, the configuration of the orebody, expected recovery rates of metals from the ore, comparable facility and equipment costs, anticipated climate conditions and other factors. As a result, actual cash operating costs and economic returns of any and all development projects may materially differ from the costs and returns estimated, and accordingly, our business results of operations may be negatively affected.

The Company’s marketing of metals concentrates could be adversely affected if there were to be a significant delay or disruption of purchases by its third party smelter customers. In particular, a significant delay or disruption in our sales of Cerro Bayo concentrates as a result of the expected discontinuation of purchases by the current Japanese smelter customer could have a material adverse effect on our operations.

        The Company currently markets its silver and gold concentrates to third party smelters in Japan and Canada. The loss of any one smelter customer could have a material adverse effect on us in the event of the possible unavailability of alternative smelters. No assurance can be given that alternative smelters would be timely available if the need for them were to arise, or that delays or disruptions in sales could not be experienced that would result in a materially adverse effect on out operations.

Our silver and gold production may decline, reducing our revenues and negatively impacting our business.

        Our future silver and gold production may decline as a result of an exhaustion of reserves and possible closure of mines. It is our business strategy to conduct silver and gold exploratory activities at our existing mining and exploratory properties as well as at new exploratory projects, and to acquire silver and gold mining properties and businesses that possess mineable ore reserves and are expected to become operational in the near future. We can provide no assurance that our silver and gold production in the future will not decline. Accordingly, our revenues from the sale of silver and gold may decline, negatively affecting our results of operations.

There are significant hazards associated with our mining activities, not all of which are fully covered by insurance. To the extent we must pay the costs associated with such risks, our business may be negatively affected.

        The mining business is subject to risks and hazards, including environmental hazards, industrial accidents, the encountering of unusual or unexpected geological formations, cave-ins, flooding, earthquakes and periodic interruptions due to inclement or hazardous weather conditions. These occurrences could result in damage to, or destruction of, mineral properties or production facilities, personal injury or death, environmental damage, reduced production and delays in mining, asset write-downs, monetary losses and possible legal liability. Although we maintain insurance in an amount that we consider to be adequate, liabilities might exceed policy limits, in which event we could incur significant costs that could adversely affect our results of operation. Insurance fully covering many environmental risks (including potential liability for pollution or other hazards as a result of disposal of waste products occurring from exploration and production) is not generally available to us or to other companies in the industry. The realization of any significant liabilities in connection with our mining activities as described above could negatively affect our results of operations.

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We are subject to significant governmental regulations, and their related costs and delays may negatively affect our business.

        Our mining activities are subject to extensive federal, state, local and foreign laws and regulations governing environmental protection, natural resources, prospecting, development, production, post-closure reclamation, taxes, labor standards and occupational health and safety laws and regulations including mine safety, toxic substances and other matters related to our business. Although these laws and regulations have never required us to close any mine, the costs associated with compliance with such laws and regulations are substantial. Possible future laws and regulations, or more restrictive interpretations of current laws and regulations by governmental authorities could cause additional expense, capital expenditures, restrictions on or suspensions of our operations and delays in the development of our properties. Moreover, governmental authorities and private parties may bring lawsuits based upon damage to property and injury to persons resulting from the environmental, health and safety impacts of our past and current operations, which could lead to the imposition of substantial fines, penalties and other civil and criminal sanctions. Substantial costs and liabilities, including for restoring the environment after the closure of mines, are inherent in our operations. Although we believe we are in substantial compliance with applicable laws and regulations, we cannot assure you that any such law, regulation, enforcement or private claim will not have a negative effect on our business, financial condition or results of operations.

        Some of our mining wastes are currently exempt to a limited extent from the extensive set of federal Environmental Protection Agency (EPA) regulations governing hazardous waste under the Resource Conservation and Recovery Act (RCRA). If the EPA designates these wastes as hazardous under RCRA, we would be required to expend additional amounts on the handling of such wastes and to make significant expenditures to construct hazardous waste disposal facilities. In addition, if any of these wastes causes contamination in or damage to the environment at a mining facility, such facility may be designated as a “Superfund” site under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). Under CERCLA, any owner or operator of a Superfund site since the time of its contamination may be held liable and may be forced to undertake extensive remedial cleanup action or to pay for the government’s cleanup efforts. Additional regulations or requirements are also imposed upon our tailings and waste disposal areas in Idaho and Alaska under the federal Clean Water Act (CWA) and in Nevada under the Nevada Water Pollution Control Law which implements the CWA. Airborne emissions are subject to controls under air pollution statutes implementing the Clean Air Act in Nevada, Idaho and Alaska. Compliance with CERCLA, the CWA and state environmental laws could entail significant costs, which could have a material adverse effect on our operations.

        In the context of environmental permits, including the approval of reclamation plans, we must comply with standards and regulations which entail significant costs and can entail significant delays. Such costs and delays could have a dramatic impact on our operations.

We are required to obtain government permits to expand operations or begin new operations. The costs and delays associated with such approvals could affect our operations, reduce our revenues, and negatively affect our business as a whole.

        Mining companies are required to seek governmental permits for expansion of existing operations or for the commencement of new operations such as the Kensington development project. Obtaining the necessary governmental permits is a complex and time-consuming process involving numerous jurisdictions and often involving public hearings and costly undertakings. The duration and success of permitting efforts are contingent on many factors that are out of our control. The governmental approval process may increase costs and cause delays depending on the nature of the activity to be permitted, and could cause us to not proceed with the development of a mine. Accordingly, this approval process could harm our results of operations.

        On February 2, 2005, the Southeast Alaska Conservation Council (“SEACC”) and a group of other community and private environmental groups filed an appeal of the U.S. Forest Service Record of Decision for the Final Supplemental Environmental Impact Statements for the Kensington Gold Project, alleging numerous ecological, cultural and recreational value threats posed by the project under various environmental and other laws and regulations. On March 23, 2005, the US Forest Service upheld its decision to approve the FSEIS. SEACC has also threatened to sue the U.S. Forest Service if relief is not obtained in the course of its administrative appeal. The Company is unable to predict what the outcome of a suit would be, if one is filed, or its impact upon the permitting process.

32


We are an international company and are exposed to risks in the countries in which we have significant operations or interests. Foreign instability or variances in foreign currencies may cause unforeseen losses, which may affect our business.

        Chile, Argentina and Bolivia are the most significant foreign countries in which we directly or indirectly own or operate mining properties or developmental projects. We also conduct exploratory projects in these countries. Argentina, while currently economically and politically stable, has experienced political instability, currency value fluctuations and changes in banking regulations in recent years. Although the governments and economies of Chile and Bolivia have been relatively stable in recent years, property ownership in a foreign country is generally subject to the risk of expropriation or nationalization with inadequate compensation. Any foreign operations 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. We may enter into agreements which require us to purchase currencies of foreign countries in which we do business in order to ensure fixed exchange rates. In the event that actual exchange rates vary from those set forth in the hedge contracts, we will experience U.S. dollar-denominated currency gains or losses. Future economic or political instabilities or changes in the laws of foreign countries in which we have significant operations or interests and unfavorable fluctuations in foreign currency exchange rates could negatively impact our foreign operations and our business as whole.

Any of our future acquisitions may result in significant risks, which may adversely affect our business.

        An important element of our business strategy is the opportunistic acquisition of silver and gold mines, properties and businesses. While it is our practice to engage independent mining consultants to assist in evaluating and making acquisitions, any mining properties we may acquire may not be developed profitably or, if profitable when acquired, that profitability might not be sustained. In connection with any future acquisitions, we may incur indebtedness or issue equity securities, resulting in dilution of the percentage ownership of existing shareholders. We intend to seek shareholder approval for any such acquisitions to the extent required by applicable law, regulations or stock exchange rules. We cannot predict the impact of future acquisitions on the price of our business or our common stock. Unprofitable acquisitions, or additional indebtedness or issuances of securities in connection with such acquisitions, may impact the price of our common stock and negatively affect our results of operations.

Our ability to find and acquire new mineral properties is uncertain. Accordingly, our prospects are uncertain for the future growth of our business.

        Because mines have limited lives based on proven and probable ore reserves, we are continually seeking to replace and expand our ore reserves. Identifying promising mining properties is difficult and speculative. Furthermore, we encounter strong competition from other mining companies in connection with the acquisition of properties producing or capable of producing silver and gold. Many of these companies have greater financial resources than we do. Consequently, we may be unable to replace and expand current ore reserves through the acquisition of new mining properties on terms we consider acceptable. As a result, our revenues from the sale of silver and gold may decline, resulting in lower income and reduced growth.

Third parties may dispute our unpatented mining claims, which could result in losses affecting our business.

        The validity of unpatented mining claims, which constitute a significant portion of our property holdings in the United States, is often uncertain and may be contested. Although we have attempted to acquire satisfactory title to undeveloped properties, we, in accordance with mining industry practice, do not generally obtain title opinions until a decision is made to develop a property. As a result, some titles, particularly titles to undeveloped properties, may be defective. Defective title to any of our mining claims could result in litigation, insurance claims, and potential losses affecting our business as a whole.

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Item 3. Legal Proceedings.

        Federal Natural Resources Action

        An action was filed on March 22, 1996 in the United States District Court for the District of Idaho by the United States against various defendants, including the Company, asserting claims under CERCLA and the Clean Water Act for alleged damages to federal natural resources in the Coeur d’Alene River Basin of Northern Idaho. The damages are claimed to result from alleged releases of hazardous substances from mining activities conducted in the area since the late 1800s.

        The Company and representatives of the U.S. Government, including the Environmental Protection Agency, the Department of Interior and the Department of Agriculture, reached an agreement to settle the lawsuit. The terms of settlement are set forth in a Consent Decree issued by the court. Pursuant to the terms of the Consent Decree, dated May 14, 2001, the Company has paid the U.S. Government a total of approximately $3.9 million, of which $3.3 million was paid in May 2001 and the remaining $0.6 million was paid in June 2001. In addition, the Company will (i) pay the United States 50% of any future recoveries from insurance companies for claims for defense and indemnification under general liability insurance policies in excess of $0.6 million, (ii) accomplish certain cleanup work on the Mineral Point property and Caladay property, and (iii) make a conveyance to the U.S. or the State of Idaho of certain real property to possibly be used as a waste repository. Finally, commencing five years after effectiveness of the settlement, the Company will be obligated to pay net smelter return royalties on its operating properties, up to a maximum of $3.0 million, amounting to a 2% net smelter royalty on silver production if the price of silver exceeds $6.50 per ounce, and a $5.00 per ounce net smelter royalty on gold production if the price of gold exceeds $325 per ounce. The royalty payment obligation expires after May 14, 2021.

        States of Maine, Idaho and Colorado Superfund Sites Related to Callahan Mining Corporation

        During 1991, the Company acquired all of the outstanding common stock of Callahan Mining Corporation.

        During 2001, the United States Forest Service made a formal request for information regarding the Deadwood Mine Site located in central Idaho. Callahan Mining Corporation had operated at this site during the 1940‘s. The Forest Service believes that some cleanup action is required at the location. However, Coeur d’Alene Mines Corporation did not acquire Callahan until 1991, more than 40 years after Callahan disposed of its interest in the Deadwood property. The Company did not make any decisions with respect to generation, transport or disposal of hazardous waste at the site. Therefore, it is believed that the Company is not liable for any cleanup, and if Callahan might be liable, it has no substantial assets with which to satisfy any such liability. To date no claim has been made by the United States for any dollar amount of cleanup costs against either the Company or Callahan.

        During 2002, the EPA made a formal request for information regarding a Callahan mine site in the State of Maine. Callahan operated there in the late 1960‘s, shut the operations down in the early 1970‘s and disposed of the property. The EPA contends that some cleanup action is warranted at the site, and listed it on the National Priorities List in late 2002. The Company believes that because it made no decisions with respect to generation, transport or disposal of hazardous waste at this location, it is not liable for any cleanup costs. If Callahan might have liability, it has no substantial assets with which to satisfy such liability. To date, no claim has been made for any dollar amount of cleanup costs against either the Company or Callahan.

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        In January 2003, the U.S. Forest Service made a formal request for information regarding a Callahan mine site in the State of Colorado known as the Akron Mine Site. Callahan operated there in approximately the late 1930s through the 1940s, and to the Company’s knowledge, disposed of the property. The Company is not aware of what, if any, cleanup action the Forest Service is contemplating. However, the Company did not make decisions with respect to generation, transport or disposal of hazardous waste at this location, and therefore believes it is not liable for any cleanup costs. If Callahan might have liability, it has no substantial assets with which to satisfy such liability. To date, no claim has been made for any dollar amount of cleanup costs against either the Company or Callahan.

        Suit by Credit Suisse First Boston

        On December 2, 2003, suit was filed by Credit Suisse First Boston against the Company in the United States District Court for the Southern District of New York (Docket No. 03 Civ 9547). The plaintiff alleges that the Company breached a contract between the parties providing for services to be furnished by the plaintiff to the defendant. Plaintiff alleges that it is entitled to damages in the amount of $2,400,000 attributed to the breach. The Company believes it did not breach the contract and that it is not liable. However, in the course of pretrial discovery proceedings the District Judge has ordered that the Company may not amend its pleadings to assert a certain counterclaim, and that an expert whom the Company desires to utilize at the time of trial may not testify. If the District Judge maintains his stance as stated, the Company may be exposed to summary judgment against it, when its side of the case cannot be fully presented through the use of an expert witness. However, the Company believes that if a motion for summary judgment is made by the plaintiff bank, and if the motion is granted, the trial court’s ruling is subject to probable reversal on appeal. Upon trial after reversal, and with the use of an expert witness, the Company believes that it is more likely than not that the court will be convinced that the bank’s claim for damages is not valid.

        Argentina Regulatory Issues

        In September 2004 the Provincial government in Argentina made a formal demand upon the Company’s wholly owned subsidiary which operates the Martha Mine for royalty payment attributed to ore mined and shipped in excess of payments made before the demand. The government takes the position that insufficient royalty is being paid. The demand was in the approximate amount of $200,000. The Company paid the demand under protest and is contesting the amount through an administrative review procedure. The Provincial government may make further such demands attributed to additional ore shipped from the mine. The Company is not able to predict at this time what the position of the Provincial government will be nor the amount of dollar exposure associated with further demands, if such demands are made.

        Coeur d’Alene Mines Corporation learned on November 19, 2004 that its wholly owned subsidiary, Compania Minera Polimet S.A. (“Polimet”), the owner of the Martha mine, is being investigated by Argentine governmental agencies. Based on discussions between the Company’s counsel and governmental authorities, the Company currently believes that the investigation relates to operations carried out by the predecessor owner of Polimet. In particular, the Company understands that the investigation may focus on shipments of ore from the Martha mine made by the predecessor owner of Polimet in 2001 and early 2002, and whether such shipments complied with applicable export control laws. The Company acquired the stock of Polimet in April 2002.

        At this point, neither the Company, Polimet nor any officer or director has been served with any complaint or subpoena, given any official written notice or formally charged with any offense. Consequently, the Company cannot state with certainty or specificity any allegations that may ultimately be brought against the Company, Polimet or their individual directors or officers, or what remedies may ultimately be sought or obtained against the Company. If the Company suffers any losses or damages related to operation of the Martha mine prior to the Company’s ownership, the Company will pursue indemnification against the previous owner of Polimet.

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        The Company believes it has fully complied with Argentine law since it acquired the Martha mine. If the Company or Polimet is formally charged or notified of a pending action, the Company will cooperate fully with the Argentine government authorities to resolve the matter.

        Kensington Mine Permits

        On February 7, 2005, the Southeast Alaska Conservation Council (“SEACC”) and a group of other community and private environmental groups filed an appeal with the Regional Forester of the U.S. Forest Service in Juneau, Alaska seeking to set aside the ROD for the FSEIS for the Kensington Gold Project. The appellants allege numerous threats to the Berners Bay ecological, cultural and recreational value in violation of the Endangered Species Act, the Alaska National Interest Lands Conservation Act, the National Environmental Policy Act, the National Forest Management Act, the Clean Water Act and other laws and agency regulations. The Company objected to the appellants’ allegations in support of the ROD for the FSEIS issued by the U.S. Forest Service. On March 23, 2005, the U.S. Forest Service upheld its decision to approve the FSEIS. SEACC has also threatened to sue the U.S. Forest Service if relief is not obtained in the course of its administrative appeal. The Company is unable to predict what the outcome of a suit would be, if one is filed, or its impact upon the permitting process.

AVAILABLE INFORMATION

        The Company’s website is http://www.coeur.com. Coeur makes available free of charge, on or through its website, its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and Forms 3 and 4, as soon as reasonably practicable after electronically filing such reports with the Securities and Exchange Commission. Copies of the charters of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee of the Board of Directors are available at our website www.coeur.com. Coeur has adopted a Code of Conduct and Ethics for Directors, Officers and Employees, including the chief executive officer, chief financial officer and controller. A copy of the code of ethics and our Corporate Governance Guidelines are available at our website www.coeur.com. Information contained on the Company’s website is not a part of this report.

        The Company’s Board of Directors adopted an addendum to its Policies and Procedures Manual to establish a code of ethics for the chief executive and principal financial and accounting officers of the Company. The Company will provide a copy of the code free of charge to any person that requests a copy by writing to the Secretary, Coeur d’Alene Mines Corporation, 400 Coeur d’Alene Mines Building, 505 Front Avenue, Post Office Box I, Coeur d’Alene, Idaho 83816-0316.

Item 4. Submission of Matters to a Vote of Security Holders.

        Not applicable.





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Item 4A. Executive Officers of the Registrant.

        The following table sets forth certain information regarding the Company’s current executive officers:

Name
Age
Positions with Coeur
Since
Dennis E. Wheeler 62 Chairman of the Board 1992
Chief Executive Officer and President 1986

James A. Sabala
50 Executive Vice President 2003
Chief Financial Officer

Harry F. Cougher
62 Senior Vice President - North American Operations 2005

Raymond Threlkeld
58 President - South American Operations 2004

Donald J. Birak
51 Senior Vice President - Exploration 2004

Alan L. Wilder
56 Senior Vice President - Project Development 2004

Gary W. Banbury
52 Senior Vice President 2004
Chief Administrative Officer

James R. Arnold
52 Vice President - Technical Services 2003

Mitchell J. Krebs
33 Vice President - Corporate Development 2003

Tom T. Angelos
49 Controller 2004
Chief Accounting Officer

Jennifer E. Kean
37 Treasurer 2004

Dennis E. Wheeler has been Chairman of the Board of Coeur d’Alene Mines Corporation since May 1992 and Chief Executive Officer since December 1986. Previously, Mr. Wheeler served as President of Coeur, commencing in December 1980. Mr. Wheeler was our Chief Administrative Officer from December 1980 to December 1986, Secretary from January 1980 to December 1980 and Senior Vice President and General Counsel from 1978 to 1980.

James A. Sabala was appointed as Executive Vice President and Chief Financial Officer of Coeur in January 2003. Prior to that, Mr. Sabala was Vice President and Chief Financial Officer of Stillwater Mining Company from 1998 to 2003, and from 1981 to 1998 was employed by Coeur in various capacities, most recently as Executive Vice President and Chief Financial Officer.

Harry F. Cougher was appointed Senior Vice President – North American Operations in January 2005. Prior to that Mr. Cougher was the Vice President and General Manager of Coeur Silver Valley since 2001. Previous to this Mr. Cougher served as Senior Vice President Mining & Chief Operating Officer for Sunshine Mining Company from 1994 to 2001.

Raymond Threlkeld was appointed Senior Vice President – South American Operations of Coeur to manage ongoing silver/gold operations in Chile and Argentina, as well as the development-stage San Bartolome silver project in Bolivia. Mr. Threlkeld was most recently Regional Vice President Chile/Argentina, Barrick Gold Corporation, in charge of the development of the Veladero and Pascua Lama gold/silver deposits.

Donald J. Birak was appointed as Senior Vice President – Exploration of Coeur in January 2004. Prior to that, Mr. Birak was employed with AngloGold North America, Inc. from March 1999 to January 20, 2004, as Vice President – Exploration.

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Alan L. Wilder was appointed Senior Vice President – Project Development in July 2004. Prior to that, Mr. Wilder was an independent consultant from July 2002 to July 2004 for Glamis Gold and Coeur d’Alene Mines Corporation. Prior thereto, he was Project Manager for BHP Tintaya from February 2000 to June 2002 and from 1999 to 2000 he was an independent consultant for the mining industry.

Gary W. Banbury was appointed Senior Vice President and Chief Administrative Officer in February 2004. Prior to that, Mr. Banbury served as Vice President—Administration and Human Resources from 2000 to 2004. Mr. Banbury held the position of Vice President—Human Resources of Coeur from 1998 to 2000, and prior thereto he served as Manager of Human Resources with Coeur.

James R. Arnold was appointed as Vice President Technical Services in June 2003. From February 2002 to May 2003, Mr. Arnold served as Chief Operating Officer of Earthworks Technologies, Inc., a wholly owned subsidiary of Coeur. In addition, he was a principal with Knight Piesold and Company from September 1997 until February 2002 where he served as President and CEO.

Mitchell J. Krebs was appointed to the position of Vice President—Corporate Development of Coeur in February 2003. Mr. Krebs was employed as an independent consultant from September 2001, and from May 2000 through August 2001 was employed as the President of Mine Depot Inc. From August 1999 through April 2000, Mr. Krebs was an associate with Allied Capital Corporation. From August 1995 through November 1997, Mr. Krebs was employed by Coeur as Manager—Acquisition Evaluation.

Tom T. Angelos was appointed as Controller and Chief Accounting Officer of Coeur in September 2004. Prior to that, Mr. Angelos was Controller of Stillwater Mining Company from 1998 to 2004, and from 1983 to 1998 was employed by Coeur in various capacities, most recently as Controller.

Jennifer E. Kean was appointed as Treasurer of Coeur in September 2004. Previously, Ms. Kean held the position of Director of Corporate Planning and Assistant Treasurer from February to September 2004. Prior to that, Ms. Kean was the Director of Corporate Finance for Sony Pictures Entertainment from 2001 to 2003. Prior thereto, she was a Senior Associate with PriceWaterhouseCoopers from 2000 to 2001 and a Senior Consultant with Ernst & Young from 1995 to 1998.







38


Part II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

        The Company’s Common Stock is listed on the New York Stock Exchange (the “NYSE”), the Toronto Stock Exchange and the Pacific 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:

High
Low
2003  
First Quarter $  2.08  $  1.16 
Second Quarter $  1.55  $  1.27 
Third Quarter $  3.72  $  1.40 
Fourth Quarter $  5.78  $  2.92 
2004
First Quarter $  7.67  $  5.34 
Second Quarter $  7.14  $  3.88 
Third Quarter $  4.74  $  3.10 
Fourth Quarter $  5.21  $  3.93 
2005
First Quarter (through March 15, 2005) $  4.37  $  3.33 

        The Company has not paid per share cash distributions or dividends on its Common Stock since 1996. Future distributions or 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 15, 2005, there were 5,221 record holders of the Company’s outstanding Common Stock.

        Sales of Securities Without Registration Under the Securities Act of 1933.

        On February 26, 2003, the Company completed a private placement of $37.2 million principal amount of 9% Convertible Senior Subordinated Notes due February 2007 (the “9% Notes”). The net proceeds were approximately $33.8 million, of which $10.0 million was available for general corporate purposes and the remainder was used to retire $22.4 million principal amount of the remaining $28.3 million principal amount of the Company’s 6 3/8% Convertible Subordinated Debentures due January 2004 (the “6 3/8% Debentures”). The 9% Notes were senior in right of payment to the 6 3/8% and 7 1/4% Debentures. The 9% Notes were convertible into Coeur common stock, at any time prior to maturity at a conversion price of $1.60 per share, subject to adjustment. Interest was payable semi-annually on February 15 and August 15 of each year. The 9% Notes were redeemable at the option of the Company six months after issuance, subject to certain conditions, and at the option of the holders in the event of a change in control. Of the financial advisory fees paid by the Company in connection with the issuance of the 9% Notes, the Company elected to issue 647,966 unregistered shares of common stock valued at $1.54 per share in lieu of cash. No underwriter was used with this transaction. The private placement was made to several accredited institutional investors. The private placement was exempt from registration under the Securities Act of 1933 by virtue of Regulation D thereunder.

        The Company made no repurchases of its common stock during the year ended December 31, 2004.



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        Equity Compensation Plan Information

        The following table sets forth information as of December 31, 2004 regarding the Company’s equity compensation plans.

Plan category
Number of shares to be
issued upon exercise of
outstanding options,
warrants and rights

Weighted-average exercise
price of outstanding options,
warrants and rights

Number of shares remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a))

(a) (b) (c)
Equity compensation                
   plans approved by  
   security holders    1,796,908   $ 3.01    6,907,970  

Equity compensation
  
   plans not approved  
   by security holders    0    --    --  



       Total    1,796,908   $ 3.01    6,907,970  












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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.

Income Statement Data: 2004
2003
2002
2001
2000
(In thousands except per share data)

Revenues:
                       
  Sales of metal(1)   $ 130,245   $ 108,522   $ 86,333   $ 69,200   $ 93,174  
  Other income(2)    3,205    2,019    8,544    2,712    8,032  





     Total revenues    133,450    110,541    94,877    71,912    101,206  

Costs and expenses:
  
  Production costs    79,790    77,861    82,855    69,149    86,661  
  Depreciation and depletion    18,800    16,627    13,511    11,347    20,785  
  Administrative and general    14,497    12,264    8,806    8,122    9,714  
  Mining exploration    11,068    4,947    3,849    10,046    9,412  
  Pre-development    11,449    1,967    2,606    --    --  
  Interest expense    2,831    12,851    21,948    14,592    16,999  
  Write-down of mining properties and other(3)    1,983    6,393    23,060    9,946    21,236  
  Merger expenses    15,675    --    --    --    --  
  Loss (gain) on early retirement of debt (4)    --    41,564    19,061    (48,217 )  (16,136 )





     Total expenses    156,093    174,474    175,696    74,985    148,671  

Net loss from operations before income taxes
    (22,643 )  (63,933 )  (80,819 )  (3,073 )  (47,465 )
(Provision) benefit for income taxes    5,785    7    --    6    (348 )





Net loss before cumulative effect of change in  
    accounting principle    (16,858 )  (63,926 )  (80,819 )  (3,067 )  (47,813 )
Cumulative effect of change in accounting principle    --    (2,306 )  --    --    --  





Net loss   $ (16,858 ) $ (66,232 ) $ (80,819 ) $ (3,067 ) $ (47,813 )






Other comprehensive loss
    (908 )  (556 )  (1,470 )  821    (294 )





Comprehensive loss    (17,766 )  (66,788 )  (82,289 )  (2,246 )  (48,110 )





Net loss attributable to common shareholders   $ (16,858 ) $ (66,232 ) $ (80,819 ) $ (3,067 ) $ (49,993 )






Basic and Diluted Earnings Per Share Data:
  

Net loss
   $ (0.08 ) $ (0. 39 ) $ (1.03 ) $ (0.07 ) $ (1.41 )





Weighted average shares of Common stock    215,969    168,186    78,193    41,946    35,439  






December 31,
Balance Sheet Data: 2004
2003
2002
2001
2000
(In thousands except per share data)

Total assets
    $ 525,777   $ 259,467   $ 173,491   $ 210,380   $ 271,377  
Working capital -(4)   $ 349,560   $ 100,315   $ 7,034   $ 16,270   $ 52,263  
Long-term liabilities   $ 210,173   $ 39,529   $ 89,711   $ 141,877   $ 228,659  
Shareholders' equity   $ 293,454   $ 197,478   $ 47,687   $ 26,788   $ 17,440  

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(1) Historically, the Company has recorded revenue from concentrate sales agreements based on the gold and silver prices prevailing at the time risk of loss and title to the concentrate passes to third-party smelters (at the lower of month-end spot price or the average monthly price for that month). The final settlement price is not fixed until a later date (typically one to three months) based upon quoted metal prices by an established metal exchange as set forth in each contract, at such date. The Company’s provisionally priced sales contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of concentrates measured at the forward price at the time of sale. The embedded derivative does not qualify for hedge accounting. The embedded derivative is recorded as a derivative asset, in prepaid expenses and other or, a derivative liability on the balance sheet and is adjusted to fair value through revenue each period until the date of final gold and silver settlement.

(2) Included in other income for the year 2004 are: (i) loss on closure of gold forward sales contracts of $0.9 million, and (ii) $0.3 million of proceeds from the Handy and Harman bankruptcy settlement. Included in other income for the year 2003 are: (i) $0.4 million of insurance settlement (ii) $0.5 million of gains on foreign currency and (iii) $0.5 million of interest income. Included in other income for the year 2002 are: (i) the gain on the sale of Petorca of $1.4 million, and (ii) a gain on the sale of other assets of $3.2 million. Included in other income in 2001 was interest income of $2.7 million. Included in other income for the year 2000 are: (i) a gain recorded on mark to market of the Company’s gold call positions sold of $4.1 million, and (ii) loss on investment in Pan American Silver Corp. stock of $2.3 million.

(3) The year 2002 includes an impairment to the Coeur Silver Valley properties of $19.0 million. The year 2001 includes an impairment to the Kensington property of $6.1 million. During 2001, the Company also recorded an expense of approximately $4.2 million for settlement of an environmental lawsuit, including $3.9 million in payments and estimated legal fees and other costs. As a consequence of the sale of the Company’s shareholding in Gasgoyne Gold Mines NL, the Company recorded a write-down of $12.2 million in 2000 to reflect the excess book value of its shareholding in Gasgoyne above the $15.6 million sales price.

(4) During 2003, holders of $12.7 million of our 13 3/8% Convertible Senior Subordinated Notes due December 31, 2003 voluntarily converted such notes, in accordance with original terms, into approximately 9.6 million shares of common stock including payment for make whole provision for interest expense.

  During 2003, we also exchanged $27.9 million and $2.1 million principal amount of our outstanding 6 3/8% Convertible Subordinated Debentures due 2004 and our 7 1/4% Convertible Subordinated Debentures due 2005, respectively, in exchange for 18.5 million shares of common stock and recorded a loss on exchange and early retirement of debt of approximately $29.7 million. The shares included 0.5 million shares of common stock issued as payment for interest expense as part of the transaction. In conjunction with the issuance of the 9% Convertible Senior Subordinated Notes due 2007, we also issued 0.6 million shares of common stock for partial payment of offering costs of $1.0 million.

  In July 2003, we and each of the holders of our 9% Convertible Senior Subordinated Notes due 2007 entered into an Early Conversion Agreement, whereby such holders exchanged an aggregate of $32.6 million principal amount of our 9% Convertible Senior Subordinated Notes due 2007 for 27.5 million shares of common stock, including shares issued for accrued interest. We recorded a loss on early retirement of debt of $4.2 million in the third quarter of 2003 in conjunction with this transaction. On November 25, 2003, the Company issued 3.2 million shares of common stock in a registered offering, the proceeds of which were used to redeem $4.6 million principal amount of the 9% Convertible Senior Subordinated Notes and recorded a loss on the early retirement of debt of $7.6 million.

  In September 2002, the EITF issued 02-15, “Determining Whether Certain Conversions of Convertible Debt to Equity Securities Are within the Scope of FASB Statement No. 84". The EITF concluded that the conversion of debt to equity pursuant to inducement should be accounted for in accordance with SFAS No. 84. SFAS No. 84 requires a non-cash charge to earnings for the implied value of an inducement to convert from convertible debt to common equity securities of the issuer. SFAS No. 84 does not apply, however, if the conversion of convertible debt is under the original terms of the debenture.

  We applied the provisions of SFAS No. 84 to all convertible debt for equity exchange transactions completed after September 11, 2002. In the fourth quarter of 2002, we purchased $10.3 million and $2.7 million aggregate principal amount of our 6 3/8% Convertible Subordinated Debentures due 2004 and our 7 1/4% Convertible Subordinated Debentures due 2005, respectively. We issued approximately 8.7 million shares of our common stock with a market value of approximately $17.2 million. The value of securities issuable pursuant to original conversion privileges was approximately $1.1 million. Therefore, pursuant to the provisions of SFAS No. 84, an induced debt conversion expense of $16.1 million was recorded and is included in gain (loss) on early retirement of debt in the consolidated statement of operations for the year December 31, 2002.

42


  We exchanged $13.7 million, $11.1 million and $3.0 million aggregate principal amount of our 6% Senior Convertible Debentures due 2002, our 6 3/8% Convertible Subordinated Debentures due 2004, and our 7 1/4% Convertible Subordinated Debentures due 2005, respectively, during the year ended December 31, 2002. We issued approximately 25.3 million shares of our common stock, including interest expense, and recorded a loss on early retirement of debt of approximately $19.1 million. In addition, holders of $28.8 million of Series I 13 3/8% Convertible Senior Subordinated Notes due December 2003 and $21.5 million of the Series II 13 3/8% Convertible Senior Subordinated Notes due December 2003 voluntarily converted such Notes, under the original terms of the applicable indentures, into approximately 37.1 million shares of common stock. We also issued 8.0 million shares of common stock as payment of interest expense on the 13 3/8% Notes. Transactions completed prior to September 11, 2002 were accounted for as extinguishments of debt, in accordance with APB No. 26, “Early Extinguishment of Debt”.

  During 2001, we issued 6.1 million shares of common stock in exchange for approximately $16.0 million in principal amount of our 7 1/4% Convertible Subordinated Debentures due 2005, and recorded a gain of approximately $9.0 million. Also during 2001, we completed an exchange offer whereby existing convertible subordinated debenture holders could exchange their existing debt for the newly registered 13 3/8% Convertible Senior Subordinated Notes due 2003. As a result of the exchange offer, we recorded a gain of $39.2 million, net of taxes and offering costs in the third quarter of 2001.

  During 2000, we repurchased approximately $9.1 million principal amount of our 6% Convertible Subordinated Debentures due 2002, approximately $0.6 million principal amount of our 6 3/8% Convertible Subordinated Debentures due 2004, and approximately $22.0 million principal amount of our outstanding 7 1/4% Convertible Subordinated Debentures due 2005. We paid a price for those repurchased debentures of approximately $14.1 million. As a result of these repurchases, we recorded a gain of approximately $16.1 million.

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 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 business strategy is to capitalize on the ore reserve/mineralized material bases located at its operating mines and the expertise of its management team to become the leading primary silver production company through long-term, cash flow generating growth. The principal elements of the Company’s business strategy are to: (i) increase the Company’s silver production and reserves in order to remain the nation’s largest primary silver producer and one of the world’s larger primary silver producers; (ii) decrease cash costs and increase production at the Company’s existing silver mining operations; (iii) to transform development-stage properties into producing mines; (iv) acquire operating mines, exploration and/or development properties with a view to reducing the Company’s cash and total costs, provide short-term positive cash flow return and expand its silver production base and reserves; and (v) continue to explore for new silver and gold discoveries primarily near its existing mine sites and evaluate new opportunities to expand its production through acquisitions and exploration.

        The Rochester Mine, Cerro Bayo/Martha Mine and Silver Valley’s Galena Mine, each operated by the Company, constituted the Company’s principal sources of mining revenues in 2004.

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Critical Accounting Policies and Estimates

        Management considers the following policies to be most critical in understanding the judgments that are involved in preparing the Company’s consolidated financial statements and the uncertainties that could impact its results of operations, financial condition and cash flows. Our consolidated financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. We have identified the policies below as critical to our business operations and the understanding of our results of operations. Management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States (GAAP). The preparation of these statements requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting period. We base these estimates on historical experience and on assumptions that we consider reasonable under the circumstances; however, reported results could differ from those based on the current estimates under different assumptions or conditions. The impact and any associated risks related to these policies on our business operations are discussed throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations. The areas requiring the use of management’s estimates and assumptions relate to recoverable ounces from proven and probable reserves that are the basis of future cash flow estimates and units-of-production depreciation and amortization calculations; estimates of recoverable gold and silver ounces in ore on leach pad; reclamation and remediation costs; and post-employment and other employee benefit liabilities. For a detailed discussion on the application of these and other accounting policies, see Note B in the Notes to the Consolidated Financial Statements of this Annual Report on Form 10-K.

Revenue Recognition: Revenue is recognized when title to silver and gold passes to the buyer and when collectibility is reasonably assured. The passing of title to the customer is based on terms of the sales contract. Product pricing is determined at the point revenue is recognized by reference to active and freely traded commodity markets for example, the London Bullion Market, an active and freely traded commodity market, for both gold and silver, in an identical form to the product sold.

        Under our concentrate sales contracts with third-party smelters, final gold and silver prices are set on a specified future quotational period, typically one to three months, after the shipment date based on market metal prices. Revenues are recorded under these contracts at the time title passes to the buyer based on the forward price for the expected settlement period. The contracts, in general, provide for a provisional payment based upon provisional assays and quoted metal prices. Final settlement is based on the average applicable price for a specified future period, and generally occurs from three to six months after shipment. Final sales are settled using smelter weights, settlement assays (average of assays exchanged and/or umpire assay results) and are priced as specified in the smelter contract. The Company’s provisionally priced sales contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of concentrates at the forward price at the time of sale. The embedded derivative does not qualify for hedge accounting. The embedded derivative is recorded as a derivative asset in prepaid expenses and other, or a derivative liability on the balance sheet and is adjusted to fair value through revenue each period until the date of final gold and silver settlement. The form of the material being sold, after deduction for smelting and refining is in an identical form to that sold on the London Bullion Market. The form of the product is metal in flotation concentrate, which is the final process for which the company is responsible.

        The effects of forward sales contracts are reflected in revenue at the date the related precious metals are delivered or the contracts expire. Third party smelting and refining costs are recorded as a reduction of revenue.

        At December 31, 2004, the Company had outstanding provisionally priced sales of $26.7 million consisting of 2.5 million ounces of silver, 18,755 ounces of gold and 1.0 million pounds of copper. For each one cent per ounce change in realized silver price, revenue would vary (plus or minus) approximately $25,000; for each one dollar per ounce change in realized gold price, revenue would vary (plus or minus) approximately $18,755; and for each one cent per pound change in realized copper price, revenue would vary (plus or minus) approximately $10,000. At December 31, 2003, the Company had outstanding provisionally priced sales of $32.8 million, consisting of 3.7 million ounces of silver, 37,487 ounces of gold and 681,196 pounds of copper. For each one cent per ounce change in realized silver price, revenue would vary (plus or minus) approximately $37,000; for each one dollar per ounce change in realized gold price, revenue would vary (plus or minus) approximately $37,487; and for each one cent per pound change in realized copper price, revenue would vary (plus or minus) approximately $6,812.

44


Reserve Estimates. The preparation of this Annual Report on Form 10-K requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates. The most critical accounting principles upon which the Company’s financial status depends are those requiring estimates of recoverable ounces from proven and probable reserves and/or assumptions of future commodity prices. There are a number of uncertainties inherent in estimating quantities of reserves, including many factors beyond our control. Ore reserves estimates are based upon engineering evaluations of samplings of drill holes and other openings. These estimates involve assumptions regarding future silver and gold prices, the geology of our mines, the mining methods we use and the related costs we incur to develop and mine our reserves. Changes in these assumptions could result in material adjustments to our reserve estimates. We use reserve estimates in determining the units-of-production depreciation and amortization expense, as well as in evaluating mine asset impairments.

        We review and evaluate our long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. We utilize the methodology set forth in Statement of Financial Accounting Standard (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Asset,” to evaluate the recoverability of capitalized mineral property costs. An impairment is considered to exist if total estimated future cash flows or probability-weighted cash flows on an undiscounted basis is less than the carrying amount of the assets, including property, plant and equipment, mineral property, development property, and any deferred costs such as deferred stripping. The accounting estimates related to impairment are critical accounting estimates because the future cash flows used to determine whether an impairment exists is dependent on reserve estimates and other assumptions including, silver and gold prices, production levels, and capital and reclamation costs, all of which are based on detailed engineering life-of-mine plans. An impairment loss exists when estimated undiscounted cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. Any impairment loss recognized represents the excess of the asset’s carrying value as compared to its estimated fair value. The Company reviews the carrying value of its assets whenever events or changes in circumstances indicate that the carrying amount of its assets may not be fully recoverable. The Company has previously recorded $0.0 million, $0.0 million and $19.0 million in write-downs for the years ended December 31, 2004, 2003 and 2002, respectively.

        The following table summarizes write-downs and other recorded for all years presented:

2004
2003
2002
Mineral property write-downs(1)     $ --   $ --   $ 19,045  
Mine closure and holding costs (2)    1,909    5,455    2,902  
Investment in new business venture(3)    74    938    1,113  



Write-down of mineral properties and other   $ 1,983   $ 6,393   $ 23,060  




45


  (1) 2002 - Coeur Silver Valley
  (2) Holding costs at Coeur Silver Valley, Kensington and Cerro Bayo
  (3) Earthworks Technology costs; 2003, 2002

        We depreciate our property, plant and equipment, mining properties and mine development using the units-of-production method over the estimated life of the ore body based on our proven and probable recoverable reserves or on a straight-line basis over the useful life, whichever is shorter. The accounting estimates related to depreciation and amortization are critical accounting estimates because the 1) determination of reserves involves uncertainties with respect to the ultimate geology of our reserves and the assumptions used in determining the economic feasibility of mining those reserves and 2) changes in estimated proven and probable reserves and useful asset lives can have a material impact on net income.

        Ore on leach pad. The Rochester Mine utilizes the heap leach process to extract silver and gold from ore. The heap leach process is a process of extracting silver and gold by placing ore on an impermeable pad and applying a diluted cyanide solution that dissolves a portion of the contained silver and gold, which are then recovered in metallurgical processes.

        The key stages in the conversion of ore into silver and gold are (i) the blasting process in which the ore is broken into large pieces; (ii) the processing of the ore through a crushing facility that breaks it into smaller pieces; (iii) the transportation of the crushed ore to the leach pad where the leaching solution is applied; (iv) the collection of the leach solution; (v) subjecting the leach solution to the precipitation process, in which gold and silver is converted back to a fine solid; (vi) the conversion of the precipitate into dorè; and (vii) the conversion by a third party refinery of the dorè into refined silver and gold bullion.

        We use several integrated steps to scientifically measure the metal content of ore placed on the leach pads during the key stages. As the ore body is drilled in preparation for the blasting process, samples of the drill residue are assayed to determine estimated quantities of contained metal. We estimate the quantity of ore by utilizing global positioning satellite survey techniques. We then process the ore through a crushing facility where the output is again weighed and sampled for assaying. A metallurgical reconciliation with the data collected from the mining operation is completed with appropriate adjustments made to previous estimates. We then transport the crushed ore to the leach pad for application of the leaching solution. As the leach solution is collected from the leach pads, we continuously sample for assaying. We measure the quantity of leach solution by flow meters throughout the leaching and precipitation process. After precipitation, the product is converted to dorè, which is the final product produced by the mine. We again sample and assay the dorè,. Finally, a third party smelter converts the dorè into refined silver and gold bullion. At this point are we able to determine final ounces of silver and gold available for sale. We then review this end result and reconcile it to the estimates we had used and developed throughout the production process. Based on this review, we adjust our estimation procedures when appropriate.

        Our reported inventories include metals estimated to be contained in the ore on the leach pads of $43.8 million as of December 31, 2004. Of this amount, $15.0 million is reported as a current asset and $28.8 million is reported as a noncurrent asset. The distinction between current and noncurrent is based upon the expected length of time necessary for the leaching process to remove the metals from the broken ore. The historical cost of the metal that is expected to be extracted within twelve months is classified as current and the historical cost of metals contained within the broken ore that will be extracted beyond twelve months is classified as noncurrent.

        The estimate of both the ultimate recovery expected over time, and the quantity of metal that may be extracted relative to such twelve month period, requires the use of estimates which are inherently inaccurate since they rely upon laboratory testwork. Testwork consists of 60 day leach columns from which we project metal recoveries into the future. The quantities of metal contained in the ore are based upon actual weights and assay analysis. The rate at which the leach process extracts gold and silver from the crushed ore is based upon laboratory column tests and actual experience occurring over approximately eighteen years of leach pad operation at the Rochester Mine. The assumptions we use to measure metal content during each stage of the inventory conversion process includes estimated recovery rates based on laboratory testing and assaying. We periodically review our estimates compared to actual experience and revise our estimates when appropriate. The length of time necessary to achieve our currently estimated ultimate recoveries of 61.5% for silver and 93% for gold is estimated to be between 5 and 10 years. However, the ultimate recovery will not be known until leaching operations cease, which is currently estimated for 2011.

46


        When we began operations in 1986, based solely on laboratory testing, we estimated the ultimate recovery of silver and gold at 50% and 80%, respectively. Since 1986, we have adjusted the expected ultimate recovery 3 times (once in each of 1989, 1997 and 2003) based upon actual experience gained from leach operations. In 1989, we increased our estimated recoveries for silver and gold to 55% and 85%, respectively. The change was accounted for prospectively as a change in estimate, which had the effect of increasing the estimated recoverable ounces of silver and gold contained in the heap by 1.6 million ounces and 10,000 ounces, respectively. In 1997, we revised our estimated recoveries for silver and gold to 59% and 89%, respectively, which increased the estimated recoverable ounces of silver and gold contained in the heap by 4.7 million ounces and 39,000 ounces, respectively. Finally, in 2003, we revised our estimated recoveries for silver and gold to 61.5% and 93%, respectively, which increased the estimated recoverable ounces of silver and gold contained in the heap by 1.8 million ounces and 41,000 ounces, respectively.

        If our estimate of ultimate recovery requires adjustment, the impact upon our inventory valuation and upon our income statement would be as follows:

Positive/Negative
Change in Silver Recovery

Positive/Negative
Change in Gold Recovery

1%
2%
3%
1%
2%
3%
Quantity of recoverable                            
ounces    1.5 million  3.1 million  4.6 million  10,800    21,700    32,500  
Positive impact on  
future cost of  
production per silver  
equivalent ounce for  
increases in recovery  
rates   $0.66   $1.15   $1.54   $0.31   $0.59   $0.83  
Negative impact on  
future cost of  
production per silver  
equivalent ounce for  
decreases in recovery  
rates   $0.91   $2.27   $4.49   $0.36   $0.78   $1.28  

        Inventories of ore on leach pads are valued based upon actual costs incurred to place such ore on the leach pad, less costs allocated to minerals recovered through the leach process. The costs consist of those production activities occurring at the mine site and include the costs, including depreciation, associated with mining, crushing and precipitation circuits. In addition, refining is provided by a third party refiner to place the metal extracted from the leach pad in a saleable form. These additional costs are considered in the valuation of inventory.

        Reclamation and remediation costs. Reclamation and remediation costs are based principally on legal and regulatory requirements. Management estimates costs associated with reclamation of mining properties as well as remediation cost for inactive properties. Such costs related to active mines are accrued and charged over the expected operating lives of the mines using the units-of-production method.

47


        The estimated undiscounted cash flows generated by our assets and the estimated liabilities for reclamation and remediation are determined using the Company’s assumptions about future costs, mineral prices, mineral processing recovery rates, production levels and capital and reclamation costs. Such assumptions are based on the Company’s current mining plan and the best available information for making such estimates. On an ongoing basis, management evaluates its estimates and assumptions; however, actual amounts could differ from those based on such estimates and assumptions.

        Pension and other Benefit Plans. Pension and other benefit plan costs can be impacted by actual results over future periods. If the difference between expected returns and actual results falls outside certain limits, the difference will be amortized into future earnings on a straight-line basis over the average remaining working life of the participants. The long-term expected rate of return on plan assets for purposes of the actuarial valuation was assumed to be 6% and 6% as of December 31, 2004 and 2003, respectively.

        The following table provides details of the pension plans asset mix at December 31, 2004:

Asset Class
Actual Mix
Target Mix
Expected
Rate of
Return

Standard
Deviation or
Volatility

U.S. equity investments      42 %  30 %  8.75 %  16.00 %
Guaranteed investment contracts    9 %  10 %  4.00 %  1.00 %
Fixed income investments    27 %  30 %  5.50 %  7.25 %
S&P 500 index fund    22 %  30 %  8.75 %  16.00 %


            7.40 %  11.00 %

        The Plan’s Trustees evaluate the level of volatility within the total Trust and each of its component investments making appropriate inquiries to the plan’s investment advisors when prudent. See Note M to the Company’s consolidated financial statements for more detail.

Operating Statistics and Reserve Estimates

        The Company’s total production in 2004 was 14.1 million ounces of silver and 129,300 ounces of gold, compared to 14.2 million ounces of silver and 119,500 ounces of gold in 2003. Total estimated proven and probable reserves at December 31, 2004 were approximately 196.2 million ounces of silver and 1.4 million ounces of gold, compared to silver and gold reserves at December 31, 2003 of approximately 174.6 million ounces and 1.4 million ounces, respectively.

        The following table shows the estimated amounts of proven and probable reserves and mineralized material at the Company’s following locations (1):







48


Proven and Probable (1)
(000's) (000's) Mineralized Material
Tons (000's)
Grade Ag
Grade Au
Ounces AG
Ounces AU
Tons
(000's)

Grade Ag
Grade Au
Rochester      23,998    0.86    0.009    20,731    213    35,064    0.86    0.005  
Silver Valley    718    18.84    --    13,518    --    2,169    10.92    --  
Cerro Bayo    862    7.09    0.134    6,109    116    3,829    4.29    0.081  
Mina Martha    57    68.56    0.085    3,930    5    74    52.75    0.058  
San Bartolome    46,176    3.29    --    151,882    --    1,166    3.44    --  
Kensington (2)    4,206    --    0.250    --    1,050    3,116    --    0.270  








Total tons    76,017    --    --    --    --    45,418    --    --  




     Silver    71,811    2.73    --    196,170    --    42,302    1.84    --  
      Gold    29,123    --    0.047    --    1,384    42,083    --    0.032  

  (1) Reserves using silver price of $6.00 and gold price of $390.
  (2) Reserves using gold price of $375

        The ore reserves at December 31, 2004 may change with fluctuations in the price of gold and silver. The following table shows the estimated changes to ore reserves at different pricing ranges.

Proven and Probable Ore Reserve Sensitivity to Prices
Per ounce
Silver Price

Per ounce
Gold Price

Tons (000's)
(000's)
Ounces AG

(000's)
Ounces AU

Rochester (1) $5.00 $340 18,863 18,682 196
$5.50 $375 26,403 24,629 240
$6.00 $390 34,741 31,836 279
Silver Valley $5.00 $340      364   8,136   --
$5.50 $375      420   9,092   --
$6.00 $390      718 13,518   --
Cerro Bayo $5.00 $340      862   6,109 116
$5.50 $375      862   6,109 116
$6.00 $390      862   6,109 116
Mina Martha $5.00 $340        52   3,740     4
$5.50 $375        54   3,864     5
$6.00 $390        57   3,935     5

  (1) Rochester sensitivities are as contained within raw, un-optimized Whittle pit shells.







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        The following table presents total production by company for the years ended December 31:

2004
2003
2002
ROCHESTER MINE                
       Silver ozs    5,669,074    5,585,385    6,417,792  
       Gold ozs    69,456    52,363    71,905  
       Cash Costs per oz./silver   $3.93   $4.67   $2.99  
       Full Costs per oz./silver   $5.66   $5.58   $3.75  

GALENA MINE (COEUR SILVER VALLEY)
  
       Silver ozs    3,521,813    3,735,663    5,302,721  
       Cash Costs per oz./silver   $5.46   $4.66   $4.25  
       Full Costs per oz./silver   $6.02   $5.03   $5.00  

CERRO BAYO/MARTHA (A)
  
       Silver ozs    4,944,261    4,868,854    3,112,169  
       Gold ozs    59,876    67,155    45,209  
       Cash Costs per oz./silver   $2.07   $0.60   $0.38  
       Full Costs per oz./silver   $3.33   $2.53   $1.86  

CONSOLIDATED TOTALS
  
       Silver ozs    14,135,148    14,189,902    14,832,682  
       Gold ozs    129,332    119,518    117,114  
       Cash Costs per oz./silver   $3.66   $3.27   $2.89  
       Full Costs per oz./silver   $4.94   $4.39   $3.80  

       Silver ozs. sold
    13,263,330    14,894,210    13,347,477  
       Gold ozs. sold    115,996    126,942    98,537  
       Price realized per oz./silver   $6.82   $4.89   $4.63  
       Price realized per oz./gold   $410   $345   $311  

(A)  The Company commenced operations at Cerro Bayo and Martha in April 2002 and June 2002, respectively.











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        The following tables present reconciliation between Non-GAAP cash costs per ounce to GAAP production costs:

YEAR ENDED DECEMBER 31, 2004
(In thousands except ounces and per ounce costs)
Rochester
Galena
Cerro Bayo/
Martha(1)

Total

Production of Silver (ounces)
     5,669,074    3,521,813    4,944,261    14,135,148  
Cash Costs per ounce   $ 3.93   $ 5.46   $ 2.07   $ 3.66  





Total Cash Costs (000's)
   $ 22,287   $ 19,231   $ 10,228   $ 51,746  
Add/Subtract:  
Third Party Smelting Costs    (923 )  (5,499 )  (6,250 )  (12,672 )
By-Product Credit    28,646    3,766    24,796    57,208  
Deferred Stripping Adjustment    (403 )  1    110    (292 )
Change in Inventory    (13,380 )  756    (3,576 )  (16,200 )





Production Costs (GAAP)
   $ 36,227   $ 18,255   $ 25,308   $ 79,790  





YEAR ENDED DECEMBER 31, 2003
(In thousands except ounces and per ounce costs)
Rochester
Galena
Cerro Bayo/
Martha(1)

Total

Production of Silver (ounces)
    5,585,385    3,735,663    4,868,854    14,189,902  
Cash Costs per ounce   $ 4.67   $ 4.66   $ 0.60   $ 3.27  





Total Cash Costs (000's)
   $ 26,062   $ 17,392   $ 2,911   $ 46,365  
Add/Subtract:  
Third Party Smelting Costs    (811 )  (4,939 )  (4,675 )  (10,425 )
By-Product Credit    18,980    2,256    24,383    45,619  
Deferred Stripping Adjustment    (322 )  --    --    (322 )
Change in Inventory    (5,149 )  (165 )  1,938    (3,376 )





Production Costs (GAAP)
   $ 38,760   $ 14,544   $ 24,557   $ 77,861  





YEAR ENDED DECEMBER 31, 2002
(In thousands except ounces and per ounce costs)
Rochester
Galena
Cerro Bayo/
Martha(1)

Total

Production of Silver (ounces)
    6,417,792    5,302,721    3,112,169    14,832,682  
Cash Costs per ounce   $ 2.99   $ 4.25   $ 0.38   $ 2.89  





Total Cash Costs
   $ 19,206   $ 22,531   $ 1,191   $ 42,928  
Add/Subtract:  
Third Party Smelting Costs    (1,013 )  (7,576 )  (1,003 )  (9,592 )
By-Product Credit    22,328    3,058    14,495    39,881  
Accrued Reclamation Costs    1,161    636    86    1,883  
Deferred Stripping Adjustment    (174 )  --    --    (174 )
Change in Inventory    15,122    (125 )  (7,068 )  7,929  





Production Costs (GAAP)
   $ 56,630   $ 18,524   $ 7,701   $ 82,855  




(1)  The Company commenced operations at Cerro Bayo and Martha in April 2002 and June 2002, respectively.

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        “Cash Costs per Ounce” are calculated by dividing the cash costs computed for each of the Company’s mining properties for a specified period by the amount of gold ounces or silver ounces produced by that property during that same period. Management uses cash costs per ounce as a key indicator of the profitability of each of its mining properties. Gold and silver are sold and priced in the world financial markets on a US dollar per ounce basis. By calculating the cash costs from each of the Company’s mines on the same unit basis, management can easily determine the gross margin that each ounce of gold and silver produced is generating.

        “Cash Costs” are costs directly related to the physical activities of producing silver and gold, and include mining, processing and other plant costs, third-party refining and smelting costs, marketing expense, on-site general and administrative costs, royalties, in-mine drilling expenditures that are related to production and other direct costs. Sales of by-product metals are deducted from the above in computing cash costs. Cash costs exclude depreciation, depletion and amortization, corporate general and administrative expense, exploration, interest, and pre-feasibility costs and accruals for mine reclamation. Cash costs calculated and presented using the “Gold Institute Production Cost Standard” applied consistently for all periods presented.

        Total cash costs per ounce is a non-GAAP measurement and you are cautioned not to place undue reliance on it and are urged to read all GAAP accounting disclosures presented in the consolidated financial statements and accompanying footnotes. In addition, see the reconciliation of “cash costs” to production costs above.

Results of Operations

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

        Revenues

        Sales of concentrates and dorè in the year ended December 31, 2004 increased by $21.7 million, or 20%, over the year ended December 31, 2003 to $130.2 million. The increase in sales was attributable to increased metal prices received in 2004 compared with 2003. In 2004, the Company sold 13.3 million ounces of silver and 116,000 ounces of gold, compared to sales of 14.9 million ounces of silver and 127,000 ounces of gold in 2003. In the year ended December 31, 2004, the Company produced a total of 14.1 million ounces of silver and 129,332 ounces of gold compared to 14.2 million ounces of silver and 119,518 ounces of gold in 2003. In the year ended December 31, 2004, the Company realized average silver and gold prices of $6.82 and $410, respectively, compared with realized average prices of $4.89 and $345, respectively, in the prior year.

        Interest and other income in the year ended December 31, 2004 increased by $1.2 million compared with the year ended December 31, 2003. The increase is attributable to an increase in the level of cash, cash equivalents and short-term investments held during 2004 as compared to 2003.







52


        Costs, Expenses and Write-downs

        The following table sets forth year 2004 versus year 2003 costs, expenses and write-downs:

        Production costs in the year ended December 31, 2004 increased by $1.9 million, or 2%, over the year ended December 31, 2003 to $79.8 million. The increase in production costs is primarily due to increased costs at the Company’s Galena and Cerro Bayo/Martha mines. At the Galena mine, the cash cost per ounce of silver production increased to $5.46 per ounce compared to $4.66 per ounce in 2003. The higher cost in 2004 is attributable to the mining of lower-grade ore and the conversion to higher-cost mining methods needed to accommodate ground conditions in certain mining areas during 2004. Also contributing to higher costs were increased mine repair in connection with the ongoing optimization plan designed to increase production in future years. At the Cerro Bayo/Martha mine, the cash cost per ounce of production increased to $2.07 per silver ounce in 2004 compared to $0.60 in 2003. The increase in costs is primarily attributable to the mining of lower-grade ore in 2004 compared to 2003. All operations were impacted by increasing costs for consumables, particularly diesel and steel. The increases at Galena and Cerro Bayo/Martha were partially offset by lower costs at the Rochester mine. At Rochester, the cash cost per ounce of silver production declined to $3.93 in 2004 compared to $4.67 in 2003. The decrease is primarily attributable to the increased production of by-product gold in 2004 occurring as a result of the mining of higher-grade gold ores.

        Depreciation and amortization increased in the year ended December 31, 2004 by $2.2 million, or 13%, over the prior year, primarily due to the placement of additional assets, particularly the new crusher facility at Rochester, in service during the year.

        Administrative and general expenses increased $2.2 million in the year ended December 31, 2004 compared to 2003 due primarily to costs associated with the implementation of Sarbanes-Oxley Section 404 activities, the termination of certain benefit plans and increased stock exchange fees resulting from an increase of the number of common shares outstanding.

        Exploration expenses increased $6.1 million in the year ended December 31, 2004 compared to 2003, due to increased exploration activity at the Cerro Bayo and Mina Martha mines and increased activity to identify additional business opportunities.

        Pre-development expense increased $9.5 million as a result of an increased level of activity at the San Bartolome and Kensington mines during 2004. In the fourth quarter of 2004, we commenced construction activities at the San Bartolome project and as a result, $1.0 million of expenditures were capitalized.

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        Interest expenses decreased $10.0 million in the year ended December 31, 2004 compared to 2003, as a result of the completion of the Company’s restructuring program which was substantially completed in 2003.

        Write-downs of mining properties and other expenses amounted to $2.0 million in 2004 compared to $6.4 million in 2003. The decrease is primarily the result of classification of Kensington costs as pre-development in 2004 and reduced holding costs at the Galena mine stemming from its temporary shutdown in the third quarter of 2003.

        Expenses of $15.7 million were incurred in 2004 in connection with the Company’s tender offer for outstanding shares of Wheaton River Minerals Ltd. That offer expired on September 30, 2004, with Coeur not purchasing any Wheaton shares tendered due to unsatisfied conditions of the offer. No such expenses were incurred in 2003.

        During 2003, the Company completed a debt restructuring program; therefore, no loss on exchange on early retirement of debt was incurred in 2004 compared to a $41.6 million loss in 2003. See “Debt Reduction Program” discussion below.

        Income Taxes

        The Company recorded an income tax benefit of $5.8 million or 25.6% of pre-tax loss for the year 2004. The tax benefit is comprised of a $4.4 million benefit for income taxes associated with the expected utilization of past net operating losses and $1.4 million reversal of a previous tax accrual.

        Cumulative Effect of Change in Accounting Principle

        Effective January 1, 2003, the Company was required by the FASB to recognize the full discounted estimated future reclamation liability and set up a corresponding asset to be amortized over the life of the mine on a units-of-production basis. The impact of this change was accounted for as a change in accounting principle as of January 1, 2003. Prior to 2003, the Company recognized a pro rata share of the future estimated reclamation liability on a units-of-production basis. See Note I to the Consolidated Financial Statements – Reclamation and remediation costs.

        Net Loss

        As a result of the above, the Company’s net loss amounted to approximately $16.9 million in the year ended December 31, 2004 compared to a net loss of $66.2 million in the year ended December 31, 2003.

Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

        Revenues

        Sales of concentrates and dorè in the year ended December 31, 2003 increased by $22.2 million, or 26%, over the year ended December 31, 2002 to $108.5 million. The increase in sales was primarily attributable to an increase in the quantity of silver and gold sold during 2003, increased metal prices received in 2003 compared with 2002 and an increase in gain on embedded derivative of $0.4 million for the year ended December 31, 2003. In 2003, the Company sold 14.9 million ounces of silver and 127,000 ounces of gold, compared to sales of 13.3 million ounces of silver and 99,000 ounces of gold in 2002. In the year ended December 31, 2003, the Company produced a total of 14.2 million ounces of silver and 120,000 ounces of gold compared to 14.8 million ounces of silver and 117,000 ounces of gold in 2002. In the year ended December 31, 2003, the Company realized average silver and gold prices of $4.89 and $345, respectively, compared with realized average prices of $4.63 and $311, respectively, in the prior year.

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        Interest and other income in the year ended December 31, 2003 decreased by $6.5 million compared with the year ended December 31, 2002. The primary reason for the decrease is due to gains recorded in 2002 of $3.2 million for assets sold from Silver Valley and $1.4 million for the sale of the Petorca mine.

        Costs, Expenses and Write-downs

        The following table sets forth year 2003 versus year 2002 costs, expenses and write-downs:

        Production costs in the year ended December 31, 2003 decreased by $5.0 million, or 6%, from the year ended December 31, 2002 to $77.9 million. The decrease in production costs is primarily due to increased production from the Company’s low-cost Cerro Bayo and Martha mines resulting in lower total production costs in 2003 compared to 2002. The decrease in production costs was offset partially by increased costs at the Company’s Rochester mine due to a crusher relocation and increased costs at the Company’s Galena mine due to the implementation of a long-range optimization plan.

        Depreciation and amortization increased in the year ended December 31, 2003 by $3.1 million, or 23%, over the prior year, primarily due to increased production at the Cerro Bayo mine and reduced depletion expense at the Galena mine.

        Administrative and general expenses increased $3.5 million in the year ended December 31, 2003 compared to 2002 due primarily to costs associated with the Company’s restructuring activities in 2003.

        Exploration expenses increased $1.1 million in the year ended December 31, 2003 compared to 2002, due to increased exploration activity at the Cerro Bayo and Mina Martha mines.

        Pre-development expense decreased $0.6 million as a result of a lower level of activity at the San Bartolome mine during the first half of 2003.

        Interest expense decreased $9.1 million in the year ended December 31, 2003 compared to 2002, due to a reduction in debt levels associated with the Company’s restructuring program which was substantially completed in 2003.

        Write-downs of mining properties and other expenses amounted to $6.4 million in 2003, primarily as a result of holding costs at the Galena and Rochester mines for maintenance and crusher relocation in 2003. Write-downs of mining properties and other expenses in 2002 amounted to a total of $23.1 million, primarily as a result of (i) $19.0 million write-down of the Silver Valley property, (ii) $2.9 million of mine closing and holding costs at Petorca and Kensington and (iii) $1.1 million on environmental charges.

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        Early retirement of debt resulted in a $41.6 million loss in 2003 compared to a $19.1 million loss in 2002. During 2003, the Company reduced its total debt by $70.0 million from December 31, 2002 to December 31, 2003. See “Debt Reduction Program” discussion below.

        Cumulative Effect of Change in Accounting Principle

        Effective with the first quarter of 2003 the Company was required by the FASB to change the methodology used to recognize its reclamation obligations. Prior to 2003, the Company recognized a pro rata share of the future estimated reclamation liability on a units-of-production basis. After January 1, 2003 companies are required to recognize the full discounted estimated future reclamation liability and set up a corresponding asset to be amortized over the life of the mine on a units-of-production basis. The impact of this change was accounted for as a change in accounting principle as of January 1, 2003. See Note I to the Consolidated Financial Statements – Reclamation and remediation costs.

        Net Loss

        As a result of the above, the Company’s net loss amounted to approximately $66.2 million in the year ended December 31, 2003 compared to a net loss of $80.8 million in the year ended December 31, 2002.

Liquidity and Capital Resources

        Working Capital; Cash and Cash Equivalents

        The Company’s working capital at December 31, 2004 was approximately $349.6 million compared to $100.3 million at December 31, 2003. The ratio of current assets to current liabilities was 16.8 to 1 at December 31, 2004 compared to 5.5 to 1 at December 31, 2003. The increase in working capital is primarily the result of issuance of $180 million of 1 ¼% Convertible Senior Notes due January 2024 and issuance of 26,625,200 shares of common stock during 2004.

        Net cash used in operating activities in 2004 was $18.6 million compared with $5.1 million used in operating activities in 2003. The increase of $13.5 million is primarily attributable to increased inventories and receivables in 2004 compared to 2003.

        A total of $43.8 million was used by investing activities in 2004 compared to $33.4 million used in 2003. The increase of $10.4 million is due to an increase in the net purchases of short-term investments of $20.1 million offset by a decrease in capital expenditures of $9.4 million in 2004 compared to 2003.

        The Company’s financing activities provided $273.0 million during 2004 compared to $91.8 million in 2003. The increase is primarily due to the proceeds received from the issuance in 2004 of $112.6 million of common stock and the issuance of 1 ¼% Convertible Senior Notes of $173.9 million, net of issuance costs.

        The Company believes its cash, cash equivalents and short-term investments and cash from operations will be adequate to meet its obligations during the next twelve months. Nevertheless, if the Company decides to pursue additional mineral interests or acquisitions, additional equity issuances or financing may be necessary. There can be no assurances that such financing will be available when or if needed.

        The Company’s cash flow forecasts indicate that approximately $181.2 million will be spent during 2005 on capital expenditures at its operating mines. The Company has commenced construction on the San Bartolome silver project and expects to commence construction its Kensington gold project during 2005. The Company currently estimates capital costs for these projects at approximately $226.5 million. In the fourth quarter of 2004, the US Forest Service issued its Record of Decision for the Final Environmental Impact Statement. It is expected that, subject to the resolution of a recently filed appeal of that decision, the remaining permits will be received in the first half of 2005, that construction will commence and that the project will begin commercial production in 2006. At San Bartolome, an updated feasibility study was completed in 2004 and construction has commenced. It is estimated that the San Bartolome project will commence production in the second half of 2006.

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        Capitalized Expenditures

        During 2004, the Company expended $3.5 million at the Rochester mine, $3.1 million for continuing mine development at the Cerro Bayo and Mina Martha properties, $2.2 million at the Galena mine and $1.0 million for the development of the San Bartolome mine. During 2005, the Company plans to expend $1.4 million for investment activities at the Rochester mine, $3.8 million at the Galena mine, $2.7 million at Cerro Bayo, $3.6 million at the Kensington development property and $93.1 million at the San Bartolome development property. An updated feasibility study was completed in 2004 for the San Bartolome project and construction has commenced. It is estimated that the San Bartolome project will commence production in the second half of 2006. An updated feasibility study was completed during 2004 for the Kensington project. In the fourth quarter of 2004, the US Forest Service issued its Record of Decision for the Final Supplemental Environmental Impact Statement. It is expected that, subject to the resolution of a recently filed appeal of that decision, the remaining permits will be received in the first half of 2005, that construction will commence and that the project will begin commercial production in 2006.

        Debt Reduction Program

        During the past five years, the Company has pursued a program of restructuring and reducing its outstanding indebtedness, which has resulted in a reduction of long-term debt from $246.5 million at December 31, 1998 to $180.0 million at December 31, 2004. In addition, the interest rate on the long-term debt has been reduced to 1 ¼%. A summary of the major components of the program are as follows:

        2002 Private Placement Transaction

        In May 2002, the Company issued $21.5 million principal amount of new Series II 13 3/8% Convertible Senior Subordinated Notes (“Series II 13 3/8% Notes”) due December 2003, for proceeds of approximately $13.5 million, net of discount of $5.5 million and offering costs of approximately $1.9 million. Proceeds from this transaction were used to retire the remaining outstanding $9.4 million of 6% Convertible Subordinated Debentures due June 10, 2002 upon their maturity along with accrued interest and for general corporate purposes. The Series II 13 3/8% Notes were issued on similar terms, subject to certain contingent provisions, as the Company’s previously issued, Series I 13 3/8% Notes.

        2002 Exchanges and Conversions

        During 2002, the holders of the 6%, 6 3/8% and 7 1/4% Debentures exchanged a total of $13.7 million, $11.1 million, and $3.0 million principal amount, respectively, in exchange for a total of 14.4 million, 8.6 million and 2.3 million shares of common stock, respectively. Shares issued for the 6 3/8% and 7 ¼% Debentures include 0.7 million and 0.2 million shares of common stock issued for payment of interest.

        As of December 31, 2002, the holders of a total of approximately $28.7 million principal amount of Series I 13 3/8% Notes had converted their notes into a total of 21.2 million shares of common stock, excluding make whole interest payments.

        As of December 31, 2002, the holders of a total of approximately $21.5 million principal amount of Series II 13 3/8% Notes had converted their notes into a total of 15.9 million shares of common stock. As a result, the entire issue of Series II 13 3/8% Notes had converted into common stock. The Company issued 2.9 million shares for payment of interest.

57


        2003 Issuance of 9% Senior Convertible Notes

        On February 26, 2003, the Company completed a private placement of $37.2 million principal amount of 9% Notes. The net proceeds were approximately $33.8 million. The 9% Notes were senior in right of payment to the 6 3/8% and 7 1/4% Debentures. The 9% Notes were convertible into Coeur common stock, at any time prior to maturity at a conversion price of $1.60 per share, subject to adjustment. Interest was payable semi-annually on February 15 and August 15 of each year. The Company was entitled to elect to pay interest in cash or stock, in its sole discretion. The 9% Notes were redeemable at the option of the Company six months after issuance, subject to certain conditions, and at the option of the holders in the event of a change in control. Of the financial advisory fees paid by the Company in connection with the issuance of the 9% Notes, the Company elected to issue 0.6 million unregistered shares of common stock valued at $1.54 per share in lieu of cash. No underwriter was used with this transaction. The private placement was made to several accredited institutional investors. The private placement was exempt from registration under the Securities Act of 1933 by virtue of Regulation D thereunder.

        On March 7, 2003, the Company called for the redemption of approximately $22.4 million principal amount of the outstanding 6 3/8% Debentures, which was funded by a portion of the proceeds received from the sale of the 9% Notes. The redeemed securities were retired on April 7, 2003.

        Effective as of July 10, 2003, Coeur entered into a series of agreements under which indebtedness of the Company were exchanged for or converted into shares of the Company’s common stock. The Company and each of the holders of the Company’s 9% Notes entered into an Early Conversion Agreement. The amount of principal converted under the Early Conversion Agreements was $32.6 million, and the common shares issued, including payment of interest, was approximately 27.5 million. After giving effect to the exchanges, an aggregate of $4.6 million of 9% Notes remained outstanding. The Company recorded a loss on early retirement of debt of $4.2 million in the third quarter of 2003 in conjunction with these transactions.

        2003 Redemptions

        On November 25, 2003, the Company issued 3.1 million shares of common stock in a registered offering, the proceeds of which were used to redeem the remaining $4.6 million principal amount of the 9% Notes and recorded a loss on the early retirement of debt of $7.6 million. In addition, during the fourth quarter of 2003, the Company redeemed the remaining $4.8 million principal amount of the 6 3/8% Convertible Subordinated Debentures due January 2004.

        2003 Exchanges and Conversions

        During 2003, holders of $12.7 million of our Series I 13 3/8% Convertible Senior Subordinated Notes due December 31, 2003 voluntarily converted such notes, in accordance with original terms, into approximately 9.6 million shares of common stock including payment for make whole provision for interest expense.

        During 2003, we exchanged $27.9 million and $2.1 million principal amount of our outstanding 6 3/8% Debentures and our 7 1/4% Debentures, respectively, in exchange for 18.5 million shares of common stock and recorded a loss on exchange and early retirement of debt of approximately $29.7 million. The shares included 0.5 million shares of common stock issued as payment for interest expense as part of the transaction. In conjunction with the issuance of the 9% Convertible Senior Subordinated Notes due 2007, we also issued 0.6 million shares of common stock for partial payment of offering costs of $1.0 million.

58


        2004 Redemption

        On February 11, 2004, the Company announced the redemption of the remaining outstanding $9.6 million principal amount of the Company’s 7 ¼% Convertible Subordinated Debentures due October 15, 2005. On March 11, 2004, the Company redeemed the remaining outstanding $9.6 million principal amount of the 7 ¼% Debentures.

        2004 Issuance of 1.25% Convertible Senior Notes

        On January 13, 2004 the Company completed its offering of $180 million aggregate principal amount of 1¼% Convertible Senior Notes due 2024 (“1¼% Notes”). The 1¼% Notes are convertible into shares of Coeur common stock at a conversion rate of approximately 131.5789 shares of Coeur common stock per $1,000 principal amount of Notes, representing a conversion price of $7.60 per share. Interest on the notes will be payable in cash at the rate of 1¼% per annum beginning July 15, 2004. The Company intends to use the proceeds of the offering for general corporate purposes, which may include the development of its Kensington gold project and its San Bartolome silver project, or the acquisition of precious metals properties or businesses. Construction commenced at the San Bartolome project on October 1, 2004. The Kensington project is subject to the receipt of final permits and final construction decision. The Notes will be general unsecured obligations, senior in right of payment to Coeur’s other indebtedness. The offering was made through an underwriting led by Deutsche Bank Securities. Offering of the Notes was made only by means of a prospectus under Coeur’s existing shelf registration statement, including the accompanying prospectus supplement relating to the Notes.

        Issuances of Common Stock

        During 2004, the Company completed a public offering of 26.6 million shares of common stock at a public offering price of $4.50 per share, which included 1.6 million shares purchased by the underwriter at the offering price to cover over allotment. The Company realized total net proceeds for the offering, after payment of the underwriters’ discount, of $113.1 million.

        During the third quarter of 2003, the Company completed a public offering of 23.7 million shares of common stock at a public offering price of $3.40 per share, which included 3.1 million shares purchased by the underwriters at the offering price to cover over allotments. The Company realized total net proceeds from the offering, after payment of the underwriters’ discount, of approximately $76.0 million.

        On July 7, 2003, the Company sold 0.2 million shares of common stock to an institutional investor for an aggregate of $0.3 million, or $1.40 per share. The net proceeds from the sale of shares were used to pay amounts owed by the Company’s subsidiary, Empresa Minera Manquiri S.A., a Bolivian corporation, under contracts pursuant to which it obtained certain mineral rights in Bolivia and for general corporate purposes. The sale of share was effected pursuant to the Company’s shelf registration statement.

        On May 23, 2003, the Company sold 8.1 million shares of common stock to an institutional investor for an aggregate of $10.0 million, or $1.23 per share. The Company also granted the investor an option, exercisable within 30 days, to purchase an additional 1.2 million shares of common stock at a price of $1.23 per share. The proceeds of the sale were used for general corporate purposes and working capital needs, including the repayment of Series I 13 3/8% Notes and 6 3/8% Debentures. On June 20, 2003, the Company sold 1.2 million shares of common stock to the institutional investor for an aggregate of $1.5 million, or $1.23 per share, in connection with the above-referenced option. The sales of shares were effected under the Company’s shelf registration statement.

        On November 25, 2003, the Company issued 3.1 million shares of common stock in registered offering, the proceeds of which were used to redeem the remaining $4.6 million principal amount of the 9% Convertible Senior Subordinated Notes.

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Contractual Obligations

        The following table summarizes our contractual obligations at December 31, 2004 and the effect such obligations are expected to have on our liquidity and cash flow in future periods.

Payments Due by Period
Contractual Obligations
Total
Less Than
1 Year

1-3
Years

3-5
Years

More Than
5 Years

Convertible debt (1)     $ 180,000   $ --   $ --   $ --   $ 180,000  
Interest on convertible debt    87,750    2,250    4,500    4,500    76,500  
Operating lease (2)    3,594    2,338    1,182    74    --  
Capital lease (3)    114    114    --    --    --  
Kensington Trust (4)    1,339    220    660    459    --  
TDA Grant (5)    546    546    --    --    --  
Reclamation and mine closure (6)    37,901    975    2,534    7,261    27,131  
Pension and health benefits (7)    6,134    443    1,057    1,037    3,597  
Other long-term liabilities (8)    1,140    9    11    --    1,120  





     Total   $ 318,518   $ 6,895   $ 9,944   $ 13,331   $ 288,348  






  (1) The $180.0 million principal amount of 1 ¼% Debentures due 2024 outstanding at December 31, 2004 are convertible into shares of common stock at a conversion rate of approximately 131.5789 shares of Coeur common stock per $1,000 principal amount of Notes, representing a conversion price of $7.60 per share, subject to adjustment in certain events.

  The Company is required to make semi-annual interest payments. The Debentures are redeemable at the option of the Company, and have no other funding requirements until maturity on January 15, 2024.

  (2) The Company has entered into various operating lease agreements which expire over a period of five years.

  (3) The Company has entered into various capital lease agreements for commitments over the next year.

  (4) Purchase obligation for the Kensington property in Alaska.

  (5) The Company obtained a U.S. government grant to promote development in Bolivia. The amount received is to be reimbursed once a construction decision and financing are obtained.

  (6) Reclamation and mine closure amounts represent the Company’s estimate of the discounted cash flows of its legal obligation to reclaim and remediate mining properties. This amount will increase over the passage of time for accretion of the obligation and will decrease as reclamation and remediation work is completed. Amounts shown on table are undiscounted.

  (7) Pension and health benefit amounts were determined by the actuary and are estimated based on the census information for the employee or retiree for each respective plan.

  (8) The remaining liabilities include amounts required by GAAP to accrue and include liabilities for severance, workers’ compensation and other miscellaneous accruals.

Risk Factors; Forward-Looking Statements

        For information relating to important risks and uncertainties that could materially adversely affect the Company’s business, securities, financial condition or operating results, reference is made to the disclosure set forth under Item 1 above under the caption “Risk Factors.” In addition, because the following discussion includes numerous forward-looking statements relating to the Company, its results of operations and financial condition and business, reference is made to the information set forth above in Item 1 under the caption “Important Factors Relating to Forward-Looking Statements.”

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Litigation

        Current litigation matters are discussed in both Item 3 and in Note Q – Litigation in the Notes to the Consolidated Financial Statements.

Environmental Compliance Expenditures

        For the years ended December 31, 2004, 2003, and 2002, the Company expended $4.4 million, $4.5 million and $5.3 million, respectively, in connection with routine environmental compliance activities at its operating properties. Such activities include monitoring, bonding, earth moving, water treatment and re-vegetation activities.

        The Company estimates that environmental compliance expenditures during 2005 will be approximately $6.8 million to obtain permit modifications and other regulatory authorizations. 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.

Realization of Net Operating Loss Carryforwards

        In assessing the realizability of deferred tax assets, management considers whether it is more likely that not that some portion or all of the deferred tax assets will not be realized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. A valuation allowance has been provided for the portion of the Company’s net deferred tax assets for which it is more likely than not that they will not be realized. For 2004, the Company included $4.4 million of income tax benefit resulting from an adjustment to the valuation allowance for the expected benefit of net operating loss carryforwards to be utilized in future years.

Off-Balance Sheet Arrangements

        The Company has no existing off-balance sheet arrangements as defined under SEC regulations.

Recent Accounting Pronouncements

        In November 2004, FASB issued SFAS No. 151, “Inventory Costs,” which amends the guidance in ARB No. 43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). This Statement now requires that these items be recognized as a current-period expense regardless of whether they meet the criterion of “so abnormal” as previously stated in ARB No. 43, Chapter 5. In addition, this Statement requires that the allocation of fixed production overheads to costs of conversion be based on the normal capacity of the production facility. SFAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company has performed a review of the provisions of the Statement and has determined that its current accounting practice is to recognize idle facilities as a current-period expense and, therefore, does not believe that adoption will have a material impact on its financial statements.




61


        In December 2004, FASB issued SFAS No. 123R (revised 2004), “Share-Based Payment,” which revises SFAS No. 123, “Accounting for Stock-Based Compensation,” and supersedes APB Opinion 25, “Accounting for Stock Issued to Employees.” This Statement changes the accounting for transactions in which an entity exchanges its equity instruments for goods or services by requiring the fair-value-based method of accounting and eliminates the alternative to use APB Opinion 25‘s intrinsic value method of accounting that was provided in SFAS No. 123 as originally issued. SFAS No. 123R addresses financial statement users’ and other parties’ concerns of faithfully representing the economic transactions affecting an entity by requiring the entity to recognize the cost of employee services received in share-based payment transactions, thereby reflecting the economic consequences of those transactions in the financial statements. The Statement was also issued to (i) improve the comparability of reported financial information by eliminating alternative accounting methods, (ii) simplify US GAAP, and (iii) converge with international accounting standards. SFAS No. 123R is effective for public companies that do not file as small business issuers as of the beginning of the first interim or annual reporting period that begins after June 15, 2005. The Company has performed a review of the provisions of the Statement and has determined that it will defer adoption until the third quarter of 2005, at which time it will begin recognizing compensation expense on the remaining portion of outstanding awards for which the requisite service period has not been rendered and for any awards granted, modified, repurchased or cancelled after the effective date. It is not believed that adoption will have a material impact on our financial reporting and disclosure.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

        The Company is exposed to various market risks as a part of its operations. In an effort to mitigate losses associated with these risks, the Company may, at times, enter into derivative financial instruments. These may take the form of forward sales contracts, foreign currency exchange contracts and interest rate swaps. The Company does not actively engage in the practice of trading derivative securities for profit. This discussion of the Company’s market risk assessments contains “forward looking statements” that contain risks and uncertainties. Actual results and actions could differ materially from those discussed below.

        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 and are affected by numerous factors, such as supply and demand and investor sentiment. In order to mitigate some of the risk associated with these fluctuations, the Company will at times, enter into forward sale contracts. The Company continually evaluates the potential benefits of engaging in these strategies based on current market conditions. The Company may be exposed to nonperformance by counterparties as a result of its hedging activities. This exposure would be limited to the amount that the spot price of the metal falls short of the contract price. The Company has historically sold silver and gold produced by our mines pursuant to forward contracts and at spot prices prevailing at the time of sale. Since 1999, the Company has not engaged in any silver hedging activities and is currently not engaged in any gold hedging activities.

        The Company operates in several foreign countries, specifically Bolivia, Chile, and Argentina, which exposes it to risks associated with fluctuations in the exchange rates of the currencies involved. As part of its program to manage foreign currency risk, the Company enters into, from time to time, foreign currency forward exchange contracts. These contracts enable the Company to purchase a fixed amount of foreign currencies. Gains and losses on foreign exchange contracts that are related to firm commitments are designated and effective as hedges and are deferred and recognized in the same period as the related transaction. All other contracts that do not qualify as hedges are marked to market and the resulting gains or losses are recorded in income. The Company continually evaluates the potential benefits of entering into these contracts to mitigate foreign currency risk and proceeds when it believes that the exchange rates are most beneficial.

        All of the Company’s long-term debt at December 31, 2004, is fixed-rate based. The Company’s exposure to interest rate risk, therefore, is limited to the amount it could pay at current market rates. The Company currently does not have any derivative financial instruments to offset the fluctuations in the market interest rate. It may choose to use instruments, such as interest rate swaps, in the future to manage the risk associated with interest rate changes.

        The following table summarizes the information at December 31, 2004 associated with the Company’s financial liabilities and financial instruments except as to provisionally priced sales of concentrates which are discussed below the table:

62



2005
2006
2007
2008
2009
Total
Fair
Value
12/31/04

Liabilities                                
  Short and Long Term Debt  
    Fixed Rate    --    --    --    --    --   $ 180,000   $ 166,776  
    Average Interest Rate    1.250 %  1.250 %  1.250 %  1.250 %  1.250 %        

        Fair value is determined by trading information available on or near the balance sheet date for all the above securities. Long term debt represents the face amount of the outstanding debentures and is timed as they come due. The average interest rate in the table is calculated using the weighted average on the outstanding face amount of each debenture for the time period each debenture is outstanding. All long term debt is denominated in US dollars.

        At December 31, 2004, the Company had outstanding provisionally priced sales of $26.7 million, consisting of 2.5 million ounces of silver, 18,755 ounces of gold and 1.0 million pounds of copper, which had a fair value of approximately $26.7 million.













63


Item 8. Financial Statements and Supplementary Data

        The restated financial statements required hereunder and contained herein are listed under Item 15(a)(1) below.

Item 9. Changes and Disagreements with Accountants on Accounting and Financial Disclosure

        Not applicable.

Item 9A. Controls and Procedures

(a)    Disclosure Controls and Procedures

        The Company’s disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by it in its periodic reports filed with the Securities and Exchange Commission is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Based on an evaluation of the Company’s disclosure controls and procedures conducted by the Company’s Chief Executive Officer and Chief Financial Officer, and due to the material weaknesses described below in “(b) Management’s Report on Internal Control Over Financial Reporting,” such officers concluded that the Company’s disclosure controls and procedures were not effective at a reasonable assurance level as of December 31, 2004. Such officers believe that in view of the remediation measures being implemented to address those control deficiencies, they will, upon implementation of those measures, be able to conclude that the Company’s disclosure controls and procedures are effective at a reasonable level of assurance at a future date.

(b)    Management’s Report on Internal Control Over Financial Reporting

        The management of Coeur d’Alene Mines Corporation and subsidiaries (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. Coeur d’Alene Mines’ internal control system was designed to provide reasonable assurance to the Company’s management and the board of directors regarding the preparation and fair presentation of published financial statements.

        All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

        An internal control significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Company’s ability to initiate, authorize, record, process, or report external financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Company’s annual or interim financial statements that is more than inconsequential will not be prevented or detected. An internal control material weakness is a control deficiency, or a combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected.

        Management of the Company conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its assessment, management concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2004, because of the following deficiencies, each of which constitutes a material weakness in the Company’s internal control over financial reporting:

64


  The Company did not have policies and procedures in place to ensure that the initial determination and subsequent monitoring of factors affecting the realization of deferred tax assets, including the associated deferred tax asset valuation allowances, were sufficient to result in the reporting of deferred tax assets, including the related deferred tax asset valuation allowances, in accordance with U.S. generally accepted accounting principles. In addition, the Company did not have effective review procedures associated with the Company’s accounting for income taxes and related disclosures. As a result, the Company recorded adjustments, including a material adjustment related to the deferred tax asset valuation allowances, to correct errors in accounting and to fairly present its financial statements as of and for the year ended December 31, 2004.

  The Company did not have effective review procedures in place to ensure that the Company’s Chilean operations properly apply accounting principles relative to depletion. As a result, the Company’s Chilean subsidiary applied a method of accounting for depletion that was not in accordance with corporate accounting policies, nor in accordance with U.S. generally accepted accounting principles. As a result, the Company was required to record adjustments to accumulated depletion, depletion expense, and inventory to correct errors in accounting and to fairly present its financial statements as of and for the year ended December 31, 2004.

  The Company did not have effective policies and procedures in place to review and approve the propriety of non-standard journal entries and accounting for the Company’s foreign operation non-routine transactions. The absence of these policies and procedures could have resulted in material errors in the preparation of the Company’s annual or interim financial statements.

        KPMG LLP, the independent registered public accounting firm that audited the Company’s consolidated financial statements, has issued an a attestation report on management’s assessment of the Company’s internal control over financial reporting as of December 31, 2004. KPMG’s report is included herein.

(c)    Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In order to remediate the material weaknesses identified in Management’s Report on Internal Control Over Financial Reporting, we have taken the following actions subsequent to December 31, 2004:

  We have retained a consulting certified public accountant who is skilled in the area of taxation and related financial reporting. This individual will assist the Company in the preparation of its quarterly and annual income tax reporting; and
  We will increase the level of monitoring associated with all decentralized operations including an increase in the level of internal auditing related to all financial operations.

65


Item 9B. Other Information

        Not applicable.

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 our definitive proxy statement or amendment hereto 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 our executive officers is set forth 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 our definitive proxy statement or amendment hereto 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 and Related Stockholder Matters

        Pursuant to General Instruction G(3) of Form 10-K, the information called for by this item is hereby incorporated by reference from our definitive proxy statement or amendment hereto 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 our definitive proxy statement or amendment hereto to be filed pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report.

Item 14. Principal Accountant Fees and Services

        Pursuant to General Instruction G(3) of Form 10-K, the information called for by this item is hereby incorporated by reference from our definitive proxy statement or amendment hereto 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 15. Exhibits and Financial Statement Schedules

(a) The following financial statements are filed herewith:

(1) The following consolidated financial statements of Coeur d’Alene Mines Corporation and subsidiaries are included in Item 8:

  Consolidated Balance Sheets – December 31, 2003 and 2004.

  Consolidated Statements of Operations and Comprehensive Loss – Years Ended December 31, 2002, 2003 and 2004.

66


  Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2002, 2003 and 2004.

  Consolidated Statements of Cash Flows for the Years Ended December 31, 2002, 2003 and 2004.

  Notes to Consolidated Financial Statements.

(b) Exhibits: The following listed documents are filed as Exhibits to this report:

3(a) - Articles of Incorporation of the Registrant and amendments thereto. (Incorporated
herein by reference to Exhibit 3(a) to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1988.)

3(b)
- Bylaws of the Registrant and amendments thereto. (Incorporated herein by reference to
Exhibit 3.1 to the Registrant's Current Report on Form 8-K dated August 30, 2004.)

3(c)
- Certificate of Designations, Powers and Preferences of the Series B Junior Preferred
Stock of the Registrant, as filed with Idaho Secretary of State on May 13, 1999.
(Filed herewith.)

3(d)
- Restated and Amended Articles of Incorporation of the Registrant as filed with the
Secretary of State of the State of Idaho effective September 13, 1999. (Incorporated
herein by reference to Exhibit 3 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1999.)

3(e)
- Amendment to Restated and Amended Articles of Incorporation of the Registrant
(Incorporated herein by reference to Exhibit 3.1 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 2002.)

4(a)
- Specimen certificate of the Registrant's stock. (Incorporated herein by reference to
Exhibit4 to the Registrant's Registration Statement on Form S-2 (File No. 2-84174).)

4(b)
- Indenture dated as of January 13, 2004, by and between the Registrant and the Bank of
New York relating to the Registrant's 11/4% Convertible Senior Notes due 2024
(Incorporated herein by reference to Exhibit 4.1 to Registrant's Current Report on
Form 8-K dated January 7, 2004).

10(a)
- Agreement, dated January 1, 1994, between Coeur-Rochester, Inc. and Johnson Matthey
Inc. (Incorporated herein by reference to Exhibit 10(m) of the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1993.)
10(b) - Master Equipment Lease No. 099-03566-01, dated as of December 28, 1988, between Idaho
First National Bank and the Registrant. (Incorporated herein by reference to Exhibit
10(w) of the Registrant's Annual Report on Form 10-K for the year ended December 31,
1988.)

10(c)
- Master Equipment Lease No. 01893, dated as of December 28, 1988, between Cargill
Leasing Corporation and the Registrant. (Incorporated herein by reference to Exhibit
10(x) of the Registrant's Annual Report on Form 10-K for the year ended December 31,
1988.)

67


10(d) - Rights Agreement, dated as of May 11, 1999, between the Registrant and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent. (Incorporated herein by reference to
Exhibit 1 to the Registrant's Form 8-A relating to the registration of the Rights on
the New York and Pacific Stock Exchanges.)

10(e)
- Amended and Restated Profit Sharing Retirement Plan of the Registrant. (Incorporated
herein by reference to Exhibit 10(ff) to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1993.) *

10(f)
- 1993 Annual Incentive Plan and Long-Term Performance Share Plan of the Registrant.
(Incorporated herein by reference to Exhibit 10(jj) to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1993.)*

10(g)
- Lease Agreement, dated January 12, 1994, between First Security Bank of Idaho and
Coeur Rochester, Inc. (Incorporated herein by reference to Exhibit 10(mm) to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1993.)

10(h)
- Extension of Employment and Severance Agreement between the Registrant and Dennis E.
Wheeler, dated June 28, 1994. (Incorporated by reference to Exhibit 10 (nn) to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1994.)*

10(i)
- 401k Plan of the Registrant. (Incorporated by reference to Exhibit 10 (pp) to the
Registrants Annual Report on Form 10-K for the year ended December 31, 1994.)*

10(j)
- Mining Lease, effective as of June 1, 1997, between Silver Valley Resources and
American Silver Mining Company. (Incorporated herein by reference to Exhibit 10(a) to
the Registrant's Registration Statement on Form S-3 (File No. 333-40513).)

10(k)
- Mining Lease, effective as of April 23, 1996, between Silver Valley Resources
Corporation and Sterling Mining Company. (Incorporated herein by reference to Exhibit
10(b) to the Registrant's Registration Statement on Form S-3 (File No. 333-40513).)

10(l)
- Mining Lease, effective as of March 21, 1997, between Silver Valley Resources
Corporation and Silver Buckle Mines, Inc. (Incorporated herein by reference to Exhibit
10(c) to the Registrant's Registration Statement on Form S-3 (File No. 333-40513).)

10(m)
- Mining Lease, effective as of March 21, 1997, between Silver Valley Resources
Corporation and Placer Creek Mining Company. (Incorporated herein by reference to
Exhibit 10(d) to the Registrant's Registration Statement on Form S-3 (File No.
333-40513).)
10(n) - Form of severance/change in control agreements entered into by the Registrant with
each of its executive officers (James A. Sabala - January 13, 2003, Gary W. Banbury -
March 19, 1998, Wayne L. Vincent - October 29, 1998 and James N. Meek - March 11,
1999). (Incorporated by reference to Exhibit 10(hh) to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 2001).

10(o)
- Employment Agreement, dated as of January 13, 2003, between the Registrant and James
A. Sabala. (Incorporated by reference to Exhibit 10(jj) to Registrant's Annual Report
on Form 10-K for the period ended December 31, 2002).

68


10(p) - 2003 Long-Term Incentive Plan of the Registrant. (Incorporated herein by reference to
Appendix A to the Registrant's definitive Proxy Statement on Schedule 14A filed with
the SEC on April 21, 2003.)

10(q)
- Employment Agreement, dated February 1, 2004 between the Registrant and Donald J.
Birak (Incorporated by reference to Exhibit 10(t) to Registrant's Annual Report on
Form 10-K for the period ended December 31, 2003).

10(r)
- Employment Agreement, dated March 11, 2003 between the Registrant and Gary Banbury.
(Incorporated herein by reference to Exhibit 10(b) to Registrant's Quarterly Report on
10-Q for the quarter ended March 31, 2003).

10(s)
- Employment Agreement, dated March 11, 2003 between the Registrant and Mitchell J.
Krebs. (Incorporated herein by reference to Exhibit 10(a) to Registrant's Quarterly
Report on 10-Q for the quarter ended March 31, 2003).

10(t)
- Amendment to Employment Agreement, dated February 5, 2004 between the Registrant and
James N. Meek. (Incorporated herein by reference to Exhibit 10(c) to Registrant's
Quarterly Report on 10-Q for the quarter ended March 31, 2004).

10(u)
- Amendment to Employment Agreement, dated February 5, 2004 between the Registrant and
Wayne Vincent. (Incorporated herein by reference to Exhibit 10(d) to Registrant's
Quarterly Report on 10-Q for the quarter ended March 31, 2004).

10(v)
- Employment Agreement, dated June 9, 2003 between the Registrant and James Arnold.
(Incorporated herein by reference to Exhibit 10(a) to Registrant's Quarterly Report on
10-Q for the quarter ended June 30, 2003).

10(w)
- Amendment to Employment Agreement dated December 31, 2004 between the Registrant and
Harry F. Cougher. (Filed herewith.)

10(x)
- Employment Agreement, dated July 15, 2004 between the Registrant and Raymond
Threlkeld. (Filed herewith.)

10(y)
- Underwriting Agreement, dated November 18, 2004, by and among the Company and the
Underwriters named on Schedule 1 thereto. (Incorporated herein by reference to Exhibit
1.1 to the Registrant's Current Report on Form 8-K dated November 18, 2004.)

10(z)
- Employment Agreement, dated as of September 20, 2004, between the Registrant and
Jennifer E. Kean. (Incorporated by reference to Exhibit 10(a) to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30, 2004.)

10(aa)
- Employment Agreement, dated as of September 20, 2004, between the Registrant and Tom
T. Angelos. (Incorporated by reference to Exhibit 10(b) to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 2004.)

10(bb)
- Employment Agreement, dated as of July 15, 2004, between the Registrant and Alan L.
Wilder. (Incorporated by reference to Exhibit 10(c) to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 2004.)

21
- List of subsidiaries of the Registrant. (Filed herewith.)

69


23 - Consent of KPMG LLP. (Filed herewith.)

31.1
- Certification of the CEO

31.2
- Certification of the CFO

32.1
- CEO Section 1350 Certification

32.2
- CFO Section 1350 Certification

(c) Independent auditors’ reports are included herein as follows:

  Report of KPMG LLP as of December 31, 2004 and for the years ended December 31, 2004, 2003 and 2002.

















70


SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Coeur d'Alene Mines Corporation
(Registrant)

Date:  March 21, 2005
By:  /s/ Dennis E. Wheeler
        Dennis E. Wheeler
        (Chairman, President and Chief Executive Officer)

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Dennis E. Wheeler Chairman, President, Chief Executive Officer and Director March 21, 2005
Dennis E. Wheeler

/s/ James A. Sabala
Executive Vice President and Chief Financial Officer March 22, 2005
James A. Sabala

/s/ Harry F. Cougher
Senior Vice President North American Operations March 23, 2005
Harry F. Cougher

/s/ Raymond Threlkeld
President - South American Operations March 15, 2005
Raymond Threlkeld

/s/ Tom T. Angelos
Controller and Chief Accounting Officer March 28, 2005
Tom T. Angelos

/s/ Cecil D. Andrus
Director March 15, 2005
Cecil D. Andrus

/s/ James J. Curran
Director March 15, 2005
James J. Curran

/s/ James A. McClure
Director March 15, 2005
James A. McClure

/s/ Robert E. Mellor
Director March 15, 2005
Robert E. Mellor

/s/ John H. Robinson
Director March 15, 2005
John H. Robinson

/s/ Timothy R. Winterer
Director March 15, 2005
Timothy R. Winterer

/s/ J. Kenneth Thompson
Director March 15, 2005
J. Kenneth Thompson

71


ANNUAL REPORT ON FORM 10-K


CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED DECEMBER 31, 2004

COEUR D’ALENE MINES CORPORATION

COEUR D’ALENE, IDAHO




Reports of Independent Registered Public Accounting Firm F-2 - F-4

Consolidated Balance Sheets - December 31, 2004 and 2003
F-5 - F-6

Consolidated Statements of Operations and Comprehensive Loss - Years Ended December
    31, 2004, 2003 and 2002 F-7

Consolidated Statements of Changes in Shareholders' Equity for the Years Ended
F-8
    December 31, 2004, 2003 and 2002

Consolidated Statements of Cash Flows for the Years Ended December 31, 2004, 2003
    and 2002 F-9

Notes to Consolidated Financial Statements
F-10








F-1


Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders
Coeur D’Alene Mines Corporation:

We have audited the accompanying consolidated balance sheets of Coeur D’Alene Mines Corporation and subsidiaries (the Company) as of December 31, 2004 and 2003, and the related consolidated statements of operations and comprehensive loss, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2004. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Coeur D’Alene Mines Corporation and subsidiaries as of December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles.

As discussed in note B to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations, as of January 1, 2003.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of December 31, 2004, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of the Sponsoring Organizations of the Treadway Commission, and our report dated March 28, 2005 expressed an unqualified opinion on management’s assessment of, and an adverse opinion on the effective operation of, internal control over financial reporting.

KPMG LLP

Denver, Colorado
March 28, 2005

F-2


Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders
Coeur d’Alene Mines Corporation:

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting (Item 9A(b)), that Coeur d’Alene Mines Corporation did not maintain effective internal control over financial reporting as of December 31, 2004, because of the effect of material weaknesses identified in management's assessment, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Coeur d’Alene Mines Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. The following material weaknesses in the Company’s internal control over financial reporting have been identified and included in management's assessment as of December 31, 2004:

The Company did not have policies and procedures in place to ensure that the initial determination and subsequent monitoring of factors affecting the realization of deferred tax assets, including the associated deferred tax asset valuation allowances, were sufficient to result in the reporting of deferred tax assets, including the related deferred tax asset valuation allowances, in accordance with U.S. generally accepted accounting principles. In addition, the Company did not have effective review procedures associated with the Company’s accounting for income taxes and related disclosures. As a result, the Company recorded adjustments, including a material adjustment related to the deferred tax asset valuation allowances, to correct errors in accounting as of and for the year ended December 31, 2004.

F-3


The Company did not have effective review procedures in place to ensure that the Company’s Chilean operations properly applied accounting principles relative to depletion. As a result, the Company’s Chilean subsidiary applied a method of accounting for depletion that was not in accordance with corporate accounting policies, nor in accordance with U.S. generally accepted accounting principles. As a result, the Company was required to record adjustments to accumulated depletion, depletion expense, and inventory to correct errors in accounting as of and for the year ended December 31, 2004.

The Company did not have effective policies and procedures in place to review and approve the propriety of non-standard journal entries and accounting for the Company’s foreign non-routine transactions. The absence of these policies and procedures could have resulted in material errors in the preparation of the Company’s annual or interim financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets Coeur d’Alene Mines Corporation and subsidiaries as of December 31, 2004, and the related consolidated statements of operations and comprehensive loss, changes in shareholders’ equity, and cash flows for the year then ended. The aforementioned material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2004 consolidated financial statements, and this report does not affect our report dated March 28, 2005, which expressed an unqualified opinion on those consolidated financial statements.

In our opinion, management's assessment that Coeur d’Alene Mines Corporation did not maintain effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on criteria established in Internal Control—Integrated Framework issued by COSO. Also, in our opinion, because of the effect of the material weaknesses described above on the achievement of the objectives of the control criteria, Coeur d’Alene Mines Corporation has not maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by COSO.

KPMG LLP

Denver, Colorado
March 28, 2005





F-4


CONSOLIDATED BALANCE SHEETS
COEUR D’ALENE MINES CORPORATION AND SUBSIDIARIES

December 31,
ASSETS 2004
2003
(In Thousands)

CURRENT ASSETS
           
    Cash and cash equivalents   $ 273,079   $ 62,417  
    Short-term investments    48,993    19,265  
    Receivables    10,634    8,103  
    Ore on leach pad    15,046    17,388  
    Metal and other inventory    17,639    12,535  
    Deferred tax assets    2,592    --  
    Prepaid expenses and other    3,727    3,067  


     371,710    122,775  

PROPERTY, PLANT AND EQUIPMENT
  
    Property, plant and equipment    85,070    87,546  
    Less accumulated depreciation    (54,154 )  (52,868 )


     30,916    34,678  

MINING PROPERTIES
  
    Operational mining properties    121,344    114,018  
    Less accumulated depletion    (100,079 )  (90,245 )


     21,265    23,773  
    Mineral interests    20,125    20,125  
    Non-producing and development properties    26,071    25,121  


     67,461    69,019  

OTHER ASSETS
  
    Non-current ore on leach pad    28,740    14,705  
    Restricted cash and cash equivalents    10,847    8,710  
    Debt issuance costs, net    5,757    87  
    Marketable securities    34    19  
    Deferred tax assets    1,811    --  
    Other    8,501    9,474  


     55,690    32,995  



         TOTAL ASSETS
   $ 525,777   $ 259,467  


The accompanying notes are an integral part of these consolidated financial statements.





F-5


CONSOLIDATED BALANCE SHEETS
COEUR D’ALENE MINES CORPORATION AND SUBSIDIARIES

December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 2004
2003
(In Thousands)

CURRENT LIABILITIES
           
    Accounts payable   $ 8,389   $ 7,772  
    Accrued liabilities and other    5,192    5,218  
    Accrued interest payable    1,035    120  
    Accrued salaries and wages    6,379    5,705  
    Current portion of remediation costs    1,041    1,278  
    Current portion of bank financing    114    2,367  


     22,150    22,460  

LONG-TERM LIABILITIES
  
    1 1/4% Convertible Senior Notes due January 2024    180,000    --  
    7 1/4% Convertible Subordinated Debentures due October 2005    --    9,563  
    Reclamation and mine closure    23,670    20,934  
    Other long-term liabilities    6,503    9,032  


     210,173    39,529  

COMMITMENTS AND CONTINGENCIES
  
    (See Notes H, I, J, L, M, N, O and Q)  

SHAREHOLDERS' EQUITY
  
    Common Stock, par value $1.00 per share-authorized 500,000,000 shares,  
        issued 241,028,303 and 214,195,186 in 2004 and 2003 (1,059,211  
        shares held in treasury)    241,028    214,195  
    Additional paid-in capital    629,809    542,900  
    Accumulated deficit    (561,908 )  (545,050 )
    Shares held in treasury    (13,190 )  (13,190 )
    Accumulated other comprehensive loss    (2,285 )  (1,377 )


     293,454    197,478  


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 525,777   $ 259,467  


The accompanying notes are an integral part of these consolidated financial statements.





F-6


CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
COEUR D’ALENE MINES CORPORATION AND SUBSIDIARIES

Years Ended December 31,
2004
2003
2002
(In Thousands, except per share data)

REVENUES
               
Sales of metal   $ 130,245   $ 108,522   $ 86,333  
Interest and other    3,205    2,019    8,544  



         Total revenues    133,450    110,541    94,877  

COSTS AND EXPENSES
  
Production    79,790    77,861    82,855  
Depreciation and depletion    18,800    16,627    13,511  
Administrative and general    14,497    12,264    8,806  
Exploration    11,068    4,947    3,849  
Pre-development    11,449    1,967    2,606  
Interest    2,831    12,851    21,948  
Write-down of mining properties and other holding costs    1,983    6,393    23,060  
Merger expenses    15,675    --    --  
Loss on exchange and early retirement of debt    --    41,564    19,061  



         Total cost and expenses    156,093    174,474    175,696  




LOSS FROM CONTINUING OPERATIONS
    (22,643 )  (63,933 )  (80,819 )
Income tax benefit    5,785    7    --  




Loss before cumulative effect of change in accounting principle
    (16,858 )  (63,926 )  (80,819 )
Cumulative effect of change in accounting principle    --    (2,306 )  --  




NET LOSS
    (16,858 )  (66,232 )  (80,819 )
Other comprehensive loss    (908 )  (556 )  (1,470 )




COMPREHENSIVE LOSS
   $ (17,766 ) $ (66,788 ) $ (82,289 )




BASIC AND DILUTED LOSS PER SHARE:
  
Weighted average number of shares of common stock    215,969    168,186    78,193  




Net loss before cumulative effect of change in accounting principle
   $ (0.08 ) $ (0.38 ) $ (1.03 )
Cumulative effect of change in accounting principle    --    (0.01 )  --  



Net loss   $ (0.08 ) $ (0.39 ) $ (1.03 )



The accompanying notes are an integral part of these consolidated financial statements.





F-7


CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
COEUR D’ALENE MINES CORPORATION AND SUBSIDIARIES

For Years Ended December 31, 2004, 2003 and 2002
(In Thousands)
Common
Stock
Shares

Common
Stock
$1 Par

Additional
Paid In
Capital

Accumulated
Deficit

Shares
Held in
Treasury

Accumulated
Other
Comprehensive
Income (Loss)

Total
Balances at January 1, 2002      49,278   $ 49,278   $ 388,050   $ (397,999 ) $ (13,190 ) $ 649   $ 26,788  
Net Loss (Restated)    --    --    --    (80,819 )  --    --    (80,819 )
Unrealized loss on short-term  
investments and marketable securities    --    --    --    --    --    (297 )  (297 )
Change in fair value of derivative  
hedging, net of settlement    --    --    --    --    --    (10 )  (10 )
Excess additional pension liability over    --    --    --    --    --    (1,163 )  (1,163 )
  unrecognized prior service cost  
Conversions of convertible senior  
  subordinated notes to Common stock    37,143    37,143    5,665    --    --    --    42,808  
Exchanges of convertible subordinated  
  debentures to common stock    24,382    24,382    22,413    --    --    --    46,795  
Interest on convertible senior  
 subordinated notes paid in  
 Common stock    8,850    8,850    4,735    --    --    --    13,585  
Other    --    --    --    --    --    --    --  







Balances at December 31, 2002    119,653   $ 119,653   $ 420,863   $ (478,818 ) $ (13,190 ) $ (821 ) $ 47,687  
Net Loss (Restated)    --    --    --    (66,232 )  --    --    (66,232 )
Unrealized loss on short-term  
  investments and marketable securities    --    --    --    --    --    (306 )  (306 )
Change in fair value of derivative  
  hedging, net of settlement    --    --    --    --    --    140    140  
Excess additional pension liability over  
  unrecognized prior service cost    --    --    --    --    --    (390 )  (390 )
Conversions and exchanges of convertible  
  senior subordinated notes to    50,317    50,317    54,158    --    --    --    104,475  
  Common stock  
Interest on convertible senior  
 subordinated notes paid in  
 Common stock    5,878    5,878    3,169    --    --    --    9,047  
Issuance of common stock    36,230    36,230    64,580    --    --    --    100,810  
Long-term incentive stock payout    1,240    1,240    (358 )  --    --    --    882  
Other    877    877    488    --    --    --    1,365  







Balances at December 31, 2003    214,195   $ 214,195   $ 542,900   $ (545,050 ) $ (13,190 ) $ (1,377 ) $ 197,478  
Net Loss    --    --    --    (16,858 )  --    --    (16,858 )
Unrealized loss on short-term  
  investments and marketable securities    --    --    --    --    --    (347 )  (347 )
Change in fair value of derivative hedging,  
  net of settlements    --    --    --    --    --    (130 )  (130 )
Excess additional pension liability  
  over unrecognized prior service cost    --    --    --    --    --    (431 )  (431 )
Issuance of common stock    26,795    26,795    86,601    --    --    --    113,396  
Long-term incentive stock payout    38    38    469    --    --    --    507  
Other    --    --    (161 )  --    --    --    (161 )







Balances at December 31, 2004    241,028   $ 241,028   $ 629,809   $ (561,908 ) $ (13,190 ) $ (2,285 ) $ 293,454  







The accompanying notes are an integral part of these consolidated financial statements.



F-8


CONSOLIDATED STATEMENTS OF CASH FLOWS
COEUR D’ALENE MINES CORPORATION AND SUBSIDIARIES

Years Ended December 31,
2004
2003
2002
(In Thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:
               
Net loss   $ (16,858 ) $ (66,232 ) $ (80,819 )
Add (deduct) noncash items:  
    Depreciation and depletion    18,800    16,627    13,511  
    Deferred taxes    (4,403 )  --    --  
    Loss on early retirement of convertible  
       subordinated debentures    --    41,564    19,061  
    Cumulative effect of change in accounting principle    --    2,306    --  
    Interest expense on convertible senior  
       subordinated notes paid in common stock    --    8,191    13,585  
   Unrealized (gain) loss on embedded derivative    881    (411 )  (539 )
   Amortization of restricted stock compensation    1,137    911    --  
   Amortization of debt issuance costs    408    697    1,530  
   Amortization of premium and/or discount    1,527    760    1,176  
    Other charges    (7 )  (19 )  1,882  
    Loss on sale of assets    (11 )  --    (4,564 )
    Write-down of mining properties    --    --    19,047  
    Realized loss on written call options    --    --    62  
    Gain on sale of short-term investment    --    (40 )  (916 )
Changes in operating assets and liabilities:  
    Receivables    (2,532 )  (2,738 )  (1,126 )
    Prepaid expenses and other    (486 )  (3,844 )  (519 )
    Inventories    (16,798 )  (3,226 )  7,311  
    Accounts payable and accrued liabilities    (239 )  328    2,834  



    CASH USED IN OPERATING ACTIVITIES    (18,581 )  (5,126 )  (8,484 )




CASH FLOWS FROM INVESTING ACTIVITIES:
  
    Purchases of short-term investments    (63,619 )  (99,782 )  (40,131 )
    Proceeds from sales of short-term investments    29,864    86,168    40,870  
    Proceeds from sale of property, plant and equipment    329    370    4,117  
    Capital expenditures    (10,514 )  (19,914 )  (10,316 )
    Other    153    (196 )  (515 )



    CASH USED IN INVESTING ACTIVITIES    (43,787 )  (33,354 )  (5,975 )




CASH FLOWS FROM FINANCING ACTIVITIES:
  
    Retirement of long-term debt    (9,561 )  (39,717 )  (9,427 )
    Proceeds from issuance of common stock, net of  
      issuance costs    112,604    100,810    --  
    Proceeds from issuance of notes    180,000    33,280    13,532  
    Payments of debt issuance costs    (6,089 )  --    --  
    Bank borrowings on working capital facility    6,056    30,785    15,403  
    Payments to bank on working capital facility    (8,422 )  (33,226 )  (10,485 )
    Other    (1,558 )  (128 )  (185 )



    CASH PROVIDED BY FINANCING ACTIVITIES:    273,030    91,804    8,838  




INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    210,662    53,324    (5,621 )

    Cash and cash equivalents at beginning of period
    62,417    9,093    14,714  



    Cash and cash equivalents at end of period   $ 273,079   $ 62,417   $ 9,093  




SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  
Cash paid for:  
    Interest   $ 1,572   $ 3,927   $ 6,767  

The accompanying notes are an integral part of these consolidated financial statements.

F-9


COEUR D’ALENE MINES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A — BUSINESS OF COEUR D’ALENE MINES CORPORATION

        Coeur d’Alene Mines Corporation and its subsidiaries (collectively, “Coeur” or the “Company”) is principally engaged in silver and gold mining and related activities including exploration, development, and mining at its properties located in the United States (Nevada, Idaho and Alaska) and South America (Chile, Argentina and Bolivia).

NOTE B — Summary of Significant Accounting Policies

        Principles of Consolidation: The consolidated financial statements include the wholly-owned subsidiaries of the Company, the most significant of which are Coeur Rochester, Inc., Coeur Silver Valley, Inc., Coeur Alaska, Inc., CDE Cerro Bayo Ltd., Compania Minera Polimet S.A., and Empressa Minera Manquiri S.A. The consolidated financial statements also include all entities in which voting control of more than 50% is held by the Company. The Company has no investments in entities in which it has greater than 50% ownership interest accounted for using the equity method. Intercompany balances and transactions have been eliminated in consolidation. Investments in corporate joint ventures where the Company has ownership of 50% or less and funds its proportionate share of expenses are accounted for under the equity method. The Company has no investments in entities in which it has greater than 20% ownership interest accounted for using the cost method.

        Revenue Recognition: Pursuant to guidance in Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition for Financial Statements”, revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, no obligations remain and collectibility is probable. The passing of title to the customer is based on the terms of the sales contract. Product pricing is determined at the point revenue is recognized by reference to active and freely traded commodity markets for example, the London Bullion Market for both gold and silver, in an identical form to the product sold.

        Under our concentrate sales contracts with third-party smelters, final gold and silver prices are set on a specified future quotational period, typically one to three months, after the shipment date based on market metal prices. Revenues are recorded under these contracts at the time title passes to the buyer based on the forward price for the expected settlement period. The contracts, in general, provide for a provisional payment based upon provisional assays and quoted metal prices. Final settlement is based on the average applicable price for a specified future period, and generally occurs from three to six month