UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

þ		Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

		For the quarterly period ended September 30, 2009

		OR

o		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 001-8641

COEUR D’ALENE MINES CORPORATION

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)

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 þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) Yes o No o

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The Company has 150,000,000 shares of common stock, par value of $0.01, authorized of which 78,142,242 shares were issued and outstanding as of November 3, 2009.

 

 

COEUR D’ALENE MINES CORPORATION

INDEX

		Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets — Unaudited September 30, 2009 and December 31, 2008			3
Consolidated Statements of Operations and Comprehensive Income — Unaudited Three and Nine Months Ended September 30, 2009 and 2008			5
Consolidated Statements of Shareholder’s Equity — Unaudited Nine Months Ended September 30, 2009			6
Consolidated Statements of Cash Flows — Unaudited Three and Nine Months Ended September 30, 2009 and 2008			7
Notes to Consolidated Financial Statements — Unaudited			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			38
Item 3. Quantitative and Qualitative Disclosures About Market Risk			63
Item 4. Controls and Procedures			65
Part II. Other Information			65
Item 1. Legal Proceedings			65
Item 1A. Risk Factors			65
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			67
Item 6. Exhibits			69
EX-31.1
EX-31.2
EX-32.1
EX-32.2

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

		September 30,				December 31,
		2009				2008
ASSETS		(In thousands)
CURRENT ASSETS
Cash and cash equivalents		$	45,603			$	20,760
Short-term investments			—				7,881
Receivables			53,647				53,187
Ore on leach pad			8,341				9,193
Metal and other inventory			62,068				34,846
Deferred tax assets			208				240
Prepaid expenses and other			26,152				26,344
			196,019				152,451
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment			655,834				575,020
Less accumulated depreciation			(115,579	)			(88,890	)
			540,255				486,130
MINING PROPERTIES
Operational mining properties			327,657				218,569
Less accumulated depletion			(140,604	)			(131,557	)
			187,053				87,012
Mineral interests			1,727,915				1,764,794
Less accumulated depletion			(21,354	)			(16,796	)
			1,706,561				1,747,998
Non-producing and development properties			334,497				356,912
			2,228,111				2,191,922
OTHER ASSETS
Ore on leach pad, non-current portion			18,361				20,998
Restricted assets			23,865				23,110
Receivables, non-current			37,943				34,139
Debt issuance costs, net			4,804				10,253
Deferred tax assets			5,750				4,666
Other			4,651				4,452
			95,374				97,618
TOTAL ASSETS		$	3,059,759			$	2,928,121

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

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

		September 30,				December 31,
		2009				2008
		(In thousands, except share data)
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable		$	79,374			$	66,300
Accrued liabilities and other			37,615				64,673
Accrued income taxes			19,077				927
Accrued payroll and related benefits			10,221				8,106
Accrued interest payable			839				4,446
Current portion of capital lease and other short-term obligations			12,487				14,608
Current portion of royalty obligation			30,232				—
Current portion of reclamation and mine closure			3,496				1,924
			193,341				160,984
LONG-TERM LIABILITIES
3 1/4% Convertible Senior Notes due March 2028			125,448				185,001
1 1/4% Convertible Senior Notes due January 2024			65,204				180,000
Senior Secured Floating Rate Convertible Notes due 2012			—				1,830
Non-current portion of royalty obligation			104,620				—
Non-current portion of capital lease obligations			21,564				16,837
Reclamation and mine closure			36,880				34,093
Deferred income taxes			528,605				557,449
Other long-term liabilities			6,638				6,015
			888,959				981,225
COMMITMENTS AND CONTINGENCIES
(See Notes G, H, K, L, M, N, O and Q)
SHAREHOLDERS’ EQUITY
Common Stock, par value $0.01 per share; authorized 150,000,000 shares, 78,142,194 issued at September 30, 2009 and 56,779,909 shares issued at December 31, 2008.			781				568
Additional paid-in capital			2,396,247				2,218,487
Accumulated deficit			(419,574	)			(419,958	)
Shares held in treasury, at cost (none at September 30, 2009 and 105,921 shares at December 31, 2008).			—				(13,190	)
Accumulated other comprehensive income			5				5
			1,977,459				1,785,912
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	3,059,759			$	2,928,121

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

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

		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2009				2008				2009				2008
		(In thousands, except per share amounts)
REVENUES
Sales of metal		$	89,793			$	36,538			$	202,436			$	131,145
COSTS AND EXPENSES
Production costs applicable to sales			59,139				30,049				133,706				78,696
Depreciation and depletion			28,647				6,068				57,466				16,677
Administrative and general			4,905				4,606				17,938				20,163
Exploration			3,167				5,824				10,785				14,291
Care and maintenance and other			1,162				—				3,828				—
Pre-development			—				780				—				17,222
Total costs and expenses			97,020				47,327				223,723				147,049
OPERATING LOSS			(7,227	)			(10,789	)			(21,287	)			(15,904	)
OTHER INCOME AND EXPENSE
Gain (loss) on debt extinguishments			(2,947	)			—				35,890				—
Loss on derivatives, net			(35,718	)			—				(49,572	)			—
Interest and other income (expense)			(1,704	)			2,295				1,676				3,803
Interest expense, net of capitalized interest			(6,088	)			(1,412	)			(12,047	)			(3,141	)
Total other income and expense			(46,457	)			883				(24,053	)			662
Loss from continuing operations before income taxes			(53,684	)			(9,906	)			(45,340	)			(15,242	)
Income tax benefit			13,876				4,444				18,272				2,200
NET LOSS FROM CONTINUING OPERATIONS			(39,808	)			(5,462	)			(27,068	)			(13,042	)
Income from discontinued operations, net of income taxes			114				1,419				5,041				8,301
Gain on sales of assets of discontinued operations, net of income taxes			22,411				—				22,411				—
NET INCOME (LOSS)			(17,283	)			(4,043	)			384				(4,741	)
Other comprehensive loss			—				(526	)			—				(854	)
COMPREHENSIVE INCOME (LOSS)		$	(17,283	)		$	(4,569	)		$	384			$	(5,595	)
BASIC AND DILUTED INCOME (LOSS) PER SHARE
Basic income (loss) per share:
Loss from continuing operations		$	(0.52	)		$	(0.10	)		$	(0.39	)		$	(0.24	)
Income from discontinued operations		$	0.29			$	0.03			$	0.40			$	0.15
Net income (loss)		$	(0.23	)		$	(0.07	)		$	0.01			$	(0.09	)
Diluted income (loss) per share:
Loss from continuing operations		$	(0.52	)		$	(0.10	)		$	(0.39	)		$	(0.24	)
Income from discontinued operations		$	0.29			$	0.03			$	0.40			$	0.15
Net income (loss)		$	(0.23	)		$	(0.07	)		$	0.01			$	(0.09	)
Weighted average number of shares of common stock
Basic			76,133				55,010				69,163				55,006
Diluted			76,133				55,010				69,163				55,006

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

COEUR D’ALENE MINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Nine Months Ended September 30, 2009
(In thousands)
Unaudited

																						Accumulated
		Common				Common				Additional								Shares				Other
		Stock				Stock				Paid-In				Accumulated				Held in				Comprehensive
		Shares				Par Value				Capital				(Deficit)				Treasury				Income (Loss)				Total
Balances at December 31, 2008			56,780			$	568			$	2,168,646			$	(419,339	)		$	(13,190	)		$	5			$	1,736,690
Effect of change in accounting for convertible debt instrument (See Note C)			—				—				49,841				(619	)			—				—				49,222
Balances at December 31, 2008 as adjusted			56,780			$	568			$	2,218,487			$	(419,958	)		$	(13,190	)		$	5			$	1,785,912
Net income			—				—				—				384				—				—				384
Reclassification of liability for embedded conversion option upon adoption of new accounting standard (See Note C)			—				—				21,566				—				—				—				21,566
Fractional shares purchased related to reverse stock split			(1	)			—				(35	)			—				—				—				(35	)
Conversion of Senior Secured Floating Rate Convertible Notes to common stock			8,668				87				27,670				—				—				—				27,757
Common stock issued to extinguish debt			12,696				126				139,979				—				—				—				140,105
Retirement of treasury shares			(106	)			(1	)			(13,189	)			—				13,190				—				—
Common stock issued under long-term incentive plans, net			105				1				1,769				—				—				—				1,770
Balances at September 30, 2009			78,142			$	781			$	2,396,247			$	(419,574	)		$	—			$	5			$	1,977,459

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

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

		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2009				2008				2009				2008
						(In thousands, except per share amounts)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)		$	(17,283	)		$	(4,043	)		$	384			$	(4,741	)
Add (deduct) non-cash items:
Depreciation and depletion			28,647				6,068				57,466				16,677
Amortization of debt discount			5,231				409				9,590				450
Deferred income taxes			(24,175	)			(3,894	)			(29,896	)			(7,795	)
Loss (gain) on debt extinguishment			2,947				—				(35,890	)			—
Loss on derivatives, net			32,380				5,115				45,250				8,639
Loss (gain) on foreign currency transactions			223				(63	)			(185	)			1
Share based compensation			1,885				356				4,542				2,244
Loss (gain) from discontinued operations and other assets			(32,212	)			163				(32,291	)			167
Other			662				750				2,965				2,538
Changes in operating assets and liabilities:
Receivables and other current assets			1,855				2,393				(7,145	)			(23,825	)
Inventories			(10,547	)			(685	)			(23,733	)			5,974
Accounts payable and accrued liabilities			33,421				(5,381	)			50,654				(9,366	)
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES			23,034				1,188				41,711				(9,037	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments			(6,525	)			(58,973	)			(13,906	)			(304,596	)
Proceeds from sales of investments			11,237				124,894				30,050				334,604
Capital expenditures			(54,578	)			(87,727	)			(175,509	)			(256,362	)
Proceeds from discontinued operations, sale of assets and other			55,053				49				56,877				11
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES			5,187				(21,757	)			(102,488	)			(226,343	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of gold production royalty			—				—				75,000				—
Proceeds from issuance of convertible notes			—				—				20,368				230,000
Repayment of long-term debt and capital leases			(7,268	)			(22,389	)			(22,138	)			(30,213	)
Payment of debt issuance costs			—				293				—				(8,258	)
Proceeds from short-term borrowings			—				500				—				1,194
Proceeds from sale-lease back transactions			—				—				12,511				—
Common stock repurchased			(18	)			—				(121	)			(372	)
Other			—				—				—				35
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES			(7,286	)			(21,596	)			85,620				192,386
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			20,935				(42,165	)			24,843				(42,994	)
Cash and cash equivalents at beginning of period			24,668				97,842				20,760				98,671
Cash and cash equivalents at end of period		$	45,603			$	55,677			$	45,603			$	55,677

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

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

NOTE A — BASIS OF PRESENTATION

     The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) 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 GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine-month periods ended September 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009. The balance sheet at December 31, 2008 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 ended December 31, 2008.

     Certain amounts for the three and nine months ended September 30, 2008 and at December 31, 2008 have been revised to reflect the retrospective adoption in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP) of “Convertible Debt Instruments That May Be Settled in Cash upon Conversion”, which requires an allocation of convertible debt proceeds between the liability component and the equity component (See Note C).

  In May 2009, the Company’s Board of Directors authorized the Company to proceed with a 1-for-10 reverse stock split as described in Note K. All common stock information (including information related to options to purchase shares, restricted stock, restricted units, performance shares and performance units under the Company’s share-based compensation plans as described in Note L) and all “per share” information related to common stock in the consolidated financial statements have been restated to reflect the 1-for-10 reverse stock split. In addition, in May 2009 the Company’s stockholders approved a change in the par value from $1.00 per share to $0.01 per share. As a result, for all periods presented, the carrying value of the common stock was reduced and a corresponding adjustment was recorded as additional paid in capital.

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 Empressa Minera Manquiri S.A., Coeur Mexicana S.A. de C.V. (formerly Planet Gold S.A. de C.V.), Coeur Rochester, Inc., Coeur Alaska, Inc., CDE Cerro Bayo Ltd., Coeur Argentina S.R.L. and CDE Australia Pty. Ltd. 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: Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, no obligations remain and collection 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.

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

     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 and production costs applicable to sales are recorded on a gross basis 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 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 in accrued liabilities and other 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 of $2.5 million and $6.1 million, respectively, for the three and nine months ended September 30, 2009 and $2.0 million and $5.9 million respectively, for the three and nine months ended September 30, 2008 were recorded as a reduction of revenue.

     At September 30, 2009, the Company had outstanding provisionally priced sales of $27.1 million, consisting of 1.7 million ounces of silver and 1,824 ounces of gold, which had a fair value of $29.4 million including the embedded derivative. For each one cent per ounce change in realized silver price, revenue would vary (plus or minus) approximately $17,000; and for each one dollar per ounce change in realized gold price, revenue would vary (plus or minus) approximately $1,800. At December 31, 2008, the Company had outstanding provisionally priced sales of $33.2 million, consisting of 2.2 million ounces of silver and 8,388 ounces of gold, which had a fair value of $32.1 million, including the embedded derivative. For each one cent per ounce change in realized silver price, revenue would vary (plus or minus) approximately $22,000; and for each one dollar per ounce change in realized gold price, revenue would vary (plus or minus) approximately $8,000.

     Short-term Investments: Short-term investments principally consist of highly-liquid United States, foreign government and corporate securities all classified as available-for-sale and reported at fair value with maturities that range from three months to one year. Unrealized gains and losses on these investments are recorded in accumulated other comprehensive income (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. Realized gains and losses from the sale of these investments are included in determining net income.

     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. In August 2007, the Company terminated mining and crushing operations at the Rochester mine as ore reserves were fully mined. Residual heap leach activities are expected to continue through 2014.

     The Company used several integrated steps to scientifically measure the metal content of ore placed on the leach pads. As the ore body was drilled in preparation for the blasting process, samples were taken of the drill residue which is assayed to determine estimated quantities of contained metal.

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

The Company estimated the quantity of ore by utilizing global positioning satellite survey techniques. The Company then processed the ore through crushing facilities where the output was again weighed and sampled for assaying. A metallurgical reconciliation with the data collected from the mining operation was completed with appropriate adjustments made to previous estimates. The crushed ore was then transported to the leach pad for application of the leaching solution. As the leach solution is collected from the leach pads, it is continuously sampled for assaying. The quantity of leach solution is measured by flow meters throughout the leaching and precipitation process. After precipitation, the product is converted to dorè, which is the final product produced by the mine. The inventory is stated at lower of cost or market, with cost being determined using a weighted average cost method.

     The Company reported ore on leach pad of $26.7 million as of September 30, 2009. Of this amount, $8.3 million was reported as a current asset and $18.4 million was 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. Inventories of ore on leach pad are valued based on actual production costs incurred to produce and place ore on the leach pad, adjusted for effects on monthly production of costs of abnormal production levels, less costs allocated to minerals recovered through the leach process.

     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 twenty 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. During the third quarter of 2008, the Company increased its estimated silver ounces contained in the heap inventory by 5.4 million ounces. The increase in estimated silver ounces contained in the heap inventory is due to changes in estimated recoveries anticipated for the remainder of the residual leach phase. There were no changes in recoveries related to gold contained in the heap. Consequently, the Company believes its current residual heap leach activities are expected to continue through 2014. The ultimate recovery will not be known until leaching operations cease.

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

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

     Property, Plant, and Equipment: Expenditures for new facilities, assets acquired pursuant to 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: Capitalization of mine development costs that meet the definition of an asset begins once all operating permits have been secured, mineralization is classified as proven and probable reserves and a final feasibility study has been completed. Mine development costs include engineering and metallurgical studies, drilling and other related costs to delineate an ore body, the removal of overburden to initially expose an ore body at open pit surface mines and the building of access ways, shafts, lateral access, drifts, ramps and other infrastructure at underground mines. Costs incurred during the start-up phase of a mine are expensed as incurred. Costs incurred before mineralization is classified as proven and probable reserves are expensed and classified as Exploration or Pre-development expense. All capitalized 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.

     Drilling and related costs incurred at our operating mines are expensed as incurred as exploration expense, unless we can conclude with a high degree of confidence, prior to the commencement of a drilling program, that the drilling costs will result in the conversion of a mineral resource into proven and probable reserves. Our assessment is based on the following factors: results from previous drill programs; results from geological models; results from a mine scoping study confirming economic viability of the resource; and preliminary estimates of mine inventory, ore grade, cash flow and mine life. In addition, the Company must satisfy all permitting and/or contractual requirements necessary to have the right to, and control of, the future benefit from the targeted ore body. The costs of a drilling program that meet these criteria are capitalized as mine development costs. All other drilling and related costs, including those beyond the boundaries of the development and production stage properties, are expensed as incurred.

     Drilling and related costs of approximately $0.4 million and $1.5 million, respectively for the three and nine months ended September 30, 2009 and $0.7 million and $1.9 million, respectively, for the three and nine months ended September 30, 2008, met the criteria for capitalization at properties that are in the development and production stages.

     The costs of removing overburden and waste materials to access the ore body at an open pit mine prior to the production phase are referred to as “pre-stripping costs.” Pre-stripping costs are capitalized during the development of an open pit mine. Stripping costs incurred during the production phase of a mine are variable production costs that are included as a component of inventory to be recognized in production costs applicable to sales in the same period as the revenue from the sale of inventory.

     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

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

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. The Company amortizes its mineral interest in the Endeavor mine using the units of production method.

     Asset Impairment: Management reviews and evaluates its long-lived assets for impairment when events and changes in circumstances indicate that the related carrying amounts of its assets may not be recoverable. Impairment is considered to exist if total estimated future cash flows or probability-weighted cash flows on an undiscounted basis are less than the carrying amount of the assets, including property plant and equipment, mineral property, development property, and any deferred costs. 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 and capital, 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 these assumptions and actual market conditions or the Company’s actual 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 September 30, 2009 and December 31, 2008, the Company held certificates of deposit and cash under these agreements of $23.9 million and $23.1 million, respectively, restricted for this purpose. The ultimate timing for the release of the collateralized amounts is dependent on the timing and closure of each mine. In order to release the collateral, the Company must seek approval from certain government agencies responsible for monitoring the mine closure status. Collateral could also be released to the extent the Company was able to secure alternative financial assurance satisfactory to the regulatory agencies. The Company believes there is a reasonable probability that the collateral will remain in place beyond a twelve-month period and has therefore classified these investments as long-term. In addition, at September 30, 2009 and December 31, 2008, the Company held certificates of deposit totaling $2.3 million and $5.5 million, respectively, that were pledged to support letters of credit to Mitsubishi International. These amounts are included in prepaids and other.

     Reclamation and Remediation Costs: The Company recognizes obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. These legal obligations are associated with the retirement of long-lived assets that result from the acquisition, construction, development and normal use of the asset. The fair value of a liability for an asset retirement obligation will be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. An accretion cost, representing the increase over time in the present value of the liability, is recorded each period in depreciation, depletion and amortization expense. 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.

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

     Foreign Currency: The assets and liabilities of the Company’s foreign subsidiaries are measured using U.S. dollars as their functional currency. 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 recognizes all derivatives as either assets or liabilities on the balance sheet and measures those instruments at fair value. Appropriate accounting for changes in the fair value of derivatives held is dependent on whether the derivative instrument is designated and qualifies as an accounting hedge and on the classification of the hedge transaction.

     Fair Value: Effective January 1, 2008, the Company adopted new accounting standards related to Fair Value Measurements with respect to its financial assets and liabilities only. The new standard defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurement. Refer to Note D for further details regarding the Company’s assets and liabilities measured at fair value.

     Stock-based Compensation Plans: The Company estimates the fair value of each stock option award using the Black-Scholes option valuation model. The Company estimates the fair value of performance share grants using a Monte Carlo simulation valuation model. The Company estimates forfeitures of stock based awards on historical data and periodically adjusts the forfeiture rate. The adjustment of the forfeiture rate is recorded as a cumulative adjustment in the period the forfeiture estimate is changed. The compensation costs are included in administrative and general expenses, production costs applicable to sales and the cost of self-constructed property, plant and equipment as deemed appropriate.

     Income Taxes: The Company uses 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.

     The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. The Company has substantially concluded all U.S. federal income tax matters for years through 1999. Federal income tax returns for 2000 through 2008 are subject to examination. The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. There were no significant interest or penalties accrued at September 30, 2009.

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

		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2009				2008				2009				2008
Net income (loss)		$	(17,283	)		$	(4,043	)		$	384			$	(4,741	)
Unrealized loss on marketable securities			—				(609	)			—				(724	)
Change in fair value of cash flow hedges, net of settlements			—				83				—				(130	)
Comprehensive income (loss)		$	(17,283	)		$	(4,569	)		$	384			$	(5,595	)

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

     Net Income (Loss) Per Share: The Company follows U.S. GAAP 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 convertible Senior Notes outstanding in the three and nine month periods ended September 30, 2009 and 2008 are as follows:

		Three Months Ended												Nine Months Ended
		September 30, 2009												September 30, 2009
		(Loss)				Shares				Per-Share				(Loss)				Shares				Per-Share
(In thousands except for EPS)		(Numerator)				(Denominator)				Amount				(Numerator)				(Denominator)				Amount
Basic EPS
Net loss from continuing operations		$	(39,808	)			76,133			$	(0.52	)		$	(27,068	)			69,163			$	(0.39	)
Net income from discontinued operations			22,525				76,133				0.29				27,452				69,163				0.40
Income (loss)		$	(17,283	)			76,133			$	(0.23	)		$	384				69,163			$	0.01
Effect of Dilutive Securities
Equity awards			—				—				—				—				—				—
Diluted EPS
Net loss from continuing operations		$	(39,808	)			76,133			$	(0.52	)		$	(27,068	)			69,163			$	(0.39	)
Net income from discontinued operations			22,525				76,133				0.29				27,452				69,163				0.40
Income (loss)		$	(17,283	)			76,133			$	(0.23	)		$	384				69,163			$	0.01

		Three Months Ended												Nine Months Ended
		September 30, 2008												September 30, 2008
		Income				Shares				Per-Share				Income				Shares				Per-Share
(In thousands except for EPS)		(Numerator)				(Denominator)				Amount				(Numerator)				(Denominator)				Amount
Basic EPS
Net income (loss) from continuing operations		$	(5,462	)			55,010			$	(0.10	)		$	(13,042	)			55,006			$	(0.24	)
Net income (loss) from discontinued operations			1,419				55,010				0.03				8,301				55,006				0.15
Income (loss)		$	(4,043	)			55,010			$	(0.07	)		$	(4,741	)			55,006			$	(0.09	)
Diluted EPS
Net income (loss) from continuing operations		$	(5,462	)			55,010			$	(0.10	)		$	(13,042	)			55,006			$	(0.24	)
Net income (loss) from discontinued operations			1,419				55,010				0.03				8,301				55,006				0.15
Income (loss)		$	(4,043	)			55,010			$	(0.07	)		$	(4,741	)			55,006			$	(0.09	)

     For the three and nine months ended September 30, 2009, 659,682 shares attributed to outstanding options and non-vested shares were not included in the computation of diluted EPS because their effect was antidilutive. In addition, 371,885 shares attributed to outstanding options and non-vested shares have been excluded from earnings per share calculated for the three and nine months ended September 30, 2008 as their effect was anti-dilutive. The options outstanding at September 30, 2009 expire between 2009 and 2019. Potentially dilutive shares of 1,199,099 and 1,799,291 attributed to the 1¹/4% Convertible Senior Notes have been excluded from the earnings per share calculation for the three months and nine month ended September 30, 2009, respectively, as their effect was anti-dilutive. The 3¹/4% Convertible Senior Notes were not included in the computation of diluted EPS for the three months ended September 30, 2009 and 2008 because there is no excess conversion value over the principal amount of the notes.

     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 using the effective interest method.

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

     Use of Estimates: The preparation of the Company’s consolidated financial statements in conformity with GAAP 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 and amortization; estimates of future cash flows for long lived assets; estimates of recoverable gold and silver ounces in ore on leach pad; the amount and timing of reclamation and remediation costs; valuation allowance for deferred tax assets; and other employee benefit liabilities.

     Reclassifications: Certain reclassifications of prior year balances have been made to conform to the current year presentation. These reclassifications had no material impact on the Company’s consolidated financial position, results of operations or cash flows for the periods presented. The most significant reclassifications were to reclassify $75.0 million from operational mining properties to property, plant and equipment including accumulated depreciation related to the tailings facility at the San Bartolomé mine. In addition, changes of $3.1 million in restricted cash that occurred in the second quarter of 2009 have been reclassified from cash flows from operations to cash flows from investing activities on the consolidated statement of cash flows for the nine months ended September 30, 2009.

NOTE C — RECENTLY ADOPTED ACCOUNTING STANDARDS

     In May 2008, the FASB adopted new accounting standards related to convertible debt instruments that, by their stated terms, may be settled in cash (or other assets) upon conversion, including partial cash settlement, unless the embedded conversion option is required to be separately accounted for as a derivative. The new rules require that the liability and equity components of convertible debt instruments be separately accounted for in a manner that reflects the entity’s borrowing rate. This requires an allocation of the convertible debt proceeds between the liability component and the embedded conversion option (i.e., the equity component). The difference between the principal amount of the debt and the amount of the proceeds allocated to the liability component is reported as a debt discount and subsequently accreted as additional interest over the instrument’s expected life using the effective interest method. The new accounting standards were adopted effective January 1, 2009 and have been applied retrospectively to all periods presented. The Company determined that the provisions of the new accounting standard were applicable to the 3¹/4% Convertible Senior Notes. The expected life for purposes of the allocation was deemed to be five years which coincides with the initial put option date of March 15, 2013. If exercised, the Company is required to repurchase some or all of the holder’s notes in cash and/or shares at a repurchase price equal to 100% of the principal amount.

     The Company has recorded the following balances in the consolidated balance sheet related to the 3¹/4% Convertible Senior Notes reflecting the recently adopted accounting standard:

		As of				As of
		September 30,				December 31,
		2009				2008
Principal amount of the notes		$	150,404			$	230,000
Unamortized debt discount			(24,956	)			(44,999	)
Net carrying value		$	125,448			$	185,001

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

     The following table reflects the impact of adopting the new accounting standard in the consolidated balance sheet as of December 31, 2008:

		As previously
		reported				Effect of					As revised
		December 31,				adopting New				December 31,
		2008				Accounting Standard				2008
Operational mining properties		$	292,013			$	1,551			$	293,564
Accumulated depletion			(131,698	)			(32	)			(131,730	)
Non producing development properties			351,985				4,927				356,912
Debt issuance costs, net			12,476				(2,223	)			10,253
3 1/4% Convertible Senior Notes due 2028			230,000				(44,999	)			185,001
Additional paid-in capital			2,168,646				49,841				2,218,487
Accumulated deficit			(419,339	)			(619	)			(419,958	)

     The new accounting standard required retrospective application to all periods presented. As a result of adopting the new accounting standards, the effective interest rate of 3¹/4% on the Notes increased by approximately 5.7% to 8.9% because of non-cash amortization of debt discount over the expected life of the notes. Earnings per share decreased by $0.01 for the three and nine months ended September 30, 2008. Cash flows from operations were not affected by the adoption of the new accounting standards.

     Following the adoption, the Company will amortize $51.7 million of debt discount over the remaining period ending on the initial put option date of March 15, 2013. As of September 30, 2009 the outstanding debt discount amounted to $25.0 million. For the three and nine months ended September 30, 2009, the Company recorded $1.2 million and $4.6 million, respectively, in interest expense for the contractual interest rate and accretion of $1.5 million and $5.6 million of the debt discount, respectively.

  Equity Linked Financial Instruments

     In June 2008, the Emerging Issues Task Force, or EITF, reached a consensus which clarifies the accounting treatment of an instrument (or an embedded feature) that is indexed to an entity’s own stock, which would qualify as a scope exception under U.S. GAAP. The adoption of the consensus reached by the EITF was effective for the Company’s fiscal year beginning January 1, 2009. Upon adoption, the Company determined that the bifurcated embedded conversion option in its Senior Secured Floating Rate Convertible Notes was no longer a derivative that is required to be adjusted to fair value at the end of each period. The carrying amount of the liability for the conversion option was reclassified to shareholders’ equity upon adoption.

  Derivative Instruments

     In March 2008, the FASB issued new accounting standards related to enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for and how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. The new accounting standards were adopted effective January 1, 2009 and were effective for the Company’s fiscal year, beginning January 1, 2009. See Note M for the Company’s required disclosures.

  Subsequent Events

     In May 2009, the FASB issued new accounting standards that established accounting and reporting standards for events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The new standard sets forth (i) a period after the balance sheet date during which a reporting entity’s management should evaluate events or transactions for possible recognition or disclosure in financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet in its financial statements, and (iii) the disclosures that an entity should make about events or transactions occurring after the balance sheet date in its financial statements. The Company adopted the provisions of the new accounting standards for the interim period ended June 30, 2009. The adoption had no impact on the Company’s consolidated financial position results of operations or cash flows.

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

  The Accounting Standards Codification

     In June 2009, the FASB issued new accounting standards related to its accounting standards codification of the hierarchy of generally accepted accounting principles. The new standard is the source of authoritative U.S. GAAP to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The Codification superseded non-SEC accounting and reporting standards. All accounting literature that is not in the Codification, not issued by the SEC and not otherwise grandfathered is nonauthoritative. The new standard is effective for the Company’s interim quarterly period beginning July 1, 2009. The adoption had no impact on the Company’s consolidated financial position results of operations or cash flows.

NOTE D — FAIR VALUE MEASUREMENTS

     On January 1, 2008, the Company adopted new accounting standards related to fair value measurements of financial assets and financial liabilities. The new standard defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The new standard established a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

Level 1		Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2		Quoted prices in markets that are not active or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3		Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

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

     The following table sets forth the Company’s financial assets and liabilities measured at fair value by level within the fair value hierarchy. As required, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (in thousands):

		Fair Value at September 30, 2009
		Total				Level 1				Level 2				Level 3
Assets:
Restricted investments		$	3,816			$	—			$	3,816			$	—
Other derivative instruments, net			2,429				—				2,429				—
Franco-Nevada warrant			6,254				—				6,254				—
Put and call options			403				—				403				—
		$	12,902			$	—			$	12,902			$	—
Liabilities:
Gold lease facility		$	24,484			$	—			$	24,484			$	—
Royalty embedded derivative			49,179				—				49,179				—
Put and call options			1,886				—				1,886				—
		$	75,549			$	—			$	75,549			$	—

		Fair Value at December 31, 2008
		Total				Level 1				Level 2				Level 3
Assets:
Marketable equity securities		$	8			$	8			$	—			$	—
Marketable debt securities			7,882				—				7,882				—
Short-term certificates of deposit			8,525				—				8,525				—
Restricted investments			2,031				—				2,031				—
Asset-backed commercial paper			1,772				—				—				1,772
Other derivative instruments, net			2,359				—				2,359				—
		$	22,577			$	8			$	20,797			$	1,772
Liabilities:
Gold lease facility		$	18,806			$	—			$	18,806			$	—
Warrant on floating rate convertible notes			15,277				—				—				15,277
Senior secured floating note conversion option			21,566				—				—				21,566
		$	55,649			$	—			$	18,806			$	36,843

     The Company’s marketable equity securities are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The fair value of the marketable equity securities is calculated as the quoted market price of the marketable equity security multiplied by the quantity of shares held by the Company.

     The Company’s short-term certificates of deposit, restricted investments, marketable debt securities, Franco-Nevada warrant and contingent warrant to acquire Franco-Nevada common stock, are valued using pricing models which require inputs that are derived from observable market data and as such are classified within Level 2 of the fair value hierarchy.

     The Company’s derivative instruments related to the concentrate sales contracts, foreign exchange contracts, royalty agreement, put and call options and gold lease facility are valued using quoted market prices and other significant observable inputs, including fair value modeling techniques. Such instruments are classified within Level 2 of the fair value hierarchy.

     The warrant and conversion option on the floating rate convertible notes and asset-backed commercial paper fall within Level 3 of the fair value hierarchy because there are no observable market quotes. For these instruments, management uses significant other observable inputs adjusted for various factors such as valuation models which require a variety of inputs, including contractual terms, market prices, yield curves, credit spreads, measures of volatility and correlation of such inputs. The Company estimated the fair value of the warrant on the floating rate convertible notes using a Monte Carlo simulation model including expected terms, LIBOR volatilities and correlation of such inputs.

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

     The table below sets forth a summary in fair value of the Company’s Level 3 financial assets and liabilities for the nine months ended September 30, 2009 (in thousands):

		Warrant and
		Conversion Option				Asset
		to Purchase				Backed
		Floating rate				Commercial
		Convertible Notes				Paper				Total
Balance at beginning of period		$	36,843			$	1,772			$	38,615
Additions (deletions)			(36,843	)			(1,395	)			(38,238	)
Unrealized gain (loss)			—				223				223
Realized loss			—				(600	)			(600	)
Balance at end of period		$	—			$	—			$	—

NOTE E — METAL AND OTHER INVENTORIES

		September 30,				December 31,
		2009				2008
Inventories consist of the following:		(in thousands)
Concentrate and doré inventory		$	36,270			$	19,826
Supplies			25,798				15,020
Metal and other inventories		$	62,068			$	34,846

NOTE F — DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES HELD FOR SALE

     Effective July 1, 2009, the Company sold to Perilya Broken Hill Ltd. its 100% interest in silver contained at the Broken Hill mine for $55.0 million in cash. As a result of this transaction, the Company realized a gain on the sale in the third quarter of 2009 of approximately $22.4 million, net of income taxes. Coeur originally purchased this interest from Perilya in September 2005 for $36.9 million. This transaction closed on July 30, 2009.

     The following table details selected financial information included in the income (loss) from discontinued operations in the consolidated statements of operations for the three and nine months ended September 30, 2009 and 2008 (in thousands):

		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2009				2008				2009				2008
Sales of metal		$	63			$	3,225			$	10,420			$	15,928
Production costs applicable to sales			49				(645	)			(1,650	)			(2,156	)
Depreciation and depletion			51				(553	)			(1,568	)			(1,914	)
Mining exploration			—				—				—				—
Other			—				—				—				—
Income tax expense			(49	)			(608	)			(2,161	)			(3,557	)
Income from discontinued operations			114				1,419				5,041				8,301
Gain on sale of net assets of discontinued operations			32,079				—				32,079				—
Income tax expense or gain from discontinued operations			(9,668	)			—				(9,668	)			—
Net income from discontinued operations		$	22,525			$	1,419			$	27,452			$	8,301

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

NOTE G — DEBT OBLIGATIONS

Senior Secured Floating Rate Convertible Notes

     On October 20, 2008 the Company completed an offering of $50 million in aggregate principal amount of Senior Secured Floating Rate Convertible Notes. The Company also sold to the purchaser a warrant to purchase up to an additional $25 million aggregate principal amount of convertible notes. The notes were convertible into shares of the Company’s common stock at the option of the holder at any time prior to the close of business on the business day immediately preceding the maturity date. The initial conversion price was $11.50 per share. The net proceeds to the Company were $40.2 million after deducting $0.5 million of issuance costs. The purchaser also received warrants to purchase up to an additional $25 million aggregate principal amount of convertible notes for $20.4 million.

     The notes bore interest at LIBOR plus 7.50% per year, provided that in no event would the annual rate be less than 9% or more than 12%. As of December 31, 2008 the interest rate was 12%. Interest was payable, at the Company’s option, in cash, common stock or a combination of cash and common stock. The notes were the Company’s senior secured obligations, ranking equally with all existing and future senior obligations and ranking senior to all existing and future subordinated indebtedness, and were secured by certain assets of the Company’s Coeur Rochester, Inc. subsidiary.

     On January 12, 2009, the Company amended its agreement with the holders of the Senior Secured Floating Rate Convertible Notes to modify the exercise date to allow the holder to exercise the warrant early and fix the interest rate at 12% through July 15, 2009.

     On January 20, 2009, the Company received proceeds of $20.4 million from the exercise of the warrant to purchase an additional $25 million aggregate principal amount of the Senior Secured Floating Rate Convertible Notes with terms similar to the notes it issued in October of 2008.

     As of September 30, 2009, all of the $50 million Senior Secured Floating Rate Convertible Notes due 2012 had been fully converted into 6.4 million shares of the Company’s common stock and all $25 million of the notes issued in January upon exercise of the warrant had been converted into 3.7 million shares of the Company’s common stock. Upon exercising the conversion option, the holder received 86.95652 shares of the Company’s common stock per $1,000 principal amount of notes, plus an additional payment in common stock and cash representing the value of the interest that would be earned on the notes through the fourth anniversary of the conversion date.

     Interest and accretion on the notes, prior to their conversion in March 2009, was $1.2 million and $2.0 million, respectively.

3 1/4% Convertible Senior Notes due 2028

     On March 18, 2008, the Company completed an offering of $230 million in aggregate principal amount of Convertible Senior Notes due 2028. The notes are unsecured and bear interest at a rate of 3¹/4% per year, payable on March 15 and September 15 of each year, beginning on September 15, 2008. The notes mature on March 15, 2028, unless earlier converted, redeemed or repurchased by the Company.

     Each holder of the notes may require that the Company repurchase some or all of the holder’s notes on March 15, 2013, March 15, 2015, March 15, 2018 and March 15, 2023 at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest, in cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election. Holders will also have the right, following certain fundamental change transactions, to require the Company to repurchase all or any part of their notes for cash at a repurchase price equal to 100% of the principal amount of the notes to be repurchased plus accrued and unpaid interest. The Company may redeem the notes for cash in whole or in part at any time on or after March 22, 2015 at 100% of the principal amount of the notes to be redeemed plus accrued and unpaid interest.

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

     The notes provide for “net share settlement” of any conversions. Pursuant to this feature, upon conversion of the notes, the Company (1) will pay the note holder an amount in cash equal to the lesser of the conversion obligation or the principal amount of the notes and (2) will settle any excess of the conversion obligation above the notes’ principal amount in the Company’s common stock, cash or a combination thereof, at the Company’s election.

     The notes are convertible under certain circumstances, as defined in the indenture agreement, at the holder’s option, at an initial conversion rate of 17.60254 shares of the Company’s common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $56.81 per share, subject to adjustment in certain circumstances.

     During the nine months ended September 30, 2009, $79.6 million of the 3¹/4% Convertible Senior Notes due 2028 were repurchased in exchange for 4.4 million shares of the Company’s common stock which reduced the principal amount of the notes outstanding to $150.4 million ($125.4 million net of debt discount).

     The fair value of the notes outstanding, as determined by market transactions on September 30, 2009 and December 31, 2008, was $130.5 million and $74.5 million, respectively.

     Upon adoption of the new accounting standard as described in Note C, the Company recorded $51.7 million of debt discount and the effective interest rate on the notes increased to 8.9%, including the accretion of the debt discount.

     For the three and nine months ended September 30, 2009 interest was $1.2 million and $4.6 million, respectively, and accretion of the debt discount was $1.5 million and $5.6 million, respectively.

     For the three and nine months ended September 30, 2008 interest was $1.9 million and $4.0 million, respectively, and accretion of the debt discount was $2.1 million and $4.5 million, respectively.

1 1/4% Convertible Senior Notes due 2024

     The $65.2 million principal amount of 1¹/4% Convertible Notes due 2024 outstanding at September 30, 2009 are convertible into shares of common stock at the option of the holder on January 15, 2011, 2014, and 2019, unless previously redeemed, at a conversion price of $76.00 per share, subject to adjustment in certain circumstances.

     The Company is required to make semi-annual interest payments. The notes are redeemable at the option of the Company before January 18, 2011, if the closing price of the Company’s common stock over a specified number of trading days has exceeded 150% of the conversion price, and anytime thereafter. Before January 18, 2011, the redemption price is equal to 100% of the principal amount of the notes, plus an amount equal to 8.75% of the principal amount of the notes, less the amount of any interest actually paid on the notes on or prior to the redemption date. The notes are due on January 15, 2024.

     Each holder of the notes may require that the Company repurchase some or all of the holder’s notes on January 15, 2011, January 15, 2014 and January 15, 2019 at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest, in cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election. Holders will also have the right, following certain fundamental change transactions, to require the Company to repurchase all or any part of their notes for cash at a repurchase price equal to 100% of the principal amount of the notes to be repurchased plus accrued and unpaid interest.

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

     During the three months ended September 30, 2009, $41.6 million of the 1 ¹/4% Convertible Senior Notes due 2024 were repurchased in exchange for 2.7 million shares of the Company’s common stock.

     During the nine months ended September 30, 2009, $114.8 million of the 1¹/4% Convertible Senior Notes due 2024 were repurchased in exchange for 8.3 million shares of the Company’s common stock which reduced the principal amount of the notes outstanding to $65.2 million.

     The fair value of the notes outstanding, as determined by market transactions on September 30, 2009 and December 31, 2008, was $59.1 million and $54.0 million, respectively.

     Interest on the notes for the three and nine months ended September 30, 2009 was $0.3 million and $1.3 million, respectively. Interest on the notes for the three and nine months ended September 30, 2008 was $0.6 million and $1.7 million, respectively.

Bank Loans

     During 2008, the Company’s wholly-owned Bolivian subsidiary, Empressa Minera Manquiri, received proceeds from short-term borrowings from Banco Bisa and Banco de Credito de Bolivia in the amount of $3.0 million to fund working capital requirements. The short-term bank loans matured and were repaid in April 2009.

     During the fourth quarter of 2008, the Company’s wholly-owned Argentinean subsidiary entered into several temporary credit lines in the amount of $3.5 million with the Standard Bank of Argentina secured by a standby letter of credit by Cerro Bayo, (a wholly owned subsidiary of the Company), to fund working capital requirements. The credit lines matured and were repaid on April 13, 2009, June 30, 2009 and July 24, 2009.

Capitalized Interest

     The Company capitalizes interest incurred on its various debt instruments as a cost of properties under development. For the three months ended September 30, 2009 and 2008, the Company capitalized interest of $3.2 million and $4.3 million, respectively and for the nine months ended September 30, 2009 and 2008, the Company capitalized interest of $19.1 million and $10.6 million, respectively.

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.

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

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

		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2009				2008				2009				2008
		(in thousands)
Asset retirement obligation — beginning balance		$	35,792			$	33,437			$	34,662			$	33,135
Accretion			809				629				2,399				1,886
Additions			2,972				—				2,972				—
Settlements			(203	)			(1,106	)			(663	)			(2,061	)
Asset retirement obligation — ending balance		$	39,370			$	32,960			$	39,370			$	32,960

     During the third quarter of 2009, the Company increased its estimated asset retirement obligation at the Cerro Bayo mine in the amount of $3.0 million. In addition, the Company has accrued $1.0 million and $1.4 million as of September 30, 2009 and December 31, 2008, respectively, for reclamation liabilities related to former mining activities. These amounts are also included in reclamation and mine closure liabilities.

NOTE I — INCOME TAXES

     The Company computes income taxes using 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 Company differences are expected to reverse. The Company has U.S. net operating loss carryforwards which expire in 2009 through 2025. Net operating losses in foreign countries have an indefinite carryforward period, except in Mexico where net operating loss carryforwards are limited to ten years.

     For the three and nine months ended September 30, 2009, the Company reported an income tax benefit of approximately $13.9 million and $18.3 million, respectively, compared to an income tax benefit of $4.4 million and $2.2 million for the three and nine months ended September 30, 2008. The following table summarizes the components of the Company’s income tax provision for the three and nine months ended September 30, 2009 and 2008:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2009				2008				2009				2008
Current:
United States — Alternative minimum tax		$	(1,533	)		$	422			$	(1,772	)		$	(566	)
United States — Foreign withholding			(479	)			(523	)			(1,317	)			(927	)
Argentina			(2,912	)			443				(4,244	)			(2,496	)
Australia			105				(440	)			1,245				(1,782	)
Mexico			(17	)			(27	)			(66	)			(49	)
Canada			—				—				(53	)			(20	)
Bolivia			(1,931	)			669				(5,088	)			—
Deferred:
United States			7,708				403				10,074				1,950
Argentina			—				267				—				638
Australia			276				276				(22	)			411
Chile			569				608				1,205				(740	)
Mexico			10,031				3,404				21,727				7,227
Bolivia			2,059				(1,058	)			(3,417	)			(1,446	)
Income tax benefit		$	13,876			$	4,444			$	18,272			$	2,200

   The income tax provision for the three and nine months ended September 30, 2009 and 2008 varies from the statutory rate primarily because of differences in tax rates for the Company’s foreign operations and changes in valuation allowances for net deferred tax assets.

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

NOTE J — DEFINED CONTRIBUTION AND 401(K)

Defined Contribution Plan

     The Company provides a noncontributory defined contribution retirement plan for all eligible U.S. employees. Total contributions charged to expense were $0.1 million and $0.1 million for the three months ended September 30, 2009 and 2008, respectively and $0.5 million and $0.5 million for the nine months ended September 30, 2009 and 2008, respectively. Contributions are based on a percentage of the salary of eligible employees.

401(k) Plan

     The Company maintains a retirement 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 adopted a Safe Harbor Tiered Match and is required to make matching contributions equal to 100% of the employee’s contribution up to 3% of the employee’s compensation plus matching contributions equal to 50% of the next 2% of the employee’s contribution. Employees have the option of investing in twelve different types of investment funds. Total plan expenses charged to operations for the three months ended September 30, 2009 and 2008, were $0.1 million and $0.1 million, respectively. Total plan expenses charged to operations in the nine months ended September 30, 2009 and 2008 were $0.4 million and $0.5 million, respectively.

NOTE K — 1-FOR-10 REVERSE STOCK SPLIT

     In May 2009, the Company’s Board of Directors authorized the Company to proceed with a 1-for-10 reverse stock split, which became effective at 6:01 p.m., Eastern Time, on May 26, 2009, which had been approved by the Company’s shareholders at the Annual Meeting of Shareholders on May 12, 2009. The Company’s common stock began trading at the split-adjusted basis on May 27, 2009.

     As the reverse stock split proportionally reduced the authorized, issued and outstanding shares of common stock of the Company, without any change to the par value, the “common stock” balance on the consolidated balance sheets as of December 31, 2008 and all per share amounts contained in this Quarterly Report on Form 10-Q, unless otherwise indicated, have been adjusted to reflect the 1-for-10 reverse stock split assuming the reverse stock split occurred January 1, 2008.

NOTE L — STOCK-BASED COMPENSATION PLANS

     The Company has an Annual Incentive Plan, a Long-Term Incentive Plan (the “2003 Long-Term Incentive Plan”) and the 2005 Non-Employee Directors’ Equity Incentive Plan (“2005 Non-Employee Directors’ Plan”). Total employee stock-based compensation charged to operations and capital projects under these Plans was $2.6 million and $1.4 million for the three months ended September 30, 2009 and 2008, respectively and $6.9 million and $5.1 million for the nine months ended September 30, 2009 and 2008, respectively.

     Stock options and SARs granted under the Company’s incentive plans vest over three years and are exercisable over a period not to exceed ten years from the grant date. The exercise price of the stock options and SARs is equal to the greater of the par value of the shares or the fair market value of the shares on the date of the grant. The value of each stock option award and SAR is estimated on the date of grant using the Black-Scholes option pricing model. Stock options granted are accounted for as equity based awards and SARs are accounted for as liability based awards. The value of the SARs are remeasured at each reporting date. SARs, when vested, provide the participant the right to receive cash equal to the excess of the market price of the shares over the exercise price when exercised.

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

     Restricted stock and restricted stock units granted are accounted for based on the market value of the underlying shares on the date of grant and vest in equal installments annually over three years. Restricted stock awards are accounted for as equity-based awards and restricted stock unit awards are accounted for as liability-based awards. Restricted stock units are remeasured at each reporting date. Holders of the restricted stock are entitled to vote the shares and to receive any dividends declared on the shares. Restricted stock units are settled in cash based on the number of vested restricted stock units multiplied by the current market price of the common shares when exercised.

     Performance shares and performance units awarded are accounted for at fair value. Performance share awards are accounted for as equity-based awards and performance units are accounted for as liability based awards. Performance share and performance units are valued using a Monte Carlo simulation valuation model on the date of grant. The value of the performance units is remeasured each reporting date. Vesting is contingent on meeting certain market conditions based on relative total shareholder return. The performance shares and units vest at the end of the three-year service period if the market conditions are met and the employee remains an employee of the Company. The existence of a market condition requires recognition of compensation cost for the performance share awards over the requisite period regardless of whether the market condition is ever satisfied. Performance units are cash-based awards and are settled in cash based on the current market price of the common shares when exercised.

     The compensation expense recognized in the Company’s consolidated financial statements for the three months ended September 30, 2009 and 2008 for stock based compensation awards was $1.9 million and $0.4 million, respectively and for the nine months ended September 30, 2009 and 2008 was $4.5 million and $2.3 million, respectively. The SAR’s, restricted stock units and performance units are liability-based awards and are required to be remeasured at the end of each reporting period with corresponding adjustments to previously recognized and future stock-based compensation expense.

     As of September 30, 2009, there was $3.4 million of total unrecognized compensation cost (net of estimated forfeitures) related to unvested stock options, SARs, restricted stock, restricted stock units, performance shares and performance units which is expected to be recognized over a weighted-average remaining vesting period of 1.8 years.

     The following table sets forth the weighted average fair value of stock options on the date of grant and the weighted average fair value of the SARs at September 30, 2009. The assumptions used to estimate the fair value of the stock options and SARs using the Black-Scholes option valuation model are as follows:

														As of
		Date of Grant												September 30,
		Stock Options								SARs				SARs
		2009				2008				2009				2009
Weighted average fair value of stock options granted and SAR’s outstanding		$	3.90				$2.26			$	5.50			$	15.58
Expected volatility			70.8	%			56.0-56.2	%			74.4	%			74.9	%
Expected life		6.0 years				6.0 years				5.8 years				5.3 years
Risk-free interest rate			2.08	%			3.0-3.35	%			1.6	%			2.3	%
Expected dividend yield			—				—				—				—

     The expected volatility is determined using historical volatilities based on historical stock prices. The Company estimated the expected life of the options and SARs 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 or SAR. The Company has not paid dividends on its common stock since 1996.

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

     The following table summarizes stock option and SARs activity during the nine months ended September 30, 2009:

		Stock Options								SARs
						Weighted								Weighted
						Average								Average
		Shares				Exercise Price				Shares				Exercise Price
Outstanding at December 31, 2008			243,370			$	33.79				—			$	—
Granted			163,720				10.00				112,471				10.00
Exercised			—				—				—				—
Canceled/forfeited			(14,412	)			44.36				—				—
Outstanding at September 30, 2009			392,678			$	23.48				112,471			$	10.00

     Options to purchase 192,990 shares were exercisable at September 30, 2009 at a weighted average exercise price of $31.63.

     As of September 30, 2009, there was $0.9 million of unrecognized compensation cost related to non-vested stock options and SARs to be recognized over a weighted average period of 1.5 years.

     The following table summarizes restricted stock and restricted units activity during the nine months ended September 30, 2009, adjusted for the 1-for-10 reverse stock split:

										Restricted Units
		Restricted Stock												Weighted
						Weighted								Average
		Number of				Average Grant				Number of				Fair Value as of
		Shares				Date Fair Value				Units				September 30, 2009
Outstanding at December 31, 2008			73,087			$	41.48				—			$	—
Granted			98,983				6.90				67,485				20.50
Vested			(32,084	)			41.65				—				—
Cancelled/Forfeited			(5,597	)			42.32				—				—
Outstanding at September 30, 2009			134,389			$	15.95				67,485			$	20.50