COEUR D ALENE MINES CORP - 10-Q Quarterly Report

Back to GetFilings.com

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549'
-----------------

FORM 10-Q

(Mark One)

X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934

For the quarterly period ended June 30, 2002

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 on its charter)

IDAHO 82-0109423
------------------------------- ----------------------------
(State or other jurisdiction of (I.R.S. Employer Ident. No.)
incorporation or organization)

P. O. Box I, Coeur d'Alene, Idaho 83816-0316
- --------------------------------- ----------
(Address of principal executive (Zip Code)
offices)

Registrant's telephone number, including area code:(208) 667-3511
- ------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report

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
----- -----

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 84,918,645 shares were issued and
outstanding as of August 15, 2002.

COEUR D'ALENE MINES CORPORATION

INDEX

Page No.

PART I. Financial Information (unaudited)

Item 1. Financial Statements
Consolidated Balance Sheets --
June 30, 2002 and December 31, 2001 3

Consolidated Statements of Operations and
Comprehensive Loss --
Three Months and Six Months Ended June 30,
2002 and 2001 5

Consolidated Statements of Cash Flows --
Three Months and Six Months Ended June 30,
2002 and 2001 6

Notes to Consolidated Financial Statements 7

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 21

PART II. Other Information

Item 2. Changes in Securities and Use of Proceeds 34

Item 3. Quantitative and Qualitative Disclosure about
Market Risk 35

Item 6. Exhibits and Reports on Form 8-K 37

SIGNATURES 38

2

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

June 30, December 31,
2002 2001
---------- ------------
ASSETS (In Thousands)

CURRENT ASSETS
Cash and cash equivalents $ 11,955 $ 14,714
Short-term investments 763 3,437
Receivables and prepaid expenses 6,217 5,902
Inventories 47,636 46,286
--------- ---------
TOTAL CURRENT ASSETS 66,571 70,339

PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 100,580 99,096
Less accumulated depreciation (69,390) (65,422)
--------- ---------
31,190 33,674

MINING PROPERTIES
Operational mining properties 121,410 117,555
Less accumulated depletion (82,936) (79,697)
--------- ---------
38,474 37,858
Developmental properties 46,724 46,685
--------- ---------
85,198 84,543

OTHER ASSETS
Restricted investments 11,591 11,219
Debt issuance costs, net of accumulated
amortization 3,585 3,262
Other 4,537 7,343
--------- ---------
19,713 21,824
--------- ---------
$ 202,672 $ 210,380
========= =========

See notes to consolidated financial statements.

3

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

June 30, December 31,
2002 2001
---------- ------------
(In Thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable $ 5,637 $ 3,721
Accrued liabilities 8,044 7,561
Accrued interest payable 2,274 2,720
Accrued salaries and wages 3,947 4,542
6% convertible subordinated debentures
due 2002 - 23,171
--------- ---------
TOTAL CURRENT LIABILITIES 19,902 41,715

LONG-TERM LIABILITIES
13 3/8% convertible senior subordinated
notes due December 2003 (Series I) 25,327 41,399
13 3/8% convertible senior subordinated
notes due December 2003 (Series II)
(net of discount of $5,175) 16,304 -
6 3/8% convertible subordinated debentures
due January 2004 65,457 66,270
7 1/4% convertible subordinated debentures
due October 2005 14,394 14,650
Reclamation and mine closure 13,696 14,462
Other long-term liabilities 5,663 5,096
--------- ---------
TOTAL LONG-TERM LIABILITIES 140,841 141,877

SHAREHOLDERS' EQUITY

Common Stock, par value $1.00 per share-
authorized 125,000,000 shares, issued
80,090,060 and 49,278,232 shares at June 30,
2002 and December 31, 2001 (including 1,059,211
shares held in treasury), respectively 80,090 49,278
Capital surplus 395,607 388,050
Accumulated deficit (420,750) (397,999)
Shares held in treasury (13,190) (13,190)
Accumulated other comprehensive income 172 649
--------- ---------

41,929 26,788
--------- ---------
$ 202,672 $ 210,380
========= =========

See notes to consolidated financial statements.

4

COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Three and Six Months Ended June 30, 2002 and 2001
(Unaudited)

3 MONTHS ENDED 6 MONTHS ENDED
JUNE 30 JUNE 30
-------------------- --------------------
2002 2001 2002 2001
-------- -------- -------- --------
(In thousands except for per share data)
REVENUES
Product sales $ 19,565 $ 18,213 $ 36,034 $ 36,219
Interest and other 2,564 1,838 3,092 1,854
-------- -------- -------- --------
Total Revenues 22,129 20,051 39,126 38,073

COSTS AND EXPENSES
Production 16,262 17,836 34,276 36,093
Depreciation and amortization 3,533 2,549 5,411 5,366
Administrative and general 2,464 2,163 4,569 4,440
Exploration 983 1,882 1,611 3,274
Prefeasibility 960 555 1,782 1,121
Interest 5,447 3,638 9,848 7,382
Other 667 856 1,460 1,073
Loss (gain) on retirement of
debt 2,668 (5,791) 2,920 (8,972)
-------- -------- -------- --------
Total Costs and Expenses 32,984 23,688 61,877 49,777
-------- -------- -------- --------

LOSS BEFORE INCOME TAXES (10,855) (3,637) (22,751) (11,704)
Income tax provision - - - 1
-------- -------- -------- --------

NET LOSS (10,855) (3,637) (22,751) (11,705)
Unrealized holding gain
(loss) on securities (578) 296 (477) 711
-------- -------- -------- --------
COMPREHENSIVE LOSS $(11,433) $ (3,341) $(23,228) $(10,994)
======== ======== ======== ========

BASIC AND DILUTED LOSS PER
SHARE DATA
Weighted average number of
shares of Common Stock 67,654 43,100 60,008 39,729
======== ======== ======== ========
Net Loss per share
attributable to Common
Shareholders $ (0.16) $ (0.08) $ (0.38) $ (0.29)
======== ======== ======== ========

See notes to consolidated financial statements.

5

COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three and Six Months Ended June 30, 2002 and 2001
(Unaudited)

3 MONTHS ENDED 6 MONTHS ENDED
JUNE 30 JUNE 30
-------------------- --------------------
2002 2001 2002 2001
-------- -------- -------- --------
(In Thousands)
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss $(10,855) $ (3,637) $(22,751) $(11,705)

Add (deduct) noncash items:
Depreciation, depletion, and
amortization 3,533 2,549 5,411 5,366
(Gain) loss on early
retirement of debt 2,920 (5,791) 2,920 (8,972)
Other 100 622 917 2,811
Non-cash interest expense 4,185 - 5,388 -
Unrealized loss (gain) on
written calls - 158 - (221)

Changes in Operating Assets
and Liabilities:
Receivables 864 3,108 (435) 3,927
Inventories (1,348) 1 600 1,374 2,640
Accounts payable and
accrued liabilities 698 (8,603) 1,754 (9,811)
-------- -------- -------- --------
NET CASH PROVIDED BY (USED
IN) OPERATING ACTIVITIES 97 (9,994) (5,422) (15,965)

CASH FLOWS FROM INVESTING
ACTIVITIES
Purchases of short-term
investments (782) (468) (782) (1,723)
Proceeds from sales of short-
term investments 2,420 337 3,684 5,603
Proceeds from sale of assets 6 - 6 14,733
Expenditures on mining assets (3,177) (1,908) (4,731) (3,885)
Other 115 (303) (22) (562)
-------- -------- -------- --------

NET CASH (USED IN) PROVIDED
BY INVESTING ACTIVITIES (1,418) (2,342) (1,845) 14,166

CASH FLOWS FROM FINANCING
ACTIVITIES
Retirement of debt (9,427) - (9,427) -
Proceeds from issuance of
long-term debt, net of
issuance costs 14,050 - 14,050 -
Other (54) (75) (115) (371)
-------- -------- -------- --------

NET CASH PROVIDED BY (USED
IN) FINANCING ACTIVITIES 4,569 (75) 4,508 (371)
-------- -------- -------- --------

INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,248 (12,411) (2,759) (2,170)
Cash and cash equivalents at
beginning of period 8,707 45,468 14,714 35,227
-------- -------- -------- --------

Cash and cash equivalents at
end of period $ 11,955 $ 33,057 $ 11,955 $ 33,057
======== ======== ======== ========

See notes to consolidated financial statements.

6

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

NOTE A: Basis of Presentation

The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States 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 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 and six month periods ended June 30, 2002 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2002.

The balance sheet at December 31, 2001 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by accounting principles generally accepted in the United
States for complete financial statements. For further information, refer to the
consolidated financial statements and footnotes thereto included in the Coeur
d'Alene Mines Corporation ("Coeur" or the "Company") Annual Report on Form 10-K
for the year ended December 31, 2001.

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., Compania Minera CDE Petorca, Coeur Australia and Empressa Minera
Manquiri S.R.L. The consolidated financial statements also include all entities
in which voting control of more than 50% is held by the Company. The Company has
no investments in entities in which it has greater than 50% ownership interest
accounted for using the equity method. Intercompany balances and transactions
have been eliminated in consolidation. Investments in corporate joint ventures
where the Company has ownership of 50% or less and funds its proportionate share
of expenses are accounted for under the equity method. The Company has no
investments in entities in which it has greater than 20% ownership interest
accounted for using the cost method.

Revenue Recognition: Revenue is recognized when title to silver and gold
passes at the shipment or delivery point to the buyer. The effects of forward
sales contracts and purchased put contracts are reflected in revenue at the date
the related precious

7

metals are delivered or the contracts expire. All by-product sales and third
party smelting and refining costs are recorded as revenue product sales.
By-product sales are primarily derived from copper which is produced as part of
the silver recovery process at Coeur Silver Valley. On an annual basis,
by-product sales represent less than 5% of revenues recognized as product sales.

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

Short-term Investments: Short-term investments principally consist of
highly-liquid United States, foreign government and corporate securities with
original maturities in excess of three months and less than one year. The
Company classifies all short-term investments as available-for-sale securities.
Unrealized gains and losses on these investments are recorded in accumulated
other comprehensive income as a separate component of shareholders' equity. Any
decline in market value judged 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 loss.

Inventories: Inventories include ore on leach pads, ore in the milling
processes, concentrates, dore and ore in stock piles. The classification of
inventory is determined by the stage at which the ore is in the production
process. The gold and silver content of inventories of ore on leach pads is
calculated based on samples taken of the ore prior to placement on the leach
pad. The ore on leach pads is then 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 is not placed on the leach pad and is classified as waste with no
value. Inventories of ore in stock piles and ore in the milling process are also
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.
Inherent in estimating net realizable value is an estimate of the percentage of
the minerals on leach pads and in process that will ultimately be recovered.
There have been no adjustments to the recovery rates used in estimated net
realizable value for the periods presented in these financial statements.
Management evaluates this estimate on an ongoing basis and adjustments are
accounted for prospectively. All inventories are stated at the lower of cost or
market, with cost being determined using the first-in, first-out and weighted
average cost methods. 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.

Property, Plant, and Equipment: Expenditures for new facilities, new assets
or expenditures that extend the useful lives of existing facilities are
capitalized and depreciated using the straight-line method at rates sufficient
to depreciate such costs

8

over the shorter of estimated productive lives of such facilities or the useful
life of the individual assets. Productive lives range from 7 to 31 years for
buildings and improvements, 3 to 13 years for machinery and equipment and 3 to 7
years for furniture and fixtures. Certain mining equipment is depreciated using
the units-of-production method based upon estimated total proven and probable
reserves. Maintenance and repairs are expensed as incurred.

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

Asset Impairment: Management reviews and evaluates its long-lived assets
for impairment when events or changes in circumstances indicate that the related
carrying amounts may not be recoverable. The Company utilizes the methodology
set forth in Statement of Financial Accounting Standard ("SFAS") No. 121,
"Accounting for the Impairment of Long Lived Assets and Long Lived Assets to be
Disposed Of" to evaluate the recoverability of capitalized mineral property
costs. An impairment is considered to exist if total estimated future cash flows
or probability-weighted cash flows on an undiscounted basis, is less than the
carrying amount of the assets, including property plant and equipment, mineral
property, development property, and any deferred costs such as deferred
stripping. An impairment loss is measured and recorded based on discounted
estimated future cash flows or the application of an expected present value
technique to estimate fair value in the absence of a market price. Future cash
flows include estimates of proven and probable

9

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 detailed engineering life-of-mine plans.
Assumptions underlying future cash flow estimates are subject to risks and
uncertainties. Any differences between significant assumptions and market
conditions and/or the Company's performance could have material effect on the
Company's financial position and results of operations. 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
groups. Generally, in estimating future cash flows, all assets are grouped at a
particular mine for which there is identifiable cash flow.

In August 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
that established a single accounting model, based on the framework of SFAS No.
121, for long-lived assets to be disposed of by sale. The statement was adopted
on January 1, 2002, and there was no impact on the Company upon adoption.

Restricted Investments: The Company, under the terms of its lease, self
insurance, and bonding agreements with certain banks, lending institutions and
regulatory agencies, is required to collateralize certain portions of the
Company's obligations. The Company has collateralized these obligations by
assigning certificates of deposit that have maturity dates ranging from three
months to a year, to the respective institutions or agency. At June 30, 2002 and
December 31, 2001, the Company had certificates of deposit under these
agreements of $11.6 million and $11.2 million, respectively, restricted for this
purpose. The ultimate timing for the release of the colaterallized 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 the
twelve-month period ending December 31, 2002, and has therefore classified these
investments as long-term.

Deferred Stripping Costs: Deferred stripping costs are unique to the mining
industry and are determined based on the Company's estimates for the life of
mine strip ratio for each mine. These costs are capitalized in periods when the
life of mine ratio is below the current mining strip ratio, and amortized during
periods where the life of mine strip ratio is above the current strip ratio. The
Rochester mine is the only mine that has previously capitalized deferred
stripping costs. The life of mine strip ratio that was used to accumulate the
deferred stripping amounts was 1.8 to 1 (waste to ore) and was based on the
estimated average stripping ratio for the life of the mine, compared to the then
current ratio of 2.2 to 1 (waste to

10

ore) for the periods presented in the Statements of Operations. The deferred
stripping costs have been amortized as waste and ore have been removed from the
Rochester mine pit. At present the remaining life of mine plan estimates the
future stripping ratio as 1.1 to 1 (waste to ore), and the remaining costs will
be amortized over the remaining life of the mine. At June 30, 2002 and December
31, 2001 the carrying amount of the deferred stripping costs were $1.6 million
and $1.7 million, respectively, and are included in other assets in the
accompanying balance sheet. No additional deferred stripping costs were
capitalized during the periods presented. Based on current reserves and current
production levels the amortization would be no less than four years. The amounts
that were amortized for the six months ended June 30, 2002 and June 30, 2001
were $0.1 million and $0.2 million, respectively which we included in
depreciation and depletion in the Statement of Operations.

Reclamation and Remediation Costs: Estimated future costs are based
principally on legal and regulatory requirements. Such costs related to active
mines are accrued and charged over the expected operating lives of the mines
using the unit-of-production method. Future remediation costs for inactive mines
are accrued based on management's best estimate at the end of each period of the
undiscounted costs expected to be incurred at the site. Such cost estimates
include, where applicable, ongoing care and maintenance and monitoring costs.
Changes in estimates are reflected in earnings in the period an estimate is
revised.

In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations," which established a uniform methodology for accounting
for estimated reclamation and abandonment costs. The statement will be adopted
January 1, 2003, when the Company will record the estimated present value of
reclamation liabilities and change the carrying amount of the related asset.
Subsequently, the reclamation costs will be allocated to expense over the life
of the related assets and will be adjusted for changes resulting from the
passage of time and revisions to either the timing or amount of the original
present value estimate. The Company is in the process of quantifying the effect
of adoption.

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 uses derivative financial
instruments as part of an overall risk-management strategy. These instruments
are used as a means of hedging exposure to precious

11

metals prices and foreign currency exchange rates. The Company does not hold or
issue derivative financial instruments for trading purposes. Written options do
not qualify for hedge accounting and are marked to market each reporting period
with corresponding changes in fair value recorded to operations as other income.

The Company uses forward sales contracts and combinations of put and call
options to fix a portion of its exposure to precious metals prices. The
underlying production for forward sales contracts is designated for physical
delivery at the inception of the derivative. If the Company enters into
derivatives that qualify for hedge accounting, deferral accounting is applied
only if the derivatives continue to reduce the price risk associated with the
underlying hedged production. Contracted prices on forward sales contracts are
recognized in product sales as the designated production is delivered or sold.
In the event of early settlement of hedge contracts, gains and losses are
deferred and recognized in income at the originally designated delivery date.

The Company uses foreign currency contracts to hedge its exposure to
movements in the foreign currency translation amounts for anticipated
transactions. These contracts are marked-to-market to earnings each reporting
period.

Income Taxes: The Company accounts for income taxes using the liability
method, recognizing certain temporary differences between the financial
reporting basis of the Company's liabilities and assets and the related income
tax basis for such liabilities and assets. This method generates a net deferred
income tax liability or asset for the Company as of the end of the year, as
measured by the statutory tax rates in effect as enacted. The Company derives
its deferred income tax charge or benefit by recording the change in the net
deferred income tax liability or asset balance for the year.

The Company's deferred income tax assets include certain future tax
benefits. The Company records a valuation allowance against any portion of those
deferred income tax assets that it believes will more likely than not fail to be
realized.

Comprehensive Income: In addition to net loss, comprehensive income
includes all changes in equity during a period, except those resulting from
investments by and distributions to owners. Items of comprehensive income
include foreign currency exchanges, the effective portions of hedges and
unrealized gains and losses on investments classified as available-for-sale.

Loss Per Share: Loss per share is computed by dividing the net loss
attributable to common stock by the weighted average number of common shares
outstanding during each period. All stock options outstanding at each period end
have been excluded from the weighted

12

average share calculation. The effect of potentially dilutive stock options
outstanding was antidilutive in 2001 and 2000.

Use of Estimates: The preparation of financial statements in conformity
with accounting principles generally accepted in the United States requires the
Company's management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Reclassifications: Certain reclassifications of prior year balances have
been made to conform to current year presentation. The Company has reclassified
restricted investments to long-term restricted investments on December 30, 2001
balance sheet to conform to the June 30, 2002 balance sheet.

Note C: Business Acquisitions

On April 2, 2002, the Company completed the acquisition of Compania Minera
Polimet S.A. ("Polimet") from Yamana Resources Inc. ("Yamana") for $2.5 million
in cash. The acquisition of Polimet has been accounted for under the purchase
method of accounting in accordance with APB No. 16. The carrying values of
assets and liabilities other than the mining properties have been estimated to
approximate fair market value. Polimet owns 100% of the Martha Mine and an
exploration land package consisting of approximately 202,000 acres located in
the western portion of the Santa Cruz Province, Argentina. The results of
operations of Polimet has been included in the Company's financial statements
for the time period after the date of acquisition, April 2, 2002. Coeur also
acquired warrants to purchase 10 million common shares of Yamana for an
additional $600,000. The Company purchased 5 million shares in May, and may
purchase 2.5 million shares in September, and 2.5 million shares in December.

NOTE D: Inventories

Inventories are comprised of the following:

JUNE 30, DECEMBER 31,
2002 2001
---------- ------------
(In Thousands)
In process, stockpiles and on leach pads $ 36,603 $ 39,794
Concentrate and dore' inventory 5,886 1,567
Supplies 5,147 4,925
-------- --------
$ 47,636 $ 46,286
======== ========
Long-term in process and on leach pads $ - $ 2,725
======== ========

Inventories of ore on leach pads and in the milling process are valued
based on actual costs incurred or estimated net realized value,

13

less costs allocated to minerals recovered through the leaching and milling
processes. Inherent in estimating net realized value is an estimate of the
percentage of the minerals on leach pads and in process that will ultimately be
recovered. All inventories are stated at the lower-of-cost or market, with cost
being determined using the first-in, first-out and weighted-average-cost
methods. Concentrate and dore inventory includes product at the mine site and
product held by refineries.

NOTE E: Income Taxes

The Company has reviewed its net deferred tax asset as of June 30, 2002,
together with net operating loss carry forwards, and has decided to forego
recognition of potential tax benefits arising therefrom. In making this
determination, the Company has considered the Company's history of tax losses
incurred since 1989, the current level of gold and silver prices and the ability
of the Company to use accelerated depletion and amortization methods in the
determination of taxable income. As a result, the Company's net deferred tax
asset has been fully reserved at June 30, 2002 and December 31, 2001.

NOTE F: Long-Term Debt and Supplemental Cash Flow Information

In May 2002, The Company issued $21.5 million principal amount of new
Series II 13 3/8% Convertible Senior Subordinated Notes ("Series II Notes") due
December 2003, for proceeds of approximately $14.1 million, net of discount of
$5.5 million and offering costs of approximately $1.9 million. Proceeds from
this transaction were used to retire the outstanding $9.4 million of 6%
Convertible Subordinated Debentures due June 10, 2002 upon their maturity along
with accrued interest and for general corporate purposes. The new Series II
Notes were issued on similar terms, subject to certain contingent provisions, as
the Company's previously issued, currently outstanding Series I 13 3/8%
Convertible Senior Subordinated Notes ("Series I Notes") due December 31, 2003.

During the 2nd quarter of 2002, the Company repurchased $10.3 million, $0.8
million and $0.3 million principal amount of its outstanding 6%, 6-3/8% and
7-1/4% Convertible Subordinated Debentures, respectively, in exchange for 11.9
million shares of common stock and recorded a loss on retirement of debt of
approximately $2.9 million. In addition, holders of $10.3 million of the Series
I Notes voluntarily converted such Notes, under the terms of the indenture, into
approximately 7.7 million shares of common stock. The Company also issued 2.7
million shares of common stock as payment of $4.2 million of accrued interest on
the 13 3/8% Notes.

During the 1st quarter of 2002, the Company repurchased $3.5 million
principal amount of its outstanding 6% Convertible Subordinated Debentures in
exchange for approximately 3.4 million shares of common stock. In addition,
holders of $5.7 million

14

principal amount of Series I Notes voluntarily converted their Notes into 5.1
million shares of common stock.

During the 2nd quarter of 2001, the Company repurchased $11.0 million
principal amount of its outstanding 7-1/4% Convertible Subordinated Debentures
in exchange for 4.3 million shares of common stock.

During the 1st quarter of 2001, the Company repurchased $5.0 million
principal amount of its outstanding 7-1/4% Convertible Subordinated Debentures
in exchange for 1.8 million shares of common stock.

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, the Chief
Financial Officer and the Chief Operating Officer.

The operating segments are managed separately because each segment
represents a distinct use of Company resources and contribution to the Company's
cash flows in its respective geographic area. The Company's reportable operating
segments are the Rochester, Coeur Silver Valley and Cerro Bayo mining
properties, the Kensington development property, and the Company's exploration
programs, which includes the San Bartolome silver development property. All
operating segments are engaged in the discovery and/or mining of gold and silver
and generate the majority of their revenues from the sale of precious metal
concentrates and/or refined precious metals. The Coeur Silver Valley and Cerro
Bayo mines sell precious metal concentrates, typically under long term contracts
to smelters located in Canada (Noranda Inc. and Cominco Ltd.), in the United
States (Asarco Inc.) and Japan (Sumitomo Ltd. and DOWA Mining Company). Refined
gold and silver produced by the Rochester mine is primarily sold on a spot basis
to precious metal trading banks such as Goldman Sachs, Morgan Stanley, Mitsui
and N.M. Rothschild.

Intersegment revenues consist of precious metal sales to the Company's
metals marketing division and are transferred at the market value of the
respective metal on the date of the transfer. The other segment includes
earnings from unconsolidated subsidiaries accounted for by the equity method,
the corporate headquarters, elimination of intersegment transactions and other
items necessary to reconcile to consolidated amounts. Revenues in the other
segment are generated principally from interest received from the Company's cash
and investments that are not allocated to the operating segments. The

15

accounting policies of the operating segments are the same as those described in
the summary of significant accounting policies in the Company's Annual Report on
Form 10-K. The Company evaluates performance and allocates resources based on
each segments profit or loss before interest, income taxes, depreciation and
amortization, unusual and infrequent items, and extraordinary items.

Segment Reporting
(In Thousands)

Rochester Galena Cerro Bayo Petorca Exploration Other Total
--------------------------------------------------------------------------------------
Six Months Ended June 30, 2002

Total net sales and revenues $ 24,992 $ 13,275 $ - $ - $ - $ 859 $ 39,126
===================================================================================================================================

Depreciation and depletion 2,137 1,629 1,407 - 9 229 5,411
Interest income - - - - - 181 181
Interest expense - - 776 - - 9,072 9,848
Gain on forward sale contracts - - - - - 62 62
Write-down of mine property and other 245 396 819 1,460
Loss on early retirement of debt - - - - - (2,920) (2,920)
Profit (loss) (1,420) 4,004 1,193 - (375) (6,451) (3,049)

Investments in non-consolidated affiliates - - - - - - -
Segment assets (A) 63,144 27,642 28,641 501 35 51,863 171,826
Capital expenditures for property 300 582 2,164 - - 1,685 4,731

Six Months Ended June 30, 2001

Total net sales and revenues $ 24,409 $ 8,531 $ 160 $ 3,451 $ - $ 1,522 $ 38,073
===================================================================================================================================

Depreciation and depletion 3,775 1,154 - 265 11 161 5,366
Interest income - - 1 2 - 1,148 1,151
Interest expense - - - - - 7,382 7,382
Gain on forward sale contracts - - - - - 221 221
Income tax (credit) expense - 1 - - - - 1
Gain on early retirement of debt - - - - - 8,972 8,972
Profit (loss) 1,976 (1,723) (1,528) (1,050) (810) (4,941) (7,076)

Investments in non-consolidated affiliates - - - - - 12 12
Segment assets (A) 76,437 27,526 23,296 2,885 183 57,003 187,330
Capital expenditures for property 611 1,730 801 - 30 713 3,885

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

16

Segment Reporting Cont.
(In Thousands) Six Months Ended June 30,
2002 2001
---------- ----------
(Loss)
Total loss from reportable segments $ (3,049) $ (7,076)
Depreciation, depletion and amortization
expense (5,411) (5,366)
Interest expense (9,848) (7,382)
(Loss) gain on early retirement of debt (2,920) 8,972
Other (1,523) (852)
--------- ---------
Loss before income taxes $ (22,751) $ (11,704)
========= =========

June 30,
2002 2001
---------- ----------
Assets
Total assets for reportable segments $ 171,826 $ 187,330
Cash and cash equivalents 11,955 33,057
Short-term investments 763 3,951
Other assets 18,128 17,340
--------- ---------
Total consolidated assets $ 202,672 $ 241,678
========= =========

Geographic Information
(In thousands) Long-Lived
June 30, 2002 Revenues Assets
---------- ----------
United States $ 39,419 $ 75,080
Chile (293) 21,922
Bolivia - 18,850
Other Foreign Countries - 2,121
--------- ---------
Consolidated Total $ 39,126 $ 117,973
========= =========

Long-Lived
June 30, 2001 Revenues Assets
---------- ----------
United States $ 36,016 $ 88,394
Chile 1,857 21,406
Bolivia - 18,850
Other Foreign Countries 200 559
--------- ---------
Consolidated Total $ 38,073 $ 129,209
========= =========

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

NOTE H: Hedging

For the first half of 2001 the Company recorded a realized loss of
approximately $0.2 million in connection with its hedge program. The Company has
14,000 ounces in forward sales in its gold protection program, whereby over the
next six months the Company will receive an average price of $320.

17

The following table summarizes the information at June 30, 2002 associated
with the Company's financial and derivative financial instruments that are
sensitive to changes in interest rates, commodity prices and foreign exchange
rates. For long-term debt obligations, the table presents principal cash flows
and related average interest rates. For gold call options and amortizing forward
sales, the table presents ounces contracted to be delivered and the related
average price per ounce in U.S. dollars. For foreign currency exchange
contracts, the table presents the notional amount in Chilean Peso's to be
purchased along with the average foreign exchange rate.

Fair
Value
(dollars in thousands) 2002 2003 2004 2005 2006 Thereafter Total 6/30/02
- -------------------------------------------------------------------------------------------------------------------

Liabilities
Long Term Debt (prior
to exchange) $128,820
Fixed Rate $ - $46,806 $ 65,457 $ 14,394 $ - $ - $126,657
Average Interest Rate 10.668% 9.061% 7.006% 7.250%

Derivative Financial
Instruments
Gold Forward
Sales - USD $ 21
Ounces 14,000 - - - - - -
Price Per Ounce $320.00 - - - - - -

Foreign Currency
Contracts
Chilean Peso - USD $ 1,500 $ 2,100 - - - - - $-(A)
Exchange Rate 705 705 - - - - -
(CLP to USD)
(A. Entered into
August 1, 2002)

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

NOTE I: New Accounting Standards and Requirements

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections" ("SFAS 145"). Under SFAS 145, most gains and losses from
extinguishments of debt will not be classified as extraordinary items unless
they meet much more narrow criteria in Accounting Principles Board Opinion No.
30 "Reporting the Results of Operations--Reporting the Effects of Disposal of a
Segment of a

18

Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions" ("APB 30"). SFAS 145 may be early adopted, but is otherwise
effective for fiscal years beginning after May 15, 2002, and must be adopted
with retroactive effect. The Company has not yet adopted such standard and will
adopt such standard in fiscal 2003 in accordance with the effective date and
transition guidance provided for in SFAS 145. The Company is currently
evaluating the potential impact, if any, the adoption of SFAS 145 will have on
its financial position and results of operations.

The adoption of SFAS No. 145 will require the disclosure for gains or
losses on the extinguishment of debt to not be extraordinary if they do not meet
the criteria in APB Option No. 30.

NOTE J: 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 as a result of alleged releases of hazardous substances from
mining activities conducted in the area since the late 1800s.

On March 16, 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.
Pursuant to the terms of the Consent Decree dated May 14, 2001, the Company has
paid the U.S. Government a total of approximately $3.9 million, of which $3.3
million was paid in May 2001 and the remaining $.6 million was paid in June
2001. In addition, the Company will (i) pay the United States 50% of any future
recoveries from insurance companies for claims for defense and indemnification
coverage under general liability insurance policies in excess of $600,000, (ii)
accomplish certain cleanup work on the Mineral Point property (i.e., the former
Coeur Mine site) and Calladay property, and (iii) make available certain real
property to be used as a waste repository. Finally, commencing five years after
effectiveness of the settlement, the Company will be obligated to pay net
smelter royalties on its operating properties, up to a maximum of $3 million,
amounting to a 2% net smelter royalty on silver production if the price of
silver exceeds $6.50 per ounce, and a $5.00 per ounce net smelter royalty on
gold production if the price of gold exceeds $325 per ounce. The royalty would
run for 15 years commencing five years after effectiveness of the settlement.

Noranda Smelter Strike
On June 18, 2002 we received notification from Noranda that the employees
working at the smelter in Quebec were on strike. This

19

smelter is where Coeur Silver Valley ships essentially 100% of its concentrate.
Under the terms of our contract with Noranda, they have declared a "Force
Majure" and do not have to accept the concentrate sent to them by the Company's
Galena Mine. Noranda has agreed to accept 650 tonnes of the Galena concentrate,
which represents almost 100% of the concentrate produced by Coeur Silver Valley.
Although there is no written contract for Noranda to continue to accept this
amount, the Company is currently looking for alternative purchasers of the
concentrate, and has been able to spot sell 400 tonnes to an alternative
purchaser. Management believes that Noranda will continue to purchase all
produced concentrate from Coeur Silver Valley. However, the Company would see a
significant decrease in product sales from Coeur Silver Valley in the event
Noranda does not continue to do so.

Lawsuit to Recover Inventory
During the first quarter of 2000, Handy & Harman Refining Group,
Inc.("Handy & Harman"), to which the Rochester Mine had historically sent
approximately 50% of its dore, filed for Chapter 11 bankruptcy. The Company had
inventory at the refinery of approximately 67,000 ounces of silver and 5,000
ounces of gold that has been delivered to certain creditors of Handy & Harman.
On February 27, 2001 the Company commenced a lawsuit against Handy & Harman and
certain others in the U.S. Bankruptcy Court for the District of Connecticut
seeking recovery of the metals and/or damages. Handy & Harman's Chapter 11
liquidation plan was confirmed by the Bankruptcy Court in August 2001 and on
November 3, 2001, the Company received approximately $294,000 from Handy &
Harman as a partial payment under the plan. The liquidating custodian of Handy &
Harman under the liquidation plan recently advised the Company that Handy &
Harman intends to file suit against the Company prior to March 28, 2002 for the
value of 100,000 ounces of silver (i.e., approximately $500,000) as a preference
based on the Company's draw-down of its account at Handy & Harman in mid-March
2000. Based on this more recent legal action, the Company has determined that
the recovery of any additional amounts would be remote. As a result the Company
has recorded a $1.4 million write-down of the carrying amount in the fourth
quarter of 2001. Management of the Company and legal counsel believe that the
threatened claims are without merit, and will vigorously defend any such suit.

Bunker Hill Action
On January 7, 2002, a private class action suit captioned Baugh vs. Asarco,
et al., was filed in the Idaho District Court for the First District (Lawsuit
No. 2002131) in Kootenai County, Idaho against the companies that have been
defendants in the prior Bunker Hill and natural resources litigation in the
Coeur d'Alene Basin, including the Company, by eight northern Idaho residents
seeking medical benefits and property compensation from the mining companies
involved in the Bunker Hill Superfund site. At this early stage of the
litigation, the Company cannot predict the outcome of this suit.

20

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

Management's Discussion and Analysis includes references to total cash costs per
ounce of gold and silver produced both on an individual mine basis and on a
consolidated basis. Total cash costs per ounce represent a non- U.S. 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 here-in and should be referred to when
reading the total cash cost per ounce measurement.

General

The results of the Company's operations are significantly affected by the
market prices of silver and gold which may fluctuate widely and are affected by
many factors beyond the Company's control, including, without limitation,
interest rates, expectations regarding inflation, currency values, governmental
decisions regarding the disposal of precious metals stockpiles, global and
regional political and economic conditions, and other factors.

The average prices of silver(Handy & Harmon)and gold(London Final)for the
first half of 2002 were $4.63 and $301 per ounce, respectively. The market
prices of silver and gold on August 9, 2002 were $4.67 per ounce and $312.95 per
ounce, respectively.

The Company's currently operating mines are the Rochester mine in Nevada,
the Galena mine in the Coeur d'Alene Mining District of Idaho, the Cerro Bayo
and Furioso Mines in Chile, and the Mina Martha mine in Argentina.

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.

21

The following table sets forth the amounts of silver and gold produced by
the mining properties owned by the Company or in which the Company has an
interest, based on the amounts attributable to the Company's ownership interest,
and the cash and full costs of such production during the three-month and
six-month periods ended June 30, 2001 and 2002:

Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2002 2001 2002 2001
--------- --------- --------- ---------

ROCHESTER MINE
Gold ozs. 17,132 20,504 33,555 40,023
Silver ozs. 1,637,443 1,488,598 3,053,210 2,990,247
*Cash Costs per oz./silver $2.81 $3.15 $3.30 $3.25
Full Costs per oz./silver $3.65 $4.32 $4.15 $4.68

Galena Mine
Silver ozs. 1,383,449 1,032,966 2,856,991 2,140,907
*Cash Costs per oz./silver $4.14 $4.61 $4.05 $4.48
Full Costs per oz./silver $4.86 $5.30 $4.74 $5.15

CERRO BAYO MINE
Gold ozs. 5,919 N/A 5,919 N/A
Silver ozs. 260,543 N/A 260,543 N/A
*Cash Costs per oz./silver $2.34 N/A $2.34 N/A
Full Costs per oz./silver $6.01 N/A $6.01 N/A

PRIMARY SILVER MINES
*Consolidated Cash Cost
per ounce of silver $3.34 $3.75 $3.61 $3.77

PETORCA MINE
Gold ozs. N/A 6,772 N/A 13,931
Silver ozs. N/A 35,610 N/A 57,737
*Cash Costs per oz./gold N/A $319 N/A $330
Full Costs per oz./gold N/A $338 N/A $349

PRIMARY GOLD MINES
*Consolidated Cash Cost
per ounce of gold N/A $319 N/A $330

CONSOLIDATED PRODUCTION TOTALS
Gold ozs. 23,051 27,276 39,474 53,954
Silver ozs. 3,281,435 2,557,174 6,170,744 5,188,891

* See reconciliation of non-GAAP cash costs to GAAP production costs below under
"Costs and Expenses".

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

22

By calculating the cash costs from each of the Company's mines on the same unit
basis, management can easily determine the gross margin that each ounce of gold
and silver produced is generating.

"Cash Costs" are costs directly related to the physical activities of producing
silver and gold and include mining, processing and other plant costs, deferred
mining adjustments, third-party refining and smelting costs, marketing expense,
on-site general and administrative costs, royalties, in-mine drilling
expenditures that are related to production and other direct costs. Sales of
by-product metals 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 the "Costs and Expenses" set forth below:

Operating Highlights

South America

Cerro Bayo (Chile)
o Commenced production on April 18, 2002
o 260,500 ounces of silver and 6,000 ounces of gold produced
o Cash costs of $2.34 per silver ounce*
o Projecting 3.6 million ounces of silver and 52,000 ounces of gold
production during 2002 at an average cash cost of under $0.50 per silver
ounce*

Operations commenced at Cerro Bayo on April 18, 2002, approximately one
month ahead of schedule. During the quarter, mining took place primarily from
the main Lucero and Luz Eliana veins, which are proving to be wider than
originally anticipated. Cash costs during the quarter were $2.34 per silver
ounce*. However, the Company expects these operating costs to decrease during
the third and fourth quarters as grades and tons to the mill increase.

During underground ramp development, Coeur intersected several significant
vein structures that contain high-grade mineralization. Positive results were
generated from Coeur's surface exploration work

* See reconciliation of non-GAAP cash costs to GAAP production costs below
under "Costs and Expenses."

23

during the first six months of 2002, which was focused on expanding the ore
reserves within the immediate area of operation.

As a result of the Company's continued exploration success, it will be
conducting an aggressive $1.2 million exploration program at Cerro Bayo
throughout the remainder of 2002. The objectives of this program are to (i)
increase existing reserves by focusing on the known and newly identified vein
structures located within the immediate area of operations; and to (ii)
establish the presence of non-reserve mineral material and confirm the
geological potential along strike extensions of the known vein structures 500 to
600 meters to the north and south of the existing operations.

Thus far this year, Coeur has spent $268,000 on exploration at Cerro Bayo,
which resulted in the discovery of 2.2 million silver equivalent ounces,
representing a 15% increase in reserves. Since commencing exploration at Cerro
Bayo in 2000, the Company's average discovery cost per ounce has averaged
approximately $0.09 per ounce of silver.

Martha (Argentina)
o Acquisition of Martha was completed during the second quarter
o Began trucking ore to Cerro Bayo for blending and processing
o Projected to contribute 1.6 million ounces of silver production to Cerro
Bayo during 2002

Coeur completed the acquisition of 100% of the Martha high-grade silver
mine on April 3, 2002 for $2.5 million in cash. The first truck left Martha for
Cerro Bayo during the last week of June, and 37 trucks were sent from Martha in
July containing a total of 900 tons of high-grade ore.

Mine development continues and an exploration program designed to identify
deeper and lateral extensions of the Martha vein began August 6, 2002. This
program will also drill into a new parallel vein located approximately 30 meters
away from the Martha vein. Finally, these exploration efforts during the second
half of 2002 will include a review of the 202,000 acres of prospective property
Coeur acquired as part of its transaction.

At the time Coeur acquired Martha, the Company estimated total reserves of
19,000 tons at an average silver equivalent grade of 143 ounces per ton.

North America

Rochester Mine (Nevada)
o 1.6 million ounces of silver and 17,000 ounces of gold produced during the
second quarter

24

o 3.1 million ounces of silver and 33,500 ounces of gold produced during the
first six months of 2002
o Cash costs of $2.81 per ounce of silver* during the second quarter - a 24%
decrease from first quarter
o Projecting approximately 6.5 million ounces of silver and 50,000 ounces of
gold production for 2002 at an average cash cost of approximately $3.70 per
ounce of silver*

After a slow start to the year, Rochester rebounded with an improved second
quarter, reducing cash operating costs by over 24% to $2.81 per ounce* and
increasing silver production 16% to 1.6 million ounces compared to the first
quarter of 2001. Mine management made several modifications to the mine plan,
plant and heaps during the first six months of the year in order to generate the
efficiencies reflected in these second quarter results.

Mining at the Nevada Packard satellite deposit, located one and one-half
miles to the south of Rochester, is expected to commence late in the third
quarter. Road construction and development of access to the pit is currently
underway.

Coeur Silver Valley - Galena Mine (Idaho)
o 1.4 million ounces of silver produced during the quarter, representing a
34% increase over 2001 second quarter production levels
o Cash costs of $4.14 per ounce* during the second quarter - an 11% decrease
from last year's second quarter
o Projecting 5.0 million ounces of silver production for 2002 at an average
cash cost of approximately $3.92 per ounce - a 15% decrease from 2001
levels*

Coeur Silver Valley continued to exceed anticipated levels of production at
historically low cash operating costs during the second quarter. Mechanized
mining continues to be the primary reason for these significant operational
improvements. Year to date, Silver Valley has realized silver grades that are 3
to 4 ounces per ton higher than historical levels. In addition, several
compilation studies that were implemented over the past two years have allowed
Coeur to mine old areas of the mine that contain higher-grade mineralization
that were not reflected in the mine's 2002 mine plan.

* See reconciliation of non-GAAP cash costs to GAAP production costs below
under "Costs and Expenses."

25

Development and Exploration Projects

San Bartolome (Bolivia)
o Feasibility study expected to be completed during the fourth quarter
o Expect to make a financing decision by year-end
o Impact of tin continues to be studied. Preliminary results indicate that
80% of the deposit can yield an economic tin concentrate

Puchuldiza (Chile)
o Consistent with Coeur's focus on silver, the Company signed an exploration
agreement with Barrick Gold Corporation late in 2001 covering Coeur's
Puchuldiza gold property located in northern Chile.
o During the second quarter, Barrick reported encouraging results from
initial field work at Puchuldiza and believes that there are positive
implications for the potential for a significant mineralized gold system at
depth.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2002 Compared to
Three Months Ended June 30, 2001.

Revenues

Product sales in the second quarter of 2002 increased by $1.4 million, or
7%, from the second quarter of 2001 to $19.6 million. The increase in sales is
attributable to an increase in realized silver and gold prices of $4.82 and $304
per ounce, respectively in the second quarter of 2002 compared to $4.37 and $273
in the same quarter of 2001. The change in metal prices amounted to $1.9 million
of the change between periods. This increase was offset by increased smelting
and refining costs and reduced by-product sales which amounted to a decrease of
$0.5 million. In the second quarter of 2002, the Company produced a total of
3,281,435 ounces of silver and 23,051 ounces of gold compared to 2,557,175
ounces of silver and 27,276 ounces of gold in the second quarter of 2001.

Interest and other income in the second quarter of 2002 increased by $0.7
million compared with the second quarter of 2001. The increase is due to a gain
recorded for the receipt of insurance proceeds at the Galena mine of $1.5
million for a business interruption claim offset by less interest income
received as a result of decreased interest rates and lower cash balances
resulting in $0.8 million of the decrease.

26

Costs and Expenses

Production costs in the second quarter of 2002 decreased by $1.6 million,
or 9%, from the second quarter of 2001 to $16.3 million. The decrease in
production costs is a result of efficiencies gained earlier this year at both
Rochester and Galena mines.

The following tables are a reconciliation between the non-GAAP measure cash
costs and production costs reported in the Statement of Operations:

Three months ended June 30, 2002 Rochester Galena Cerro Bayo Total
----------------------------------------------------

Production of Silver (ounces) 1,637,443 1,383,449 260,543 3,281,435

Cash Costs per ounce $ 2.81 $ 4.14 $ 2.34
----------------------------------------------------

Total Cash Costs (thousands) $ 4,601 $ 5,728 $ 609 $ 10,938

Add/Subtract:
Third Party Smelting Costs (243) (1,991) (195) (2,429)
By-Product Credit 5,765 845 1,553 8,163
Accrued Reclamation Costs 309 164 - 473
Inventory Variations 1,520 (436) (1,967) (883)
----------------------------------------------------
Production Costs $ 11,952 $ 4,310 $ - $ 16,262

Three months ended June 30, 2001 Rochester Galena Petorca Total
----------------------------------------------------
Production of Silver (ounces) 1,488,598 1,032,966 2,521,564
Production of Gold (ounces) 6,772 6,772

Cash Costs per ounce $ 3.15 $ 4.61 $ 319
----------------------------------------------------

Total Cash Costs (thousands) $ 4,689 $ 4,762 $ 2,158 $ 11,609

Add/Subtract:
Third Party Smelting Costs (198) (1,964) (735) (2,896)
By-Product Credit 5,697 627 865 7,188
Accrued Reclamation Costs 297 167 - 464
Inventory Variations 350 242 878 1,470
----------------------------------------------------
Production Costs $ 10,836 $ 3,834 $ 3,166 $ 17,836

Depreciation and amortization increased in the second quarter of 2002 by
$1.0 million, or 39%, from the prior year's second quarter, due to increased
depletion taken at the Rochester and Galena mines due to increased production of
silver at the mines.

Exploration expenses decreased in the second quarter of 2002 compared to
the same period in 2001 by $0.9 million as exploration was temporarily slowed
down due to cash conservation efforts in the first half of 2002. These expenses
are expected to increase in the third and fourth quarters.

27

Pre-feasibility expenses on the San Bartolome project were $0.4 million
higher in the second quarter of 2002 over the same quarter of 2001 as the
feasibility study started in late 2001 continued.

Interest expense increased in the second quarter of 2002 over the second
quarter of 2001 to $5.4 million from $3.6 million due to make whole interest
payments on conversions of the Series I 13 3/8% Convertible Senior Subordinated
Notes of $4.2 million, which requires payment of the interest portion through
December 2003, as a provision of the conversion.

The loss on retirement of debt amounted to $2.9 million in the second
quarter ending June 30, 2002 compared to a gain on retirement of debt of $5.8
million in the same quarter of 2001. Refer to Debt Reduction Program discussion
for more detail.

Net Loss

As a result of the above mentioned factors, the Company's net loss amounted
to $10.9 million in the second quarter of 2002 compared to a net loss of $3.6
million in the second quarter of 2001. The net loss attributable to common
shareholders was $0.16 per share for the second quarter of 2002, compared to
$0.08 per share for the second quarter of 2001.

Debt Reduction Program

During the second quarter of 2002, the Company exchanged a total of 11.9
million common shares for a principal amount of $10.3 million, $0.8 million and
$0.3 million of its 6%, 6 3/8% and 7 1/4% Convertible Subordinated Debentures,
respectively. As a consequence of these transactions, the Company recorded a
loss on the early retirement of debt of $2.9 million in the second quarter of
2002.

In three privately negotiated transactions completed in the second quarter
of 2001, the Company repurchased in aggregate, $11.0 million principal amount of
its outstanding 7 1/4% Convertible Subordinated Debentures due 2005 in exchange
for 4.3 million shares of common stock. As a result of the transactions, the
Company recorded a gain in the second quarter ending June 30, 2001 of
approximately $5.8 million, net of deferred offering costs.

Six Months Ended June 30, 2002 Compared to
Six Months Ended June 30, 2001.

Revenues

Product sales in the first half of 2002 decreased by $0.2 million, or 1%,
from the first half of 2001 to $36.0 million. The decrease in sales is
attributable to the decreased production of gold in the six months ended June
30, 2002, compared to the six months

28

ended June 30, 2001. The decrease amounted to 14,500 ounces of gold resulting in
a $4.5 million decrease in product sales. This was offset by an increase in
silver ounces sold of approximately 982,000 ounces and higher prices realized
for the first half of 2002 over 2001 of $4.7 million. In the first half of 2002,
the Company produced a total of 6,170,744 ounces of silver and 39,474 ounces of
gold compared to 5,188,892 ounces of silver and 53,954 ounces of gold in the
first half of 2001. In the first half of 2001, the Company realized average
silver and gold prices of $4.64 and $298, respectively, compared with realized
average prices of $4.45 and $272, respectively, in the prior year's first half.
The decline in gold production was due primarily to the closure of the Company's
Petorca mine in August 2001, as well as the reduced production from Rochester.
This decreased production was offset by gold production at Cerro Bayo in 2002.

Interest and other income in the first half of 2002 increased by $1.2
million compared with the first half of 2001. The increase is due to income
received for insurance proceeds at the Galena mine of $1.5 million for a
business interruption claim offset by less interest income received as a result
of decreased interest rates and lower cash balances of $0.3 million.

Costs and Expenses

Production costs in the first half of 2002 decreased by $1.8 million, or
5%, from the first half of 2001 to $34.3 million. The decrease in production
costs is a result of the closure of the Petorca mine in August 2001.

The following tables are a reconciliation between the non-GAAP measure cash
costs to GAAP production costs reported in the Statement of Operations:

Six months ended June 30, 2002 Rochester Galena Cerro Bayo Total
----------------------------------------------------

Production of Silver (ounces) 3,053,210 2,856,991 260,543 6,170,744

Cash Costs per ounce $ 3.30 $ 4.05 $ 2.34
----------------------------------------------------

Total Cash Costs (thousands) $ 10,076 $ 11,571 $ 610 $ 22,256

Add/Subtract:
Third Party Smelting Costs (484) (4,053) (195) 4,731)
By-Product Credit 10,417 1,736 1,553 13,706
Accrued Reclamation Costs 573 324 - 897
Inventory Variations 4,422 (307) (1,967) 2,148
----------------------------------------------------
Production Costs $ 5,004 $ 9,272 $ - $ 34,276

29

Six months ended June 30, 2001 Rochester Galena Petorca Total
----------------------------------------------------

Production of Silver (ounces) 2,990,247 2,140,907 5,131,154
Production of Gold (ounces) 13,931 13,931

Cash Costs per ounce $ 3.25 $ 4.48 $ 329.70
----------------------------------------------------

Total Cash Costs (thousands) $ 9,718 $ 9,591 $ 4,594 $ 23,903

Add/Subtract:
Third Party Smelting Costs (416) (2,563) (1,403) (4,382)
By-Product Credit 10,646 1,050 1,214 12,910
Accrued Reclamation Costs 726 283 - 1,009
Inventory Variations 2,188 649 (184) 2,653
----------------------------------------------------
Production Costs $ 22,862 $ 9,010 $ 4,221 $ 36,093

Depreciation and amortization increased slightly in the first half of 2002
to $5.4 million, from the prior year's first half, due to additional depletion
taken at the Rochester and Galena mines based on increased silver production.

Exploration expense decreased in the first half of 2002 by $1.7 million to
$1.6 million as a result of a concerted effort to conserve cash in the first
half of 2002. These costs are expected to increase during the second half of
2002.

Pre-feasibility expenses increased $0.7 million in the first half of 2002
over the first half of 2001 as the San Bartolome feasibility study started in
late 2001 continues, and is estimated to be completed in the last quarter of
2002.

Interest expenses increased $2.5 million in the first half of 2002 compared
to 2001 due to make whole interest payments made to holders of the Series I 13
3/8% Convertible Senior Subordinated Notes that converted to common stock during
2002.

Loss on retirement of debt amounted to $2.9 million for the six months
ending June 30, 2002 compared to a gain on retirement of debt of $9.0 million in
the same period in 2001. Refer to Debt Reduction Program discussion below for
additional detail.

Net Loss

As a result of the above mentioned factors, the Company's net loss amounted
to $22.8 million in the first half of 2002 compared to a net loss of $11.7
million in the first half of 2001. The net loss attributable to common
shareholders was $0.38 per share for the first half of 2002, compared to $0.29
per share for the first half of 2001.

30

Debt Reduction Program

During the first half of 2002 the Company repurchased $13.8 million, $0.8
million and $1.3 million amount of its outstanding 6%, 6 3/8% and 7 1/4%
Convertible Subordinated Debentures, respectively in exchange for 17.6 million
shares of common stock and recorded a loss of approximately $2.9 million. In
addition, holders of $16.0 million principal amount of the Series I 13 3/8%
Convertible Senior Subordinated Notes voluntarily converted their Notes into
approximately 12.8 million shares of common stock.

In May 2002, the Company issued $21.5 million principal amount of new
Series II 13 3/8% Convertible Senior Subordinated Notes due December 2003, for
proceeds of $14.1 million, net of discount of $5.5 million and offering costs of
approximately $1.9 million.

In three privately negotiated transactions completed in the second quarter
of 2001, the Company repurchased in aggregate, $11 million principal amount of
its outstanding 7 1/4% Convertible Subordinated Debentures due 2005 in exchange
for 4,257,618 shares of common stock. As a result of the transactions, the
Company recorded an extraordinary gain in the second quarter ending June 30,
2001 of approximately $5.8 million, net of deferred offering costs and taxes.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital; Cash and Cash Equivalents

The Company's working capital at June 30, 2002 increased by $18.1 million
to approximately $46.7 million compared to $28.6 million at December 31, 2001.
The increase is a result of retirement of the Company's 6% Convertible
Subordinated Debentures Due 2002. The ratio of current assets to current
liabilities was 3.3 to 1.0 at June 30, 2002 compared to 1.7 to 1.0 at December
31, 2001.

Net cash provided by operating activities in the three months ended June
30, 2002 was $0.1 million compared to net cash used in operating activities of
$10.0 million in the three months ended June 30, 2001, as a result of reduced
liabilities in the second quarter of 2001. Net cash used in investing activities
in the 2002 period was $1.4 million compared to net cash used in investing
activities of $2.3 million in the prior year's comparable period. The decrease
primarily resulted from an increase in proceeds from short-term investments of
$2.1 million offest in part by an increase in capital expenditures of $1.6
million. Net cash provided by financing activities was $4.6 million in the
second quarter of 2002, compared to $0.1 million used in the second quarter of
2001. The increase was primarily a result of $14.1 million of proceeds received
for the issuance of new Series II 13 3/8% Convertible Senior Subordinated Notes
offset by the retirement of $9.4 million of 6% Debentures due June 2002. As a
result of the above, cash and cash equivalents

31

increased by $3.2 million in the second quarter of 2002 compared to a decrease
of $12.4 million for the comparable period in 2001.

Net cash used in operating activities in the six months ended June 30, 2002
was $5.4 million compared to $16.0 million in the six months ended June 30, 2001
primarily resulting from a decrease in current liabilities of $9.8 million in
the first half of 2001. Net cash used in investing activities in the 2002 period
was $1.8 million compared to net cash provided by investing activities of $14.2
million in the prior year's comparable period. The decrease primarily resulted
from the proceeds received in the prior year of $14.7 million from the sale of
the Company's 50% interest in Gasgoyne Gold Mines and offset in part by an
increase in capital expenditures of $0.8 million. Net cash provided by financing
activities was $4.5 million in the six months of 2002, compared to $0.4 million
used in the six months of 2001. The increase was primarily a result of $14.1
million from the proceeds received for the issuance of new Series II 13 3/8%
Convertible Senior Subordinated Notes offset by the retirement of 6% Debentures
due June 2002, of $9.4 million. As a result of the above, cash and cash
equivalents decreased by $2.8 million in the six months of 2002 compared to a
decrease of $2.2 million for the comparable period in 2001.

The Company has improved its working capital position since December 31,
2001 by extinguishing $23.2 million of its 6% Convertible Subordinated
Debentures originally due June, 2002, with (a) the proceeds from the issuance in
May 2002 of the Series II 13 3/8% Convertible Senior Subordinated Notes due
December 2003 and (b) exchanges of common shares. The Company believes it may be
able to further reduce its debt obligations by converting additional debt to
common equity during the remainder of this year. Capital expenditures for the
balance of the year are somewhat discretionary. Management believes that its
existing cash and cash flow generated from operations will allow it to meet its
obligations for the next twelve months.

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 as a result of alleged releases of hazardous substances from
mining activities conducted in the area since the late 1800s.

On March 16, 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.
Pursuant to the terms of the Consent Decree dated May 14, 2001, the Company has
paid the U.S.

32

Government a total of approximately $3.9 million, of which $3.3 million was paid
in May 2001 and the remaining $.6 million was paid in June 2001. In addition,
the Company will (i) pay the United States 50% of any future recoveries from
insurance companies for claims for defense and indemnification coverage under
general liability insurance policies in excess of $600,000, (ii) accomplish
certain cleanup work on the Mineral Point property (i.e., the former Coeur Mine
site) and Calladay property, and (iii) make available certain real property to
be used as a waste repository. Finally, commencing five years after
effectiveness of the settlement, the Company will be obligated to pay net
smelter royalties on its operating properties, up to a maximum of $3 million,
amounting to a 2% net smelter royalty on silver production if the price of
silver exceeds $6.50 per ounce, and a $5.00 per ounce net smelter royalty on
gold production if the price of gold exceeds $325 per ounce. The royalty would
run for 15 years commencing five years after effectiveness of the settlement.

Noranda Smelter Strike
On June 18, 2002 we received notification from Norada that the employees
working at the smelter in Quibec were on strike. This smelter is where Coeur
Silver Valley ships essentially 100% of its concentrate under the terms of our
contract with Noranda they have declared a "Force Majure" and do not have to
accept the concentrate sent to them by the Company's Galena Mine. Noranda has
agreed to accept 650 tonnes of the Galena concentrate, which represents almost
100% of the concentrate produced by Coeur Silver Valley. Although there is no
written contract for Noranda to continue to accept this amount. The Company is
currently looking for alternative purchaser's of the concentrate, and have been
able to spot sale 400 tonnes to an alternative purchaser. Management believes
that Noranda will continue to purchase all produced concentrate from Coeur
Silver Valley, if they don't, the Company would see a significant decrease in
produce sales from Coeur Silver Valley.

Lawsuit to Recover Inventory
During the first quarter of 2000, Handy & Harman Refining Group,
Inc.("Handy & Harman"), to which the Rochester Mine had historically sent
approximately 50% of its dore, filed for Chapter 11 bankruptcy. The Company had
inventory at the refinery of approximately 67,000 ounces of silver and 5,000
ounces of gold that has been delivered to certain creditors of Handy & Harman.
On February 27, 2001 the Company commenced a lawsuit against Handy & Harman and
certain others in the U.S. Bankruptcy Court for the District of Connecticut
seeking recovery of the metals and/or damages. Handy & Harman's Chapter 11
liquidation plan was confirmed by the Bankruptcy Court in August 2001 and on
November 3, 2001, the Company received approximately $294,000 from Handy &
Harman as a partial payment under the plan. The liquidating custodian of Handy &
Harman under the liquidation plan

33

recently advised the Company that Handy & Harman intends to file suit against
the Company prior to March 28, 2002 for the value of 100,000 ounces of silver
(i.e., approximately $500,000) as a preference based on the Company's draw-down
of its account at Handy & Harman in mid-March 2000. Based on this more recent
legal action, the Company has determined that the recovery of any additional
amounts would be remote. As a result the Company has recorded a $1.4 million
write-down of the carrying amount in the fourth quarter of 2001. Management of
the Company and legal counsel believe that the threatened claims are without
merit, and will vigorously defend any such suit.

Bunker Hill Action
On January 7, 2002, a private class action suit captioned Baugh vs. Asarco,
et al., was filed in the Idaho District Court for the First District (Lawsuit
No. 2002131) in Kootenai County, Idaho against the companies that have been
defendants in the prior Bunker Hill and natural resources litigation in the
Coeur d'Alene Basin, including the Company, by eight northern Idaho residents
seeking medical benefits and property compensation from the mining companies
involved in the Bunker Hill Superfund site. At this early stage of the
litigation, the Company cannot predict the outcome of this suit.

PART II. Other Information

Item 2. Changes in Securities and Use of Proceeds.

(c) Sale of Unregistered Securities

On May 31, 2002, the Company issued $21.5 million principal amount of a new
second series of 13 3/8% Convertible Senior Subordinated Notes due December 31,
2003 (the "Series II Notes") to eight institutional investors (the "Investors")
for an aggregate purchase price of 16.0 million. The sale was effected without
registration under the Securities Act of 1933 (the "Act") in reliance upon
Section 4(2) thereof. The notes were issued pursuant to an Indenture, dated May
31, 2002, (the "Indenture") between the Company and the Bank of New York, as
trustee. The terms of the Series II Notes and the Indenture are substantially
similar, subject to certain contingent provisions, to the terms of the
previously issued 13 3/8% Convertible Senior Subordinated Notes due December 31,
2003 and related Indenture, dated August 1, 2001, between the Company and the
Bank of New York, as trustee, relating thereto. Each of the Investors qualified
as an "accredited investor" within the meaning of Rule 501(a) under the Act.

34

The Series II Notes are convertible at any time prior to their maturity on
December 31, 2003 at a conversion price of $1.35 per share, subject to
adjustment. The Company may elect to automatically convert the Series II Notes
at any time prior to maturity if the closing sale price of the Company's common
stock exceeds 200% of the conversion price for at least 20 trading days during a
30-day trading day period ending within five trading days prior to the notice of
automatic conversion. If an automatic conversion occurs prior to maturity, the
Company will make a payment to holders in cash or, at the Company's option, in
common stock, equal to $211.77 for each $1,000 principal amount of notes, less
any interest actually paid prior to automatic conversion. If paid in common
stock, the shares of common stock will be valued at 90% of the average of the
closing price of the Company's common stock for the five trading days
immediately preceding the second trading day prior to the automatic conversion
date. If holders elect to convert their Series II Notes prior to maturity and
prior to notice of automatic conversion, they will have the right to receive a
payment upon conversion equal to $211.77 for each $1,000 principal amount of
notes, less interest actually paid, payable in cash or in common stock at the
Company's option. If paid in common stock, the shares will be valued at 90% of
the average of the closing price of the Company's common stock for the five
trading days immediately preceding the second trading day prior to the voluntary
conversion date, subject to a minimum valuation equal to the conversion price.

Pursuant to the terms of the Purchase Agreement and related Registration
Rights Agreement, dated as of May 15, 2002, entered into by and among the
Company and the Investors, the Company filed a Registration Statement on Form
S-3 with the Securities and Exchange Commission on June 4, 2002, in order to
register the Series II Notes and underlying shares of common stock for resale in
the future by the holders thereof under the Act.

Of the approximately $16.0 million of proceeds from the sale of the Series
II Notes, the Company used approximately $10.0 million to pay the entire $9.4
million principal amount of the Company's 6% Convertible Subordinated Debentures
due 2002 when they matured on June 10, 2002, plus accrued interest thereon, and
the balance for general corporate purposes.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to various market risks as a part of its operations.
As an effort to mitigate losses associated with these risks, the Company may, at
times, enter into derivative financial instruments. These may take the form of
forward sales contracts, foreign currency exchange contracts and interest rate
swaps. The Company does not actively engage in the practice of trading
derivative securities for profit. This discussion of the Company's

35

market risk assessments contains "forward looking statements" that contain risks
and uncertainties. Actual results and actions could differ materially from those
discussed below.

The Company's operating results are substantially dependent upon the world
market prices of silver and gold. The Company has no control over silver and
gold prices, which can fluctuate widely and are affected by numerous factors,
such as supply and demand and investor sentiment. In order to mitigate some of
the risk associated with these fluctuations, the Company will at times, enter
into forward sale contracts. The Company continually evaluates the potential
benefits of engaging in these strategies based on the then current market
conditions. The Company may be exposed to nonperformance by counterparties as a
result of its hedging activities. This exposure would be limited to the amount
that the spot price of the metal falls short of the contract price.

The Company operates in several foreign countries, specifically Bolivia,
Argentina and Chile, which exposes it to risks associated with fluctuations in
the exchange rates of the currencies involved. As part of its program to manage
foreign currency risk, the Company will enter into foreign currency forward
exchange contracts. These contracts enable the Company to purchase a fixed
amount of foreign currencies. Gains and losses on foreign exchange contracts
that are related to firm commitments are designated and effective as hedges and
are deferred and recognized in the same period as the related transaction. All
other contracts that do not qualify as hedges are marked-to-market and the
resulting gains or losses are recorded in income. The Company continually
evaluates the potential benefits of entering into these contracts to mitigate
foreign currency risk and proceeds when it believes that the exchange rates are
most beneficial.

All of the Company's long-term debt at June 30, 2002 is fixed-rate based.
The Company's exposure to interest rate risk, therefore, is limited to the
amount it could pay at current market rates. The Company currently does not have
any derivative financial instruments to offset the fluctuations in the market
interest rate. It may choose to use instruments, such as interest rate swaps, in
the future to manage the risk associated with interest rate changes.

Fair
Value
(dollars in thousands) 2002 2003 2004 2005 2006 Thereafter Total 6/30/02
- -------------------------------------------------------------------------------------------------------------------

Liabilities
Long Term Debt (prior
to exchange) $128,820
Fixed Rate $ - $46,806 $ 65,457 $ 14,394 $ - $ - $126,657
Average Interest Rate 10.668% 9.061% 7.006% 7.250%

Derivative Financial
Instruments
Gold Forward
Sales - USD $ 21
Ounces 14,000 - - - - - -
Price Per Ounce $320.00 - - - - - -

36

Fair
Value
(dollars in thousands) 2002 2003 2004 2005 2006 Thereafter Total 6/30/02
- -------------------------------------------------------------------------------------------------------------------

Foreign Currency
Contracts
Chilean Peso - USD $ 1,500 $ 2,100 $-(A)
Exchange Rate 705 705
(CLP to USD)
(A. Entered into
August 1, 2002)

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

Item 6. Exhibits and Reports on Form 8-K

a) Exhibits.

99.1 Letter of Certification of the CEO

99.2 Letter of Certification of the CFO

b) Form 8-K. The Company filed a Report on Form 8-K on July 23, 2002
(reporting the Company's determination on July 22, 2002 that the firm
of Arthur Andersen LLP would no longer serve as the Company's
independent accounting firm and the Company's engagement of KPMG LLP
to serve as the Company's independent accounting firm).

37

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

COEUR D'ALENE MINES CORPORATION
(Registrant)

Dated August 19, 2002 /S/ Dennis E. Wheeler
---------------------------------------
DENNIS E. WHEELER
Chairman, President and
Chief Executive Officer

Dated August 19, 2002 /s/ Geoffrey A. Burns
---------------------------------------
GEOFFREY A. BURNS
Vice President and
Chief Financial Officer

38