UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 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        

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 under the Exchange Act). YES          NO    X  

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 249,860,704 shares were issued and outstanding as of November 1, 2005.


COEUR D’ALENE MINES CORPORATION

INDEX

Page No.

PART I.
Financial Information  

Item 1.
Financial Statements
Consolidated Balance Sheets -- Unaudited   3
September 30, 2005 and December 31, 2004

 
Consolidated Statements of Operations and
Comprehensive Income (Loss) -- Unaudited   5
Three and Nine Months Ended September 30, 2005
and 2004

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

 
Notes to Consolidated Financial Statements -- Unaudited   7

Item 2.
Management’s Discussion and Analysis of 24
Financial Condition and Results of Operations

Item 3.
Quantitative and Qualitative Disclosures about
Market Risk 49

Item 4.
Controls and Procedures 50

PART II.
Other Information

Item 6.
Exhibits 50

Signatures



2


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

September 30,
2005

December 31,
2004

ASSETS (In Thousands)

CURRENT ASSETS
           
    Cash and cash equivalents   $ 216,062   $ 273,079  
    Short-term investments    41,418    48,993  
    Receivables    23,575    10,634  
    Ore on leach pad    13,902    15,046  
    Metal and other inventory    17,681    17,639  
    Deferred tax assets    1,330    2,592  
    Prepaid expenses and other    4,476    3,727  


     318,444    371,710  

PROPERTY, PLANT AND EQUIPMENT
  
    Property, plant and equipment    98,260    85,070  
    Less accumulated depreciation    (57,537 )  (54,154 )


     40,723    30,916  

MINING PROPERTIES
  
    Operational mining properties    125,404    121,344  
    Less accumulated depletion    (107,101 )  (100,079 )


     18,303    21,265  

    Mineral interests
    71,722    20,125  
    Non-producing and development properties    45,499    26,071  


     135,524    67,461  

OTHER ASSETS
  
    Non-current ore on leach pad    39,870    28,740  
    Restricted cash and cash equivalents    17,116    10,847  
    Debt issuance costs, net    5,530    5,757  
    Deferred tax assets    3,128    1,811  
    Other    9,110    8,535  


     74,754    55,690  


         TOTAL ASSETS   $ 569,445   $ 525,777  


See notes to consolidated financial statements.

3


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

September 30,
2005

December 31,
2004

LIABILITIES AND SHAREHOLDERS’ EQUITY (In Thousands)

CURRENT LIABILITIES
           
    Accounts payable   $ 11,740   $ 8,389  
    Accrued liabilities and other    7,777    5,306  
    Accrued interest payable    469    1,035  
    Accrued salaries and wages    6,020    6,379  
    Current portion of remediation costs    460    1,041  


     26,466    22,150  

LONG-TERM LIABILITIES
  
    1 1/4% Convertible Senior Notes due January 2024    180,000    180,000  
    Reclamation and mine closure    24,848    23,670  
    Other long-term liabilities    7,744    6,503  


     212,592    210,173  

COMMITMENTS AND CONTINGENCIES
  

SHAREHOLDERS’ EQUITY
  
    Common Stock, par value $1.00 per share-authorized 500,000,000  
        shares, issued 250,883,651 and 241,028,303 shares in 2005 and  
        2004 (1,059,211 shares held in treasury)    250,884    241,028  
    Additional paid-in capital    656,650    629,809  
    Accumulated deficit    (561,927 )  (561,908 )
    Shares held in treasury    (13,190 )  (13,190 )
    Accumulated other comprehensive loss    (2,030 )  (2,285 )


     330,387    293,454  


TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $ 569,445   $ 525,777  


See notes to consolidated financial statements.

4


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

Three Months Ended
September 30,

Nine Months Ended
September 30,

2005
2004
2005
2004
(In Thousands, except per share data)

REVENUES
                   
Sales of metal   $ 42,047   $ 30,211   $ 115,454   $ 86,242  
Interest and other    2,052    1,056    5,350    1,142  




         Total revenues    44,099    31,267    120,804    87,384  

COSTS AND EXPENSES
  
Production    27,591    19,014    71,569    52,328  
Depreciation and depletion    4,838    4,862    14,372    14,481  
Administrative and general    4,233    3,553    14,611    11,194  
Exploration    2,887    2,983    9,350    7,003  
Pre-development    --    3,117    6,052    8,768  
Interest    737    662    1,869    2,257  
Litigation settlement    --    --    1,600    --  
Other holding costs    79    262    586    1,606  
Merger expenses    --    14,894    --    14,894  




         Total costs and expenses    40,365    49,347    120,009    112,531  





INCOME (LOSS) FROM OPERATIONS
  
BEFORE TAXES    3,734    (18,080 )  795    (25,147 )
Income tax provision    (281 )  --    (813 )  --  




NET INCOME (LOSS)    3,453    (18,080 )  (18 )  (25,147 )
Other comprehensive income (loss)    134    333    255    (526 )




COMPREHENSIVE INCOME (LOSS)   $ 3,587   $ (17,747 ) $ 237   $ (25,673 )





BASIC AND DILUTED NET INCOME (LOSS)
  
PER SHARE:  
Net income (loss)   $ 0.01   $ (0.08 ) $ 0.00   $ (0.12 )





Weighted average number of shares of common stock
  
    outstanding  
  Basic    241,683    213,261    240,572    213,217  




  Diluted    242,477    213,261    240,572    213,217  




See notes to consolidated financial statements.

5


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

Three Months Ended
September 30,

Nine Months Ended
September 30,

2005
2004
2005
2004
(In Thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:
                   
Net income (loss)   $ 3,453   $ (18,080 ) $ (18 ) $ (25,147 )
Add (deduct) non-cash items:  
    Depreciation and depletion    4,838    4,862    14,372    14,481  
    Deferred taxes    (175 )  --    (55 )  --  
    Unrealized (gain) loss on embedded derivative    (646 )  (1,395 )  (725 )  362  
    Amortization of restricted stock compensation    313    321    887    994  
    Amortization of debt issuance costs    76    76    227    332  
    Amortization of premium and/or discounts    115    370    702    1,197  
    Other charges    155    (76 )  423    38  
Changes in Operating Assets and Liabilities:  
    Receivables    (774 )  3,277    (12,907 )  1,211  
    Prepaid expenses and other    (371 )  (74 )  (1,093 )  (388 )
    Inventories    (1,063 )  (7,406 )  (10,028 )  (16,954 )
    Accounts payable and accrued liabilities    (2,054 )  11,175    440    9,812  




    CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES    3,867    (6,950 )  (7,775 )  (14,062 )

CASH FLOWS FROM INVESTING ACTIVITIES:
  
    Capital expenditures    (58,320 )  (2,732 )  (85,154 )  (5,858 )
    Purchases of short-term investments    (11,502 )  (1,107 )  (34,419 )  (59,950 )
    Proceeds from sales of short-term investments    13,019    10,521    35,207    23,232  
    Other    (19 )  41    95    278  




    CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES    (56,822 )  6,723    (84,271 )  (42,298 )

CASH FLOWS FROM FINANCING ACTIVITIES:
  
    Retirement of long-term debt    (147 )  --    (208 )  (9,561 )
    Retirement of building loan    --    --    --    (1,200 )
    Proceeds from issuance of subordinated notes    --    --    --    180,000  
    Debt issuance costs    --    --    --    (6,089 )
    Proceeds from issuance of common stock (net)    35,949    --    35,397    --  
    Bank Borrowings on working capital facility    --    --    --    6,056  
    Payments to Bank on working capital facility    --    --    --    (8,423 )
    Common stock repurchased    --    --    --    (793 )
    Other    (65 )  1,424    (160 )  9  




    CASH PROVIDED BY FINANCING ACTIVITIES:    35,737    1,424    35,029    159,999  





INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    (17,218 )  1,197    (57,017 )  103,639  

    Cash and cash equivalents at beginning of period
    233,280    164,859    273,079    62,417  




    Cash and cash equivalents at end of period   $ 216,062   $ 166,056   $ 216,062   $ 166,056  




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 nine-month periods ended September 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, CDE Australia 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 third quarter of 2005 and 2004, third party smelting and refining costs amounted to $2.8 million and $1.5 million, respectively. For the nine months ended September 30, 2005 and 2004, third party smelting and refining costs amounted to $9.0 million and $7.9 million, respectively, and are recorded as a reduction of revenue.

        At September 30, 2005, the Company had outstanding provisionally priced sales of $39.8 million, consisting of 3.5 million ounces of silver, 31,303 ounces of gold and 636,602 pounds of copper. For each one cent per ounce change in realized silver price, revenue would vary (plus or minus) approximately $35,000; for each one dollar per ounce change in realized gold price, revenue would vary (plus or minus) approximately $31,000; and for each one cent per pound change in realized copper price, revenue would vary (plus or minus) approximately $6,400. At September 30, 2004, the Company had outstanding provisionally priced sales of $17.0 million consisting of 1.9 million ounces of silver, 10,067 ounces of gold and 796,487 pounds of copper. For each one cent per ounce change in realized silver price, revenue would vary (plus or minus) approximately $19,000; for each one dollar per ounce change in realized gold price, revenue would vary (plus or minus) approximately $10,000; and for each one cent per pound change in realized copper price, revenue would vary (plus or minus) approximately $8,000.

        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 $53.8 million as of September 30, 2005. Of this amount, $13.9 million is reported as a current asset and $39.9 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 September 30, 2005 and December 31, 2004, the Company held certificates of deposit and cash restricted under these agreements of $17.1 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 September 30, 2005 and December 31, 2004 the carrying amount of the deferred stripping costs were $0.5 million and $0.9 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 nine months ended September 30, 2005 were $0.1 million and $0.3 million, respectively, and the amounts that were amortized for the three and nine months ended September 30, 2004 were $0.1 million and $0.3 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. 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
September 30,

Nine Months Ended
September 30,

2005
2004
2005
2004
Net income (loss) attributable to common shareholders as                    
    reported   $ 3,453   $ (18,080 ) $ (18 ) $ (25,147 )
Add stock-based employee compensation expense included  
     in reported net income (loss)   $ 313   $ 321   $ 887   $ 994  
Deduct total stock based employee compensation expense  
    determined under fair value method for all awards   $ (434 ) $ (417 ) $ (1,421 ) $ (1,474 )




Pro forma net income (loss)   $ 3,332   $ (18,176 ) $ (552 ) $ (25,627 )





Basic and diluted net income (loss) per share as reported
   $ 0.01   $ (0.08 ) $ 0.00   $ (0.12 )
Basic and diluted pro forma net income (loss) per share   $ 0.01   $ (0.09 ) $ 0.00   $ (0.12 )

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

Three Months Ended
September 30,
Nine Months Ended
September 30,
2005
2004
2005
2004
Unrealized gain (loss) on marketable                    
    securities   $ 63   $ 127   $ 221   $ (288 )
Changes in fair value of cashflow hedges, net  
    of settlement    71    206    34    (238 )




Other comprehensive income (loss)   $ 134   $ 333   $ 255   $ (526 )




        Net Income/(Loss) Per Share: The Company follows SFAS 128, Earnings Per Share, which requires the presentation of basic and diluted earnings per share. Basic earnings per share is computed by dividing the net income/(loss) available to common shareholders by the weighted average number of common shares outstanding during each period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The effect of potentially dilutive stock options outstanding in the three and nine months ended September 30, 2005 is as follows:

For the Three Months Ended
September 30, 2005

For the Nine Months Ended
September 30, 2005

(In thousands except for EPS) Income
(Numerator)

Shares
(Denominator)

Per-Share
Amount

Income
(Numerator)

Shares
(Denominator)

Per-Share
Amount

Net income (loss) available to                            
  common shareholders   $ 3,453           $ (18 )        
Basic EPS  
   Net income (loss) available  
   to common stockholders    3,453    241,683   $ 0.01   $ (18 )  240,572   $ 0.00  


Effect of Dilutive Securities  
   Options    --    794        --    --      




Diluted EPS  
   Net income (loss) available  
   to common stockholders   $ 3,453    242,477   $ 0.01   $ (18 )  240,572   $ 0.00  






During the three and nine months ended September 30, 2004, the effect of potentially diluted stock options outstanding were antidilutive.

For the three months ended September 30, 2005, options to purchase 886,455 shares of common stock at prices between $3.92 to $17.94 per share were not included in the computation of diluted EPS because the options’ exercise price was greater than the average market price of the common shares. The options which expire between 2006 to 2015 were still outstanding at September 30, 2005.

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

Three Months Ended
September 30,
Nine Months Ended
September 30,
(In thousands) 2005
2004
2005
2004

Options
     --    1,810    2,271    1,810  
1.25% Debentures Convertible at $7.60    23,684    23,684    23,684    23,684  




Total potentially dilutive shares    23,684    25,494    25,955    25,494  




        Debt Issuance Costs: Costs associated with the issuance of debt are included in other noncurrent assets and are amortized over the term of the related debt.

13


        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 of the EITF consensus on the Company’s financial position and results of operations and expects to adopt the consensus in the first quarter of 2006.

NOTE C- METAL AND OTHER INVENTORIES

        Inventories consist of the following:

September 30,
2005

December 31,
2004

Concentrate and dorè inventory     $ 10,841   $ 11,876  
Supplies    6,840    5,763  


         Metal and other inventory   $ 17,681   $ 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 2025 while the foreign country net operating losses have an indefinite carryforward period.

14


        For the three months ended September 30, 2005, the Company reported an income tax provision of approximately $0.3 million. The income tax provision is comprised of a $0.8 million deferred tax provision, based upon actual earnings for the quarter then ended, reduced by a $0.4 million deferred tax benefit arising from a release of valuation allowance due to the increased proven and probable reserves and revised projected future taxable income at CDE Cerro Bayo Ltd., a $0.6 million benefit for the release of valuation allowance associated with the expected utilization of past net operating losses and other deductible temporary differences in Argentina and Australia and offset by $0.7 million in current taxes payable in Argentina and Australia. The Company reported a current $0.2 million domestic tax benefit from a net operating loss carryback and did not report and any domestic deferred tax provision, as management determined that it is more likely than not that the net deferred taxes would not be utilized.

        For the nine months ended September 30, 2005, the Company recorded an income tax provision of approximately $0.8 million. The tax provision is comprised of $2.9 million deferred tax provision, based upon actual earnings for the nine months ended September 30, 2005, reduced by $1.7 million deferred tax benefit arising from a release of valuation allowance due to increased proven and probable reserves and revised projected future taxable income at the Cerro Bayo mine, and $1.2 million benefit for the release of valuation allowance associated with the expected utilization of past net operating losses and other deductible temporary differences in Argentina and Australia and offset by a net $0.8 million in current taxes payable in Argentina, Australia and the United States. As of September 30, 2005, the net foreign deferred tax asset is approximately $4.4 million ($1.3 million current and $3.1 million long term).

        The income tax provision for the first nine 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 a portion 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 1.25% Notes are general unsecured obligations, senior in right of payment to Coeur’s other indebtedness.

        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, the Senior Vice President of North America Operations and the President of the South America Operations.

        During the third quarter, the Company reassessed its reportable segments and as a result has expanded its segment disclosures to include the Broken Hill mine and the Kensington 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, Kensington, and CDE Australia (Endeavor and Broken Hill) mining properties. 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.), Japan (Sumitomo Ltd. and DOWA Mining Company) and Mexico (Penoles). 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. Concentrates produced at CDE Australia (Endeavor and Broken Hill mines) are sold to Zinifex, an Australian smelter.

15


        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 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 (“Segment Profit (loss)”).

Segment Reporting
(In Thousands)
Rochester
Mine

Galena
Mine

Cerro
Bayo Mine

Martha
Mine

Endeavor
Broken
Hill

San
Bartolome

Kensington
Other
Total
Three Months Ended
September 30, 2005

Total net sales and revenues
    $ 16,957   $ 3,320   $ 16,236   $ 3,655   $ 1,912   $ 538   $ (31 ) $ --   $ 1,512   $ 44,099  

Depreciation and depletion
    2,492    494    1,109    223    274    160    --    --    86    4,838  
Interest income    --    --    30    --    --    --    --    --    2,387    2,417  
Interest expense    --    --    3    --    --    --    --    --    734    737  
Income tax (benefit) expense    --    --    410    (12 )  --    --    --    --    (117 )  281  
Segment Profit (loss)    4,915    (776 )  6,000    167    1,715    385    (31 )  (263 )  (2,803 )  9,309  

Segment assets (A)
    83,817    12,765    33,790    5,615    15,538    36,974    29,980    47,511    9,760    275,750  

Capital expenditures for property
    113    1,016    682    468    25    36,472    2,465    17,032    47    58,320  

 
Rochester
Mine

Galena
Mine

Cerro
Bayo Mine

Martha
Mine

Endeavor
Broken
Hill

San
Bartolome

Kensington
Other
Total
Three Months Ended
September 30, 2004

Total net sales and revenues
   $ 14,037   $ 4,904   $ 9,864   $ 1,524   $ --   $ --   $ 1   $ --   $ 937   $ 31,267  

Depreciation and depletion
    2,728    476    1,258    308    --    --    1    13    78    4,862  
Interest income    --    --    4    --    --    --    --    --    926    930  
Interest expense    --    --    50    --    --    --    --    --    612    662  
Income tax (benefit) expense    --    --    --    --    --    --    --    --    --    --  
Merger expenses    --    --    --    --    --    --    --    --    14,894    14,894  
Segment Profit (loss)    6,201    691    3,932    (1,385 )  --    --    (1,094 )  (2,374 )  (3,634 )  2,337  

Segment assets (A)
    75,234    11,036    26,802    3,346    --    --    20,251    25,862    6,109    168,640  

Capital expenditures for property
    1,038    712    777    74    --    --    --    44    87    2,732  

16


Rochester
Mine

Galena
Mine

Cerro
Bayo Mine

Martha
Mine

Endeavor
Broken
Hill

San
Bartolome

Kensington
Other
Total
Nine Months Ended
September 30, 2005

Total net sales and revenues
    $ 44,173   $ 12,266   $ 47,268   $ 9,370   $ 1,583   $ 538   $ (37 ) $ --   $ 5,643    120,804  

Depreciation and depletion
    8,061    1,507    3,431    613    346    160    --    35    219    14,372  
Interest income    --    --    75    --    --    --    --    --    6,471    6,546  
Interest expense    --    --    3    --    --    --    --    --    1,866    1,869  
Litigation settlement    --    --    --    --    --    --    --    --    (1,600 )  (1,600 )
Income tax (benefit) expense    --    --    1,182    (290 )  --    --    --    --    (79 )  813  
Segment Profit (loss)    15,286    (1,296 )  19,347    520    1,371    385    (120 )  (6,822 )  (10,035 )  18,636  

Segment assets (A)
    83,817    12,765    33,790    5,615    15,538    36,974    29,980    47,511    9,760    275,750  

Capital expenditures for property
    1,082    2,462    2,114    1,468    15,125    36,472    8,034    18,031    366    85,154  


 
Rochester
Mine

Galena
Mine

Cerro
Bayo Mine

Martha
Mine

Endeavor
Broken
Hill

San
Bartolome

Kensington
Other
Total
Nine Months Ended
September 30, 2004

Total net sales and revenues
   $ 41,263   $ 17,445   $ 23,274   $ 4,004   $ --   $ --   $ --   $ --   $ 1,398   $ 87,384  

Depreciation and depletion
    7,459    1,430    4,241    1,102    --    --    4    36    209    14,481  
Interest income    --    --    4    --    --    --    --    --    2,308    2,312  
Interest expense    1    --    123    --    --    --    --    --    2,133    2,257  
Loss on forward sales contracts    --    --    --    --    --    --    --    --    936    936  
Merger expenses    --    --    --    --    --    --    --    --    14,894    14,894  
Segment Profit (loss)    17,590    2,680    8,332    (1,958 )  --    --    (4,004 )  (5,115 )  (10,104 )  7,421  

Segment assets (A)
    75,234    11,036    26,802    3,346    --    --    20,251    25,862    6,109    168,640  

Capital expenditures for property
    1,616    1,537    1,691    408    --    --    --    74    532    5,858  

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

The following reconciles total segment’s profit or loss before interest, income taxes, depreciation and amortization, unusual and infrequent items, and extraordinary items to net income (loss) before income taxes as presented in the consolidated statements of operations and comprehensive income (loss).

Three Months Ended
September 30,
Nine Months Ended
September 30,
2005
2004
2005
2004
Income (Loss)                    
Total segment profit (loss)   $ 9,309   $ 2,337   $ 18,636   $ 7,421  
Depreciation, depletion and amortization expense    (4,838 )  (4,862 )  (14,372 )  (14,481 )
Interest expense    (737 )  (662 )  (1,869 )  (2,257 )
Litigation Settlement & Other    --    (14,893 )  (1,600 )  (15,830 )




     Income (loss) before income taxes   $ 3,734   $ (18,080 ) $ 795   $ (25,147 )




17


September 30,
2005
2004
Assets                    
Total assets for reportable segments   $ 275,750   $ 168,640          
Cash and cash equivalents    216,062    166,056          
Short-term investments    41,418    52,335          
Other assets    36,215    25,348          


      Total consolidated assets   $ 569,445   $ 412,379          



Geographic Information
(In thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
Revenues(a) 2005
2004
2005
2004
 United States     $ 22,511   $ 19,909   $ 62,834   $ 60,126  
 Australia    1,824    --    1,495    --  
 Chile    16,128    9,832    47,156    23,252  
 Argentina    3,655    1,524    9,370    4,004  
 Bolivia    (31 )  --    (37 )  --  
 Other Foreign Countries    12    2    (14 )  2  




 Consolidated Total   $ 44,099   $ 31,267    120,804   $ 87,384  





September 30,
Long-Lived Assets 2005
2004
 United States     $ 77,100   $ 61,049          
 Australia    51,091    --          
 Chile    16,581    13,541          
 Argentina    1,919    1,585          
 Bolivia    29,362    20,155          
 Other Foreign Countries    194    144          


 Consolidated Total   $ 176,247   $ 96,474          


  (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.

18


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

(in thousands)
Asset Retirement Obligation - January 1, 2005     $ 23,436  
Accretion    1,313  
Additions    --  
Settlements    (445 )

Asset Retirement Obligation - September 30, 2005   $ 24,304  

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

        For the first nine months of 2005, the Company recorded a realized gain of approximately $15,007 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 September 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 Pesos to be purchased along with the average foreign exchange rate.

(dollars in thousands)
2005
2006
2007
2008
2009
Thereafter
Total
Fair Value
9/30/05

 Liabilities                                    
    Long Term Debt (A)  
     Fixed Rate   $ --   $ --   $ --   $ --   $ --   $ 180,000   $ 180,000   $ 148,104  
    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   $ 600    --    --    --    --    --   $ 600   $ 34  
 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.

19


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

Nine Months Ended September 30,
Components of Net Period Benefit Cost:
(In thousands)
Defined Benefit Plan
Post-Retirement Medical Plan
2005
2004
2005
2004
Service cost     $ 258   $ 259   $ 6   $ 13  
Interest cost    333    282    15    87  
Expected return on plan assets    (196 )  (159 )  --    --  
Amortization of prior service cost    45    42    (94 )  --  
Amortization of the net (gain) loss    212    202    (279 )  --  




Net periodic benefit cost   $ 652   $ 626   $ (352 ) $ 100  




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. For the nine months ended September 30, 2005 and 2004, $0.5 million and $0.5 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 third quarter of 2005 and 2004 were $0.3 million and $0.2 million, respectively, and plan expenses charged to net income (loss) for the nine months ended September 30, 2005 and 2004 were $0.8 million and $0.7 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 third quarter of 2005 and 2004 were $0.1 million and $0.1 million, respectively, and total plan expenses charged to operations for the nine months ended September 30, 2005 and 2004 were $0.4 million and $0.4 million, respectively.

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 September 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 38.4% and 47.9% of total metals sales in the first nine months 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.

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        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 61.6% and 52.1% of metals sales in the first nine months 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 $0.6 million was paid in June 2001. In addition, the Company will (i) pay the United States 50% of any future recoveries from insurance companies for claims for defense and indemnification under general liability insurance policies in excess of $0.6 million, (ii) accomplish certain cleanup work on the Mineral Point property and Caladay property, and (iii) make a conveyance to the U.S. or the State of Idaho of certain real property to possibly be used as a waste repository. Finally, commencing five years after effectiveness of the settlement, the Company will be obligated to pay net smelter return royalties on its operating properties, up to a maximum of $3 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 and $0.3 million in legal fees.

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.

21


        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 accrued in the first quarter of 2005 and 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.

        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.

        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 insurer for the Company is defending the action under a reservation of rights.  The complaint does not specify damages sought by the plaintiff; however, management believes this will not result in a material adverse financial impact to the Company, and believes that the matter is covered by insurance.

22


Federal District Court of Alaska Permit Challenge

        On September 12, 2005 three environmental groups filed a lawsuit in Federal District Court in Alaska against the U.S. Corps of Engineers and the U.S. Forest Service seeking to invalidate permits issued to Coeur Alaska, Inc. for the Company’s Kensington mine. The Plaintiffs claim the Clean Water Act (CWA) Section 404 permit issued by the Corps of Engineers authorizing the deposition of mine tailings into Lower Slate Lake conflicts with the CWA and is thus illegal. They additionally claim the U.S. Forest Service’s approval of the Amended Plan of Operations is arbitrary and capricious because it relies on the 404 permit issued by the Corps.

        On September 29, 2005, Coeur Alaska, Inc. filed its Answer to Complaint and Motion to Intervene as a Defendant-Intervenor in the action. That motion is pending with the court. Once the Company has been granted Defendant-Intervenor status, it will join the agencies in their defense of the permits as issued. On October 12, 2005, the State of Alaska and Goldbelt, Inc, a local native corporation, additionally joined in filing their respective Motions to Intervene as Defendant-Intervenors as supporters of the Kensington project as permitted. On November 8, 2005, the U.S. Corps of Engineers filed a Motion for Voluntary Remand with the court to review the permit issued to the Company under the Clean Water Act (CWA) Section 404 and requested that the court stay the legal proceeding filed by SEACC and the other environmental groups pending the outcome of review. While the Company does not know the potential outcome of this filing, or the potential impact it may have on the project, it believes the U.S. Corps of Engineers followed appropriate procedures and made a correct decision in issuing the permit.

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.

        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. Payment is expected to take place in late 2005 or early 2006. 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.

NOTE N – BROKEN HILL TRANSACTION

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        On September 8, 2005, the Company acquired all of the silver production and reserves, up to 17.2 million payable ounces, contained at the Broken Hill mine in Australia, which is owned and operated by Perilya Broken Hill Ltd. (“PBH”) for $36.0 million. The Broken Hill Mine is located in New South Wales, Australia and is a zinc/lead/silver ore body. Pursuant to the Agreement, the transaction is capped at approximately 24.5 million contained ounces (or 17.2 million payable ounces) of silver to be mined by PBH at Broken Hill on the Company’s behalf. In addition, CDE Australia will pay PBH an operating cost contribution of approximately US$2.00 for each ounce of payable silver under the terms of the Agreement and PBH may earn up to an additional US$6.0 million of consideration by meeting certain silver production thresholds over the next eight years.

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.

        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 nine months of 2005 were $7.09 and $431 per ounce, respectively. The market prices of silver and gold on November 1, 2005 were $7.47 per ounce and $459.50 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 and Broken Hill mines in Australia.

24


  Operating Highlights and Statistics

South American Operations

        At the Cerro Bayo mine in Southern Chile, total cash costs per ounce of silver in the third quarter of 2005 were $0.37 per ounce compared to $1.63 per ounce in the third quarter of 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 third quarter of 2005 as compared to the same period in 2004. Silver production was 742,825 ounces and gold production was 16,744 ounces in the third quarter of 2005 compared to 606,069 ounces of silver and 14,482 ounces of gold in the third quarter of 2004. The increase in production is due to higher silver and gold ore grades compared to the same period in 2004.

        Total cash costs per ounce for the first nine months of 2005 amounted to $0.33 compared to $2.31 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 and an increase in the by-product credit as compared with the same period of 2004. For the nine months ended September 30, 2005, silver production was 2,093,964 ounces and gold production was 46,711 ounces compared to 1,978,764 ounces of silver and 35,721 ounces of gold for the same period of 2004.

        At the Martha Mine in Southern Argentina, total cash costs per ounce in the third quarter of 2005 were $4.24 per ounce compared to $5.38 per ounce in 2004. The decreased cash cost per ounce was primarily due to the transition from contract mining to owner mining during the third quarter of 2005 and higher silver production. Silver production was 569,873 ounces in the third quarter of 2005 compared to 317,720 ounces in the third quarter of 2004. The increase in silver production was due to an increase in silver grade.

        For the nine months ended September 30, 2005, silver production was 1,555,054 ounces compared to 1,216,117 ounces in the same period last year. Total cash costs per ounce in the nine-month period were $4.52 per ounce in 2005 compared to $3.79 per ounce in 2004. The increased silver production and the increase in cash costs per ounce were primarily due to the transition from contract mining to owner mining which resulted in some duplication of costs during the first nine months of 2005.

North American Operations

        At the Rochester mine, silver production was 1,708,950 ounces and gold production was 21,436 ounces during the third quarter of 2005 compared to 1,324,127 ounces of silver and 17,432 ounces of gold in the third quarter of the prior year. Total cash costs per ounce decreased 14% to $3.64 in the third quarter of 2005 from $4.23 in the third quarter of 2004. The decrease in cash costs per ounce is primarily due to increased silver and gold production during its third quarter of 2005.

        Silver production for the nine months ended September 30, 2005 was 4,053,531 ounces compared to 3,951,428 ounces for the nine months ended September 30, 2004 and gold production increased to 49,840 ounces from 44,912 ounces. Total cash costs per ounce for the nine months ended September 30, 2005 increased by 16% to $5.56 compared to $4.78 for the same period of 2004. This increase in cash cost per ounce is attributable to higher equipment maintenance and diesel fuel costs.

        At Coeur Silver Valley (Galena Mine), silver production in the third quarter of 2005 decreased 41% to 459,805 from 785,296 ounces produced in the third quarter of 2004. Total cash costs per ounce in the third quarter of 2005 increased to $8.39 from $6.16 per ounce in the third quarter of the prior year. The production shortfall is primarily due to the loss of production from the 2400 Upper Silver Vein and the lower 72 Vein while these areas are under redevelopment, as well as ore grade dilution from development activities currently occurring on the 3400 and 4000 level 215 Vein systems.

25


        Silver production for the nine months ended September 30, 2005 was 1,729,801 ounces compared to 2,647,240 ounces for the nine months ended September 30, 2004. The decrease in silver production is primarily due to lower then expected ore grades from the lower 72 Vein area and the shorter than expected strike length of the 2400 Upper Silver Vein which has necessitated the redevelopment of these areas to reach higher ore grade horizons in the ore block. In addition, poor ground conditions have delayed the development and mining of the 117 Vein. Cash costs per ounce for the nine months ended September 30, 2005 increased 43% to $7.60 per ounce compared to $5.30 for the nine months ended September 300, 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 in the third quarter of 2005 was 220,613 ounces at a cash cost of $1.95 per ounce. Coeur’s share of total silver production for the nine months ended September 30, 2005 amounted to 279,078 ounces at a cash cost of $1.94 per ounce.

        On October 24, 2005, CBH announced that mining operations at the Endeavor mine have been suspended below the four haulage level following an uncontrolled fall of waste ground into the mine’s 6Z2 crown pillar stope. A detailed risk assessment is now underway by CBH who announced that they expect reduced production over the next two quarters.

        On September 8, 2005, the Company acquired all of the silver production and reserves, up to 17.2 million payable ounces, contained at the Broken Hill mine in Australia which is owned and operated by Perilya Broken Hill Ltd. (“PBH”) for $36.0 million. Coeur’s share of the silver production from the Broken Hill mine in the third quarter of 2005 was 83,010 ounces at a cash cost of $2.69 per ounce.









26


Operating Statistics

        The following table sets forth the amounts of silver and gold produced by the following mining properties and the cash and full costs of such production during the three- and nine-month periods ended September 30, 2005 and 2004. The Rochester, Galena, Cerro Bayo and Martha mines are wholly-owned by the Company. The Company has a contractual interest in the Endeavor and Broken Hill mine silver reserves and production.

Three Months Ended
September 30,

Nine Months Ended
September 30,

2005
2004
2005
2004
ROCHESTER MINE                    
      Silver ozs.    1,708,950    1,324,127    4,053,531    3,951,428  
      Gold ozs    21,436    17,432    49,840    44,912  
      Cash costs per oz./silver   $3.64   $4.23   $5.56   $4.78  
      Full costs per oz./silver   $5.07   $6.22   $7.49   $6.59  

GALENA MINE
  
      Silver ozs.    459,805    785,296    1,729,801    2,647,240  
      Gold ozs.    60    77    205    267  
      Cash costs per oz./silver   $8.39   $6.16   $7.60   $5.30  
      Full costs per oz./silver   $9.47   $6.77   $8.47   $5.84  

CERRO BAYO (A)
  
      Silver ozs.    742,825    606,069    2,093,964    1,978,764  
      Gold ozs.    16,744    14,482    46,711    35,721  
      Cash costs per oz./silver   $0.37   $1.63   $0.33   $2.31  
      Full costs per oz./silver   $1.86   $3.70   $1.97   $4.45  

MARTHA MINE (A)
  
      Silver ozs.    569,873    317,720    1,555,054    1,216,117  
      Gold ozs.    726    403    1,933    1,644  
      Cash costs per oz./silver   $4.24   $5.38   $4.52   $3.79  
      Full costs per oz./silver   $4.62   $6.34   $4.91   $4.68  

ENDEAVOR MINE (B)
  
      Silver ozs.    220,613    --    279,078    --  
      Cash costs per oz./silver   $1.95    --   $1.94    --  
      Full costs per oz./silver   $3.19    --   $3.18    --  

BROKEN HILL MINE (C)
  
      Silver ozs.    83,010    --    83,010    --  
      Cash costs per oz./silver   $2.69    --   $2.69    --  
      Full costs per oz./silver   $4.62    --   $4.62    --  

CONSOLIDATED PRODUCTION TOTALS
  
      Silver ozs.    3,785,076    3,033,212    9,794,438    9,793,549  
      Gold ozs.    38,966    32,394    98,689    82,544  
      Cash costs per oz./silver   $3.54   $4.33   $4.51   $4.30  
      Full costs per oz./silver   $4.78   $5.88   $5.92   $5.72  

CONSOLIDATED SALES TOTALS
  
      Silver ozs. sold    3,614,629    2,810,653    10,454,763    9,405,311  
      Gold ozs. sold    38,303    26,406    107,516    74,268  
      Realized price per silver oz.   $7.26   $6.74   $7.12   $6.67  
      Realized price per gold oz.   $452   $406   $436   $399  

(A) Beginning in the first quarter of 2005, the Company 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. Production totals represent Coeur’s share of the silver production in the three and nine months ended September 30, 2005.

27


(C) On September 8, 2005, the Company acquired all of the silver production and reserves, up to 17.2 million payable ounces, contained at the Broken Hill mine in Australia which is owned and operated by Perilya Broken Hill Ltd. (“PBH”) for $36.0 million. Coeur’s share of the silver from September 8, 2005 to September 30, 2005 was 83,010 ounces at a cash cost of $2.69 per ounce, representing Coeur’s agreed upon operating cost contribution including smelting and refining 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.

        “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 September 30, 2005
Rochester
Galena
Cerro
Bayo

Martha
Endeavor
Broken
Hill

Total
Production of Silver (ounces)      1,708,950    459,805    742,825    569,873    220,613    83,010    3,785,076  
Cash Costs per ounce   $3.64   $8.39   $0.37   $4.24   $1.95   $2.69   $3.54  








Total Cash Costs (thousands)
   $6,217   $3,859   $273   $2,415   $430   $223   $13,417  

Add/(Subtract):
  
   Third Party Smelting Costs    (281 )  (745 )  (1,126 )  (336 )  (234 )  (70 )  (2,792 )
   By-Product Credit    9,476    596    7,350    320    --    --    17,742  
   Deferred Stripping and other  
    adjustments    (54 )  --    10    174    --    --    130  
   Change in Inventory    (3,326 )  3    2,005    410    2    --    (906 )







Production Costs   $12,032   $3,713   $8,512   $2,983   $198   $153   $27,591  








 
Three Months Ended September 30, 2004
Rochester
Galena
Cerro
Bayo

Martha
Endeavor
Broken
Hill

Total
Production of Silver (ounces)    1,324,127    785,296    606,069    317,720    --    --    3,033,212  
Cash Costs per ounce   $4.23   $6.16   $1.63   $5.38    --    --   $4.33  








Total Cash Costs (thousands)
   $5,602   $4,840   $988   $1,711    --    --   $13,141  

Add/(Subtract):
  
   Third Party Smelting Costs    (234 )  (1,238 )  (974 )  (169 )  --    --    (2,615 )
   By-Product Credit    7,007    846    5,809    162    --    --    13,824  
   Deferred Stripping and other  
    adjustments    (100 )  --    48    (40 )  --    --    (92 )
   Change in Inventory    (4,439 )  (584 )  (451 )  230    --    --    (5,244 )







Production Costs   $7,836   $3,864   $5,420   $1,894       $19,014  








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Nine Months Ended September 30, 2005
Rochester
Galena
Cerro
Bayo

Martha
Endeavor
Broken
Hill

Total
Production of Silver (ounces)      4,053,531    1,729,801    2,093,964    1,555,054    279,078    83,010    9,794,438  
Cash Costs per ounce   $5.56   $7.60   $0.33   $4.52   $1.94   $2.69   $4.51  








Total Cash Costs (thousands)
   $22,536   $13,149   $691   $7,030   $541   $223   $44,170  

Add/(Subtract):
  
   Third Party Smelting Costs    (687 )  (2,877 )  (3,152 )  (903 )  (292 )  (70 )  (7,981 )
   By-Product Credit    21,637    2,224    20,150    834    --    --    44,845  
   Deferred Stripping and other  
    adjustments    (256 )  --    --    --    --    --    (256 )
   Change in Inventory    (14,499 )  (321 )  5,271    376    (36 )  --    (9,209 )







Production Costs   $28,731   $12,175   $22,960   $7,337   $213   $153   $71,569  








 
Nine Months Ended September 30, 2004
Rochester
Galena
Cerro
Bayo

Martha
Endeavor
Broken
Hill

Total
Production of Silver (ounces)    3,951,428    2,647,240    1,978,764    1,216,117    --    --    9,793,549  
Cash Costs per ounce   $4.78   $5.30   $2.14   $3.79    --    --   $4.30  








Total Cash Costs (thousands)
   $18,900   $14,039   $4,566   $4,605    --    --   $42,110  

Add/(Subtract):
  
   Third Party Smelting Costs    (655 )  (3,919 )  (3,432 )  (655 )  --    --    (8,661 )
   By-Product Credit    17,969    2,559    14,319    658    --    --    35,505  
   Deferred Stripping and other    
    adjustments    (302 )  --    38    (94 )  --    --    (358 )
   Change in Inventory    (12,239 )  315    (3,971 )  (373 )  --    --    (16,268 )







Production Costs   $23,673   $12,994   $11,520   $4,141       $52,328  







Exploration and Development Projects

Exploration Projects:

        The Company conducted exploration at all of its properties in the third quarter of 2005. The majority of this activity was focused at the Cerro Bayo, Martha and Galena operating properties and the Kensington development-stage property.

        Exploration at Cerro Bayo during the third quarter of 2005 consisted of reserve development/delineation drilling and drilling to discover new mineralization. Approximately 18,200 meters (59,700 feet) were drilled in the two programs in the quarter with approximately 60% of the total drilled footage being devoted to the discovery of new mineralization. Most notable of this effort was the discovery of the Marcella Sur vein which lies approximately 1,000 meters to the west of the current mining area and reserves. Over 3,400 meters (11,100 feet) were drilled on this new discovery which lies under approximately 70 meters (230 feet) of barren gravel and fine-grained unconsolidated sediments. Drilling to date has defined a strike length of mineralization approximately 650 meters (2,100 feet) long (north to south) and 70 meters (230 feet) of vertical height. Drilling will continue in the new Marcella Sur vein and other targets for the remainder of the year.

        At Martha, exploration was largely devoted to discovery of new mineralization. Over 7,500 meters (24,600 feet) were drilled in the quarter. Drilling will continue in the fourth quarter to discover new mineralization and define reserves at Martha.

        Exploration at the Galena mine, located in North Idaho, focused on discovery of new mineralization. A total of 19,700 feet of drilling was completed in the third quarter of 2005.

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        Exploration commenced in the third quarter of 2005 at Kensington. Nearly 10,700 feet of drilling was conducted from underground platforms accessed from the 850 and 2,050 portals to define/delineate new reserves. The program focused on zones 41, 35 and 20 in the main Kensington area. Drilling will continue at these and other targets through the remainder of the year. Drilling to date has confirmed the existence of high-grade gold mineralization.

        In the third quarter, the Company continued exploration on its properties in the Lake Victoria Goldfields District of northern Tanzania. Most of the work was focused on data compilation 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. Reconnaissance work was conducted on the Company’s Bunda 1 and 2, Biharamulo and Bukombe concessions as well.

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 nine months of 2005, the Company capitalized $8.0 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 late 2005 or early 2006. 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, the previously estimated construction period of 20 months and the original projected commencement of commercial production has been impacted. The Company believes that commercial production could occur in 2007. 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 estimated initial mine life of fifteen years and the cash cost per ounce of gold produced to be approximately $251. Construction 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. 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 Corps of Engineers’ 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 denied a hearing which concluded the administrative appeal process. On September 12, 2005, SEACC, Sierra Club and Lynn Canal Conservation filed a lawsuit in Federal District Court in Alaska challenging the permits issued by the US Corps of Engineers and the US Forest Service and on November 8, 2005, the U.S. Corps of Engineers filed a Motion for Voluntary Remand with the court to review the permit issued to the Company under the Clean Water Act (CWA) Section 404 and requested that the court stay the legal proceeding filed by SEACC and the other environmental groups pending the outcome of review. While the Company does not know the potential outcome of this filing, or the potential impact it may have on the project, it believes the U.S. Corps of Engineers followed appropriate procedures and made a correct decision in issuing the permit.

        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 commenced 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 mineral 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. Mineral resources which are not mineral reserves do not have demonstrated economic viability. 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 Amended Lease Agreement dated August 5, 2005 between Hyak Mining Company Inc. as Lessor and Coeur Alaska Inc. as Lessee which expires in August 2020.

        During the nine months ended September 30, 2005, the Company capitalized $18.0 million in connection with construction activities. The Company plans approximately $49.5 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 challenged, appealed or contested by third parties or issuing agencies or as to whether the Company will place the Kensington project into commercial production.

        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. Mr. Birak has reviewed the available data and procedures and believes all of the information contained herein with respect to all of the projects is accurate and the reserves calculations related to such projects were conducted in a professional and competent manner.

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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 mineral reserves and/or assumptions of future commodity prices. There are a number of uncertainties inherent in estimating quantities of mineral 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 estimates. We use mineral 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.

32


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

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

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

        We use several integrated steps to scientifically measure the metal content of ore placed on the leach pads during the key stages. As the ore body is drilled in preparation for the blasting process, samples of the drill residue are assayed to determine estimated quantities of contained metal. We estimate the quantity of ore by utilizing global positioning satellite survey techniques. We then process the ore through a crushing facility where the output is again weighed and sampled for assaying. A metallurgical reconciliation with the data collected from the mining operation is completed with appropriate adjustments made to previous estimates. We then transport the crushed ore to the leach pad for application of the leaching solution. As the leach solution is collected from the leach pads, we continuously sample for assaying. We measure the quantity of leach solution by flow meters throughout the leaching and precipitation process. After precipitation, the product is converted to dorè, which is the final product produced by the mine. We again sample and assay the 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 $53.8 million as of September 30, 2005. Of this amount, $13.9 million is reported as a current asset and $39.9 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  11,502    23,004    34,506  
Positive impact on  
  future cost of  
  production per silver  
  equivalent ounce for  
  increases in recovery  
  rates   $0.70   $1.23   $1.65   $0.34   $0.64   $0.91  
Negative impact on  
  future cost of  
  production per silver  
  equivalent ounce for  
  decreases in recovery  
  rates   $0.95   $2.32   $4.48   $0.39   $0.85   $1.39  

        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.

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RESULTS OF OPERATIONS

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

Revenues

        Sales of metal in the third quarter of 2005 were $42.0 million, an increase of $11.8 million, or 39%, compared with $30.2 million in the third 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 third quarter of 2005, the Company sold 3.6 million ounces of silver and 38,303 ounces of gold compared to 2.8 million ounces of silver and 26,406 ounces of gold for the same period in 2004. In the third quarter of 2005, realized silver and gold prices were $7.26 and $452 per ounce, respectively, in the third quarter of 2005 compared to $6.74 and $406 per ounce, respectively, in the comparable quarter of 2004.

        In the third quarter of 2005, the Company produced a total of 3.8 million ounces of silver and 38,966 ounces of gold, compared to 3.0 million ounces of silver and 32,394 ounces of gold in the third quarter of 2004. The increase in silver production is primarily due to increased production from the Rochester, Cerro Bayo and Martha mines, offset in part by decreased production from the Silver Valley Galena mine related to the loss of production from the 2400 Upper Silver Vein and the lower 72 Vein while these areas are under redevelopment, as well as ore grade dilution from development activities currently occurring on the 3400 and 4000 level 215 Vein systems. 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 for the third quarter of 2005 amounted to 220,613 ounces. In addition, on September 8, 2005, the Company acquired all of the silver production and reserves contained at the Broken Hill mine in Australia, which is owned and operated by Perilya Broken Hill Ltd. Coeur’s share of silver production from September 8, 2005 to September 30, 2005 amounted to 83,010 ounces.

        Interest and other income in the third quarter of 2005 increased by $1.0 million compared with the third quarter of 2004. The increase was primarily due to higher levels of cash and short-term investments on hand and higher interest rates.

Costs and Expenses

        Production costs in the third quarter of 2005 increased by $8.6 million, or 45%, from the third quarter of 2004 to $27.6 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 and to the operating cost contributions associated with the newly acquired interests in the Endeavor and Broken Hill mines.

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

        Administrative and general expenses increased by $0.7 million in the third quarter of 2005 compared to the same period in 2004 due to higher legal and accounting fees of $0.7 million primarily related to internal control over financial reporting compliance activities for 2005.

        Exploration expenses decreased by $0.1 million in the third quarter of 2005 compared to the same period in 2004.

        Pre-development expenses decreased from $3.1 million in the third quarter of 2004 to $0 in the third quarter of 2005 as a result of the San Bartolome project being classified as a development-stage property commencing with the fourth quarter of 2004 and the Kensington project being classified as a development-stage property commencing with the third quarter of 2005.

        Interest expense of $0.7 million in the third quarter of 2005 is comparable to the third quarter of 2004.

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        In the third quarter of 2004, the Company incurred merger-related expenses of $14.9 million related to the termination of the tender offer to acquire all of the outstanding shares of Wheaton River Minerals which were written off in the third quarter of 2004.

Income Taxes

        For the three months ended September 30, 2005, the Company reported an income tax provision of approximately $0.3 million. The income tax benefit is comprised of a $0.8 million deferred tax provision, based upon actual earnings for the quarter then ended, reduced by a $0.4 million deferred tax benefit arising from a release of valuation allowance due to the increased proven and probable reserves and revised projected future taxable income at CDE Cerro Bayo Ltd., a $0.6 million benefit for the release of valuation allowance associated with the expected utilization of past net operating losses and other deductible temporary differences in Argentina and Australia and offset by $0.7 million in current taxes payable in Argentina and Australia. The Company reported a current $0.2 million domestic tax benefit from a net operating loss carryback and did not report and any domestic deferred tax provision, as management determined that it is more likely than not that the net deferred taxes would not be utilized.

Net Income (Loss)

        As a result of the aforementioned factors, the Company’s net income amounted to $3.5 million, or $0.01 per share, in the third quarter of 2005 compared to a net loss of $18.1 million, or $0.08 per share, in the third quarter of 2004.

        Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004

Revenues

        Sales of metal for the nine months ended September 30, 2005 increased by $29.2 million, or 34%, over the same period of 2004 to $115.5 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 nine months ended September 30, 2005, the Company sold 10.5 million ounces of silver and 107,516 ounces of gold compared to 9.4 million ounces of silver and 74,268 ounces of gold for the same period in 2004. Realized silver and gold prices were $7.12 and $436 per ounce, respectively, in the nine months ended September 30, 2005, compared to $6.67 and $399 in the comparable period of 2004.

        In the nine months ended September 30, 2005, the Company produced a total of 9.8 million ounces of silver and 98,689 ounces of gold, compared to 9.8 million ounces of silver and 82,544 ounces of gold in the nine months ended September 30, 2004. Lower silver production at the Silver Valley Galena mine was due to lower than expected ore grades from the lower 72 Vein area and the shorter than expected strike length of the 2400 Upper Silver Vein which has necessitated the redevelopment of these areas to reach higher ore grade horizons in the ore block. In addition, poor ground conditions have delayed the development and mining of the 117 Vein. This was offset by higher silver production from the Rochester, Cerro Bayo and Martha mines. 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 for the third quarter of 2005 from the Endeavor mine amounted to 220,613 ounces. On September 8, 2005, the Company acquired all of the silver production and reserves contained at the Broken Hill mine in Australia, which is owned and operated by Perilya Broken Hill Ltd.. Coeur’s share of silver production from September 8, 2005 to September 30, 2005 amounted to 83,010 ounces.

        Interest and other income in the nine months ended September 30, 2005 increased by $4.2 million compared with the same period of 2004. The increase was due to higher levels of cash and short-term investments on hand and higher interest rates.

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Costs and Expenses

        Production costs in the nine months ended September 30, 2005 increased by $19.2 million, or 37%, from the nine months ended September 30, 2004 to $71.6 million. The increase is the result of higher diesel, utility and operating materials and supply costs at the Company’s mine operations and the Company’s operating cost contributions associated with the Company’s newly acquired interests in the Endeavor and Broken Hill mines.

Other Expenses

        Depreciation and amortization was $14.4 million in the nine months ended September 30, 2005, compared with $14.5 million in the first nine months of 2004.

        Administrative and general expenses increased by $3.4 million to $14.6 million in the nine months ended September 30, 2005, compared to the same period in 2004 due to higher outside audit services of $1.5 million primarily related to internal control over financial reporting compliance activities, higher compensation costs of $0.7 million and $1.2 million in increased other general administrative expenses.

        Exploration expenses were $9.4 million in the nine months ended September 30, 2005, compared to $7.0 million in the same period in 2004 due to increased exploration activities at the Cerro Bayo and Martha mines in South America.

        Pre-development expenses decreased by $2.7 million to $6.1 million in the first nine months of 2005, compared to $8.8 million in the same period of 2004 due to the classification of the San Bartolome and Kensington projects as development-stage properties in the fourth quarter of 2004 and the third quarter of 2005, respectively.

        Interest expense decreased by $0.4 million in the nine months ended September 30, 2005 compared with the nine months ended September 30, 2004 to $1.9 million from $2.3 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 L – Litigation and Other Events.

        In the third quarter of 2004, the Company incurred merger-related expenses of $14.9 million related to the termination of the tender offer to acquire all of the outstanding shares of Wheaton River Minerals which were written off in the third quarter of 2004.

Income Taxes

        For the nine months ended September 30, 2005, the Company recorded an income tax provision of approximately $0.8 million. The tax provision is comprised of a $2.9 million deferred tax provision, based upon actual earnings for the nine months ended September 30, 2005, reduced by $1.7 million deferred tax benefit arising from a release of valuation allowance due to increased proven and probable reserves and revised projected future taxable income at the Cerro Bayo mine, and $1.2 million benefit for the release of valuation allowance due to inome taxes associated with the expected utilization of past net operating losses and other deductible temporary differences in Argentina and $1.0 million in current taxes payable in Argentina and Australia. As of September 30, 2005, the net foreign deferred tax asset is approximately $4.4 million ($1.3 million current and $3.1 million long term). The Company reported a current $0.2 million domestic tax benefit from a net operating loss carryback and did not report any domestic deferred tax provision, as management determined that it is more likely than not that the net deferred taxes would not be utilized.

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Net Loss

        As a result of the aforementioned factors, the Company’s net loss amounted to $0.0 million, or $0.00 per share, in the nine months ended September 30, 2005 compared to a net loss of $25.1 million, or $0.12 per share, in the same period of 2004.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital; Cash and Cash Equivalents

        The Company’s working capital at September 30, 2005, decreased by $57.6 million to approximately $292.0 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 12 to 1 at September 30, 2005, compared to 16.8 to 1 at December 31, 2004.

        Net cash provided by operating activities during the third quarter of 2005 was $3.9 million compared to cash used by operating activities of $7.0 million during the third quarter of 2004. The increase in cash flow from operations of $10.8 million is primarily due to increased profitability and an increase in accounts payable in the third quarter of 2005. Net cash used in investing activities during the third quarter of 2005 was $56.8 million compared to net cash provided by investing activities of $6.7 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 Kensington and San Bartolome projects and the acquisition of the silver production from the Broken Hill mine. Net cash provided by financing activities increased by $34.3 million. The increase is due to the proceeds received from the issuance of common stock of $35.9 million. As a result of the above, cash and cash equivalents decreased by $17.2 million during the third quarter of 2005 compared to an increase of $1.2 million for the comparable quarter in 2004.

        Net cash used in operating activities for the nine months ended September 30, 2005 was $7.8 million compared to net cash used in operating activities of $14.1 million in the nine months ended September 30, 2004. The decrease in net cash flow used in operating activities is primarily due to higher sales of metal related to increased sales volumes and higher realized metal prices partially offset by increased receivables associated with the timing and payment of concentrate shipments. Net cash used in investing activities in the first nine months of 2005 was $84.3 million compared to net cash used in investing activities of $42.3 million in the prior year’s comparable period. The increase in cash used in investing activities primarily resulted from an increase in capital expenditures related to the construction activities at the Kensington and San Bartolome projects and the acquisition of the silver production from the Endeavor and Broken Hill mines. Net cash provided by financing activities was $35.0 million in the first nine months of 2005, compared to $160.0 million provided in the first nine 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 compared to the receipt of $35.4 million proceeds from the issuance of common stock. As a result of the above, cash and cash equivalents decreased by $57.0 million in the first nine months of 2005 compared to an increase of $103.6 million for the comparable period in 2004.

Debt and Capital Resources

        At September 30, 2005, the Company had $257.5 million of cash, cash equivalents and short-term investments. Management believes that its existing and available cash and cash flow from operations will allow it to meet its obligations for the next twelve months.

Issuance of Common Stock

        On September 13, 2005, the Company completed its public offering of 9,863,014 shares of common stock. The Company used the net proceeds to fund its purchase from Perilya Broken Hill Ltd. of silver contained at the Broken Hill mine in Australia.

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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 1930’s through the 1940’s, 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.

        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.

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        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 insurer for the Company is defending the action under a reservation of rights.  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.

Federal District Court of Alaska Permit Challenge

        On September 12, 2005 three environmental groups filed a lawsuit in Federal District Court in Alaska against the U.S. Corps of Engineers and the U.S. Forest Service seeking to invalidate permits issued to Coeur Alaska, Inc. for the Company’s Kensington mine. The Plaintiffs claim the Clean Water Act (CWA) Section 404 permit issued by the Corps of Engineers authorizing the deposition of mine tailings into Lower Slate Lake conflicts with the CWA and is thus illegal. They additionally claim the U.S. Forest Service’s approval of the Amended Plan of Operations is arbitrary and capricious because it relies on the 404 permit issued by the Corps.

        On September 29, 2005, Coeur Alaska, Inc. filed its Answer to Complaint and Motion to Intervene as a Defendant-Intervenor in the action. That motion is pending with the court. Once the Company has been granted Defendant-Intervenor status, it will join the agencies in their defense of the permits as issued. On October 12, 2005, the State of Alaska and Goldbelt, Inc, a local native corporation, additionally joined in filing their respective Motions to Intervene as Defendant-Intervenors as supporters of the Kensington project as permitted. On November 8, 2005, the U.S. Corps of Engineers filed a Motion for Voluntary Remand with the court to review the permit issued to the Company under the Clean Water Act (CWA) Section 404 and requested that the court stay the legal proceeding filed by SEACC and the other environmental groups pending the outcome of review. While the Company does not know the potential outcome of this filing, or the potential impact it may have on the project, it believes the U.S. Corps of Engineers followed appropriate procedures and made a correct decision in issuing the permit.

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.

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Risks Relating to our Business

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

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

  until recently, historically low gold and silver market prices;

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

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

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

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

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

        We have historically financed our operations through the issuance of common stock and convertible debt, and may be required to incur additional indebtedness in the future. We have commenced construction at the San Bartolome and Kensington projects 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 and that portion of rent deemed representative of interest) in each of the last five fiscal years. The amounts by which earnings were inadequate to cover fixed charges were approximately, $47.5 million in 2000, $3.1 million in 2001, $80.8 million in 2002, $63.9 million in 2003 and $22.7 million in 2004. Earnings were adequate to satisfy fixed charges for the nine months ended September 30, 2005 totaling $0.7 million. As of September 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 $292.0 million at September 30, 2005. In the last five full fiscal 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 $7.8 million in the first nine 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.

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  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 November 1, 2005 was $7.47 and $459.50 per ounce, respectively. The price of silver and gold may decline in the future. Factors that are generally understood to contribute to a decline in the price of silver include sales by private and government holders, and a general global economic slowdown.

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

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

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

        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 realized in actual production. Our operating results may be negatively affected by inaccurate estimates.

        The ore reserve figures presented in our public filings are estimates made by our technical personnel. Reserve estimates are a function of geological and engineering analyses that require us to make assumptions about production costs and silver and gold market prices. Reserve estimation is an imprecise and subjective process and the accuracy of such estimates is a function of the quality of available data and of engineering and geological interpretation, judgment and experience. Assumptions about silver and gold market prices are subject to great uncertainty as those prices have fluctuated widely in the past. Declines in the market prices of silver or gold may render reserves containing relatively lower grades 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.

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        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 November 1, 2005 silver and gold prices were $7.47 per ounce and $459.50 per ounce, respectively.

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

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

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

        We use several integrated steps to scientifically measure the metal content of ore placed on the leach pads during the key stages 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 $53.8 million as of September 30, 2005. Of this amount, $13.9 million is reported as a current asset and $39.9 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.

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        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:

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  11,502    23,004    34,506  
Positive impact on  
  future cost of  
  production per silver  
  equivalent ounce for  
  increases in recovery  
  rates   $0.70   $1.23   $1.65   $0.34   $0.64   $0.91  
Negative impact on  
  future cost of  
  production per silver  
  equivalent ounce for  
  decreases in recovery  
  rates   $0.95   $2.32   $4.48   $0.39   $0.85   $1.39  

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

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

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

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

        Our ability to sustain or increase our present production levels depends in part on successful exploration and development of new ore bodies and/or expansion of existing mining operations. Mineral exploration, particularly for silver and gold, involves many risks and is frequently unproductive. If mineralization is discovered, it may take a number of years until production is possible, during which time the economic viability of the project may change. Substantial expenditures are required to establish 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.

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        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.

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

        The Company currently markets its silver and gold concentrates to third party smelters in Japan, Canada and Mexico. During 2005, the Company concluded contracts which allow for 100% of the concentrate from Cerro Bayo previously being sold to a smelter in Japan to be sold to a Mexican smelter. 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.

  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.

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

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

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

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

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

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

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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, Bolivia and Australia 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.

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

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        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 September 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.

(dollars in thousands)
2005
2006
2007
2008
2009
Thereafter
Total
Fair Value
9/30/05

 Liabilities                                    
    Long Term Debt (A)  
     Fixed Rate   $ --   $ --   $ --   $ --   $ --   $ 180,000   $ 180,000   $ 148,104  
    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   $ 600    --    --    --    --    --   $ 600   $ 34  
 Exchange Rate    574    --    --    --    --    --          
 (CLP to USD)  

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        As of September 30, 2005, the Company had outstanding provisionally priced sales of $39.8 million consisting of 3.5 million ounces of silver, 31,303 ounces of gold and 636,602 pounds of copper which had a fair value of approximately $40.6 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 the timing of when they 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. In that connection, the Company had identified at December 31, 2004 material weaknesses in its internal control over financial reporting relating to its accounting for income taxes, Chilean operations and certain foreign, non-routine transactions. During the first quarter of 2005, the Company implemented remediation measures 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.  Additional internal processes monitoring decentralized operations were implemented during the second quarter, the Company has continued and plans to continue to retain its consulting certified public accountant skilled in the area of taxation and related financial reporting and, during the third quarter, an additional foreign tax advisor was engaged to assist in connection with foreign tax accounting. As a result of the implementation of those measures, and 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 were effective as of September 30, 2005.

(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 September 30, 2005, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. Other Information

Item 6. Exhibits

  a) Exhibits.
  10.1 Silver Sale Agreement, dated September 8, 2005, between the Registrant, Perilya Broken Hill Ltd and CDE Australia Pty. Ltd. (Portions of this exhibit have been omitted pursuant to a request for confidential treatment.)
  10.2 Employment agreement and change in control agreement, effective October 15, 2005, between the Registrant and James K. Duff.
  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 November 9, 2005
/s/ Dennis E. Wheeler
DENNIS E. WHEELER
Chairman, President and
  Chief Executive Officer


Dated November 9, 2005
/s/ James A. Sabala
JAMES A. SABALA
Executive Vice President and
  Chief Financial Officer








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