Coeur d’Alene Mines Corporation (NYSE:CDE) (TSX:CDM) today provided an update on recent activities related to a legal dispute between its subsidiary, Coeur Rochester, Inc. and Rye Patch Gold US Inc. and its publicly-traded Canadian parent corporation, Rye Patch Gold Corp. The legal dispute stems from competing asserted interests in certain unpatented mining claims covering federal lands near Coeur’s Rochester mining operations following Coeur Rochester’s inadvertent failure to pay 2011 annual mining claim maintenance fees.
In late December 2011, the Nevada State District Court enjoined Rye Patch Gold US Inc. from entering certain active mine areas at the Rochester operations pending the outcome of a trial scheduled for November 2012. Although Coeur cannot predict the outcome of the trial, it believes its claims are superior to those staked by Rye Patch.
Earlier this year, Rye Patch filed a motion for a preliminary injunction to prevent Coeur Rochester from entering the disputed claims. A hearing on the motion was held in late June before the Special Master, retired U.S. District Judge David W. Hagen, who was appointed by the Court to assist in addressing certain pre-trial matters. In a report dated August 6, 2012, the Special Master issued a recommendation that the Court deny Rye Patch’s motion on the grounds that Rye Patch did not demonstrate a likelihood of success on the merits of the case and did not show that it would suffer irreparable harm if a preliminary injunction were not granted. The Special Master’s report noted that Rye Patch has not demonstrated that it has made a discovery of valuable minerals on any of the disputed claims, which is a critical issue in the case.
In addition, on August 9, 2012, the Court entered orders adopting a number of recommendations made by the Special Master regarding several pending motions, including denying Rye Patch's motion to dismiss Rye Patch Gold Corp., the publicly-traded parent company of Rye Patch Gold US Inc., as a party to the litigation. Rye Patch Gold Corp. must now answer Coeur Rochester’s complaint and respond to discovery requests. The Court also entered an order denying Rye Patch’s motion to revoke the appointment of the Special Master.
Following a $27 million expansion in 2011 to further extend Rochester’s mine life, the operation is expected to produce 2.6-2.9 million silver ounces and 30,000-35,000 gold ounces in 2012. Rochester has been in operation for over 26 years and currently employs approximately 225 people. As of December 31, 2011, Rochester contained proven and probable reserves of 29.6 million ounces of silver and 247,000 ounces of gold within 47.3 million tons at average grades of 0.59 ounce of silver per ton and 0.005 ounce of gold per ton. Based on a detailed review, the Company is confident that none of these reserves are located on the disputed claims.
This news release contains forward-looking statements within the meaning of securities legislation in the United States and Canada, including statements regarding expected production levels. Such statements are subject to numerous assumptions and uncertainties, many of which are outside the control of Coeur, and are based on information that Coeur believes is reasonable, but involve significant uncertainties affecting the business of Coeur, including, but not limited to, future gold and silver prices, costs, ore grades, estimation of gold and silver reserves, mining and processing conditions, construction delays and related disruptions in production, disputed mineral claims, risks and hazards inherent in the mining business (including environmental hazards, industrial accidents, weather and geologically related conditions), permitting and regulatory matters (including penalties, fines, sanctions, and shutdowns), as well as other uncertainties and risk factors set out in filings made from time to time with the United States Securities and Exchange Commission, and the Canadian securities regulators, including, without limitation, in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of Coeur's reports on Form 10-K and Form 10-Q. Actual results, developments and timetables could vary significantly from the estimates presented. Readers are cautioned not to put undue reliance on forward-looking statements. Coeur disclaims any intent or obligation to update publicly such forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, Coeur undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of Coeur, its financial or operating results or its securities.
Donald J. Birak, Coeur's Senior Vice President of Exploration and a qualified person under Canadian National Instrument 43-101, supervised the preparation of the scientific and technical information concerning Coeur's mineral projects in this news release. For a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources, as well as data verification procedures and a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant factors, please see the Technical Reports for each of Coeur's properties as filed on SEDAR at www.sedar.com.
Cautionary Note to U.S. Investors-The United States Securities and Exchange Commission permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We may use certain terms in public disclosures, such as "measured," "indicated," "inferred” and “resources," that are recognized by Canadian regulations, but that SEC guidelines generally prohibit U.S. registered companies from including in their filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 10-K which may be secured from us, or from the SEC's website at http://www.sec.gov.
Coeur d’Alene Mines Corporation is the largest U.S.-based primary silver producer and a growing gold producer. The Company built and commenced production from three wholly-owned, long-lived mines between 2008 and 2010: the San Bartolomé silver mine in Bolivia, the Palmarejo silver-gold mine in Mexico and the Kensington gold mine in Alaska. Further production has commenced from a new heap leach pad at Coeur's long-time Rochester silver-gold mine in Nevada. The Company also owns and operates the Martha silver-gold mine in Argentina and owns a non-operating interest in a silver-base metal mine in Australia. Coeur conducts ongoing exploration activities near and within its operating properties in Argentina, Mexico, Alaska, Nevada and Bolivia. In addition, Coeur owns strategic minority shareholdings in seven silver and gold development companies in North and South America.