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 March 31, 2006.

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 a large accelerated filer, an accelerated filer or a non-accelerated filer (See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 under the Exchange Act).

Large accelerated filer    |X|        Accelerated filer   |_|        Non-accelerated filer   |_|

Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of 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 277,950,182 shares were issued and outstanding as of May 5, 2006.


COEUR D’ALENE MINES CORPORATION

INDEX

Page No.

Part I.
Financial Information  

Item 1.
Financial Statements
Consolidated Balance Sheets - Unaudited   3
March 31, 2006 and December 31, 2005

 
Consolidated Statements of Operations and   5
Comprehensive Income (Loss) - Unaudited
Three Months Ended March 31, 2006 and 2005

 
Consolidated Statements of Cash Flows - Unaudited   6
Three Months Ended March 31, 2006 and 2005

 
Notes to Consolidated Financial Statements - Unaudited   7

Item 2.
Management’s Discussion and Analysis of
Financial Condition and Results of Operations 26

Item 3.
Quantitative and Qualitative Disclosures About Market Risk 42

Item 4.
Controls and Procedures 43

Part II.
Other Information 44

Item 1A.
Risk Factors 44

Item 6.
Exhibits 47




2


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

March 31,
2006

December 31,
2005

ASSETS (In Thousands)

CURRENT ASSETS
           
    Cash and cash equivalents   $ 347,651   $ 214,616  
    Short-term investments    26,690    25,726  
    Receivables    23,038    27,986  
    Ore on leach pad    27,743    25,394  
    Metal and other inventories    12,986    12,807  
    Deferred tax assets    2,678    2,255  
    Prepaid expenses and other    6,388    4,707  
    Assets of operations held for sale (Note D)    15,877    14,828  


     463,051    328,319  

PROPERTY, PLANT AND EQUIPMENT
  
    Property, plant and equipment    109,049    105,107  
    Less accumulated depreciation    (59,852 )  (57,929 )


     49,197    47,178  

MINING PROPERTIES
  
    Operational mining properties    122,650    121,441  
    Less accumulated depletion    (107,794 )  (105,486 )


     14,856    15,955  

    Mineral interests
    72,201    72,201  
    Less accumulated depletion    (3,860 )  (2,218 )


     68,341    69,983  

    Non-producing and development properties
    89,886    72,488  


     173,083    158,426  

OTHER ASSETS
  
    Ore on leach pad, non-current portion    31,316    29,254  
    Restricted cash and cash equivalents    17,041    16,943  
    Debt issuance costs, net    5,378    5,454  
    Deferred tax assets    2,837    923  
    Other    7,666    8,319  


     64,238    60,893  


         TOTAL ASSETS   $ 749,569   $ 594,816  


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

3


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

March 31,
2006

December 31,
2005

(In thousands except
share data)

LIABILITIES AND SHAREHOLDERS’ EQUITY
           

CURRENT LIABILITIES
  
    Accounts payable   $ 12,426   $ 17,189  
    Other current liabilities    6,604    6,274  
    Accrued interest payable    469    1,031  
    Accrued salaries and wages    4,864    7,840  
    Current taxes payable    1,716    66  
    Liabilities of operations held for sale (Note D)    12,816    12,908  


     38,895    45,308  

LONG-TERM LIABILITIES
  
    11/4% Convertible Senior Notes due January 2024    180,000    180,000  
    Reclamation and mine closure    24,301    24,082  
    Other long-term liabilities    4,286    3,873  


     208,587    207,955  

COMMITMENTS AND CONTINGENCIES
  

SHAREHOLDERS’ EQUITY
  
    Common Stock, par value $1.00 per share; authorized 500,000,000  
        shares, issued 278,869,045 and 250,961,353 shares in 2006 and  
        2005 (1,059,211 shares held in treasury)    278,869    250,961  
    Additional paid-in capital    775,611    656,977  
    Accumulated deficit    (537,369 )  (551,357 )
    Shares held in treasury    (13,190 )  (13,190 )
    Accumulated other comprehensive loss    (1,834 )  (1,838 )


     502,087    341,553  


TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $ 749,569   $ 594,816  


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






4


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

Three Months Ended March 31,
2006
2005

REVENUES
           

Sales of metal
   $ 44,854   $ 32,235  

COSTS AND EXPENSES
  
Production costs applicable to sales    20,099    17,342  
Depreciation and depletion    6,318    4,149  
Administrative and general    5,090    5,549  
Exploration    1,968    2,709  
Pre-development    --    2,369  
Litigation settlement    --    1,600  


         Total cost and expenses    33,475    33,718  



OTHER INCOME AND EXPENSE
  
Interest and other income    2,521    1,948  
Interest expense, net of capitalized interest    (521 )  (570 )


         Total other income and expense    2,000    1,378  



Income (loss) from continuing operations before income taxes
    13,379    (105 )
Income tax benefit (provision)    347    (679 )



INCOME (LOSS) FROM CONTINUING OPERATIONS
    13,726    (784 )
Income (loss) from discontinued operations, net of income taxes    612    (361 )



NET INCOME (LOSS)
    14,338    (1,145 )
Other comprehensive income (loss)    4    (1 )



COMPREHENSIVE INCOME (LOSS)
   $ 14,342   $ (1,146 )



BASIC AND DILUTED INCOME (LOSS) PER SHARE
  
Basic income (loss) per share:  
Income (loss) from continuing operations   $ 0.06   $ (0.00 )
Income (loss) from discontinued operations    --    --  


Net income (loss)   $ 0.06   $ (0.00 )



Diluted income (loss) per share:
  
Income (loss) from continuing operations   $ 0.05   $ (0.00 )
Income (loss) from discontinued operations    --    --  


Net income (loss)   $ 0.05   $ (0.00 )



Weighted average number of shares of common stock
  
   Basic    252,485    239,985  
   Diluted    277,383    239,985  

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

5


COEUR D’ALENE MINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2006 and 2005
(Unaudited)

Three Months Ended March 31,
2006
2005
(In Thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net income (loss )     $ 14,338   $ (1,145 )
Add (deduct) non-cash items:    
    Depreciation and depletion       6,318     4,149  
    Deferred taxes       (2,073 )   679  
    Unrealized gain on embedded derivative, net       (1,559 )   (391 )
    Share based compensation       625     400  
    Other charges       502     410  
Changes in Operating Assets and Liabilities:    
    Receivables       4,830     (1,316 )
     Prepaid and other current assets       336     882  
    Inventories       (4,590 )   (3,256 )
    Accounts payable and accrued liabilities       (918 )   (2,332 )
Discontinued operations       (645 )   (577 )



CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
      17,164     (2,497 )

CASH FLOWS FROM INVESTING ACTIVITIES:
   
    Purchases of short-term investments       (11,381 )   (10,546 )
    Proceeds from sales of short-term investments       10,316     6,015  
    Capital expenditures       (27,806 )   (3,499 )
    Other       (241 )   (29 )
    Discontinued operations       (497 )   (632 )


CASH USED IN INVESTING ACTIVITIES       (29,609 )   (8,691 )

CASH FLOWS FROM FINANCING ACTIVITIES:
   
    Proceeds from issuance of common stock       154,560     --  
    Payment of public offering costs       (8,388 )   --  
    Common stock repurchased       (739 )   (569 )
    Other       47     (80 )


    CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:       145,480     (649 )



INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
      133,035     (11,837 )

    Cash and cash equivalents at beginning of period
      214,616     273,068  


    Cash and cash equivalents at end of period     $ 347,651   $ 261,231  


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

6


Coeur d’Alene Mines
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-month period ended March 31, 2006 are not necessarily indicative of the results that may be expected for the year ended December 31, 2006. The balance sheet at December 31, 2005 has been derived from the audited financial statements at that date. 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 ending December 31, 2005.

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 a 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 assets or as 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. Third party smelting and refining costs of $2.6 million and $2.2 million during the three months ended March 31, 2006 and 2005, respectively, are recorded as a reduction of revenue.

        At March 31, 2006, the Company had outstanding provisionally priced sales of $43.5 million, consisting of 3.2 million ounces of silver, 22,000 ounces of gold and 0.4 million pounds of copper. For each one cent per ounce change in realized silver price, revenue would vary (plus or minus) approximately $32,000; for each one dollar per ounce change in realized gold price, revenue would vary (plus or minus) approximately $22,000; and for each one cent per pound change in realized copper price, revenue would vary (plus or minus) approximately $4,000. At March 31, 2005, the Company had outstanding provisionally priced sales of $43.0 million consisting of 3.8 million ounces of silver, 37,848 ounces of gold and 0.9 million pounds of copper. For each one cent per ounce change in realized silver price, revenue would vary (plus or minus) approximately $37,600; for each one dollar per ounce change in realized gold price, revenue would vary (plus or minus) approximately $37,800; and for each one cent per pound change in realized copper price, revenue would vary (plus or minus) approximately $9,300.

        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, Chile, Argentina and Australia 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 the 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 dore, 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 $59.0 million as of March 31, 2006. Of this amount, $27.7 million is reported as a current asset and $31.3 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 ore on leach pad inventory is stated at actual production costs incurred to produce and place ore on the leach pad during the current period, adjusted for the effects on monthly production costs of abnormal production levels.

        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 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 nineteen 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. Commencing in 2003, the estimated recoveries for silver and gold were revised to 61.5% and 93%, respectively, from the 59% and 89% used in 2002. 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, dore, 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 dore 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, capital leases, 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: Costs incurred to develop new properties are capitalized as incurred, where it has been determined that the property can be economically developed. At the Company’s underground mines, these costs include the cost of building access ways, shaft sinking and access, lateral development, drift development, ramps and infrastructure development. All such costs are amortized using the units of production method over the estimated life of the ore body based on recoverable ounces to be mined from proven and probable reserves. 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 costs of product inventory and charged against operations as products are sold. Major development expenditures incurred to increase production or extend the life of the mine are capitalized. Mineral exploration costs are expensed as incurred.

9


        Mineral Interests: 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 recoverable ounces to be mined from 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.

        Asset Impairment: 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. 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. 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 and development property. An impairment loss is measured and recorded based on the difference between book value and 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 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. If the assets are impaired, a calculation of fair value is performed and if the fair value is lower than the carrying value of the assets, the assets are reduced to their fair market value. 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 ore 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 March 31, 2006 and December 31, 2005, the Company held certificates of deposit and cash under these agreements of $17.0 million and $16.9 million, respectively, which were restricted for this purpose. The ultimate timing of 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 is 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.

10


        Deferred Stripping Costs: Effective January 1, 2006, the Company adopted Emerging Issues Task Force (“EITF”) Issue No. 04-06, “Accounting for Stripping Costs Incurred during Production in the Mining Industry.” EITF Issue No. 04-06 addresses the accounting for stripping costs incurred during the production phase of a mine and refers to these costs as variable production costs that should be included as a component of inventory to be recognized in costs applicable to sales in the same period as the revenue from the sale of inventory. The consensus requires application through recognition of a cumulative effect adjustment to opening retained earnings in the period of adoption, with no charge to current earnings for prior periods. The Company recorded a charge of approximately $0.4 million to retained earnings at January 1, 2006 to write off deferred stripping costs, as the cumulative effect of a change in accounting method.

        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. Accretion, 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 H 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 derivative financial instruments 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 instrument 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 Consolidated Statements of 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 I – Derivative Financial Instruments and Fair Value of Financial Instruments.

11


        Stock-based Compensation Plans: Effective January 1, 2006, the Company began recording compensation expense associated with awards of equity instruments in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Share-Based Payment”. Prior to January 1, 2006, the Company accounted for awards of equity instruments according to the provisions of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations, and therefore no related compensation expense was recorded for awards granted with no intrinsic value. The Company adopted the modified prospective transition method provided for under SFAS No. 123(R), and, consequently, has not retroactively adjusted results from prior periods. Under this transition method, compensation cost associated with awards of equity instruments recognized in the first three months of 2006 includes: 1) amortization related to the remaining unvested portion of all awards granted for the fiscal years 1995 to 2005, based on the grant date fair value, estimated in accordance with the original provisions of SFAS No. 123, “Accounting for Stock-Based Compensation”; and 2) amortization related to all equity instruments awards granted subsequent to December 31, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123(R). The compensation cost is included in administrative and general expenses.

        The compensation expense recognized in the Company’s consolidated financial statement for the three months ended March 31, 2006 for awards of equity instruments was $0.6 million. As of March 31, 2006, there was $3.5 million of total unrecognized compensation cost (net of estimated forfeitures) related to unvested stock options, restricted stock grants and performance share grants which is expected to be recognized over a weighted-average vesting period of 2.6 years.

        The Company continues to estimate the fair value of each stock option award on the date of grant using the Black-Scholes option valuation model. The Company now estimates forfeitures of stock based awards based on historical data and adjusts the forfeiture rate periodically. The adjustment of the forfeiture rate will result in a cumulative adjustment in the period the forfeiture estimate is changed. During the three months ended March 31, 2006, the Company recorded an adjustment of $0.1 million to reduce compensation expense for forfeited awards.

        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 or benefits 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.

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




12


For the period ended March 31,
2006
2005
Net income (loss)     $ 14,338   $ (1,145 )
Unrealized gain (loss) on marketable securities    102    48  
Change in fair value of cash flow hedges, net of settlements    (98 )  (49 )


Comprehensive income (loss)   $ 14,342   $ (1,146 )


        Net Income (Loss) Per Share: The Company follows SFAS No. 128, “Earnings Per Share,” which requires the presentation of basic and diluted earnings per share. Basic earnings per share is computed by dividing 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 and debentures outstanding in the years ending December 31, 2005, 2004 and 2003 are as follows:

For the Period Ended
March 31, 2006

For the Period Ended
March 31, 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   $ 14,338           $ (1,145 )        


Basic EPS  
   Net income (loss)  
  available to common  
  stockholders   $ 14,338    252,485   $ 0.06   $ (1,145 )  239,985   $ (0.01 )
Effect of Dilutive Securities  
   Equity awards    --    1,214        --    --      
   1.25% Convertible Notes    494    23,684        --    --      




Diluted EPS  
   Net income (loss)  
  available to common  
  stockholders   $ 14,832    277,383   $ 0.05   $ (1,145 )  239,985   $ (0.01 )






        For the three months ended March 31, 2006, options to purchase 339,588 shares of common stock at prices between $6.66 to $15.19 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 March 31, 2006.

The following potentially dilutive shares have been excluded from earnings per share calculation as of March 31, 2005 as their effect is antidilutive:

March 31, 2005
Stock Options      2,352,367  
1.25% Notes  
  Convertible at $7.60 per share    23,684,211  

Total potentially dilutive shares    26,036,578  

        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.

        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 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; useful lives utilized for depreciation, depletion, amortization and accretion of future cash flows for long lived assets; estimates of recoverable gold and silver ounces in ore on leach pad; reclamation and remediation costs; valuation allowance for deferred tax assets; and post-employment and other employee benefit liabilities.

13


        Reclassifications: Certain amounts in prior years have been reclassified to conform to March 31, 2006 presentation. The most significant reclassifications were to reclassify the consolidated balance sheet amounts and the consolidated statements of operations from historical presentation to assets and liabilities of operations held for sale on the consolidated balance sheets and to income (loss) from discontinued operations in the consolidated statements of operations for all periods presented. The consolidated statements of cash flows have been reclassified for assets held for sale and discontinued operations for all periods presented.

NOTE C- METAL AND OTHER INVENTORIES

        Inventories consist of the following:

March 31,
2006

December 31,
2005

(in thousands)

Concentrate and dore inventory
    $ 7,644   $ 7,836  
Supplies    5,342    4,971  


Metal and other inventories   $ 12,986   $ 12,807  


NOTE D – DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES HELD FOR SALE

        During the first quarter of 2006, the Company committed to a plan to sell Coeur Silver Valley Inc. (“CSV”), a wholly owned subsidiary of Coeur d’Alene Mines Corporation, that owns and operates the Galena underground silver mine and adjoining properties in Northern Idaho. On April 10, 2006, the Company announced that it had entered into an agreement to sell 100% of the shares CSV to U.S. Silver Corporation for $15 million in cash. The transaction is expected to close by June 1, 2006. The sale is contingent upon customary closing conditions such as U.S. Silver’s arrangements for financing, approval by the board of directors of Coeur d’Alene Mines, and completion of final documentation. Pursuant to SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” CSV has been classified as held for sale and the results of its operations have been reported in discontinued operations for all periods presented.

        The following table details selected financial information included in the income (loss) from discontinued operations in the consolidated statements of operations for the three months ended March 31, 2006 and March 31, 2005 (in thousands):

Three Months Ended
March 31, 2006
March 31, 2005
Sales of metal     $ 5,710   $ 4,579  
Production costs applicable to sales    (4,260 )  (3,899 )
Depreciation and depletion    (595 )  (512 )
Mining exploration    (210 )  (409 )
Other    (33 )  (120 )


Income (loss) from discontinued operations   $ 612   $ (361 )




14


        The major classes of assets and liabilities of operations held for sale in the consolidated balance sheet are as follows (in thousands):

March 31, 2006
December 31, 2005
Assets            
    Receivables   $ 2,836   $ 2,036  
    Prepaids    911    906  
    Inventory    2,805    2,561  
    Property, plant and equipment (net)    1,907    2,016  
    Operational mining properties, net    6,492    6,357  
    Other    926    952  


Total assets of discontinued operations   $ 15,877   $ 14,828  



Liabilities
  
    Accounts payable   $ 615   $ 747  
    Accrued liabilities    292    166  
    Accrued salaries, wages and benefits    540    578  
    Reclamation and mine closure    7,031    6,905  
    Defined benefit liabilities    2,588    2,588  
    Other non-current liabilities    1,750    1,924  


Total liabilities of discontinued operations   $ 12,816   $ 12,908  


NOTE E- SHARE-BASED COMPENSATION PLANS

        The company has a Long Term Incentive Plan and Directors’ Plan, which is more fully described in Note K of the Company’s notes to the consolidated financial statements included in the 2005 Annual Report on Form 10-K, that provides for the grant to eligible employees and directors of stock options, share appreciation rights (SARs), restricted shares and performance shares.

        Stock options granted under the Company’s incentive plans vest over three years and are exercisable over a period not to exceed 10 years from the grant date. The value of each option award is estimated on the date of the grant using the Black-Scholes option pricing model.

        Restricted stock is granted at prices equal to the fair market value of the shares on the date of grant and vest in equal installments annually over three years. Holders of the restricted stock are entitled to vote the shares and to receive any dividends declared on the shares.

        Performance shares also are granted at the fair market value of the underlying shares on the date of grant. Vesting is contingent on meeting certain performance measures based on relative total shareholder return. The performance shares vest at the end of the three-year service period. Performance shares granted under the plan assume that the performance measure will be achieved. If such performance measures are not met, no compensation cost is recognized and any recognized compensation is reversed.

        Effective January 1, 2006, the Company began recording compensation expense associated with awards of equity instruments in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Share-Based Payment”. Prior to January 1, 2006, the Company accounted for awards of equity instruments according to the provisions of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations, and therefore no related compensation expense was recorded for awards granted with no intrinsic value. The Company adopted the modified prospective transition method provided for under SFAS No. 123(R), and, consequently, has not retroactively adjusted results from prior periods. Under this transition method, compensation cost associated with awards of equity instruments recognized in the first three months of 2006 includes: 1) amortization related to the remaining unvested portion of all awards granted for the fiscal years 1995 to 2005, based on the grant date fair value, estimated in accordance with the original provisions of SFAS No. 123, “Accounting for Stock-Based Compensation”; and 2) amortization related to all equity instruments awards granted subsequent to December 31, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123(R). The compensation cost is included in administrative and general expenses.

15


        Prior to the Company’s adoption of SFAS No. 123(R), benefits of tax deduction in excess of recognized compensation costs were reported as operating cash flows. SFAS No. 123(R) requires excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid. There were no significant excess tax benefits for the three-month period ended March 31, 2006.

        The compensation expense recognized in the Company’s consolidated financial statement for the three months ended March 31, 2006 for awards of equity instruments was $0.6 million. As of March 31, 2006, there was $3.5 million of total unrecognized compensation cost (net of estimated forfeitures) related to unvested stock options, restricted stock grants and performance share grants which is expected to be recognized over a weighted-average vesting period of 2.6 years.

        The Company continues to estimate the fair value of each stock option award on the date of grant using the Black-Scholes option valuation model. The Company now estimates forfeitures of stock based awards based on historical data and adjusts the forfeiture rate periodically. The adjustment of the forfeiture rate will result in a cumulative adjustment in the period the forfeiture estimate is changed. During the three months ended March 31, 2006, the Company recorded an adjustment of $0.1 million to reduce compensation expense for forfeited awards.

        The impact of adopting SFAS No. 123(R) as of January 1, 2006 resulted in a decrease in net income of $0.3 million, or nil per basic and diluted share. Cash received from share options exercised under the Long-Term Incentive Plan for the first quarter of 2006 was $0.4 million and is reflected as a financing activity in the Company’s consolidated statements of cash flows. The impact of adoption excludes the amortization of restricted stock awards in the amount of $0.3 million for the three months ended March 31, 2006. Compensation expense related to the amortization of restricted stock awards was recognized prior to the implementation of SFAS No. 123(R).

        The following pro-forma information, as required by SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment of FASB Statement No. 123,” is presented for comparative purposes and illustrates the effect on net income per common share for the periods presented as if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation prior to December 31, 2005.

Three Months Ended
March 31,2005

(in thousands except per share data)

Net loss As reported
    $ (1,145 )
    Add: Stock-based employee compensation expense  
    included in reported net loss    400  
    Less: Stock-based employee compensation expense  
    determined under fair value for all awards    (603 )

Net income - Pro forma   $ (1,348 )


Net income per share:
  
    Basic and diluted - As reported   $ (0.00 )

    Basic and diluted - Pro forma   $ (0.01 )

16


        The weighted average fair value of stock options on the date of grant, and the assumptions used to estimate the fair value of the stock options using the Black-Scholes option valuation model were as follows:

Three Months Ended
March 31,
2006

March 31,
2005


Weighted average fair value of options granted
    $ 3.35   $ 3.92  
Expected volatility    68.5%  68.5%
Expected life    6 yrs    6 yrs  
Risk-free interest rate    4.6%  3.9%
Expected dividend yield    0.00%  0.00%

        The expected volatility of the option is determined using historical volatilities based on historical stock prices. The expected life of options granted during the first quarter of 2006 was based on the Company’s historical share option exercise experience. The Company estimated the expected life of options granted using the midpoint between the vesting date and the original contractual term. The risk free rate was determined using the yield available on U.S. Treasury Zero-coupon issues with a remaining term equal to the expected life of the option. The Company has not paid dividends on its common stock since 1996.

        The following table summarizes stock option activity during the three months ended March 31, 2006:

Number of
Shares

Weighted
Average
Exercise
Price


Outstanding at December 31, 2005
     2,218,629   $ 3.16  
Granted    332,169    5.14  
Exercised    (186,206 )  1.85  
Forfeited    (12,210 )  17.94  


Outstanding at March 31, 2006    2,352,382   $ 3.47  


        The following table summarizes information for options currently outstanding at March 31, 2006:

Options Outstanding
Options Exercisable
Range of
Exercise
Price

Number
Outstanding

Weighted
Average
Remaining
Contractual
Life (Years)

Weighted
Average
Exercise
Price

Number
Exercisable

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Life (Years)

$0.74 to $1.22      453,145    5.52   $ 0.80    453,145   $ 0.80    5.52  
$1.23 to $1.85    466,543    6.34   $ 1.65    466,543   $ 1.65    6.34  
$1.86 to $2.63    111,502    6.65   $ 2.10    111,502   $ 2.10    6.65  
$2.64 to $3.92    626,651    7.91   $ 3.83    317,762   $ 3.75    6.97  
$3.93 to $7.09    656,936    8.72   $ 6.00    247,368   $ 6.82    7.40  
$7.10 to $17.94    37,605    1.32   $ 11.68    37,605   $ 11.68    1.32  






     2,352,382    7.20   $ 3.47    1,633,925   $ 2.87    6.30  






17


        As of March 31, 2006, the total future compensation cost related to non-vested options not yet recognized in the statement of income was $1.4 million and the weighted average period over which these awards are expected to be recognized was 2.4 years. The total intrinsic value of share options exercised during the first quarter of 2006 and 2005 was $0.8 million and $0, respectively. There were no options exercised during the first quarter of 2005. At March 31, 2006, the total intrinsic value was $7.3 million and $6.0 million for stock options outstanding and exercisable, respectively.

        The following table summarizes non-vested stock activity during the three months ended March 31, 2006:

Number of
Shares

Weighted
Average Grant
Date Fair Value


Non-vested at December 31, 2005
     661,381   $ 3.30  
Granted    220,894    5.14  
Vested    (445,025 )  2.71  
Forfeited    --    --  


Non-vested at March 31, 2006    437,250   $ 4.83  


        The fair value of non-vested shares is determined based on the closing stock price on the grant date. As of March 31, 2006, there was $1.3 million of total unrecognized compensation cost related to non-vested restricted stock-based compensation to be recognized over a weighted-average period of 2.5 years.

        The following table summarizes performance shares activity during the three months ended March 31, 2006:

Number of
Shares

Weighted
Average Grant
Date Fair Value

Outstanding at December 31, 2005      --   $ --  
Granted    220,894    5.14  
Exercised    --    --  
Forfeited    --    --  


Outstanding at March 31, 2006    220,894   $ 5.14  


        The fair value of performance shares is determined based on the closing price on the grant date. As of March 31, 2006, there was $0.8 million of total unrecognized compensation cost related to performance shares to be recognized over the weighted average period of 2.9 years.

NOTE F- 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. Net operating losses in foreign countries have an indefinite carryforward period.

        For the three months ended March 31, 2006, the Company reported an income tax benefit of approximately $0.3 million. The income tax benefit is comprised of a $0.7 million deferred tax provision, based upon actual earnings for the quarter then ended, reduced by a $2.8 million and $0.2 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. and Coeur Argentina, respectively, offset by $1.4 million in current taxes payable in Argentina and Australia and $0.2 million of deferred taxes payable in Australia. The Company recorded a current $0.4 million tax provision for foreign tax withholding.

18


        The income tax provision for the first three months ended March 31, 2006 and 2005 varies from the statutory rate primarily because of foreign operations and management’s determination as to the realization of net deferred tax assets.

NOTE G- 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, Chief Financial Officer, the Senior Vice President of North American Operations and the President of South American Operations.

        The operating segments are managed separately because each segment represents a distinct use of company resources which contribute to Company cash flows in its respective geographic area. The Company’s reportable operating segments include the Rochester, Cerro Bayo, Martha, San Bartolome, Kensington and CDE Australia (Endeavor and Broken Hill) mining properties. As of March 31, 2006, Coeur Silver Valley (Galena) was classified as held for sale and reported in discontinued operations (see Note D). 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 these precious metal concentrates and/or refined precious metals. The Coeur Silver Valley, Cerro Bayo and Martha mines sell precious metal concentrates, typically under long-term contracts, to smelters located in Canada (Falconbridge Ltd. and Teck Cominco Metals Ltd.), Japan (Sumitomo Corporation and Dowa Mining Ltd.) and Mexico ( Met-Mex Penoles). Refined gold and silver produced by the Rochester mine is principally sold on a spot basis to precious metals trading banks such as Standard Bank and Mitsui. Concentrates produced at CDE Australia (Endeavor and Broken Hill mines) are sold to Zinifex, an Australia smelter. The Company’s exploration programs are reported under the “other” segment. The other segment also includes the corporate headquarters, elimination of intersegment transactions and other items necessary to reconcile to consolidated amounts. The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies above. The Company evaluates performance and allocates resources based on profit or loss before interest, income taxes, depreciation and amortization, unusual and infrequent items, and extraordinary items.






19


        Financial information relating to the Company’s segments is as follows:

Segment Reporting
(In Thousands)

Rochester
Mine

Cerro
Bayo Mine

Martha
Mine

Endeavor
Broken
Hill

San
Bartolome

Kensington
Corporate
and
Other

Total
Three Months Ended
March 31, 2006

Sales of metal
    $ 22,204   $ 10,714   $ 5,427   $ 566   $ 5,943   $ --   $ --   $ --   $44,854  
Segment profit (loss)    10,460    5,322    1,977    509    4,348    (3 )  (7 )  (2,388 )  20,218  

Depreciation and depletion
    3,038    1,322    242    110    1,533    --    --    73    6,318  
Interest income    --    48    4    --    --    --    --    2,892    2,944  
Interest expense    --    27    --    --    --    --    --    494    521  
Income tax (benefit)  
  expense    --    (2,087 )  491    --    --    --    --    1,249    (347 )

Segment assets from
  
 continuing operations (A)    83,081    42,621    6,974    15,253    34,571    34,320    99,966    6,965    323,751  
Capital expenditures    159    1,100    683    --    --    1,944    23,752    168    27,806  

Rochester
Mine

Cerro
Bayo Mine

Martha
Mine

Endeavor
Broken
Hill

San
Bartolome

Kensington
Corporate
and
Other

Total
Three Months Ended
March 31, 2005

Sales of metal
    $ 15,448   $ 13,335   $ 3,452    --    --   $ --   $ --   $ --   $ 32,235  
Segment profit (loss)    5,937    5,628    1,168    --    --    (114 )  (2,612 )  (3,793 )  6,214  

Depreciation and depletion
    2,629    1,271    170    --    --    --    17    62    4,149  
Interest income    --    20    --    --    --    --    --    1,825    1,845  
Interest expense    --    --    --    --    --    --    --    570    570  
Litigation settlement    --    --    --    --    --    --    --    (1,600 )  (1,600 )
Income tax (benefit)  
  expense    --    679    --    --    --    --    --    --    679  

Segment assets from
  
  continuing operations (A)    76,331    30,218    4,455    --    --    23,188    25,938    6,451    166,581  
Capital expenditures    187    587    671    --    --    1,879    106    69    3,499  

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

Three Month Ended March 31,
2006
2005

Income (loss) from continuing operations before income taxes
           
Total segment profit and loss   $ 20,218   $ 6,214  
Depreciation and amortization    (6,318 )  (4,149 )
Interest expense    (521 )  (570 )
Litigation settlement    --    (1,600 )


    Income (loss) from continuing operations before income taxes   $ 13,379   $ (105 )



Assets
  
Total assets for reportable segments   $ 323,751   $ 166,581  
Cash and cash equivalents    347,651    261,232  
Short-term investments    26,690    52,920  
Other assets    35,600    27,679  
Total assets held for sale    15,877    13,941  


        Total consolidated assets   $ 749,569   $ 522,353  


20


Geographic Information
Three Months Ended
March 31, 2006:
Revenues
Long-Lived
Assets


United States
    $ 22,204   $ 117,843  
Australia    6,509    48,221  
Chile    10,714    19,298  
Argentina    5,427    3,013  
Bolivia    --    33,677  
Other Foreign Countries    --    228  


    Total   $ 44,854   $ 222,280  



Three Months Ended
  
March 31, 2005  

United States
   $ 15,448   $ 52,277  
Australia    --    --  
Chile    13,335    14,589  
Argentina    3,452    1,558  
Bolivia    --    22,982  
Other Foreign Countries    --    144  


    Total   $ 32,235   $ 91,550  


NOTE H- 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 Company uses 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.

        Changes to the Company’s asset retirement obligations are as follows:

Three Months Ended March 31,
2006
2005
(in thousands)
Asset retirement obligation - January 1     $ 30,429   $ 23,436  
Accretion    571    438  
Additions    --    --  
Settlements    (168 )  (18 )


Asset retirement obligation - March 31   $ 30,832   $ 23,856  


NOTE I- DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

        The Company enters into derivative instruments to manage the Company’s exposure to foreign currency exchange rates and market prices associated with changes in gold and silver commodity prices. The Company accounts for its derivative contracts in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” Accordingly, unrealized gains and losses related to the change in fair market value of derivative contracts, which qualify and are designated as cash flow hedges, are recorded as other comprehensive income or loss and such amounts are recognized into earnings as the associated contracts are settled.

21


Forward Foreign Exchange Contracts

        During the first quarter of 2006, the Company entered into forward foreign currency exchange contracts to reduce the foreign exchange risk associated with forecasted Chilean peso operating costs for 2006 at its Cerro Bayo mine. The contracts require the Company to exchange U.S. dollars for Chilean pesos at a weighted average exchange rate of 525 pesos to each U.S. dollar. At March 31, 2006, the Company had foreign exchange contracts of $9.9 million in U.S. dollars, respectively. For the three months ended March 31, 2006 and 2005, the Company recorded a realized loss of approximately $0.1 million and nil, respectively, in connection with its foreign currency hedging program. As of March 31, 2006, the fair value of the foreign exchange contracts was a liability of $0.3 million. Change in gains (losses) accumulated in other comprehensive income (loss) for cash flow hedging contracts are as follows:

March 31,
2006
2005
Beginning balance     $ (171 ) $ --  
Reclassification to earnings    18    --  
Change in fair value    (114 )  (49 )


Ending balance   $ (267 ) $ (49 )


Commodity Derivatives

        The Company has occasionally entered into forward metal sales contracts to manage the price risk on a portion of its cash flows against fluctuating gold prices. As of March 31, 2006, the Company had no outstanding forward sales contracts for either gold or silver. For metal delivery contracts, the realized price pursuant to the contract is recognized when physical gold or silver is delivered in satisfaction of the contract.

Concentrate Sales Contracts

        The Company enters into concentrate sales contracts with third-party smelters. The contracts, in general, provide for a provisional payment based upon provisional assays and quoted metal prices and the provisionally priced sales contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of concentrates at the forward price at the time of sale. The embedded derivative, which is the final settlement price based on a future price, does not qualify for hedge accounting. These embedded derivatives are recorded as derivative assets (in Prepaid expenses and other), or derivative liabilities (in other current liabilities), on the balance sheet and are adjusted to fair value through earnings each period until the date of final settlement.

        At March 31, 2006 the Company had outstanding provisionally priced sales of $43.5 million, consisting of 3.2 million ounces of silver, 22,000 ounces of gold and 0.4 million pounds of copper, which had a fair value of approximately $48.1 million, including the embedded derivative.

        The credit risk exposure related to any potential hedging activities is limited to the unrealized gains, if any, on outstanding contracts based on current market prices. To reduce counter-party credit exposure, the Company deals only with a group of large credit-worthy financial institutions and limits credit exposure to each. The Company does not anticipate non-performance by any of its counter parties. In addition, to allow for situations where positions may need to be revised, the Company deals only in markets that it considers highly liquid.

22


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

Pension and Post-Retirement Obligations

Three Months Ended March 31
Components of Net Period Benefit Cost:
(In thousands)
Defined Benefit Plan
Post-Retirement Medical Plan
2006
2005
2006
2005
Service cost     $ 86   $ 86   $ 2   $ 5  
Interest cost    124    111    5    28  
Expected return on plan assets    (76 )  (66 )  --    --  
Amortization of prior service cost    15    15    (31 )  --  
Amortization of actuarial (gain) loss    78    71    (85 )  --  




Net periodic benefit cost (benefit)   $ 227   $ 217   $ (109 ) $ 33  




Contributions:

The Company expects to contribute $0.7 million to its pension plans in 2006. For the three months ended March 31, 2006 and 2005, $0.2 million and $0.2 million, respectively, of contributions were made to the plans.

Defined Contribution Plan and 401(k) Plan

        The Company provides a noncontributory defined contribution retirement plan for all eligible U.S. employees. Total plan expenses charged to operations were $0.2 million and $0.2 million in the first quarters of 2006 and 2005, respectively, which is based on a percentage of salary of qualified employees.

        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 to a maximum of 3% of the employees’ compensation. Employees have the option of investing in thirteen different types of investment funds. Total plan expenses charged to operations were $0.2 million and $0.2 million in the first quarter of 2006 and 2005, respectively.

NOTE K- COMMITMENTS AND CONTINGENCIES

Labor Union Contract

        The Company maintains a labor agreement with the United Steel Workers of America at the Coeur Silver Valley Galena mine. The agreement was originally in effect from March 26, 2003 to March 1, 2006, and was further extended to September 1, 2006. The Company also maintains a labor agreement with Syndicato De Trabayadores De Compania Minera Cerro Bayo Ltd. at its Cerro Bayo mine in Chile. The agreement is effective from December 22, 2005 to December 21, 2007. The Company is currently in negotiations with the workforce at the Martha mine and expects to enter into a labor agreement by mid-2006. As of March 31, 2006, the Company had approximately 25% of its worldwide labor forces covered by collective bargaining agreements.

Termination Benefits

        In September 2005, the Company established a one-time termination benefit program at the Rochester mine as the mine approaches the end of its mine life. The employees will be required to render service until they are terminated to be eligible for benefits. Approximately 80% of the workforce is expected to be severed by mid-2007, while the remaining 20% are expected to stay on for residual leaching and reclamation activities. As of March 31, 2006, the total amount expected to be incurred under this plan is approximately $3.2 million. The liability is recognized ratably over the minimum future service period. The amount accrued for the period ended March 31, 2006 was $1.0 million and was charged to production costs.

23


NOTE L- SIGNIFICANT CUSTOMERS

        The Company markets its metals products and concentrates primarily to 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 44% and 42% of total metals sales in the first quarter of 2006 and 2005, respectively. Generally, the loss of a single bullion trading bank customer would not adversely affect the Company in view of the liquidity of the markets and availability of alternative trading banks.

        The Company currently markets its silver and gold concentrates to third party smelters in Canada, Japan, Mexico and Australia. Sales of metals concentrates to third party smelters amounted to approximately 56% and 58% of metals sales in the first quarter of 2006 and 2005, 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 M- 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 1800‘s.

        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 all of its domestic and foreign operating properties, up to a cumulative 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 commences on May 14, 2006 and expires on May 14, 2021, or earlier once the cumulative amount has been paid.

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 cleanup costs against either the Company or Callahan.

24


        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 cleanup costs against either the Company or Callahan.

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

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. Army Corps of Engineers (“Corps of Engineers”) and the U.S. Forest Service (“USFS”) 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 USFS’s approval of the Amended Plan of Operations is arbitrary and capricious because it relies on the 404 permit issued by the Corps of Engineers.

        On November 8, 2005, the 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 the plaintiffs pending the outcome of review. On November 12, 2005, the Federal District Court in Alaska granted the remand of the permit to the Corps of Engineers for further review. On November 22, 2005, the Corps of Engineers advised the Company that it was suspending the Section 404 permit pursuant to the Court’s remand to further review the permit.

        On March 29, 2006, the Corps of Engineers reinstated the Company’s 404 permit.

        On April 6, 2006 the lawsuit challenging the permit was re-opened, and Coeur Alaska, Inc. filed its Answer to the Amended Complaint and Motion to Intervene as a Defendant-Intervenor in the action. Two other parties, the State of Alaska and Goldbelt, Inc., a local native corporation, also filed Motions to Intervene as Defendant-Intervenors as supporters of the Kensington project as permitted. The Company, the State of Alaska and Goldbelt, Inc. have all been granted Defendant-Intervenor status and will join the agencies in their defense of the permits as issued.

        The Company is unable to predict the outcome of this litigation or its impact on the project. The Company plans to continue to move forward with full-scale construction of the mine.

25


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 price of silver (Handy & Harman) and gold (London Final) for the first three months of 2006 was $9.74 and $554 per ounce, respectively. The market price of silver and gold on May 5, 2006 was $13.80 per ounce and $678 per ounce, respectively.

        The Company’s operating mines are the Rochester mine in Nevada, the Cerro Bayo mine in Chile, the Martha mine in Argentina and the Endeavor and Broken Hill mines in Australia. As of March 31, 2006, the Company classified the Silver Valley (Galena) mine as held for sale and its operating results have been reported as discontinued operations.

  Operating Highlights and Statistics

South American Operations

        Cerro Bayo Mine:

        At the Cerro Bayo mine in Southern Chile, silver production was 515,822 ounces and 8,794 ounces of gold in the first quarter of 2006 compared to 659,293 ounces of silver and 14,868 ounces of gold in the first quarter of 2005. The decline in silver and gold production was primarily due to a decrease in overall ore grades that impacted the first quarter of 2006 as a result of the Company focusing its mining activities in lower grade areas of the mine. It is expected that ore grades will improve to historical levels during the rest of 2006. Total cash cost per ounce in the first quarter of 2006 was $3.46 per ounce compared to $(0.15) per ounce in 2005. The increase in cash cost per ounce is primarily due to a lower gold credit, due to lower silver and gold production, compared to the first quarter of 2005.

26


        Martha Mine:

        At the Martha Mine in Southern Argentina, silver production was 543,486 ounces in the first quarter of 2006 compared to 379,060 ounces in the first quarter of 2005. The increase in silver production was due to a 29% increase in ore grades and a 12.9% increase in tons milled as compared to the first quarter of 2005. Total cash costs per ounce in the first quarter of 2006 were $4.93 per ounce compared to $5.07 per ounce in 2005. The lower cash costs per ounce was primarily due to higher silver production in the first quarter of 2006 compared to the first quarter of 2005.

North American Operations

        Rochester Mine:

        At the Rochester mine, silver production increased 1% to 1,148,363 and gold production increased 15% to 16,117 ounces during the first quarter of 2006 compared to 1,135,997 ounces of silver and 13,992 ounces of gold in the first quarter of 2005. Total cash costs per ounce decreased to $4.32 from $6.30 in the first quarter of 2005. The decrease in cash cost per ounce is primarily due to the higher gold credit as a result of increased gold production and higher gold prices.

Australia Operations

        Endeavor Mine:

        On May 23, 2005, the Company acquired all of the silver production and reserves, up to a maximum 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 $38.4 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 original agreement, CDE Australia, a wholly-owned subsidiary of Coeur, paid Cobar $15.4 million of cash at the closing. In addition, CDE Australia, subject to certain conditions, will pay Cobar approximately $23.0 million upon the receipt of a report confirming that the reserves at the Endeavor mine are equal to or greater than the reported ore reserves for 2004. Payment could occur in 2006. In addition to these upfront payments, pursuant to the original agreement, Coeur pays Cobar an operating cost contribution of $1.00 for each ounce of payable silver plus a further increment when the silver price exceeded $5.23 per ounce. This further increment begins on the second anniversary of this agreement and was 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.

        On March 28, 2006, CDE Australia Pty, Ltd. (CDE Australia), reached an agreement with CBH Resources Ltd. to modify the terms of the original silver purchase agreement. Under the modified terms, CDE Australia owns all silver production and reserves up to a total of 20.0 million ounces, up from 17.7 million ounces in the original agreement. The silver price-sharing provision is deferred until such time as Coeur has received approximately 2 million cumulative ounces of silver from the mine or June 2007, whichever is later. In addition, the silver price-sharing threshold increased to US$7.00 per ounce, from the previous level of US$5.23 per ounce.

        In connection with the modification of the terms of the agreement, CDE Australia agreed to provide CBH with an advance of up to A$15.0 million of the A$30 million that remains to be paid under the terms of the original agreement. The remaining payment from Coeur to CBH is subject to the Endeavor mine achieving certain operational benchmarks. The advance, in the form of a loan facility, will bear interest at 7.75% once drawn by CBH.

27


        On October 29, 2005, CBH announced that mining operations at the Endeavor mine had been suspended below the No. Four haulage level following an uncontrolled fall of waste ground into the mine’s 6Z2 crown pillar stope. Limiting production to the areas above this level was done as a safety precaution due to the proximity of the 6Z2 crown pillar stope to the main haulage decline. In late November 2005, CBH announced that mine operations had recommenced below the No. Four haulage level, but at a reduced production rate. Based on the progress made to date in correcting issues related to the ground fall, the Company now expects the mine to produce approximately one million ounces of silver during 2006. The Company’s share of silver production during the first quarter of 2006 amounted to 84,280 ounces. The cash cost per ounce of silver production was $2.13.

        Broken Hill Mine:

        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 includes up to a maximum of 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 $2.00 for each ounce of payable silver. Under the terms of the agreement, PBH may earn up to US$6.0 million of additional consideration by meeting certain silver production thresholds over the next eight years. The Company’s share of silver production during the first quarter of 2006 amounted to 557,311 ounces. The cash cost per ounce of silver production was $2.89.

Discontinued Operations

        Coeur Silver Valley (Galena) Mine:

        At Coeur Silver Valley (Galena Mine), silver production for the first quarter of 2006 decreased 30% to 499,647 ounces compared to 710,296 ounces produced in the first quarter of 2005. Total cash costs per ounce increased to $9.24 from $6.73 per ounce in the first quarter of 2005. Lower production and higher costs per ounce are due to lower than expected production grades as mine operations adjusted to changing geologic ground conditions.

        On April 10, 2006, the Company announced that it had entered into an agreement to sell 100% of the shares of its wholly owned subsidiary Coeur Silver Valley, Inc. to U.S. Silver Corporation for $15 million in cash. The transaction is expected to close by June 1, 2006.

        The sale is contingent upon customary closing conditions such as U.S. Silver’s arrangements for financing, approval by the board of directors of Coeur d’Alene Mines and U.S. Silver Corporation, and completion of final documentation.





28


Operating Statistics From Continuing Operations

        The following table presents information by mine and consolidated sales information for the three-month periods ended March 31, 2006 and 2005:

Three Months Ended March 31,
2006
2005
Rochester            
    Tons processed    2,531,900    2,358,413  
    Ore grade/Ag oz    0.67    0.91  
    Ore grade/Au oz    0.014    0.010  
    Recovery/Ag oz (A)    67.4 %  52.8 %
    Recovery/Au oz (A)    46.5 %  62.2 %
    Silver production ounces    1,148,363    1,135,997  
    Gold production ounces    16,117    13,992  
    Cash cost/oz   $4.32   $6.30  
    Total cost/oz   $7.61   $8.53  
Cerro Bayo  
    Tons milled    100,275    98,584  
    Ore grade/Ag oz    5.54    7.05  
    Ore grade/Au oz    .095    .162  
    Recovery/Ag oz    92.9 %  94.9 %
    Recovery/Au oz    92.2 %  92.8 %
    Silver production ounces    515,822    659,293  
    Gold production ounces    8,794    14,868  
    Cash cost/oz (B)   $3.46   $(0.15 )
    Total cost/oz   $5.94   $1.78  
Martha Mine  
    Tons milled    8,849    7,837  
    Ore grade/Ag oz    65.86    50.99  
    Ore grade/Au oz    .082    .065  
    Recovery/Ag oz    93.3 %  94.9 %
    Recovery/Au oz    92.3 %  92.7 %
    Silver production ounces    543,486    379,060  
    Gold production ounces    670    471  
    Cash cost/oz   $4.93   $5.07  
    Total cost/oz   $5.37   $5.51  
Endeavor (C)  
    Tons milled    103,003    --  
    Ore grade/Ag oz    1.30    --  
    Recovery/Ag oz    62.9 %  --  
    Silver production ounces    84,280    --  
    Cash cost/oz   $2.13    --  
    Total cost/oz   $3.43    --  
Broken Hill (C)  
    Tons milled    527,096    --  
    Ore grade/Ag oz    1.46    --  
    Recovery/Ag oz    72.3 %  --  
    Silver production ounces    557,311    --  
    Cash cost/oz   $2.89    --  
    Total cost/oz   $5.64    --  
CONSOLIDATED PRODUCTION TOTALS  
    Silver ounces    2,849,262    2,174,350  
    Gold ounces    25,581    29,331  
    Cash cost per oz/silver   $3.94   $4.13  
    Total cost/oz   $6.37   $5.95  
CONSOLIDATED SALES TOTALS  
    Silver ounces sold    2,877,890    2,653,097  
    Gold ounces sold    25,734    35,184  
    Realized price per silver ounce   $10.36   $6.82  
    Realized price per gold ounce   $588   $424  

29


(A) The leach cycle at Rochester requires 5 to 10 years to recover gold and silver contained in the ore. The Company estimates the ultimate recovery to be approximately 61.5% for silver and 93% for gold. As a result, current recovery may vary significantly from ultimate recovery. See Critical Accounting Policies and Estimates – Ore on Leach Pad.

(B) The negative cash cost per ounce of silver is the result of the gold by-product credit as a reduction of operating costs.

(C) The Company acquired its interests in the Endeavor and Broken Hill mines in May 2005 and September 2005, respectively.

Operating Statistics From Discontinued Operation

        The following table presents information for Coeur Silver Valley which has been classified as held for sale and reported as discontinued operations:

Three Months Ended March 31,
2006
2005
Silver Valley/Galena            
    Tons milled    32,652    37,458  
    Ore grade/Silver oz    15.91 %  19.50  
    Recovery/Silver oz    96.2 %  97.2 %
    Silver production ounces    499,647    710,296  
    Cash cost/oz   $9.24   $6.73  
    Total cost/oz   $10.43   $7.45  
    Gold production    122    92  

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

“Cash Costs” are costs directly related to the physical activities of producing silver and gold, and include mining, processing and other plant costs, third-party refining and smelting costs, marketing expense, on-site general and administrative costs, royalties, in-mine drilling expenditures that are related to production and other direct costs. Sales of by-product metals are deducted from the above in computing cash costs. Cash costs exclude depreciation, depletion and amortization, corporate general and administrative expense, exploration, interest, and pre-feasibility costs and accruals for mine reclamation. Cash costs 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 non-GAAP cash costs per ounce to GAAP production costs applicable to sales reported in the Statement of Operations:





30


THREE MONTHS ENDED MARCH 31, 2006
(In thousands except ounces and per ounce costs)
Rochester
Cerro Bayo
Martha
Endeavor
Broken Hill
Total

Production of Silver (ounces)
     1,148,363    515,822    543,486    84,280    557,311    2,849,262  
Cash Costs per ounce   $ 4.32   $ 3.46   $ 4.93   $ 2.13   $ 2.89   $ 3.94  

Total Cash Costs
   $ 4,965   $ 1,783   $ 2,681   $ 179   $ 1,609   $ 11,217  
Add/Subtract:  
Third Party Smelting Costs    --    (770 )  (312 )  (103 )  (572 )  (1,757 )
By-Product Credit    8,941    4,873    371    --    --    14,185  
Other Adjustments    739    --    --    --    --    739  
Change in Inventory    (2,893 )  (1,352 )  (63 )  (48 )  71    (4,285 )







Production costs applicable to sales
   $ 11,752   $ 4,534   $ 2,677   $ 28   $ 1,108   $ 20,099  







THREE MONTHS ENDED MARCH 31, 2005
(In thousands except ounces and per ounce costs)
Rochester
Cerro Bayo
Martha
Endeavor
Broken Hill
Total

Production of Silver (ounces)
     1,135,997    659,293    379,060    --    --    2,174,350  
Cash Costs per ounce   $ 6.30   $ (0.15 ) $ 5.07    --    --   $ 4.13  

Total Cash Costs (000’s)
   $ 7,153   $ (98 ) $ 1,921    --    --   $ 8,976  
Add/Subtract:  
Third Party Smelting Costs    --    (719 )  (197 )  --    --    (916 )
By-Product Credit    5,991    6,348    201    --    --    12,540  
Other Adjustment    (100 )  --    --    --    --    (100 )
Change in Inventory    (3,557 )  674    (275 )  --    --    (3,158 )







Production costs applicable to sales
   $ 9,487   $ 6,205   $ 1,650    --    --   $ 17,342  






The following tables present a reconciliation between non-GAAP cash costs per ounce to GAAP production costs applicable to sales reported in Discontinued Operations (see Note D):

THREE MONTHS ENDED MARCH 31,
(In thousands except ounces and per ounce costs)

Coeur Silver Valley/Galena
2006
2005
Production of Silver (ounces)      499,647    710,296                  
Cash Costs per ounce   $ 9.24   $ 6.73                  


Total Cash Costs (000's)   $ 4,615   $ 4,782                  
Add/Subtract:  
Third Party Smelting Costs    (869 )  (1,124 )                
By-Product Credit    796    938                  
Change in Inventory    (282 )  (697 )                


Production costs applicable to sales   $ 4,260   $ 3,899                  


Exploration Activity

Cerro Bayo Mine (Chile)

        Exploration at Cerro Bayo during the first quarter of 2006 focused on reserve development/delineation drilling and discovery of new mineralization. Approximately 15,800 meters (51,900 feet) were drilled in the two programs. The majority of the drilling (74%) was devoted to definition of new reserves around the current mine operations areas. Results from both programs are expected to produce additional reserves and mineralized material though the impact of the new drilling will not be fully evaluated until the program is completed.

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Martha Mine (Argentina)

        At Martha, a total of 9,300 meters (30,500 feet) of drilling was completed during the first quarter to expand reserves and discover new mineralization. Results obtained from drilling R4 Deep, Francisca and Catalina continues to expand the strike and depth of the mineralization in those veins, which were discovered in 2004. Drilling will continue throughout the year on these and other targets in the Martha mine district.

        At the Galena Mine, over 12,500 feet of new core drilling was completed in the quarter. Eight veins and targets were tested with this drilling.

Tanzania (Africa)

        In the first quarter, the Company continued exploration on its properties in the Lake Victoria Goldfields District of northern Tanzania. Mapping and sampling was conducted on the Geita 2, Bunda, and Biharamule tenements as well as on the new Saragurwa concession acquired in the fourth quarter of 2005. A RAB (rotary air blast) drill program will commence in the second quarter of 2006 on Geita 2, as will an airborne geophysical survey over Saragurwa.

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, the Company estimates 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. An updated project review, completed in the first quarter of 2006, has confirmed the capital cost estimate for the project.

        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. In December 2005, an election was held which resulted in a new president, without the necessity of a runoff election, as well as changes in numerous other levels of government. As a result, the Company is continuing the development of the project but has extended the construction period until it has been determined that the recent election has mitigated the political uncertainty. Construction work planned for the first half of 2006 includes the construction of access roads to and around the site, rough cut grading of the mill site, preparation of an ore stockpile area, movement of some ore to stockpile and the construction of a fence around the perimeter of the plant site area. The Company is targeting mid-year 2006 for the resumption of full-scale construction activities at the site. The Company believes that commercial production could begin in late 2007.

        During the first quarter of 2006, Coeur expended approximately $1.9 million and plans to incur construction costs of approximately $65.6 million in 2006, assuming a full-scale construction schedule is implemented during the year.

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

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        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 ½% at gold prices above $475, with the royalty to be capped at 1.0 million ounces of production.

        During the fourth quarter of 2004, the U.S. Forest Service issued its Record of Decision (“ROD”) for the Final Supplemental Environmental Impact Statement (“FSEIS”). On June 28, 2005, the Company received the Environmental Protection Agency’s (“EPA”) National Pollution Discharge Elimination System (“NPDES”) Permit. In addition, the Company received the U.S. Army Corps of Engineers (“Corps of Engineers”) 404 Wetlands Permit, which authorized the construction of a Lower Slate Lake tailings facility, millsite road improvements and a Slate Creek Cove dock facility. All permits were reviewed for consistency by both the Alaska Coastal Management and Department of Governmental Coordination, which issued its final ACMP permit certification.

        On September 12, 2005 three environmental groups filed a lawsuit in Federal District Court in Alaska against the 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 November 8, 2005, the 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. On November 12, 2005, the Federal District Court in Alaska granted the remand of the permit to the US Army Corps of Engineers for further review. On November 22, 2005, the Corps of Engineers advised the Company that it was suspending the Section 404 permit pursuant to the Court’s remand to further review the permit and on March 29, 2006, they reinstated the Company’s 404 permit. The Company is continuing to move forward with full-scale construction of the mine.

        On April 6, 2006 the lawsuit challenging the permit was re-opened, and Coeur Alaska, Inc. filed its Answer to the Amended Complaint and Motion to Intervene as a Defendant-Intervenor in the action. On April 6, 2006, Goldbelt, Inc, a local native corporation, and on April 7, 2006, the State of Alaska, both joined in filing their respective Motions to Intervene as Defendant-Intervenors as supporters of the Kensington project as permitted. All parties were granted Defendant-Intervenor status on April 25, 2006. The Company is unable to predict the impact of litigation or its impact on the project.

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        No assurance can be given as to whether or when regulatory permits and approvals granted to the Company may be further challenged, appealed or contested by third parties or issuing agencies, or as to whether the Company will place the Kensington project into commercial production. The Company currently estimates the total cost of construction to be approximately $190 million. The Company believes that commercial production could commence in late 2007.

        Total expenditures by the Company at the Kensington property in the first quarter of 2006 were $23.8 million. Such expenditures were used to continue the permitting and pre-development activities. The Company plans approximately $76.7 million for currently planned project expenditures during 2006.

        In the first quarter of 2006, the Company recommenced an underground core drilling program at Kensington in a continuation of the program conducted in the second half of 2005. The program is designed to expand the project’s proven and probable reserves through conversion of portions of its large mineralized material inventory to probable reserves. A total of 4,600 feet was drilled in this program.

Critical Accounting Policies and Estimates

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

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

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

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

        At March 31, 2006, the Company had outstanding provisionally priced sales of $43.5 million consisting of 3.2 million ounces of silver, 22,000 ounces of gold and 0.4 million pounds of copper. For each one cent per ounce change in realized silver price, revenue would vary (plus or minus) approximately $32,000; for each one dollar per ounce change in realized gold price, revenue would vary (plus or minus) approximately $22,000; and for each one cent per pound change in realized copper price, revenue would vary (plus or minus) approximately $4,000.

Reserve Estimates. 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. The most critical accounting principles upon which the Company’s financial status depends are those requiring estimates of recoverable ounces from proven and probable reserves and/or assumptions of future commodity prices. There are a number of uncertainties inherent in estimating quantities of reserves, including many factors beyond our control. Ore reserves estimates are based upon engineering evaluations of samplings of drill holes and other openings. These estimates involve assumptions regarding future silver and gold prices, the geology of our mines, the mining methods we use and the related costs we incur to develop and mine our reserves. Changes in these assumptions could result in material adjustments to our reserve estimates. We use reserve estimates in determining the units-of-production depreciation and amortization expense, as well as in evaluating mine asset impairments.

        We review and evaluate our long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. We utilize the methodology set forth in Statement of Financial Accounting Standard (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” 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. The accounting estimates related to impairment are critical accounting estimates because the future cash flows used to determine whether an impairment exists is dependent on reserve estimates and other assumptions including, silver and gold prices, production levels, and capital and reclamation costs, all of which are based on detailed engineering life-of-mine plans. An impairment loss exists when estimated undiscounted cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. Any impairment loss recognized represents the excess of the asset’s carrying value as compared to its estimated fair value. The Company reviews the carrying value of its assets whenever events or changes in circumstances indicate that the carrying amount of its assets may not be fully recoverable. The Company did not record any write-downs during the period ended March 31, 2006 and 2005.

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

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

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

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

        Our reported inventories include metals estimated to be contained in the ore on the leach pads of $59.0 million as of March 31, 2006. Of this amount, $27.7 million is reported as a current asset and $31.3 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 ore on leach pad inventory is stated at actual production costs incurred to produce and place ore on the leach pad during the current period, adjusted for the effects on monthly production costs of abnormal production levels.

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        The estimate of both the ultimate recovery expected over time, and the quantity of metal that may be extracted relative to such twelve month period, requires the use of estimates which are inherently inaccurate since they rely upon laboratory testwork. Testwork consists of 60 day leach columns from which we project metal recoveries into the future. The quantities of metal contained in the ore are based upon actual weights and assay analysis. The rate at which the leach process extracts gold and silver from the crushed ore is based upon laboratory column tests and actual experience occurring over approximately nineteen 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.

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

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

Positive/Negative
Change in Silver Recovery

Positive/Negative
Change in Gold Recovery

1%
2%
3%
1%
2%
3%
Quantity of recoverable                            
  ounces    1.6 million  3.3 million  4.9 million  12,300    24,500    36,800  
Positive impact on  
  future cost of  
  production per silver  
  equivalent ounce for  
  increases in recovery  
  rates   $0.80   $1.41   $1.88   $0.35   $0.66   $0.94  
Negative impact on  
  future cost of  
  production per silver  
  equivalent ounce for  
  decreases in recovery  
  rates   $1.11   $2.75   $5.40   $0.40   $0.85   $1.38  

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

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

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

RESULTS OF OPERATIONS

        Three Months Ended March 31, 2006 Compared to Three Months Ended March 31, 2005

Revenues

        Sales of metal from continuing operations in the first quarter of 2006 increased by $12.6 million, or 39%, from the first quarter of 2005 to $44.9 million. The increase in product sales of metal is attributable to an increase in the quantity of silver sold and increased metals prices realized during the first quarter of 2006 as compared to the same period in 2005, partially offset by a decrease in the quantity of gold sold during the first quarter of 2006 compared to the same period in 2005. In the first quarter of 2006, the Company sold 2.9 million ounces of silver and 25,734 ounces of gold compared to 2.7 million ounces of silver and 35,184 ounces of gold for the same period in 2005. Realized silver and gold prices were $10.36 and $588 per ounce, respectively, in the first quarter of 2006 compared to $6.82 and $424 in the comparable quarter of 2005.

        In the first quarter of 2006, the Company produced a total of 2,849,262 ounces of silver and 25,581 ounces of gold, compared to 2,174,350 ounces of silver and 29,331 ounces of gold in the first quarter of 2005. The increase in silver production is primarily due to the silver production from the Endeavor and Broken Hill mines which were acquired on May 23, 2005 and September 8, 2005, respectively.

Costs and Expenses

        Production costs applicable to sales from continuing operations in the first quarter of 2006 increased by $2.8 million, or 16%, from the first quarter of 2005 to $20.1 million. The increase in the first quarter of 2006 is primarily due to higher diesel, utility and operating materials and supply costs at the Company’s operations and operating costs associated with the Company’s newly acquired Endeavor and Broken Hill mines.

        Depreciation and depletion increased by $2.2 million, or 52%, in the first quarter of 2006 compared to the prior year’s first quarter, primarily due to the increase in depletion associated with the newly acquired Endeavor and Broken Hill mines.

        Administrative and general expenses decreased by $0.5 million in the first quarter of 2006 compared to the same period in 2005 due to lower outside audit services related to financial reporting compliance activities.

        Exploration expenses decreased by $0.7 million in the first quarter of 2006 compared to the same period in 2005 as a result of lower exploration activity in 2006 compared to 2005.

        Pre-development expenses decreased $2.4 million from the first quarter of 2005 due to classification of the Kensington project as a development-stage property in the third quarter of 2005.

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        During the first quarter of 2005, the Company recorded a litigation settlement of $1.6 million related to the Company’s settlement of a suit by Credit Suisse First Boston on April 6, 2005.

Other Income and Expenses

        Interest and other income in the first quarter of 2006 increased by $0.6 million to $2.5 million compared with the first quarter of 2005. The increase was primarily due to increased interest income from short-term investments due to higher levels of invested cash and short-term investments on hand and higher interest rates.

        Interest expense was $0.5 million in the first quarter of 2006 compared to $0.6 million in the first quarter of 2005.

Income Taxes

        For the three months ended March 31, 2006, the Company reported an income tax benefit of approximately $0.3 million. The income tax benefit is comprised of a $0.7 million deferred tax provision, based upon actual earnings for the quarter then ended, reduced by a $2.8 million and $0.2 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. and Coeur Argentina, respectively, offset by $1.4 million in current taxes payable in Argentina and Australia and $0.2 million deferred tax payable in Australia. The Company reported a current $0.4 million domestic tax provision from foreign tax withholding.

Income (Loss) From Continuing Operations

        As a result of the above, the Company’s net income from continuing operations amounted to approximately $13.7 million compared to a net loss of $0.8 million in the first quarter of 2005.

Results of Discontinued Operations

        On April 10, 2006, the Company announced that it had entered into an agreement to sell 100% of the shares of Coeur Silver Valley Inc. to U.S. Silver Corporation for $15 million in cash. The transaction is expected to close by June 1, 2006. Pursuant to FAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, Coeur Silver Valley has been classified as an asset held for sale and reported in discontinued operations.

        The following is a summary of the Company’s discontinued operations included in the consolidated statements of operations for the three months ended March 31, 2006 and March 31, 2005 (in thousands):

Three Months Ended
March 31, 2006
March 31, 2005
Sales of metal     $ 5,710   $ 4,579  
Production costs applicable to sales    (4,260 )  (3,899 )
Depreciation and depletion    (595 )  (512 )
Mining exploration    (210 )  (409 )
Other    (33 )  (120 )


Income (loss) from discontinued operations   $ 612   $ (361 )


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LIQUIDITY AND CAPITAL RESOURCES

Working Capital; Cash and Cash Equivalents

        The Company’s working capital at March 31, 2006, increased by $141.2 million to approximately $424.2 million compared to $283.0 million at December 31, 2005. The increase in working capital was primarily attributed to the net proceeds of $146.2 million related to the public sale of common stock on March 22, 2006. The ratio of current assets to current liabilities was 11.9 to 1 at March 31, 2006, compared to 7.2 to 1 at December 31, 2005.

        Net cash provided by operating activities in the three months ended March 31, 2006 was $17.2 million compared to net cash used in operating activities of $2.5 million in the three months ended March 31, 2005. The increase of $19.7 million in cash flow from operations is primarily due to the change in net income. Net cash used in investing activities in the first quarter of 2006 was $29.6 million compared to net cash used in investing activities of $8.7 million in the prior year’s comparable period. The increase of $20.9 million in cash used in investing activities is due to an increase in capital expenditures related to construction activities at the Kensington and San Bartolome projects. Net cash provided by financing activities was $145.5 million in the first quarter of 2006, compared to $0.7 million provided in the first quarter of 2005. The increase was primarily due to the receipt of $146.2 million of net proceeds from the issuance of 27.6 million shares of common stock completed in March 2006. As a result of the above, cash and cash equivalents increased by $133.0 million in the first quarter of 2006 compared to a decrease of $11.8 million for the comparable period in 2005.

Debt and Capital Resources

        At March 31, 2006, the Company had $374.3 million of cash, cash equivalents and short-term investments. Management therefore believes that its existing and available cash and cash flow from operations will allow it to meet its obligations for the next twelve months. The Company estimates approximately $181.9 million will be spent during 2006 on capital expenditures at its operating mines and development-stage properties.

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 1.25% Notes are general unsecured obligations, senior in right of payment to Coeur’s other indebtedness.

Issuance of Common Stock

        During the first quarter of 2006, the Company completed a public offering of 27.6 million shares of common stock at a public offering price of $5.60 per share. The Company realized net proceeds of $146.2 million after payment of the underwriters’ discount.

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 1800‘s.

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        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 all of its domestic and foreign operating properties, up to a cumulative 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 commences on May 14, 2006 and expires after May 14, 2021, or at a sooner date once the cumulative amount is paid.

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

        During 2001, the U.S. 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 U.S. 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 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 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 U.S. 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 cleanup costs against either the Company or Callahan.

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        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. Army Corps of Engineers (“Corps of Engineers”) and the U.S. Forest Service (“USFS”) 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 USFS’s approval of the Amended Plan of Operations is arbitrary and capricious because it relies on the 404 permit issued by the Corps of Engineers.

        On November 8, 2005, the 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 the plaintiffs pending the outcome of review. On November 12, 2005, the Federal District Court in Alaska granted the remand of the permit to the Corps of Engineers for further review. On November 22, 2005, the Corps of Engineers advised the Company that it was suspending the Section 404 permit pursuant to the Court’s remand to further review the permit.

        On March 29, 2006, the Corps of Engineers reinstated the Company’s 404 permit.

        On April 6, 2006 the lawsuit challenging the permit was re-opened, and Coeur Alaska, Inc. filed its Answer to the Amended Complaint and Motion to Intervene as a Defendant-Intervenor in the action. Two other parties, the State of Alaska and Goldbelt, Inc., a local native corporation, also filed Motions to Intervene as Defendant-Intervenors as supporters of the Kensington project as permitted. The Company, the State of Alaska and Goldbelt, Inc. have all been granted Defendant-Intervenor status and will join the agencies in their defense of the permits as issued.

        The Company is unable to predict the outcome of this litigation or its impact on the project. The Company will continue to move forward with full-scale construction of the mine.

Item 3.  Quantitative and Qualitative Disclosure About Market Risk

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

        The Company’s operating results are substantially dependent upon the world market prices of silver and gold. The Company has no control over silver and gold prices, which can fluctuate widely and are affected by numerous factors, such as supply and demand and investor sentiment. In order to mitigate some of the risk associated with these fluctuations, the Company will at times, enter into forward sale contracts. The Company continually evaluates the potential benefits of engaging in these strategies based on current market conditions. The Company may be exposed to nonperformance by counterparties as a result of its hedging activities. This exposure would be limited to the amount that the spot price of the metal falls short of the contract price. The Company has historically sold silver and gold produced by our mines pursuant to forward contracts and at spot prices prevailing at the time of sale. Since 1999, the Company has not engaged in any silver hedging activities and is currently not engaged in any gold hedging activities.

        The Company enters into concentrate sales contracts with third-party smelters. The contracts, in general, provide for a provisional payment based upon provisional assays and quoted metal prices and the provisionally priced sales contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of concentrates at the forward price at the time of sale. The embedded derivative, which is the final settlement price based on a future price, does not qualify for hedge accounting. These embedded derivatives are recorded as derivative assets (in Prepaid expenses and other), or derivative liabilities (in Accrued liabilities and other), on the balance sheet and are adjusted to fair value through earnings each period until the date of final settlement.

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        At March 31, 2006, the Company had outstanding provisionally priced sales of $43.5 million, consisting of 3.2 million ounces of silver, 22,000 ounces of gold and 0.4 million pounds of copper, which had a fair value of approximately $48.1 million including the embedded derivative. For each one cent per ounce change in realized silver price, revenue would vary (plus or minus) approximately $32,000; for each one dollar per ounce change in realized gold price, revenue would vary (plus or minus) approximately $22,000; and for each one cent per pound change in realized copper price, revenue would vary (plus or minus) approximately $4,000.

        The Company operates in several foreign countries, specifically Bolivia, Chile, and Argentina, which exposes it to risks associated with fluctuations in the exchange rates of the currencies involved. As part of its program to manage foreign currency risk, the Company enters into, from time to time, foreign currency forward exchange contracts. These contracts enable the Company to purchase a fixed amount of foreign currencies. Gains and losses on foreign exchange contracts that are related to firm commitments are designated and effective as hedges and are deferred and recognized in the same period as the related transaction. All other contracts that do not qualify as hedges are marked to market and the resulting gains or losses are recorded in income. The Company continually evaluates the potential benefits of entering into these contracts to mitigate foreign currency risk and proceeds when it believes that the exchange rates are most beneficial. During the first quarter of 2006, the Company entered into forward foreign currency exchange contracts to reduce the foreign exchange risk associated with forecasted Chilean peso operating costs for 2006 at its Cerro Bayo mine. The contracts require the Company to exchange U.S. dollars for Chilean pesos at a weighted average exchange rate of 525 pesos to each U.S. dollar. At March 31, 2006, the Company had foreign exchange contracts of $9.9 million in U.S. dollars. For the three months ended March 31, 2006 and March 31, 2005, the Company recorded a realized loss of approximately $0.1 million and nil, respectively, in connection with its foreign currency hedging program. As of March 31, 2006, the fair value of the foreign exchange contracts was a liability of $0.3 million.

        All of the Company’s long-term debt at March 31, 2006, is fixed-rate based. The fair value of the Company’s long-term debt at March 31, 2006 was $186.8 million. The fair value was estimated based upon bond market closing prices near the balance sheet date.

Item 4.  Controls and Procedures

(a) Disclosure Controls and Procedures

        The Company’s disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by it in its periodic reports filed with the Securities and Exchange Commission is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Based on an evaluation of the Company’s disclosure controls and procedures conducted by the Company’s Chief Executive Officer and Chief Financial Officer, such officers concluded at March 31, 2006, that the Company’s disclosure controls and procedures were effective.

(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 during the quarter ending March 31, 2006 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II.      Other Information

Item 1A.  Risk Factors

        Item 1A (“Risk Factors”) of the Company’s Annual Report on Form 10-K for the year ended December 31, 2005 sets forth information relating to important risks and uncertainties that could materially adversely affect the Company’s business, financial condition or operating results. Those risk factors continue to be relevant to an understanding of the Company’s business, financial condition and operating results. Certain of those risk factors have been updated in this Form 10-Q to provide updated information, as set forth below. References to “we,” “our” and “us” in these risk factors refer to the Company.

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

        We have historically financed our operations through the issuance of common stock and convertible debt, and may be required to incur additional indebtedness in the future. During 2004, we commenced construction at the San Bartolome project and in 2005 we commenced construction at Kensington project. Construction of both projects could require a total capital investment of approximately $325 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.

Prior to 2005, we did not have sufficient earnings to cover fixed charges, which deficiency could occur in future periods.

        As a result of our net losses prior to 2005, our earnings were not adequate to satisfy fixed charges (i.e., interest, preferred stock dividends and that portion of rent deemed representative of interest) in each of those periods prior to 2005. The amounts by which earnings were inadequate to cover fixed charges were approximately $3.1 million in 2001, $80.8 million in 2002, $63.9 million in 2003 and $22.7 million in 2004. Earnings were sufficient to cover fixed charges in 2005. As of March 31, 2006, 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 $424.2 million at March 31, 2006. Prior to 2005, we experienced negative cash flow from operating activities. The amount of net cash used in our operating activities amounted to approximately $29.9 million in 2001, $8.5 million in 2002, $5.1 million in 2003 and $18.6 million in 2004. During 2005 and the first quarter of 2006, we generated $6.7 million and $17.2 million, respectively, of operating cash flow. The availability of future cash flow from operations or working capital to fund the payment of interest on the notes and other fixed charges will be dependent upon numerous factors, including our results of operations, silver and gold prices, levels and costs of production at our mining properties and the amount of our capital expenditures and expenditures for acquisitions, developmental and exploratory activities.

The market prices of silver and gold are volatile. If we experience low silver and gold prices it may result in decreased revenues and decreased net income or 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 68% of our revenues from continuing operations from sales of silver, our earnings are primarily related to the price of this metal.

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        The market price of silver (Handy & Harman) and gold (London Final) on May 5, 2006 was $13.80 and $678 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 and our net losses resume, 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 adversely affect our results of operations.

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 dore; and (vii) the conversion by a third party refinery of the dore into refined silver and gold bullion.

        We use several integrated steps to scientifically measure the metal content of ore placed on the leach pads during the key stages. As the ore body is drilled in preparation for the blasting process, samples of the drill residue are assayed to determine estimated quantities of contained metal. We estimate the quantity of ore by utilizing global positioning satellite survey techniques. We then process the ore through a crushing facility where the output is again weighed and sampled for assaying. A metallurgical reconciliation with the data collected from the mining operation is completed with appropriate adjustments made to previous estimates. We then transport the crushed ore to the leach pad for application of the leaching solution. As the leach solution is collected from the leach pads, we continuously sample for assaying. We measure the quantity of leach solution with flow meters throughout the leaching and precipitation process. After precipitation, the product is converted to dore, which is the final product produced by the mine. We again weigh, sample and assay the dore. Finally, a third party smelter converts the dore and determines 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 $59.0 million as of March 31, 2006. Of this amount, $27.7 million is reported as a current asset and $31.3 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 ore on leach pad inventory is stated at actual production costs incurred to produce and place ore on the leach pad during the current period, adjusted for the effects on monthly production costs of abnormal production levels.

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        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 nineteen 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% for silver, depending on the area being leached, 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 approximately 2011.

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

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

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  3.3 million  4.9 million  12,300    24,500    36,800  
Positive impact on  
  future cost of  
  production per silver  
  equivalent ounce for  
  increases in recovery  
  rates   $0.80   $1.41   $1.88   $0.35   $0.66   $0.94  
Negative impact on  
  future cost of  
  production per silver  
  equivalent ounce for  
  decreases in recovery  
  rates   $1.11   $2.75   $5.40   $0.40   $0.85   $1.38  

        Inventories of ore on leach pads are valued based upon actual production costs incurred to produce and place such ore on the leach pad during the current period, adjusted for the effects on monthly production costs of abnormal production levels, 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.

We are required to obtain government permits to expand operations or begin new operations. The acquisition of such permits can be materially impacted by third party litigation seeking to prevent the issuance of such permits. The costs and delays associated with such approvals could affect our operations, reduce our revenues, and negatively affect our business as a whole.

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

        On 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. On November 8, 2005, the 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. On November 12, 2005, the Federal District Court in Alaska granted the remand of the permit to the Corps of Engineers for further review. On November 22, 2005, the Corps of Engineers advised the Company that it was suspending the Section 404 permit pursuant to the Court’s remand to further review the permit which was then re-instated on March 29, 2006. On April 6, 2006 the lawsuit challenging the permit was re-opened, and Coeur Alaska, Inc. filed its Answer to the Amended Complaint and Motion to Intervene as a Defendant-Intervenor in the action. That motion was granted on April 25, 2006 and the Company has joined the agencies in their defense of the permits as issued. The Company is unable to predict the outcome of this litigation or its impact on the project.

Our business depends on good relations with our employees.

        The Company could experience labor disputes, work stoppages or other disruptions in production that could adversely affect us. As of March 31, 2006, unions represented approximately 33% of our worldwide workforce. On that date, the Company had 298 employees at its Cerro Bayo mine, and 133 employees at its Coeur Silver Valley mine working under a collective bargaining agreement or similar labor agreement. The Company has a collective bargaining agreement covering the Cerro Bayo mine which expires on December 21, 2007. The current collective bargaining agreement with the Coeur Silver Valley workforce expires on September 1, 2006. The Company is currently in negotiations with the workforce at the Martha mine and expects to enter into a labor agreement by mid-2006.

Item 6.  Exhibits

  a) Exhibits.

  10(a) First Amendment to Employment Agreement effective March 30, 2006 between the Registrant and Dennis E. Wheeler
  10(b) Amended and Restated Silver Sale and Purchase Agreement dated March 28, 2006, between CDE Australia Pty Limited and Cobar Operations Pty Limited. (Portions of this exhibit have been omitted pursuant to a request for confidential treatment.)
  31.1A Certification of the CEO
  31.2A Certification of the CFO
  32.1A Certification of the CEO (18 U.S.C. Section 1350)
  32.2A 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 May 8, 2006
/s/ Dennis E. Wheeler
DENNIS E. WHEELER
Chairman, President and
  Chief Executive Officer


Dated May 8, 2006
/s/ James A. Sabala
JAMES A. SABALA
Executive Vice President and
  Chief Financial Officer








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