UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the SecuritiesExchange Act of 1934
For the quarterly period ended June 30, 2005.

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 Identification No.)
incorporation or organization)


PO Box I,
505 Front Ave.
Coeur d’Alene, Idaho 83816
(Address of principal executive offices) (Zip Code)

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

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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 under the Exchange Act). YES   X   NO       

Applicable only to corporate issuers: Indicate the number of shares outstanding of each of Issuer’s classes of common stock, as of the latest practicable date: Common stock, par value $1.00, of which 239,941,426 shares were issued and outstanding as of August 1, 2005.


COEUR D’ALENE MINES CORPORATION

INDEX

Page No.

PART I.
Financial Information  

Item 1.
Financial Statements

Consolidated Balance Sheets -- Unaudited   3
June 30, 2005 and December 31, 2004

 
Consolidated Statements of Operations and
Comprehensive Loss -- Unaudited   5
Three and Six Months Ended June 30, 2005
and 2004

 
Consolidated Statements of Cash Flows -- Unaudited   6
Three and Six Months Ended June 30, 2005
and 2004

 
Notes to Consolidated Financial Statements -- Unaudited   7

Item 2.
Management's Discussion and Analysis of 22
Financial Condition and Results of Operations

Item 3.
Quantitative and Qualitative Disclosures about
Market Risk 47

Item 4.
Controls and Procedures 48

PART II.
Other Information

Item 4.
Submission of Matters to a Vote of Security Holders 49

Item 6.
Exhibits 49

Signatures

Certifications of CEO and CFO

2


COEUR D’ALENE MINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)

June 30,
2005

December 31,
2004

ASSETS (In Thousands)

CURRENT ASSETS
           
    Cash and cash equivalents   $ 233,280   $ 273,079  
    Short-term investments    46,977    48,993  
    Receivables    22,768    10,634  
    Ore on leach pad    15,493    15,046  
    Metal and other inventory    16,496    17,639  
    Deferred tax assets    1,378    2,592  
    Prepaid expenses and other    3,669    3,727  


     340,061    371,710  

PROPERTY, PLANT AND EQUIPMENT
  
    Property, plant and equipment    88,842    85,070  
    Less accumulated depreciation    (57,442 )  (54,154 )


     31,400    30,916  

MINING PROPERTIES
  
    Operational mining properties    124,055    121,344  
    Less accumulated depletion    (104,913 )  (100,079 )


     19,142    21,265  

    Mineral interests
    35,152    20,125  
    Non-producing and development properties    30,618    26,071  


     84,912    67,461  

OTHER ASSETS
  
    Non-current ore on leach pad    38,401    28,740  
    Restricted cash and cash equivalents    13,119    10,847  
    Debt issuance costs, net    5,606    5,757  
    Deferred tax assets    2,906    1,811  
    Other    9,205    8,535  


     69,237    55,610  


         TOTAL ASSETS   $ 525,610   $ 525,777  


See notes to consolidated financial statements.

3


COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)

June 30,
2005

December 31,
2004

LIABILITIES AND SHAREHOLDERS' EQUITY (In Thousands)

CURRENT LIABILITIES
           
    Accounts payable   $ 11,891   $ 8,389  
    Accrued liabilities and other    5,169    5,306  
    Accrued interest payable    1,031    1,035  
    Accrued salaries and wages    5,209    6,379  
    Current portion of remediation costs    484    1,041  


     23,784    22,150  

LONG-TERM LIABILITIES
  
    1 1/4% Convertible Senior Notes due January 2024    180,000    180,000  
    Reclamation and mine closure    24,879    23,670  
    Other long-term liabilities    6,409    6,503  


     211,288    210,173  

COMMITMENTS AND CONTINGENCIES
  

SHAREHOLDERS' EQUITY
  
    Common Stock, par value $1.00 per share-authorized 500,000,000  
        shares, issued 241,120,982 and 241,028,303 shares in 2005 and  
        2004 (1,059,211 shares held in treasury)    241,121    241,028  
    Additional paid-in capital    630,151    629,809  
    Accumulated deficit    (565,379 )  (561,908 )
    Shares held in treasury    (13,190 )  (13,190 )
    Accumulated other comprehensive loss    (2,165 )  (2,285 )


     290,538    293,454  


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 525,610   $ 525,777  


See notes to consolidated financial statements.

4


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

Three Months ended June 30,
Six Months ended June 30,
2005
2004
2005
2004
(In Thousands, except per share data)
REVENUES                    
Sales of metal   $ 37,200   $ 26,381   $ 73,407   $ 56,031  
Interest and other    1,357    733    3,298    86  




         Total revenues    38,557    27,114    76,705    56,117  

COSTS AND EXPENSES
  
Production    22,719    16,366    43,978    33,316  
Depreciation and depletion    4,873    4,773    9,534    9,619  
Administrative and general    4,852    3,066    10,378    6,674  
Exploration    3,346    3,041    6,464    4,985  
Pre-development    3,717    4,037    6,086    5,651  
Interest    562    657    1,132    1,595  
Litigation settlement    --    --    1,600    --  
Other holding costs    336    588    472    1,344  




         Total cost and expenses    40,405    32,528    79,644    63,184  





LOSS FROM CONTINUING OPERATIONS BEFORE TAXES
    (1,848 )  (5,414 )  (2,939 )  (7,067 )
Income tax (provision) benefit    147    --    (532 )  --  




NET LOSS    (1,701 )  (5,414 )  (3,471 )  (7,067 )
Other comprehensive loss    121    (652 )  120    (860 )




COMPREHENSIVE LOSS   $ (1,580 ) $ (6,066 ) $ (3,351 ) $ (7,927 )





BASIC AND DILUTED LOSS PER SHARE:
  
Net loss   $ (0.01 ) $ (0.03 ) $ (0.01 ) $ (0.03 )




Weighted average number of shares of common stock outstanding    240,028    213,249    240,007    213,195  




See notes to consolidated financial statements.

5


COEUR D’ALENE MINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended June 30, 2005 and 2004
(Unaudited)

Three Months Ended June 30,
Six Months Ended June 30,
2005
2004
2005
2004
(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:                    
Net loss   $ (1,701 ) $ (5,414 ) $ (3,471 ) $ (7,067 )
Add (deduct) non-cash items:  
    Depreciation and depletion    4,873    4,773    9,534    9,619  
    Deferred taxes    (559 )    119
    Unrealized (gain) loss on embedded derivative    546    2,884    (79 )  1,756  
    Amortization of premium/discount    273    442    586    827  
    Amortization of restricted stock compensation    174    106    574    673  
    Amortization of debt issuance costs    76    76    152    256  
    Other charges    247    (117 )  268    113  
Changes in Operating Assets and Liabilities:  
    Receivables    (10,569 )  1,369    (12,134 )  (2,065 )
    Prepaid expenses and other    (1,603 )  383    (722 )  819  
    Inventories    (5,612 )  (4,898 )  (8,965 )  (9,548 )
    Accounts payable and accrued liabilities    4,676    1,359    2,494    (2,495 )




    CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES    (9,179 )  963    (11,642 )  (7,112 )

CASH FLOWS FROM INVESTING ACTIVITIES:
  
    Purchases of short-term investments    (12,294 )  (6,735 )  (22,840 )  (58,842 )
    Proceeds from sales of short-term investments    16,097    3,120    22,112    12,710  
    Capital expenditures    (22,657 )  (1,646 )  (26,834 )  (3,126 )
    Other    96    22    113    237  




    CASH USED IN INVESTING ACTIVITIES    (18,758 )  (5,239 )  (27,449 )  (49,021 )

CASH FLOWS FROM FINANCING ACTIVITIES:
  
    Retirement of long-term debt    (76 )  --    (156 )  (9,561 )
    Retirement of building loan    --    --    --    (1,200 )
    Proceeds from issuance of subordinated notes    --    --    --    180,000  
    Debt issuance costs    --    --    --    (6,097 )
    Proceeds from issuance of common stock    17    --    (552 )  --  
    Bank Borrowings on working capital facility    --    --    --    6,056  
    Payments to Bank on working capital facility    --    (2,727 )  --    (8,423 )
    Common stock repurchase    --    --    --    (793 )
    Other    --    (1,452 )  --    (1,407 )




    CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES:    (59 )  (4,179 )  (708 )  158,575  





INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    (27,996 )  (8,455 )  (39,799 )  102,442  

    Cash and cash equivalents at beginning of period
    261,276    173,314    273,079    62,417  




    Cash and cash equivalents at end of period   $ 233,280   $ 164,859   $ 233,280   $ 164,859  




6


Coeur d’Alene Mines Corporation
and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

NOTE A — BASIS OF PRESENTATION

        The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three-and six-month periods ended June 30, 2005 are not necessarily indicative of the results that may be expected for the year ended December 31, 2005.

        The balance sheet at December 31, 2004 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Coeur d’Alene Mines Corporation (“Coeur” or the “Company”) Annual Report on Form 10-K for the year ended December 31, 2004.

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., Coeur Argentina, 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 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 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. 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.

7


        The effects of forward sales contracts are reflected in revenue at the date the related precious metals are delivered or the contracts expire. For the second quarter of 2005 and 2004, third party smelting and refining costs amounted to $3.4 million and $3.1 million, respectively. For the six months ended June 30, 2005 and 2004, third party smelting and refining costs amounted to $6.3 million and $6.3 million, respectively, and are recorded as a reduction of revenue.

        At June 30, 2005, the Company had outstanding provisionally priced sales of $46.1 million, consisting of 3.9 million ounces of silver, 42,095 ounces of gold and 656,617 pounds of copper. For each one cent per ounce change in realized silver price, revenue would vary (plus or minus) approximately $39,000; for each one dollar per ounce change in realized gold price, revenue would vary (plus or minus) approximately $42,000; and for each one cent per pound change in realized copper price, revenue would vary (plus or minus) approximately $6,600. At June 30, 2004, the Company had outstanding provisionally priced sales of $30.5 million consisting of 3.3 million ounces of silver, 20,320 ounces of gold and 994,285 pounds of copper. For each one cent per ounce change in realized silver price, revenue would vary (plus or minus) approximately $33,000; for each one dollar per ounce change in realized gold price, revenue would vary (plus or minus) approximately $20,000; and for each one cent per pound change in realized copper price, revenue would vary (plus or minus) approximately $10,000.

        Cash and Cash Equivalents: Cash and cash equivalents include all highly-liquid investments with a maturity of three months or less at the date of purchase. The Company minimizes its credit risk by investing its cash and cash equivalents with major international banks and financial institutions located principally in the United States and Chile with a minimum credit rating of A1 as defined by Standard & Poor’s. The Company’s management believes that no concentration of credit risk exists with respect to investment of its cash and cash equivalents.

        Short-term Investments: Short-term investments principally consist of highly-liquid United States, foreign government and corporate securities with original maturities in excess of three months and less than one year. The Company classifies all short-term investments as available-for-sale securities. Unrealized gains and losses on these investments are recorded in accumulated other comprehensive loss as a separate component of shareholders’ equity. Any decline in market value considered to be other than temporary is recognized in determining net income/loss. Realized gains and losses from the sale of these investments are included in determining net income/loss.

        Ore on Leach Pad: 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 Company uses several integrated steps to scientifically measure the metal content of ore placed on the leach pads. As the ore body is drilled in preparation for the blasting process, samples are taken of the drill residue which is assayed to determine estimated quantities of contained metal. The Company estimates the quantity of ore by utilizing global positioning satellite survey techniques. The Company then processes 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. The crushed ore is then transported to the leach pad for application of the leaching solution. As the leach solution is collected from the leach pads, it is continuously sampled for assaying. The quantity of leach solution is measured 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. The inventory is stated at lower of cost or market, with cost being determined using a weighted average cost method.

8


        The Company reported ore on the leach pads of $53.9 million as of June 30, 2005. Of this amount, $15.5 million is reported as a current asset and $38.4 million is reported as a non-current asset. The distinction between current and non-current 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 non-current.

        The estimate of both the ultimate recovery expected over time and the quantity of metal that may be extracted relative to the time the leach process occurs requires the use of estimates which are inherently inaccurate since they rely upon recovery curves based on laboratory testwork. Testwork consists of 60 day leach columns from which the Company projects metal recoveries up to five years in 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 fifteen years of leach pad operations at the Rochester Mine. The assumptions used by the Company to measure metal content during each stage of the inventory conversion process includes estimated recovery rates based on laboratory testing and assaying. The Company periodically reviews its estimates compared to actual experience and revises its estimates when appropriate. The length of time necessary to achieve ultimate recoveries for silver and gold is currently estimated between 5 and 10 years. In 2003, the estimated recoveries for silver and gold were revised to 61.5% and 93%, respectively, from the 59% and 89% used in the prior three years. The impact of this change in recovery increased the estimated recoverable ounces of silver and gold contained in the heap by 1.8 million ounces and 41,000 ounces, respectively. However, the ultimate recovery will not be known until leaching operations cease which is currently estimated for 2011.

        Metal and Other Inventory: Inventories include concentrate ore, dorè, ore in stockpiles and operating materials and supplies. The classification of inventory is determined by the stage at which the ore is in the production process. Inventories of ore in stock piles are sampled for gold and silver content and are valued based on the lower of actual costs incurred or estimated net realizable value based upon the period ending prices of gold and silver. Material that does not contain a minimum quantity of gold and silver to cover estimated processing expense to recover the contained gold and silver is not classified as inventory and is assigned no value. All inventories are stated at the lower of cost or market, with cost being determined using a weighted average cost method. Concentrate and dorè inventory includes product at the mine site and product held by refineries and are also valued at lower of cost or market value. Metal inventory costs include direct labor, materials, depreciation, depletion and amortization as well as administrative overhead costs relating to mining activities.

        Property, Plant, and Equipment: Expenditures for new facilities, new assets or expenditures that extend the useful lives of existing facilities are capitalized and depreciated using the straight-line method at rates sufficient to depreciate such costs over the shorter of estimated productive lives of such facilities or the useful life of the individual assets. Productive lives range from 7 to 31 years for buildings and improvements, 3 to 13 years for machinery and equipment and 3 to 7 years for furniture and fixtures. Certain mining equipment is depreciated using the units-of-production method based upon estimated total proven and probable reserves. Maintenance and repairs are expensed as incurred.

        Operational Mining Properties and Mine Development: Mineral exploration costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property including costs to further delineate the ore body and remove over burden to initially expose the ore body, are capitalized. Such costs are amortized using the units-of-production method over the estimated life of the ore body based on proven and probable reserves. Significant payments related to the acquisition of the land and mineral rights are capitalized as incurred. Prior to acquiring such land or mineral rights the Company generally makes a preliminary evaluation to determine that the property has significant potential to develop an economic ore body. The time between initial acquisition and full evaluation of a property’s potential is variable and is determined by many factors including: location relative to existing infrastructure, the property’s stage of development, geological controls and metal prices. If a mineable ore body is discovered, such costs are amortized when production begins using the units-of-production method based on proven and probable reserves. If no mineable ore body is discovered, such costs are expensed in the period in which it is determined the property has no future economic value. Interest expense allocable to the cost of developing mining properties and to construct new facilities is capitalized until assets are ready for their intended use. Gains or losses from sales or retirements of assets are included in other income or expense. Costs incurred during the start-up phase of a mine are expensed as incurred. Ongoing mining expenditures on producing properties are charged against earnings as incurred. Major development expenditures incurred to increase production or extend the life of the mine are capitalized.

9


        Asset Impairment: Management reviews and evaluates its long-lived assets for impairment when events and changes in circumstances indicate that the related carrying amounts of its assets may not be recoverable. The Company follows Statement of Financial Accounting Standard (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” to evaluate the recoverability of its assets. An impairment is considered to exist if total estimated future cash flows or probability-weighted cash flows on an undiscounted basis, are 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. An impairment loss is measured and recorded based on discounted estimated future cash flows or the application of an expected present value technique to estimate fair value in the absence of a market price. Future cash flows include estimates of proven and probable recoverable ounces, gold and silver prices (considering current and historical prices, price trends and related factors), production levels, capital and reclamation costs, all based on life-of-mine plans and projections. Assumptions underlying future cash flow estimates are subject to risks and uncertainties. Any differences between significant assumptions and market conditions and/or the Company’s operating performance could have a material effect on the Company’s determination of reserves, or its ability to recover the carrying amounts of its long-lived assets resulting in impairment charges. In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of cash flows from other asset groups. Generally, in estimating future cash flows, all assets are grouped at a particular mine for which there is identifiable cash flow.

        Restricted Cash and Cash Equivalents: The Company, under the terms of its lease, self insurance, and bonding agreements with certain banks, lending institutions and regulatory agencies, is required to collateralize certain portions of the Company’s obligations. The Company has collateralized these obligations by assigning certificates of deposit that have maturity dates ranging from three months to a year, to the respective institutions or agency. At June 30, 2005 and June 30, 2004, the Company held certificates of deposit and cash restricted under these agreements of $13.1 million and $10.8 million, respectively, restricted for this purpose. The ultimate timing for the release of the collateralized amounts is dependent on the timing and closure of each mine. In order to release the collateral, the Company must seek approval from certain government agencies responsible for monitoring the mine closure status. Collateral could also be released to the extent the Company was able to secure alternative financial assurance satisfactory to the regulatory agencies. The Company believes there is a reasonable probability that the collateral will remain in place beyond a twelve-month period and has therefore classified these investments as long-term.

        Deferred Stripping Costs: The Rochester mine is the only mine that has previously capitalized deferred stripping costs. Deferred stripping costs are unique to the mining industry and are determined based on the Company’s estimates for the life of mine waste-to-ore ratio for each mine, calculated as the ratio of total waste tons to be moved to total proven and probable reserve tons to be moved, which results in the deferral and recognition of the costs of waste removal activities over the life of the mine as silver is produced. These costs are capitalized in periods when the life of mine ratio is below the current mining waste-to-ore ratio, and amortized during periods where the life of mine waste-to-ore ratio is above the current waste-to-ore ratio. The life of mine waste-to-ore ratio that was used to accumulate the deferred stripping amounts was 1.8 to 1 and was based on the estimated average waste-to-ore ratio for the life of the mine, compared to the then current ratio of 2.2 to 1. At present the remaining life of mine plan estimates the future waste-to-ore ratio as .0.65 to 1, and the remaining costs will be amortized over the remaining life of the mine. At June 30, 2005 and June 30, 2004 the carrying amount of the deferred stripping costs were $0.6 million and $1.0 million, respectively, and are included in other assets in the accompanying balance sheet and amortized amounts are reported in the statement of operations as depletion and depreciation. Deferred stripping costs are evaluated for loss in value under the Company’s asset impairment review as facts and circumstances warrant. No additional deferred stripping costs were capitalized during the periods presented. Based on current reserves and current production levels complete amortization should occur in less than three years commensurate with the Company’s remaining mine life at the Rochester mine to end mid-2007. Amounts that were amortized and therefore increased the Company’s reported production costs as compared to actual production costs for the three and six months ended June 30, 2005 were $0.1 million and $0.2 million, respectively, and the amounts that were amortized for the three and six months ended June 30, 2004 were $0.1 million and $0.2 million, respectively.

10


        Reclamation and Remediation Costs: Effective January 1, 2003, the Company adopted SFAS No. 143, “Accounting for Asset Retirement Obligations”, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and normal use of the asset. Prior to the adoption of SFAS No. 143, reclamation costs were accrued on an undiscounted, units-of-production basis. SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. An accretion cost, representing the increase over time in the present value of the liability, is recorded each period. As reclamation work is performed or liabilities are otherwise settled, the recorded amount of the liability is reduced.

        Future remediation costs for inactive mines are accrued based on management’s best estimate at the end of each period of the undiscounted costs expected to be incurred at the site. Such cost estimates include, where applicable, ongoing care and maintenance and monitoring costs. Changes in estimates are reflected in earnings in the period an estimate is revised. Refer to Note G for additional disclosure.

        Foreign Currency: Substantially all assets and liabilities of foreign subsidiaries are translated at exchange rates in effect at the end of each period. Revenues and expenses are translated at the average exchange rate for the period. Foreign currency transaction gains and losses are included in the determination of net income.

        Derivative Financial Instruments: The Company accounts for its derivatives in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” (as amended by SFAS No. 137) and SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities.” These Statements require recognition of all derivatives as either assets or liabilities on the balance sheet and measurement of those instruments at fair value. Appropriate accounting for changes in the fair value of derivatives held is dependent on whether the derivative transaction qualifies as an accounting hedge and on the classification of the hedge transaction.

        For derivative instruments that are designated and qualify as cash flow hedges, the effective portions of changes in fair value of the derivative are recorded in other comprehensive income (loss), and are recognized in the Statement of Consolidated Operations when the hedged item affects net income (loss) for the period. Ineffective portions of changes in the fair value of cash flow hedges are recognized currently in earnings. Refer to Note H – Derivative Financial Instruments and Fair Value of Financial Instruments.

         Stock-based Compensation Plans: The Company applies the intrinsic-value method of accounting prescribed by Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations, to account for its stock-based compensation plans. Under this method, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price. SFAS No. 123, “Accounting for Stock-Based Compensation” established accounting and disclosure requirements using a fair-value-based method of accounting for stock-based employee compensation plans. As allowed under SFAS No. 123, the Company has elected to continue to apply the intrinsic-value-based method of accounting described above, and has adopted only the disclosure requirements of SFAS No. 123.

11


        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. On April 14, 2005, the SEC amended the compliance dates for adoption. This means that financial statements for calendar year-end companies that do not file as small business issuers do not need to comply with Statement No. 123R until the interim financial statements for the first quarter of 2006. The Company has performed a review of the provisions of the Statement and has determined that it will defer adoption until the first quarter of 2006, 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 believed that adoption will not have a material impact on our financial reporting and disclosure. Had compensation costs for the Company’s options been determined based on the fair value at the grant dates consistent with SFAS No. 123, the Company would have recorded the pro forma amounts presented below:

Three Months Ended June 30, Six Months Ended June 30,
2005
2004
2005
2004
Net loss attributable to common shareholders                    
     as reported   $ (1,701 ) $ (5,414 ) $ (3,471 ) $ (7,067 )
Add stock-based employee compensation expense  
   included in reported net loss   $ 174   $ (1 ) $ 574   $ 674  
Deduct total stock based employee compensation  
   expense determined under fair value method for  
   all awards   $ (379 ) $ (400 ) $ (982 ) $ (1,058 )




Pro forma net loss   $ (1,906 ) $ (5,815 ) $ (3,879 ) $ (7,451 )




Basic and diluted net loss per share as reported   $ (0.01 ) $ (0.03 ) $ (0.01 ) $ (0.03 )
Basic and diluted pro forma net loss per share   $ (0.01 ) $ (0.03 ) $ (0.02 ) $ (0.03 )

        The fair value of each option grant was estimated using the Black-Scholes option pricing model with the following weighted average assumptions: risk free interest rate of 4.23% and 4.15% for the quarters ended June 30, 2005 and 2004, respectively; expected option life of 2-10 years for officers and directors; expected volatility of 73.16% and 94.05% for the quarters ended June 30, 2005 and 2004, respectively, and no expected dividends.

        Income Taxes: The Company computes income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes.” SFAS No. 109 requires an asset and liability approach which results in the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the financial reporting basis and the tax basis of assets and liabilities, as well as operating loss and tax credit carryforwards, using enacted tax rates in effect in the years in which the differences are expected to reverse.

        In assessing the realizability of deferred tax assets, management considers whether it is more likely than 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.

12


Comprehensive Loss: Comprehensive loss includes net loss as well as changes in stockholders’ equity that results from transactions and events other than those with stockholders. Items of comprehensive loss include the following:

Three Months Ended June 30, Six Months Ended June 30,
2005
2004
2005
2004
Unrealized gain (loss) on marketable                    
    securities   $ 109   $ (489 )  157   $ (415 )
Change in fair value of derivative hedging,  
    net of settlement    12    (163 )  (37 )  (445 )




Other comprehensive gain (loss)   $ 121   $ (652 ) $ 120   $ (860 )




        Net Income/(Loss) Per Share: Net loss per share is computed by dividing the net income/(loss) attributable to common stock by the weighted average number of common shares outstanding during each period. All stock options outstanding at each period end have been excluded from the weighted average share calculation. The effect of potentially dilutive stock options outstanding was antidilutive in the three months ended June 30, 2005 and 2004.

        Detail of potentially dilutive shares excluded from earnings per share calculation due to antidilution:

Six Months Ended June 30,
2005
2004
Options      2,334,588    1,801,953  
1.25% Debentures Convertible at $7.60    23,684,211    23,684,211  


Total potentially dilutive shares    26,018,799    25,486,164  


        Debt Issuance Costs: Costs associates with the issuance of debt are included in other noncurrent assets and are amortized over the term of the related debt using the straight-line method.

        Use of Estimates: The preparation of the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in their consolidated financial statements and accompanying notes. The more significant areas requiring the use of management estimates relate to mineral reserves, reclamation and remediation costs, valuation allowance for deferred tax assets, useful lives utilized for depreciation, depletion, amortization and accretion calculations of future cash flows from long-lived assets. Actual results could differ from those estimates.

        Reclassifications: Certain reclassifications of prior year balances have been made to conform to current year presentation.

        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 current-period expenses 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.

        During 2004, a committee of the Emerging Issues Task Force (“EITF”) began discussing the accounting treatment for stripping costs incurred during the production phase of a mine. During March 2005, the EITF reached a consensus that stripping costs incurred during the production phase of a mine are variable production costs that should be included in the costs of inventory produced during the period that the stripping costs are incurred. The Financial Accounting Standards Board ratified the EITF consensus. The EITF consensus is effective for the first reporting period in fiscal years beginning after December 15, 2005, with early adoption permitted. The Company is currently evaluating the impact on the Company’s financial position and results of operations.

13


NOTE C- METAL AND OTHER INVENTORIES

        Inventories consist of the following:

June 30,
2005

December 31,
2004


Concentrate and dore inventory
    $ 9,843   $ 11,876  
Supplies    6,653    5,763  


         Metal and other inventory   $ 16,496   $ 17,639  


NOTE D- INCOME TAXES

        The Company computes income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes.” SFAS No. 109 requires an asset and liability approach which results in the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of those assets and liabilities, as well as net operating loss and tax credit carryforwards, using enacted tax rates in effect in the years in which the differences are expected to reverse. The Company has U.S. net operating loss carryforwards which expire in 2008 through 2024 while the foreign country net operating losses have an indefinite carryforward period.

        For the three months ended June 30, 2005, the Company reported an income tax benefit of approximately $0.2 million. The income tax benefit is comprised of a $1.1 million deferred tax provision, based upon actual earnings for the quarter then ended, reduced by a $1.0 million deferred tax benefit arising from the increased proven and probable reserves and revised projected future taxable income at CDE Cerro Bayo Ltd., a $0.7 million benefit for income taxes associated with the expected utilization of past net operating losses and other deductible timing differences in Argentina and $0.4 million in current taxes payable in Argentina and Australia.

        For the six months ended June 30, 2005, the Company recorded an income tax provision of approximately $0.5 million. The tax provision is comprised of $2.1 million deferred tax provision, based upon actual earnings for the six months ended, reduced by $1.3 million deferred tax benefit arising from increases proven and probable reserves and revised projected future taxable income at the Cerro Bayo mine, and $0.7 million benefit for income taxes associated with the expected utilization of past net operating losses and other deductible timing differences in Argentina and $0.4 million in current taxes payable in Argentina and Australia. This resulted in a net reduction of the net foreign deferred tax asset to approximately $4.3 million ($1.4 million current and $2.9 million long term).

        The Company did not report any domestic tax provision, as management determined that it is more likely than not that the net deferred taxes would not be utilized.

        The income tax provision for the first six months of 2005 and 2004 varies from the statutory rate primarily because of foreign operations and management determination that it is more likely than not that all of the net deferred tax assets would not be utilized.

NOTE E– LONG-TERM DEBT

        On January 13, 2004, the Company completed its offering of $180 million aggregate principal amount of 1.25% Convertible Senior Notes due 2024 (the “1.25% Notes”). The 1.25% 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 is payable in cash at the rate of 1.25% per annum beginning July 15, 2004. The Company intends to continue to use the proceeds of the 1.25% Notes 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. The 1.25% Notes are general unsecured obligations, senior in right of payment to Coeur’s other indebtedness. The offering of the 1.25% Notes was made by means of a prospectus under Coeur’s existing shelf registration statement.

14


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

NOTE F- SEGMENT REPORTING

        Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision making group is comprised of the Chief Executive Officer, the Chief Financial Officer and the Senior Vice President of North America Operations and President of the South America Operations.

        During the second quarter, the Company reassessed its reportable segments and as a result has expanded its segment disclosures to include the Martha and Endeavor mines and the San Bartolome project. The operating segments are managed separately because each segment represents a distinct use of Company resources and contribution to the Company’s cash flows in its respective geographic area. The Company’s reportable operating segments are the Rochester, Coeur Silver Valley (Galena), Cerro Bayo, Martha, San Bartolome and Endeavor mining properties. The Kensington property and the Company’s exploration programs are included as other. All operating segments are engaged in the discovery and/or mining of gold and silver and generate the majority of their revenues from the sale of precious metal concentrates and/or refined precious metals. The Coeur Silver Valley and Cerro Bayo/Martha mines sell precious metal concentrates, typically under long term contracts to smelters located in Canada (Noranda Inc. and Teck Cominco Metals Ltd.) and Japan (Sumitomo Ltd. and DOWA Mining Company). Refined gold and silver produced by the Rochester mine is primarily sold on a spot basis to precious metal trading banks such as Standard Bank and Mitsui. Concentrate produced at the Endeavor mine is sold to Zinifex, an Australian smelter.

        Intersegment revenues consist of precious metal sales to the Company’s metals marketing division and are transferred at the market value of the respective metal on the date of the transfer. The other segment includes earnings from unconsolidated subsidiaries accounted for by the equity method, the corporate headquarters, elimination of intersegment transactions and other items necessary to reconcile to consolidated amounts. Revenues in the other segment are generated principally from interest received from the Company’s cash and investments that are not allocated to the operating segments. The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies in the Company’s Annual Report on Form 10-K. The Company evaluates performance and allocates resources based on each segment’s profit or loss before interest, income taxes, depreciation and amortization, unusual and infrequent items, and extraordinary items.

15


Segment Reporting
(In Thousands)

Rochester
Mine

Galena
Mine

Cerro Bayo
Mine

Martha
Mine

Endeavor
Mine

San
Bartolome

Other
Total
Three Months Ended                                    
June 30, 2005  

Total net sales and revenues
   $ 11,908   $ 4,457   $ 16,456   $ 3,939   $ (329 ) $ (7 ) $ 2,133    38,557  

Depreciation and depletion
    2,940    501    1,051    220    72    --    89    4,873  
Interest income    --    --    25    --    26    --    2,233    2,284  
Interest expense    --    --    --    --    --    --    562    562  
Income tax (credit) expense    --    --    93    (278 )  38    --    --    (147 )
Profit (loss)    5,059    (671 )  6,084    820    (344 )  25    (7,386 )  3,587  

Segment assets (A)
    82,732    11,627    36,224    5,270    16,914    27,630    32,742    213,139  
Capital expenditures  
for property    782    768    845    329    15,100    3,690    1,143    22,657  
 
Rochester
Mine

Galena
Mine

Cerro Bayo
Mine

Martha
Mine

Endeavor
Mine

San
Bartolome

Other
Total

Three Months Ended
  
June 30, 2004  

Total net sales and revenues
   $ 14,692   $ 3,249   $7,057   $1,359    --   $(1 ) $758   $ 27,114  

Depreciation and depletion
    2,498    491    1,330    372    --    1    81    4,773  
Interest income    --    --    --    --    --    --    743    743  
Interest expense    --    --    35    --    --    --    622    657  
Loss on forward sales    --    --    --    --    --    --    --    --  
contracts  
Profit (loss)    6,633    (1,267 )  1,660    (325 )  --    (1,885 )  (4,800 )  16  

Segment assets (A)
    71,695    10,339    28,400    3,080    --    20,253    31,537    165,304  
Capital expenditures for  
property    186    447    544    102    --    --    367    1,646  
 
Rochester
Mine

Galena
Mine

Cerro Bayo
Mine

Martha
Mine

Endeavor
Mine

San
Bartolome

Other
Total

Six Months Ended
  
June 30, 2005  

Total net sales and revenues
   $ 27,216   $ 8,946   $ 31,032   $ 5,717   $ (329 ) $ (6 ) $ 4,131   $ 76,705  

Depreciation and depletion
    5,569    1,013    2,322    390    72    --    168    9,534  
Interest income    --    --    45    --    26    --    4,058    4,129  
Interest expense    --    --    --    --    --    --    1,132    1,132  
Litigation Settlement    --    --    --    --    --    --    (1,600 )  (1,600 )
Income tax (credit) expense    --    --    772    (278 )  38    --    --    532  
Profit (loss)    10,371    (520 )  13,347    353    (344 )  (89 )  (13,791 )  9,327  

Segment assets (A)
    82,732    11,627    36,224    5,270    16,914    27,630    32,742    213,139  
Capital expenditures for  
property    969    1,446    1,432    1,000    15,100    5,569    1,318    26,834  

16


Rochester
Mine

Galena
Mine

Cerro Bayo
Mine

Martha
Mine

Endeavor
Mine

San
Bartolome

Other
Total
Six Months Ended                                    
June 30, 2004  

Total net sales and revenues
   $ 27,226   $ 12,541   $ 13,410   $2,480 $-- $(1 ) $ 461   $ 56,117  

Depreciation and depletion
    4,731    954    2,983    794    --    3    154    9,619  
Interest income    --    --    --    --    --    --    1,382    1,382  
Interest expense    1    --    73    --    --    --    1,521    1,595  
Loss on forward sales    --    --    --    --    --    --    937    937  
contracts  
Profit (loss)    11,389    1,989    4,400    (573 )  --    (2,910 )  (9,211 )  5,084  

Segment assets (A)
    71,695    10,339    28,400    3,080    --    20,253    31,537    165,304  
Capital expenditures for  
property    578    825    914    334    --    --    475    3,126  

Notes:
(A)   Segment assets consist of receivables, prepaids, inventories, property, plant and equipment, and mining properties

  Segment Reporting Cont.
(In Thousands)

Three Months Ended June 30, Six Months Ended June 30,
2005
2004
2005
2004
Income (Loss)                    
Total profit from reportable segments   $ 3,587   $ 16   $ 9,327   $ 5,084  
Depreciation, depletion and amortization expense    (4,873 )  (4,773 )  (9,534 )  (9,619 )
Interest expense    (562 )  (657 )  (1,132 )  (1,595 )
Litigation Settlement & Other    --    --    (1,600 )  (937 )




     Loss before income taxes   $ (1,848 ) $ (5,414 ) $ (2,939 ) $ (2,939 )





June 30,
2005
2004
Assets                    
Total assets for reportable segments   $ 213,139   $ 165,304          
Cash and cash equivalents    233,280    164,859          
Short-term investments    46,977    62,000          
Other assets    32,214    29,945          


      Total consolidated assets   $ 525,610   $ 419,108  



  Geographic Information
(In thousands)

Three Months Ended June 30, Six Months Ended June 30,
Revenues(a)
2005
2004
2005
2004
 United States     $ 18,530   $ 18,680   $ 40,323   $ 40,217  
 Australia    (329 )  --    (329 )  --  
 Chile    16,450    7,075    31,028    13,420  
 Argentina    3,939    1,359    5,715    2,480  
 Bolivia    (7 )  --    (6 )  --  
 Other Foreign Countries    (26 )  --    (26 )  --  




 Consolidated Total   $ 38,557   $ 27,114   $ 76,705   $ 56,705  




17


June 30,
Long-Lived Assets
2005
2004
 United States     $ 58,217   $ 62,069          
 Australia    15,027    --          
 Chile    14,518    13,928          
 Argentina    1,674    1,541          
 Bolivia    26,674    20,155          
 Other Foreign Countries    202    145          


 Consolidated Total   $ 116,312   $ 97,838          



  (a)     Revenues are geographically separated based upon the country in which operations and the underlying assets generating those revenues reside.

NOTE G- RECLAMATION AND REMEDIATION

        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. 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.

        The following is a description of the changes to the Company’s asset retirement obligations from January 1 to June 30, 2005:

(in thousands)
Asset Retirement Obligation - January 1, 2005     $ 23,436  
Accretion    876  
Additions    (69 )
Settlements    --  

Asset Retirement Obligation - June 30, 2005   $ 24,243  

NOTE H — DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

        For the first six months of 2005, the Company recorded a realized loss of approximately $11,400 in connection with its foreign currency hedging program.

        The Company no longer has forward sales in its gold price protection program. In the first quarter of 2004, the Company closed out all of its forward sales positions and recorded a loss of $0.9 million.

        The following table summarizes the information at June 30, 2005 associated with the Company’s financial and derivative financial instruments that are sensitive to changes in interest rates, commodity prices and foreign exchange rates. For long-term debt obligations, the table presents principal cash flows and related average interest rates. For foreign currency exchange contracts, the table presents the notional amount in Chilean Peso’s to be purchased along with the average foreign exchange rate.

18


(dollars in thousands)
2005
2006
2007
2008
2009
Thereafter
Total
Fair Value
6/30/05

 Liabilities                                    
    Long Term Debt (A)  
     Fixed Rate   $ --   $ --   $ --   $ --   $ --   $ 180,000   $ 180,000   $ 130,500  
    Average Interest Rate    1.25 %  1.25 %  1.25 %  1.25 %  1.25 %  1.25 %  1.25 %    

     (A) Debt due 2024
  

Foreign Currency
  
 Contracts  
  Chilean Peso - USD   $ 1,200    --    --    --    --    --   $ 1,200   $ (37 )
  Exchange Rate    574    --    --    --    --    --          
 (CLP to USD)  

        Fair value is determined by trading information on or near the balance sheet date. Long term debt represents the face amount of the outstanding convertible debentures and timing of when these become due. Interest rates presented in the table are calculated using the weighted average of the outstanding face amount of each debenture for the period remaining in each period presented. All long term debt is denominated in US dollars.

NOTE I- DEFINED BENEFIT, POST-RETIREMENT MEDICAL BENEFIT, DEFINED CONTRIBUTION AND 401(k) PLANS

Six Months Ended June 30,
Components of Net Period Benefit Cost:
(In thousands)
Defined Benefit Plan
Post-Retirement Medical Plan
2005
2004
2005
2004
Service cost     $ 172   $ 159   $ 4   $ 8  
Interest cost       222     206     10     58  
Expected return on plan assets       131     107     --     --  
Amortization of prior service cost       30     28     (62 )   --  
Amortization of the net (gain) loss       142     163     (186 )   --  




Net periodic benefit cost     $ 435   $ 449   $ (234 ) $ 66  




Contributions:

The Company previously disclosed in its financial statements for the year ended December 31, 2004, that it expected to contribute $0.7 million to its pension plans in 2005. As of June 30, 2005 and 2004, $0.4 million and $0.4 million, respectively, of contributions have been made.

Defined Contribution Plan

        The Company provides a noncontributory defined contribution retirement plan for all eligible U.S. employees. Total plan expenses charged to net income (loss) in the second quarter of 2005 and 2004 were $0.2 million and $0.2 million, respectively, and plan expenses charged to net income (loss) for the six months ended June 30, 2005 and 2004 were $0.4 million and $0.5 million, respectively, which is based on a percentage of salary of qualified employees.

401(k) Plan

        The Company maintains a savings plan (which qualifies under Section 401(k) of the U.S. Internal Revenue Code) covering all eligible U.S. employees. Under the plan, employees may elect to contribute up to 100% of their cash compensation, subject to ERISA limitations. The Company is required to make matching cash contributions equal to 50% of the employees’ contribution or up to 3% of the employees’ compensation. Employees have the option of investing in thirteen different types of investment funds. Total plan expenses charged to operations in the second quarter of 2005 and 2004 were $0.1 million and $0.1 million, respectively, and total plan expenses charged to operations for the first six months ended June 30, 2005 and 2004 were $0.3 million and $0.3 million, respectively.

19


NOTE J- 2005 NON-EMPLOYEE DIRECTORS’ EQUITY INCENTIVE PLAN

On June 3, 2005, the Company’s shareholders approved the 2005 Non-Employee Directors’ Equity Incentive Plan and authorized 500,000 shares of common stock for issuance. As of June 30, 2005, 35,996 shares were issued in lieu of $0.1 million of foregone Directors’ fees.

NOTE K- COMMITMENTS AND CONTINGENCIES

Significant Customers

        The Company markets its metals products and concentrates primarily to two bullion trading banks and five 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 37.2% and 48.8% of total metals sales in the first half of 2005 and 2004, respectively. Generally, the loss of a single bullion trading bank customer would not adversely affect the Company in view of liquidity of the product and availability of alternative trading banks.

        The Company currently markets its silver and gold concentrates to third party smelters in Canada, Japan, Mexico and Australia. Sales of metals concentrates to third party smelters amounted to approximately 62.8% and 51.2% of metals sales in the first half of 2005 and 2004, respectively. The loss of any one smelter customer could have a material adverse effect in the event of the possible unavailability of alternative smelters.

NOTE L- LITIGATION AND OTHER EVENTS

Federal Natural Resources Action

          On March 22, 1996, an action was filed 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.

        In May 2001, 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 $.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 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 15 years commencing five years after May 14, 2001. The Company recorded $4.2 million of expenses, which included $3.9 million of settlement payments, in the fourth quarter of 2000 in connection with the settlement.

States of Maine, Idaho And Colorado Superfund Sites Related to 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.

20


        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.

        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 alleged that the Company breached a contract between the parties providing for services to be furnished by the plaintiff to the defendant. Plaintiff alleged that it was entitled to damages in the amount of $2.4 million attributed to the breach. On April 6, 2005, the Company agreed to settle the suit for $1.6 million which was incurred in the first quarter of 2005.

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 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 capital stock of Polimet in April 2002.

21


        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.

        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.

District Court of Alaska Wrongful Death Action

        On July 11, 2005, an action was filed in the United States District Court for the District of Alaska at Juneau by Chelsea Walker Fink on behalf of Joseph Kollander, a minor child, and Thomas J. Kollander, Jr., plaintiffs against defendants Echo Bay Exploration, Inc., Coeur d’Alene Mines Corporation and Coeur Alaska, Inc. alleging wrongful death and negligence relating to a mine accident occurring in 1990 at the Kensington mine. Coeur Alaska was engaged in a joint venture agreement with Echo Bay Exploration at the time of the incident at issue when Echo Bay was the operator of the facility.  The Company has tendered the litigation for defense to its insurer.  The complaint does not specify damages sought by the plaintiff; however, management believes this will not result in a material adverse impact to the Company, and believes that the matter is covered by insurance.

NOTE M – ENDEAVOR TRANSACTION

        On May 23, 2005, the Company acquired all of the silver production and reserves, up to 17.7 million payable ounces, contained at the Endeavor Mine in Australia, which is owned and operated by Cobar Operations Pty. Limited (“Cobar”), a wholly-owned subsidiary of CBH Resources Ltd. (“CBH”) for $38.5 million.

        The Endeavor Mine is located 720 km northwest of Sydney in New South Wales and has been in production since 1983. In addition to principal production of lead and zinc, Endeavor is expected to produce approximately 1.3 million ounces of silver annually, from mineral reserves estimated to contain approximately 24.0 million silver ounces, which consist of 12.0 million ounces of silver in proven reserves and 12.0 million ounces in mineral reserves. Cash costs in the second quarter of 2005 were $1.89 per ounce of silver produced. In calculating the cash costs per ounce at Endeavor, the Company includes its operating cost contribution and smelting and refining treatment charges related to its share of the silver production.

        Under the terms of the agreement, CDE Australia, a wholly-owned subsidiary of Coeur, paid Cobar $15.4 million of cash at the closing. In addition, CDE Australia will pay Cobar approximately $23.1 million upon the determination by Coeur that a recently installed paste backfill plant at the Endeavor Mine is operating successfully. This determination is expected to take place in the third quarter of 2005. In addition to these upfront payments, Coeur will pay Cobar an operating cost contribution of $1.00 for each ounce of payable silver plus a further increment when the silver price exceeds the twenty-year average price of $5.23 per ounce. This further increment begins on the second anniversary of this agreement and is 50% of the amount by which the silver price exceeds $5.23 per ounce. A cost contribution of $0.25 per ounce is also payable by Coeur in respect of new ounces of proven and probable silver reserves as they are discovered. In addition, under the terms of the agreement, Coeur is entitled to receive a maximum of 17.7 million payable silver ounces from the current contained resource at the Endeavor Mine.

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

        This document contains numerous forward-looking statements relating to the Company’s gold and silver mining business. The United States Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements. Operating, exploration and financial data, and other statements in this document are based on information the Company believes reasonable, but involve significant uncertainties as to future gold and silver prices, costs, ore grades, estimation of gold and silver reserves, mining and processing conditions, changes that could result from the Company’s future acquisition of new mining properties or businesses, the risks and hazards inherent in the mining business (including environmental hazards, industrial accidents, weather or geologically related conditions), regulatory and permitting matters, and risks inherent in the ownership and operation of, or investment in, mining properties or businesses in foreign countries. Actual results and timetables could vary significantly from the estimates presented. 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.

22


        Management’s Discussion and Analysis includes references to total cash costs per ounce of silver produced both on an individual mine basis and on a consolidated basis. Total cash costs per ounce represent a non- U.S. generally accepted accounting principles (“GAAP”) measurement that management uses to monitor and evaluate the performance of its mining operations. A reconciliation of total cash costs per ounce to U.S. GAAP “Production Expenses” is also provided herein and should be referred to when reading the total cash cost per ounce measurement.

General

        The results of the Company’s operations are significantly affected by the market prices of silver and gold which may fluctuate widely and are affected by many factors beyond the Company’s control, including, without limitation, 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 average prices of silver (Handy & Harman) and gold (London Final) for the first six months of 2005 were $7.09 and $427 per ounce, respectively. The market prices of silver and gold on August 1, 2005 were $7.29 per ounce and $431.65 per ounce, respectively.

        The mines operated by the Company, or in which it has an interest, are the Rochester mine in Nevada, the Galena mine in the Coeur d’Alene Mining District of Idaho, the Cerro Bayo mine in Chile, the Martha mine in Argentina and the Endeavor mine in Australia.

      Operating Highlights and Statistics

South American Operations

        At the Cerro Bayo mine in Southern Chile, total cash costs per ounce of silver in the second quarter of 2005 were $0.76 per ounce compared to $4.11 per ounce in 2004. The decrease in cash costs per ounce is primarily due to the increased gold production which resulted in an increase in the by-product credit for the second quarter of 2005 as compared to the same period in 2004. Silver production was 691,846 ounces and gold production was 15,100 ounces in the second quarter of 2005 compared to 576,150 ounces of silver and 11,282 ounces of gold in the second quarter of 2004. The increase in production is due to higher silver and gold ore grades experienced and higher mill recoveries compared to the same period in 2004.

        Total cash costs per ounce for the first six months of 2005 amounted to $0.31 compared to $2.61 during the same period in 2004. The higher gold production and lower cash costs per ounce were due to an increase in the gold ore grade mined as compared with the same period of 2004. For the six months ended June 30, 2005, silver production was 1,351,139 ounces and gold production was 29,967 ounces compared to 1,372,695 ounces of silver and 21,240 ounces of gold for the same period of 2004.

        At the Martha Mine in Southern Argentina, total cash costs per ounce in the second quarter of 2005 were $4.43 per ounce compared to $3.29 per ounce in 2004. The increased cost per ounce was primarily due to higher operating costs partially offset by the increase in ounces produced. Silver production was 606,121 ounces in the second quarter of 2005 compared to 477,126 ounces in the second quarter of 2004. The increase in silver production was due to an 18% increase in quantity of tons processed coupled with higher mill recoveries.

23


        For the six months ended June 30, 2005, silver production was 985,181 ounces compared to 898,397 ounces in the same period last year. Total cash costs per ounce in the six-month period were $4.68 per ounce in 2005 compared to $3.22 per ounce in 2004. The increased silver production and the increase in cash costs per ounce were primarily due to an increase in the number of tons processed coupled with increases in operating expenses.

North American Operations

        At the Rochester mine, silver production was 1,208,584 ounces and gold production was 14,412 ounces during the second quarter of 2005 compared to 1,317,006 ounces of silver and 16,005 ounces of gold in the second quarter of the prior year. Total cash costs per ounce increased to $7.58 in the second quarter of 2005 from $4.54 in the second quarter of 2004. The increase in cash costs per ounce is primarily due to decreased silver and gold production during its second quarter of 2005.

        Silver production for the six months ended June 30, 2005 was 2,344,581 ounces compared to 2,627,301 ounces and gold production increased to 28,404 ounces from 27,480 ounces. Total cash costs per ounce increased by 38% to $6.96 compared to $5.06 for the same period of 2004. This increase in cash cost per ounce is attributable to higher equipment maintenance costs and lower silver production.

        At Coeur Silver Valley (Galena Mine), silver production decreased 41% to 559,700 from 954,964 ounces produced in the second quarter of 2004. Total cash costs per ounce increased to $8.05 from $4.95 per ounce in the second quarter of the prior year. The decrease in silver production is primarily due to lower than expected ore grades and shorter strike lengths in the 2400 Upper Silver Vein area and a production delay resulting from ground conditions and a delay in stope development.

        Silver production for the six months ended June 30, 2005 was 1,269,996 ounces compared to 1,861,944 ounces in 2004. The decrease in silver production is primarily due to decreased production related to lower than expected ore grades and shorter strike lengths in the 2700 Upper Silver Vein area and a production delay resulting from ground conditions and a delay in stope development. Cash costs per ounce increased 48% to $7.32 per ounce compared to $4.94 in 2004. The increase in cash costs per ounce is due to decreased silver production related to a decrease in tons milled and lower silver ore grades.

Australia Operations

        On May 23, 2005, the Company acquired all of the silver production and reserves, up to 17.7 million payable ounces, contained at the Endeavor mine in Australia, which is owned and operated by CBH Resources Ltd. (“CBH”) for $38.5 million. Coeur’s share of the silver production from the Endeavor mine from May 23, 2005 to June 30, 2005 was 58,464 ounces at a cash cost of $1.89 per ounce.

24


Operating Statistics

        The following table sets forth the amounts of silver and gold produced by the following mining properties, each of which is wholly owned by the Company, and the cash and full costs of such production during the three- and six-month periods ended June 30, 2005 and 2004:

Three Months Ended
June 30,

Six Months Ended
June 30,

2005
2004
2005
2004

ROCHESTER MINE
                   
      Silver ozs    1,208,584    1,317,006    2,344,581    2,627,301  
      Gold ozs    14,412    16,005    28,404    27,480  
      Cash costs per oz./silver   $ 7.58   $ 4.54   $ 6.96   $ 5.06  
      Full costs per oz./silver   $ 9.93   $ 6.36   $ 9.25   $ 6.79  

GALENA MINE
  
      Silver ozs    559,700    954,964    1,269,996    1,861,944  
      Gold ozs    54    88    145    189  
      Cash costs per oz./silver   $ 8.05   $ 4.95   $ 7.32   $ 4.94  
      Full costs per oz./silver   $ 8.95   $ 5.47   $ 8.11   $ 5.45  

CERRO BAYO (A)
  
      Silver ozs    691,846    576,150    1,351,139    1,372,695  
      Gold ozs    15,100    11,282    29,967    21,240  
      Cash costs per oz./silver   $ 0.76   $ 4.11   $ 0.31   $ 2.61  
      Full costs per oz./silver   $ 2.28   $ 6.42   $ 2.03   $ 4.78  

MARTHA MINE (A)
  
      Silver ozs    606,121    477,126    985,181    898,397  
      Gold ozs    735    662    1,206    1,240  
      Cash costs per oz./silver   $ 4.43   $ 3.29   $ 4.68   $ 3.22  
      Full costs per oz./silver   $ 4.78   $ 4.06   $ 5.07   $ 4.10  

ENDEAVOR MINE (B)
  
      Silver ozs    58,464    --    58,464    --  
      Cash costs per oz./silver   $ 1.89    --   $ 1.89    --  
      Full costs per oz./silver   $ 3.13    --   $ 3.13    --  

CONSOLIDATED PRODUCTION TOTALS
  
      Silver ozs    3,124,715    3,325,246    6,009,361    6,760,337  
      Gold ozs    30,300    28,037    59,723    50,149  
      Cash costs per oz./silver   $ 5.44   $ 4.41   $ 5.12   $ 4.29  
      Full costs per oz./silver   $ 6.94   $ 5.79   $ 6.64   $ 5.65  

CONSOLIDATED SALES TOTALS
  
      Silver ozs. sold    3,532,000    3,302,000    6,834,000    6,628,000  
      Gold ozs. sold    34,000    27,000    69,000    48,000  
      Realized price per silver oz   $ 7.22   $ 6.36   $ 7.06   $ 6.72  
      Realized price per gold oz   $ 430   $ 398   $ 427   $ 396  

(A) During the first quarter of 2005, the Company has segregated operating statistics to conform to current year presentation.
(B) On May 23, 2005, the Company acquired all of the silver production and reserves contained at the Endeavor mine in Australia, which is owned and operated by CBH Resources Ltd. (“CBH”), for $38.5 million. Coeur’s share of the silver production from May 23, 2005 to June 30, 2005 was 58,464 ounces at a cash cost of $1.89 per ounce, representing Coeur’s agreed upon operating costs contribution including smelting and refining treatment charges.

        Note: “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 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.

25


        “Cash Costs” are costs directly related to the physical activities of producing silver and gold and include mining, processing and other plant costs, deferred mining adjustments, 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 (primarily gold and copper) 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 are 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 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. In addition, see the reconciliation of “cash costs” to production costs under “Costs and Expenses” set forth below:

The following tables present a reconciliation between cash costs per ounce and GAAP production costs reported in the Statement of Operations:

Three months ended June 30, 2005

Rochester
Silver Valley
Cerro Bayo
Martha
Endeavor
Total
Production of Silver (ounces)      1,208,584    559,700    691,846    606,121    58,464    3,124,715  
Cash Costs per ounce   $ 7.58   $ 8.05   $ 0.76   $ 4.43   $ 1.89   $ 5.44  







Total Cash Costs (thousands)
   $ 9,166   $ 4,508   $ 527   $ 2,683   $ 111   $ 16,995  

Add/(Subtract):
  
   Third Party Smelting Costs    (196 )  (926 )  (1,017 )  (345 )  (58 )  (2,542 )
   By-Product Credit    6,168    690    6,452    314    --    13,624  
   Deferred Stripping and other
    adjustments
    (101 )  --    (18 )  (101 )  --    (220 )
   Change in Inventory    (8,240 )  373    2,600    10    (38 )  (5,295 )






Production Costs   $ 6,797   $ 4,645   $ 8,544   $ 2,561   $ 15   $ 22,562  







Three months ended June 30, 2004

Rochester
Silver Valley
Cerro Bayo
Martha
Total
                           
Production of Silver (ounces)    1,317,006    954,964    576,150    477,126    3,325,246  
Cash Costs per ounce   $4.54 $ 4.95   $ 4.11   $ 3.29   $ 4.41  






Total Cash Costs (thousands)
   $ 5,981   $ 4,730   $ 2,370   $ 1,571   $ 14,652  

Add/(Subtract):
  
   Third Party Smelting Costs    (190 )  (1,401 )  (1,701 )  (318 )  (3,610 )
   By-Product Credit    6,274    920    4,439    260    11,893  
   Deferred Stripping Adjustment    (101 )  --    (10 )  (28 )  (139 )
   Change in Inventory    (3,903 )  (361 )  (1,876 )  (290 )  (6,430 )





Production Costs   $ 8,061   $ 3,888   $ 3,222   $ 1,195   $ 16,366  





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Six months ended June 30, 2005

Rochester
Silver Valley
Cerro Bayo
Martha
Endeavor
Total
Production of Silver (ounces)      2,344,581    1,269,996    1,351,139    985,181    58,464    6,009,361  
Cash Costs per ounce   $ 6.96   $ 7.32   $ 0.31   $ 4.68   $ 1.89   $ 5.12  







Total Cash Costs (thousands)
   $ 16,319   $ 9,290   $ 417   $ 4,615   $ 111   $ 30,753  

Add/(Subtract):
  
   Third Party Smelting Costs    (405 )  (2,132 )  (2,025 )  (567 )  (58 )  (5,189 )
   By-Product Credit    12,160    1,628    12,800    515    --    27,102  
   Deferred Stripping and other  
    adjustments    (201 )  --    (10 )  (174 )  --    (385 )
   Change in Inventory    (11,173 )  (324 )  3,266    (192 )  (38 )  (8,461 )






Production Costs   $ 16,700   $ 8,462   $ 14,448   $ 4,196   $ 15   $ 43,821  







Six months ended June 30, 2004

Rochester
Silver Valley
Cerro Bayo
Martha
Total
                           
Production of Silver (ounces)    2,627,301    1,861,944    1,372,695    898,397    6,760,337      
Cash Costs per ounce   $ 5.06   $ 4.94   $ 2.61   $ 3.22   $ 4.29      





Total Cash Costs (thousands)   $ 13,298   $ 9,199   $ 3,577   $ 2,894   $ 28,968      
Add/(Subtract):  
   Third Party Smelting Costs    (421 )  (2,680 )  (2,458 )  (486 )  (6,045 )    
   By-Product Credit    10,962    1,713    8,510    496    21,681      
   Deferred Stripping Adjustment    (200 )  --    (10 )  (55 )  (65 )    
   Change in Inventory    (7,800 )  898    (3,519 )  (602 )  (11,223 )    





Production Costs   $ 15,839   $ 9,130   $ 6,100   $ 2,247   $ 33,316      






Exploration and Development Projects

Exploration Projects:

        Exploration at Cerro Bayo during the second quarter of 2005 focused on reserve development/delineation drilling and discovery of new mineralization. Approximately 24,000 meters (78,000 feet) were drilled in the two programs in the quarter. The majority of the second quarter drilling was devoted to reserve development drilling, from both surface and underground positions, on 29 different veins and targets.

        At Martha, the program to define the full potential of the Martha area progressed well. Nearly 5,600 meters (18,500 feet) of drilling was completed during the second quarter on 11 veins and targets. Results obtained from drilling R4 Deep, Francisca and Catalina have expanded the strike and depth of the mineralization in those veins, which were discovered in 2004. Drilling will continue throughout the year on these and other targets in the Martha mine district.

        Effective June 30, 2005, reserves at both properties have increased relative to year-end 2004.

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Cerro Bayo and Martha Ore Reserve Update

Notes;

1. Mid-year 2005 reserves reflect first half 2005 mine production, updated pricing assumptions, and changes due to exploration work in the period January through June, 2005. Details of all other key assumptions, parameters and methods used to estimate these mineral reserves are discussed in the Company’s Annual Report on Form 10-K and in the applicable technical reports filed with the respective U.S. and Canadian securities regulatory authorities.

2. There are no known environmental, permitting, legal, title, taxation, sociopolitical, or marketing conditions that would adversely affect the Mid-year 2005 reserves.

3. Donald J. Birak, Coeur’s Senior Vice President of Exploration, is the qualified person, per Canadian National Instrument 43-101, responsible for the preparation of the scientific and technical information in this document related to Cerro Bayo, Martha, Rochester, Silver Valley, San Bartolome and Kensington. Mr. Birak has reviewed the available data and procedures and believes the calculation of reserves was conducted in a professional and competent manner.

4. Donald Earnest, PG, Independent Consultant to Coeur, is the qualified person responsible for the preparation of the scientific and technical information for the Endeavor mine reserves and resources information. Mr. Earnest has verified the data underlying the Endeavor-related information or opinions contained in this press release, reviewed the available data and procedures and believes the calculation of Endeavor’s reserves and resources was conducted in a professional and competent manner.

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        At the Galena Mine, over 22,500 feet of new core drilling was completed in the second quarter. Three target areas were tested with this drilling; the West Galena area between 3400 and 4000 levels, the 2400 Upper Silver vein and the West Caladay.

        In the second quarter, the Company continued exploration on its properties in the Lake Victoria Goldfields District of northern Tanzania. Most of the work was focused on the Geita 2 tenement, a concession of over 103 square kilometers (25,500 acres) in size that straddles the western extension of the Geita greenstone belt, where a second phase of soil sampling, trenching and mapping were completed along with interpretation of airborne geophysical survey data.

Development Projects:

San Bartolome (Bolivia)

        During 2004, the Company completed an updated feasibility study, obtained all required permits and commenced construction of the San Bartolome mine. Based upon the results of the updated 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.

        During the first six months of 2005, the Company capitalized $5.6 million in connection with construction activities at San Bartolome.

        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 mineral resources 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.

        During the second quarter of 2005, the government of Bolivia experienced political unrest which resulted in the resignation of that country’s President and the appointment of a temporary President. The country has scheduled a new election for December 2005. As a result of this political uncertainty, the Company is continuing the development of the project but has lengthened the construction period pending the outcome of the scheduled election. As a result, it is possible that the previously estimated construction period of 20 months and the preliminary projected commencement of commercial production in the second half of 2006 will be impacted. The Company will continue to monitor the events in Bolivia and will update the expected construction period and the estimated date of commercial production as future events unfold.

        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.

Kensington (Alaska)

        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 2005, the Company received its final construction permits and updated the construction and operating cost estimates set forth in the feasibility study. Based upon the results of the updated feasibility study, we estimate the direct capital costs of the project to be approximately $105 million, the full cost of construction including owner’s costs and contingency to be $124 million, the annual production to be 100,000 ounces of gold over an initial mine life of fifteen years and the cash cost per ounce of gold produced to be approximately $251. Construction has commenced during the third quarter of 2005 and is expected to take approximately 18 months. Commercial production could commence in early 2007.

        During the fourth quarter of 2004, the U.S. Forest Service issued its Record of Decision (“ROD”) for the FSEIS. An environmental group, SEACC, and a group of other community and private environmental groups, appealed the issuance of the ROD. On March 23, 2005, the US Forest Service upheld the decision to approve the FEIS. SEACC has threatened to sue the U.S. Forest Service regarding its decision to uphold the issuance of the FEIS. 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.

        On June 28, 2005, the Company received the Environmental Protection Agency’s (“EPA”) National Pollution Discharge Elimination System (“NPDES”) Permit. In addition, the Company recently received the Army Corps of Engineers 404 Wetlands Permit, which authorizes the construction of a Lower Slate Lake tailings facility, millsite road improvements and a Slate Creek Cove dock facility. All permits have been reviewed for consistency by both the Alaska Coastal Management and Department of Governmental Coordination, which issued its final ACMP permit certification. On June 6, 2005, two environmental groups, Lynn Canal Conservation Inc. and the Sierra Club, Alaska Chapter filed an appeal of the State of Alaska 401 certification of the Corp of Engineer’s approval of the project. Both the State of Alaska and the Company responded in opposition of the appeal to the Commissioner of the Department of Environmental Conservation. The Commissioner’s decision to grant a hearing or rule on the appeal is pending.

        We believe the Kensington property package has excellent exploration potential. Not all Kensington ore zones have been fully delineated at depth or on strike and several peripheral zones and veins remain to be explored. The Company has designed an exploration program to convert 300,000 to 400,000 ounces of gold currently reported as inferred mineral resources to indicated and measured resource and ultimately proven and probable reserves, with potential to increase the life of mine gold production and to identify higher grade sections of the deposit that might be mined in the earlier years of the operation. The total inferred resource at Kensington (effective December 31, 2004) is 2.5 million tons grading 0.234 ounces per short ton. The program is expected to cost approximately $2.7 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 $0.6 million is allocated for 2005 exploration at Jualin. The Company’s rights to use and develop the Jualin property are subject to an agreement which must be renewed in May 2007 unless certain conditions with respect to development of or production from the property are met by that date. Drilling activities are expected to commence in the third quarter on both properties.

        Total expenditures by the Company at the Kensington property in the second quarter of 2005 were $3.7 million. Such expenditures were used to continue the permitting and pre-development activities. The Company plans approximately $39 million for currently planned project expenditures during 2005.

        No assurance can be given as to whether or when regulatory permits and approvals granted to the Company may be appealed or contested by third parties or as to whether the Company will place the Kensington project into commercial production.

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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 U.S. 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. The preparation of this Quarterly Report on Form 10-Q 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.

        Reserve 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. Mineral reserve estimates are based upon engineering evaluations of samplings of drill holes and other openings in the deposits. These estimates involve assumptions regarding future silver and gold prices, the geology of our mines, metallurgical characteristics, 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.

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        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.

        Reference is made to Note L to the above consolidated financial statements for information related to Coeur’s interest in the silver reserves contained at the Endeavor mine in Australia.

        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 dore. 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 $53.9 million as of June 30, 2005. Of this amount, $15.5 million is reported as a current asset and $38.4 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 recovery curves based on laboratory testwork. Testwork consists of 60 day leach columns from which we project metal recoveries up to five years in 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 fifteen 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.

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        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    1.6 million  3.2 million  4.7 million  11,300    22,600    33,900  
Positive impact on  
  future cost of  
  production per silver  
  equivalent ounce for  
  increases in recovery  
  rates   $0.67   $1.18   $1.58   $0.30   $0.57   $0.81  
Negative impact on  
  future cost of  
  production per silver  
  equivalent ounce for  
  decreases in recovery  
  rates   $0.90   $2.18   $4.16   $0.34   $0.74   $1.19  

        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. Future remediation costs for inactive mines are accrued based on management’s best estimate at the end of each period of the undiscounted costs expected to be incurred at the site. Such cost estimates include, where applicable, ongoing care and maintenance and monitoring costs. Changes in estimates are reflected in earnings in the period an estimate is revised. In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” SFAS No. 143 requires entities to record the fair value of asset retirement obligations using the present value of projected future cash flows, with an equivalent amount recorded as basis in the related long-lived asset. An accretion cost, representing the increase over time in the present value of the liability, is recorded each period and the capitalized cost is depreciated over the useful life of the related asset. As reclamation work is performed or liabilities are otherwise settled, the recorded amount of the liability is reduced.

        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.

RESULTS OF OPERATIONS

        Three Months Ended June 30, 2005 Compared to Three Months Ended June 30, 2004

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Revenues

        Sales of metal in the second quarter of 2005 were $37.2 million, an increase of $10.8 million, or 41%, compared with $26.4 million in the second quarter of 2004. The increase in sales of metal is attributable to an increase in the quantity of silver and gold sold and higher realized silver and gold prices. In the second quarter of 2005, the Company sold 3,532,000 ounces of silver and 34,000 ounces of gold compared to 3,302,000 ounces of silver and 27,000 ounces of gold for the same period in 2004. Realized silver and gold prices were $7.22 and $430 per ounce, respectively, in the second quarter of 2005 compared to $6.36 and $398 in the comparable quarter of 2004.

        In the second quarter of 2005, the Company produced a total of 3,124,715 ounces of silver and 30,300 ounces of gold, compared to 3,325,246 ounces of silver and 27,949 ounces of gold in the second quarter of 2004. The decrease in silver production is primarily due to decreased production from the Silver Valley Galena mine related to lower than expected ore grades and shorter strike lengths in the 2400 Upper Silver Vein area and a production delay due to ground conditions and a delay in stope development. On May 23, 2005, the Company acquired all of the silver production and reserves contained at the Endeavor mine in Australia, which is owned and operated by CBH Resources Ltd. Coeur’s share of silver production from May 23, 2005 to June 30, 2005 amounted to 58,464 ounces.

        Interest and other income in the second quarter of 2005 increased by $0.6 million compared with the second quarter of 2004. The increase was primarily due to higher levels of cash and short-term investments on hand.

Costs and Expenses

        Production costs in the second quarter of 2005 increased by $6.4 million, or 39%, from the second quarter of 2004 to $22.7 million. The increase in production costs at the Company’s mine operations are due to increased costs associated with diesel, utilities, and operating materials and supplies.

        Depreciation and depletion was $4.9 million compared to $4.8 million in the prior year’s second quarter.

        Administrative and general expenses increased by $1.8 million in the second quarter of 2005 compared to the same period in 2004 due to higher compensation expense of $0.7 million, higher outside services of $0.4 million primarily related to business development activities, higher audit services of $0.2 and $0.6 million in increased general administrative costs.

        Exploration expenses increased by $0.3 million in the second quarter of 2005 compared to the same period in 2004 as a result of expanded exploration efforts at the Kensington, Cerro Bayo and Martha mines.

        Pre-development expenses decreased $0.3 million to $3.7 million from the second quarter of 2004 as a result of the San Bartolome project being classified as a development-stage property commencing with the fourth quarter of 2004.

        Interest expense decreased by $0.1 million in the second quarter of 2005 compared with the second quarter of 2004 to $0.6 million from $0.7 million due to a reduction in the interest rate on the Company’s outstanding debt as a result of the completion, in the first quarter of 2004, of the Company’s debt restructuring program.

Income Taxes

        For the three months ended June 30, 2005, the Company reported an income tax benefit of approximately $0.2 million. The income tax benefit is comprised of a $1.1 million deferred tax provision, based upon actual earnings for the quarter then ended, reduced by a $1.0 million deferred tax benefit arising from the increased proven and probable reserves and revised projected future taxable income at CDE Cerro Bayo Ltd., a $0.7 million benefit for income taxes associated with the expected utilization of past net operating losses and other deductible timing differences in Argentina and $0.4 million in current taxes payable in Argentina and Australia.

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Net Loss

        As a result of the aforementioned factors, the Company’s net loss amounted to $1.7 million, or $0.01 per share, in the second quarter of 2005 compared to a net loss of $5.4 million, or $0.03 per share, in the second quarter of 2004.

        Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004

Revenues

        Sales of metal in the six months ended June 30, 2005 increased by $17.4 million, or 31%, over the same period of 2004 to $73.4 million. The increase in sales of metal is attributable to an increase in the quantity of silver and gold ounces sold and higher realized silver and gold prices. In the six months ended June 30, 2005, the Company sold 6.8 million ounces of silver and 69,000 ounces of gold compared to 6.6 million ounces of silver and 48,000 ounces of gold for the same period in 2004. Realized silver and gold prices were $7.06 and $427 per ounce, respectively, in the six months ended June 30, 2005 compared to $6.72 and $396 in the comparable period of 2004.

        In the six months ended June 30, 2005, the Company produced a total of 6,009,361 ounces of silver and 59,723 ounces of gold, compared to 6,760,337 ounces of silver and 50,149 ounces of gold in the six months ended June 30, 2004. The decrease in silver production is primarily due to lower production from the Silver Valley Galena mine related to lower than expected ore grades and shorter strike lengths in the 2400 Upper Silver Vein area and production delay due to ground conditions and a delay in stope development. This is partially offset by higher gold production from the Rochester and Cerro Bayo mines related to increased gold recoveries experienced at Rochester and higher gold grades at the Cerro Bayo mine. In addition, on May 23, 2005, the Company acquired all of the silver production and reserves contained at the Endeavor mine in Australia, which is owned and operated by CBH Resources Ltd. Coeur’s share of silver production from May 23, 2005 to June 30, 2005 from the Endeavor mine amounted to 58,464 ounces.

        Interest and other income in the six months ended June 30, 2005 increased by $3.2 million compared with the same period of 2004. The increase was due to higher levels of cash and short-term investments on hand.

Costs and Expenses

        Production costs in the six months ended June 30, 2005 increased by $10.7 million, or 32%, from the six months ended June 30, 2004 to $44.0 million. The increase is the result of higher diesel, utility and operating materials and supply costs at the Company’s mine operations.

Other Expenses

        Depreciation and amortization was $9.5 million in the six months ended June 30, 2005 compared with $9.6 million in the first six months of 2004.

        Administrative and general expenses increased by $3.7 million to $10.4 million in the six months ended June 30, 2005 compared to the same period in 2004 due to higher outside audit services of $1.2 million primarily related to Sarbanes-Oxley compliance activities, higher compensation costs of $1.0 million, higher insurance costs of $0.3 million, higher business development activities of $0.8 million and $0.4 million in increased general administrative expenses.

        Exploration expenses were $6.5 million in the six months ended June 30, 2005 compared to $5.0 million in the same period in 2004 due to increased exploration activities at the Cerro Bayo and Martha mines in South America.

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        Pre-development expenses increased by $0.4 million to $6.1 million in the first six months of 2005 compared to $5.7 million in the same period of 2004 due to increased activities at the Kensington property.

        Interest expense decreased by $0.5 million in the six months ended June 30, 2005 compared with the six months ended June 30, 2004 to $1.1 million from $1.6 million due to a reduction in the interest rate on the Company’s outstanding debt as a result of the completion in the first quarter of 2004 of the Company’s debt restructuring plan.

        During the first quarter of 2005, the Company recorded a litigation settlement of $1.6 million related to the Company’s settlement of the suit by Credit Suisse First Boston on April 6, 2005. See Note K – Litigation and Other Events.

Income Taxes

        For the six months ended June 30, 2005, the Company recorded an income tax provision of approximately $0.5 million. The tax provision is comprised of $2.1 million deferred tax provision, based upon actual earnings for the year ended, reduced by $1.3 million deferred tax benefit arising from increases proven and probable reserves and revised projected future taxable income at the Cerro Bayo mine, and $0.7 million benefit for income taxes associated with the expected utilization of past net operating losses and other deductible timing differences in Argentina and $0.4 million in current taxes payable in Argentina and Australia. This resulted in net reduction of the net foreign deferred tax asset to approximately $4.3 million ($1.4 million current and $2.9 million long term).

Net Loss

        As a result of the aforementioned factors, the Company’s net loss amounted to $3.5 million, or $0.01 per share, in the six months ended June 30, 2005 compared to a net loss of $7.1 million, or $0.03 per share, in the same period of 2004.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital; Cash and Cash Equivalents

        The Company’s working capital at June 30, 2005, decreased by $33.3 million to approximately $316.3 million compared to $349.6 million at December 31, 2004. The decrease in working capital was primarily attributed to the decrease in cash and cash equivalents and short-term investments. The ratio of current assets to current liabilities was 14.3 to 1 at June 30, 2005, compared to 16.8 to 1 at December 31, 2004.

        Net cash used in operating activities during the second quarter of 2005 was $9.2 million compared to cash provided by operating activities of $1.0 million during the second quarter of 2004. The decrease in cash flow from operations of $10.2 million is primarily due to normal variations associated with the timing and payment of concentrate shipments. Net cash used in investing activities during the second quarter of 2005 was $18.8 million compared to net cash used in investing activities of $5.2 million in the prior year’s comparable quarter. The increase in cash used in investing activities primarily resulted from an increase in capital expenditures related to the construction activities at the San Bartolome project and the acquisition of the silver production from the Endeavor mine. Net cash used in financing activities decreased by $4.1 million. The decrease is due to the payments for the retirement of the working capital facility in 2004. As a result of the above, cash and cash equivalents decreased by $28.0 million during the second quarter of 2004 compared to a decrease of $8.5 million for the comparable quarter in 2004.

        Net cash used in operating activities in the six months ended June 30, 2005 was $11.6 million compared to net cash used in operating activities of $7.1 million in the six months ended June 30, 2004. The decrease in cash flow from operations is primarily due to increased receivables associated with the timing and payment of concentrate shipments. Net cash used in investing activities in the first six months of 2005 was $27.4 million compared to net cash used in investing activities of $49.0 million in the prior year’s comparable period. The decrease in cash used in investing activities primarily resulted from a decrease in short-term investments purchased. Net cash used by financing activities was $0.7 million in the first six months of 2005, compared to $158.6 million provided in the first six months of 2004. The decrease was primarily a result of the receipt in 2004 of the $180 million of proceeds from the issuance of the 1 ¼% Convertible Senior Notes due 2024 partially offset in part by $9.6 million of retirement of long-term debt. As a result of the above, cash and cash equivalents decreased by $39.8 million in the first six months of 2005 compared to an increase of $102.4 million for the comparable period in 2004.

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Debt and Capital Resources

        At June 30, 2005, the Company had $280.3 million of cash, cash equivalents and short-term investments. Management therefore believes that its existing and available cash and cash flow from operations will allow it to meet its obligations for the next twelve months.

2004 Final Redemption of Remaining 7 ¼% Debentures

        On March 11, 2004 the Company redeemed the remaining outstanding $9.6 million principal amount of the Company’s 7 1/4% Convertible Subordinated Debentures due October 15, 2005.

Issuance of 1 ¼% Convertible Senior Notes

        On January 13, 2004 the Company completed its offering of $180 million aggregate principal amount of 1.25% Convertible Senior Notes due 2024 (the “1.25% Notes”). The 1.25% 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 is payable in cash at the rate of 1.25% per annum beginning July 15, 2004. The Company intends to continue to use the proceeds of the offering for general corporate purposes, which include the construction of its San Bartolome silver project and the development of its Kensington gold project which is subject to the receipt of final permits and final construction decision. The 1.25% Notes are general unsecured obligations, senior in right of payment to Coeur’s other indebtedness.

Litigation and Other Events

   Federal Natural Resources Action

          On March 22, 1996, an action was filed 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.

        In May 2001, 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 $.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 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 15 years commencing five years after May 14, 2001. The Company recorded $4.2 million of expenses, which included $3.9 million of settlement payments, in the fourth quarter of 2000 in connection with the settlement.

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States of Maine, Idaho And Colorado Superfund Sites Related to 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.

        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 alleged that the Company breached a contract between the parties providing for services to be furnished by the plaintiff to the defendant. Plaintiff alleged that it was entitled to damages in the amount of $2.4 million attributed to the breach. On April 6, 2005, the Company agreed to settle the suit for $1.6 million which was paid in the second quarter of 2005.

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.

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        Coeur 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.

        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.

District Court of Alaska Wrongful Death Action

        On July 11, 2005, an action was filed in the United States District Court for the District of Alaska at Juneau by Chelsea Walker Fink on behalf of Joseph Kollander, a minor child, and Thomas J. Kollander, Jr., plaintiffs, against defendants Echo Bay Exploration, Inc., Coeur d’Alene Mines Corporation and Coeur Alaska, Inc. alleging wrongful death and negligence relating to a mine accident occurring in 1990 at the Kensington mine. Coeur Alaska was engaged in a joint venture agreement with Echo Bay Exploration at the time of the incident at issue when Echo Bay was the operator of the facility.  The Company has tendered the litigation for defense to its insurer.  The complaint does not specify damages sought by the plaintiff; however, management believes this will not result in a material adverse impact to the Company, and believes that the matter is covered by insurance.

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.

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        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 $259.0 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.

      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, $22.7 million in 2004 and $3.1 million in the first six months of 2005. As of June 30, 2005, 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 $316.3 million at June 30, 2005. 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, $18.6 in 2004 and $11.6 million in the first six months of 2005. 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 substantially related to the price of this metal.

        The market price of silver (Handy & Harman) and gold (London Final) on August 1, 2005 was $7.29 and $431.65 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.

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        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.

        If silver or gold prices decline or we fail to control production costs or realize the mineable mineral 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 mineral reserves is imprecise and depends upon subjective factors. Estimated mineral reserves may not be realizedin 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 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 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 except for the Kensington reserves which are estimated using a gold price of $375. On August 1, 2005 silver and gold prices were $7.29 per ounce and $431.65 per ounce, respectively.

      The estimation of the ultimate recovery of metals contained within the heap leach pad inventory isinherently inaccurate and subjective and requires the use of estimation techniques. Actual recoveries canbe 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.

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        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 of the conversion process. 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 so we 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.

        Our reported inventories include metals estimated to be contained in the ore on the leach pads of $53.9 million as of June 30, 2005. Of this amount, $15.5 million is reported as a current asset and $38.4 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    1.6 million  3.2 million  4.7 million  11,300    22,600    33,900  
Positive impact on  
  future cost of  
  production per silver  
  equivalent ounce for  
  increases in recovery  
  rates   $0.67   $1.18   $1.58   $0.30   $0.57   $0.81  
Negative impact on  
  future cost of  
  production per silver  
  equivalent ounce for  
  decreases in recovery  
  rates   $0.90   $2.18   $4.16   $0.34   $0.74   $1.19  

        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 andoperating 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 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 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.

        Development projects, such as San Bartolome and Kensington, 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.

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      The Company’s marketing of metals concentrates could be adversely affected if there were to be a significant delay or disruption ofpurchases by its third party smelter customers.

        The Company currently markets its silver and gold concentrates to third party smelters in Japan, Canada and Mexico. In April 2005, the Company concluded contracts which allow for 50% of the concentrate from Cerro Bayo previously being sold to a smelter in Japan to be sold to a Mexican smelter. The smelter in Japan will continue to be obligated to take the remaining 50%. 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 our operations.

        In July 2005, the Company was notified by Teck Cominco Metals, Ltd., owner of the smelter located in Trail, British Columbia, Canada which purchases approximately 60% of the silver concentrate from the Coeur Silver Valley operation, of a labor strike which will temporarily shut down the facility. Teck Cominco has notified the Company that it will continue to purchase Coeur Silver Valley’s concentrates during the plant shutdown; however, it may declare a force majeure and terminate its services pursuant to the terms of the concentrate purchase agreement. The Company has located an alternative smelter to purchase the concentrates if Teck Cominco declares force majeure. If Teck Cominco declares force majeure and one or more alternative smelters do not take the concentrate delivery, the Company may suffer an adverse impact.

      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 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, andnegatively 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.

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      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 Argentina 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. During the second quarter of 2005, the government of Bolivia experienced political unrest which resulted in the resignation of that country’s President and the appointment of a temporary President. The country has scheduled a new election for December 2005. As a result of this political uncertainty, the Company is continuing the development of the project but has lengthened the construction period pending the outcome of the scheduled election. As a result, it is possible that the previously estimated construction period of 20 months will be impacted. The Company will continue to monitor the events in Bolivia and will update the expected construction period and the estimated date of commercial production as future events unfold. 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 reserves, we are continually seeking to replace and expand our 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 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.

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      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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

        The Company is exposed to various market risks as a part of its operations. As 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 the then 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 operates in several foreign countries, specifically Bolivia, Argentina, Australia and Chile, 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 will enter into foreign currency forward exchange contracts. These contracts enable the Company to purchase a fixed amount of foreign currencies in the future for United States dollars at a pre-determined exchange rate. 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 June 30, 2005 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.

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(dollars in thousands)
2005
2006
2007
2008
2009
Thereafter
Total
Fair Value
6/30/05

 Liabilities                                    
    Long Term Debt (A)  
     Fixed Rate   $ --   $ --   $ --   $ --   $ --   $ 180,000   $ 180,000   $ 130,500  
    Average Interest Rate    1.25 %  1.25 %  1.25 %  1.25 %  1.25 %  1.25 %  1.25 %    

     (A) Debt due 2024
  

Foreign Currency
  
 Contracts  
  Chilean Peso - USD   $ 1,200    --    --    --    --    --   $ 1,200   $ (37 )
  Exchange Rate    574    --    --    --    --    --          
 (CLP to USD)  

        As of June 30, 2005, the Company had outstanding provisionally priced sales of $46.1 million consisting of 3.9 million ounces of silver, 42,095 ounces of gold and 656,617 pounds of copper which had a fair value of approximately $46.3 million.

        Fair value is determined by trading information on or near the balance sheet date. Long term debt represents the face amount of the outstanding convertible debentures and timing of when these become due. Interest rates presented in the table are calculated using the weighted average of the outstanding face amount of each debenture for the period remaining in each period presented. All long term debt is denominated in US dollars.

Item 4. 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, such officers concluded that the Company’s disclosure controls and procedures relating to its income tax accounting were not effective as of June 30, 2005. Such conclusion was based on the Company’s identification of a material weakness with regard to its accounting for income taxes and financial reporting of the Chilean operations which were reported on Form 10-K for the year ended December 31, 2004. During the first quarter of 2005, the Company implemented a remediation measure designed to correct these weaknesses which involved the retention of an outside accountant experienced in international income tax issues and financial reporting to review the Company’s quarterly tax provision and increased the level of monitoring associated with all decentralized operations, including an increase in the level of internal auditing related to all financial operations. While these controls operated effectively in the first quarter of 2005, during the course of the review of the Company’s Form 10-Q for the quarter ended June 30, 2005, an adjustment to the Company’s financial statements pertaining to income taxes was identified. The Company will be adopting additional remediation measures in the course of the third quarter of 2005 to address this issue including the continued retention of a consulting certified public accountant skilled in the area of taxation and related financial reporting and an increase in the level of monitoring and internal auditing associated with the Company’s decentralized operations.

(b)   Changes in Internal Control Over Financial Reporting

        Based on an evaluation by the Company’s Chief Executive Officer and Chief Financial Officer, such officers concluded that there was no change in the Company’s internal control over financial reporting, other than the remediation measures discussed above, during the quarter ending June 30, 2005, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II.     Other Information

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

        The Company’s Annual Meeting of Shareholders was held on May 10, 2005. Of the Company’s total 240,015,206 shares of common stock outstanding on March 25, 2005, (the record date), 200,272,106 shares (or 83.4% of the outstanding) were represented in person or by proxy at the Annual Meeting.

        The first proposal was the election of directors. The following persons were nominated and elected to serve as members of the Board of Directors for one year or until their successors are elected and qualified by the votes indicated: Cecil D Andrus – 192,977,929 for and 7,294,177 withheld; James J. Curran – 191,781,594 for and 8,490,512 withheld; Andrew Lundquist – 191,755,002 for and 8,517,104 withheld; Robert E. Mellor – 192,774,507 for and 7,497,599 withheld; John H. Robinson – 193,194,611 for and 7,077,495 withheld; J. Kenneth Thompson – 192,396,098 for and 7,876,008 withheld; Timothy R. Winterer –193,399,997 for and 6,872,109 withheld; Alex Vitale – 191,990,945 for and 8,281,161 withheld; and Dennis E. Wheeler – 192,099,620 for and 8,172,486 withheld.

        The second proposal was the approval of the 2005 Non-Employee Directors’ Equity Incentive Plan and authorization of 500,000 shares of common stock for issuance thereunder. A quorum for the vote on this proposal meeting New York Stock Exchange voting requirements was not present at the May 10, 2005 shareholders meeting, and a postponement was announced for the reconvening of this proposal vote to be held on June 3, 2005. On June 3, 2005, a quorum of eligible voters was present and the proposal was approved by the holders of more than the required majority of the shares of common stock eligible to vote on this issue voting at the meeting. The proposal was approved by a vote of 88,693,387 shares for (representing 72.69% of the shares voting), 25,140,865 shares against with 8,186,446 shares abstaining.

Item 6. Exhibits

  a) Exhibits.

  10.1 2005 Non-Employee Directors’ Equity Incentive Plan (Incorporated herein by reference to Appendix A to the Registrant’s proxy statement dated April 5, 2005)

  10.2 Amended and restated employment agreement and change in control agreement, effective July 1, 2005, between the Registrant and Harry F. Cougher

  10.3 Amended and restated employment agreement and change in control agreement, effective July 1, 2005, between the Registrant and Mitchell J. Krebs

  10.4 Amended and restated employment agreement and change in control agreement, effective July 1, 2005, between the Registrant and Donald J. Birak

  10.5 Amended Mining Lease, effective as of August 5, 2005, between Hyak Mining Company, Inc. and Coeur Alaska, Inc.

  31.1 Certification of the CEO

  31.2 Certification of the CFO

  32.1 Certification of the CEO (18 U.S.C. Section 1350)

  32.2 Certification of the CFO (18 U.S.C. Section 1350)

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SIGNATURES

        Pursuant to the requirements 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)



Dated August 12, 2005 /s/ Dennis E. Wheeler
DENNIS E. WHEELER
Chairman, President and
   Chief Executive Officer



Dated August 12, 2005



/s/ James A. Sabala
JAMES A. SABALA
Executive Vice President and
  Chief Financial Officer