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

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

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

PO Box I,
505 Front Ave.
Coeur d’Alene, Idaho		83816
(Address of principal executive offices)		(Zip Code)

(208) 667-3511

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

 

 

COEUR D’ALENE MINES CORPORATION

INDEX

		Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets – Unaudited March 31, 2010 and December 31, 2009			4
Consolidated Statements of Operations and Comprehensive Income (Loss) – Unaudited Three Months Ended March 31, 2010 and 2009			5
Consolidated Statements of Changes in Shareholder’s Equity – Unaudited Three Months Ended March 31, 2010			6
Consolidated Statements of Cash Flows – Unaudited Three Months Ended March 31, 2010 and 2009			7
Notes to Consolidated Financial Statements – Unaudited			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			36
Item 3. Quantitative and Qualitative Disclosures About Market Risk			57
Item 4. Controls and Procedures			59
Part II. Other Information			59
Item 1. Legal Proceedings			59
Item 1A. Risk Factors			59
Item 2A. Unregistered Sales of Equity Securities and Use of Proceeds			61
Item 6. Exhibits			62
EX-3.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

COEUR D’ALENE MINES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

						March 31,				December 31,
		Notes				2010				2009
						(In thousands,
						except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents						$	55,962			$	22,782
Receivables							74,662				58,981
Ore on leach pad			2				7,661				9,641
Metal and other inventory			5				71,754				67,712
Prepaid expenses and other							25,211				26,920
							235,250				186,036
NON-CURRENT ASSETS
Property, plant and equipment, net			6				550,854				539,037
Mining properties, net			7				2,254,769				2,240,056
Ore on leach pad, non-current portion			2				14,985				14,391
Restricted assets							27,391				26,546
Receivables, non current							36,505				37,534
Debt issuance costs, net							7,263				3,544
Deferred tax assets			10				2,077				2,355
Other							4,408				4,536
TOTAL ASSETS						$	3,133,502			$	3,054,035
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable						$	58,398			$	77,003
Accrued liabilities and other							24,243				33,517
Accrued income taxes							10,742				11,783
Accrued payroll and related benefits							9,612				9,815
Accrued interest payable							670				1,744
Current portion of capital leases and other debt obligations			8				51,155				15,403
Current portion of royalty obligation			8				35,551				34,672
Current portion of reclamation and mine closure			9				4,673				4,671
							195,044				188,608
NON-CURRENT LIABILITIES
Long-term debt			8				190,697				185,397
Non-current portion of royalty obligation			8				128,119				128,107
Reclamation and mine closure			9				34,837				35,241
Deferred income taxes			10				504,827				516,678
Other long-term liabilities							7,545				6,799
							866,025				872,222
COMMITMENTS AND CONTINGENCIES
(Notes 7, 8, 12, 13, 14 and 16)
SHAREHOLDERS’ EQUITY
Common Stock, par value $0.01 per share; authorized 150,000,000 shares, 86,061,082 issued at March 31, 2010 and 80,310,347 issued at December 31, 2009							861				803
Additional paid-in capital							2,531,454				2,444,262
Accumulated deficit							(459,882	)			(451,865	)
Accumulated other comprehensive income							—				5
							2,072,433				1,993,205
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY						$	3,133,502			$	3,054,035

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 (LOSS)

(Unaudited)

		Three Months Ended March 31,
		2010				2009
		(In thousands,
		except per share data)
Sales of metal		$	87,505			$	45,084
Production costs applicable to sales			(51,019	)			(25,930	)
Depreciation, depletion and amortization			(28,773	)			(8,532	)
Gross profit			7,713				10,622
COSTS AND EXPENSES
Administrative and general			6,717				7,548
Exploration			2,520				3,827
Care and maintenance and other			1,463				1,526
Total cost and expenses			10,700				12,901
OPERATING LOSS			(2,987	)			(2,279	)
OTHER INCOME AND EXPENSE
Gain (loss) on debt extinguishments			(7,858	)			15,703
Fair value adjustments, net			(4,258	)			(9,402	)
Interest and other income			1,396				1,043
Interest expense, net of capitalized interest			(5,805	)			(765	)
Total other income and expense			(16,525	)			6,579
Income (loss) from continuing operations before income taxes			(19,512	)			4,300
Income tax benefit			11,495				85
Income (loss) from continuing operations			(8,017	)			4,385
Income from discontinued operations, net of income taxes			—				1,673
NET INCOME (LOSS)			(8,017	)			6,058
Other comprehensive loss			(5	)			(1	)
COMPREHENSIVE INCOME (LOSS)		$	(8,022	)		$	6,057
BASIC AND DILUTED INCOME PER SHARE
Basic income per share:
Income (loss) from continuing operations		$	(0.10	)			0.07
Income from discontinued operations			—				0.03
Net income (loss)		$	(0.10	)		$	0.10
Diluted income per share:
Income (loss) from continuing operations		$	(0.10	)			0.07
Income from discontinued operations			—				0.03
Net income (loss)		$	(0.10	)		$	0.10
Weighted average number of shares of common stock
Basic			81,753				61,145
Diluted			81,753				61,160

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

Three Months Ended March 31, 2010

(In thousands, except share data)

(Unaudited)

																		Accumulated
		Common				Common				Additional								Other
		Stock				Stock				Paid-In				Accumulated				Comprehensive
		Shares				Par Value				Capital				(Deficit)				Income				Total
Balances at December 31, 2009			80,310			$	803			$	2,444,262			$	(451,865	)			5				1,993,205
Net loss			—				—				—				(8,017	)			—				(8,017	)
Common stock issued for payment of principal, interest and financing fees on 6.5% Senior Secured Notes			1,009				10				14,540				—				—				14,550
Common stock issued to extinguish 3.25% and 1.25% debt			4,756				48				72,693				—				—				72,741
Common stock cancelled under long-term incentive plans, net			(14	)			—				(41	)			—				—				(41	)
Other			—				—				—				—				(5	)			(5	)
Balances at March 31, 2010			86,061			$	861			$	2,531,454			$	(459,882	)			—			$	2,072,433

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 Ended March 31,
		2010				2009
		(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)		$	(8,017	)		$	6,058
Add (deduct) non-cash items:
Depreciation, depletion and amortization			28,773				9,279
Accretion of royalty obligation			4,992				—
Deferred income taxes			(11,337	)			(1,514	)
Loss (gain) on debt extinguishment			7,858				(15,703	)
Fair value adjustments, net			3,672				6,958
Loss (gain) on foreign currency transactions			350				(66	)
Share-based compensation			1,387				1,703
Other non-cash charges			36				79
Changes in operating assets and liabilities:
Receivables and other current assets			(11,287	)			2,653
Inventories			(2,657	)			(5,162	)
Accounts payable and accrued liabilities			(23,000	)			(1,239	)
CASH PROVIDED (USED) BY OPERATING ACTIVITIES			(9,230	)			3,046
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments			—				(7,358	)
Proceeds from sales of investments			—				15,252
Capital expenditures			(47,189	)			(78,130	)
Other			(74	)			(142	)
CASH USED IN INVESTING ACTIVITIES			(47,263	)			(70,378	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of gold production royalty			—				75,000
Payments on gold production royalty			(8,951	)			—
Proceeds from issuance of short-term and senior convertible notes			100,000				20,368
Proceeds from gold lease facility			4,517				—
Payments on gold lease facility			(14,891	)			(1,627	)
Proceeds from bank borrowings			12,769				—
Repayment of credit facility, long-term debt and capital leases			(5,710	)			(8,950	)
Payments of common stock and debt issuance costs			(2,156	)			(73	)
Proceeds from sale-leaseback transactions			4,853				—
Additions to restricted assets associated with the Kensington Term Facility			(798	)			—
Other			40				—
CASH PROVIDED BY FINANCING ACTIVITIES:			89,673				84,718
INCREASE IN CASH AND CASH EQUIVALENTS			33,180				17,386
Cash and cash equivalents at beginning of period			22,782				20,760
Cash and cash equivalents at end of period		$	55,962			$	38,146

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 1 – BASIS OF PRESENTATION

     These consolidated financial statements have been prepared under United States Generally Accepted Accounting Principles (U.S. 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 of the information and footnotes required by U.S. 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-month period ended March 31, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010. The balance sheet at December 31, 2009 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, 2009.

     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. Consequently, for all of the periods presented, income from Broken Hill has been presented within discontinued operations in the consolidated statements of operations.

     In May 2009, the Company’s Board of Directors authorized the Company to proceed with a 1-for-10 reverse stock split. To ensure comparability of financial information, 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 11) 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 within additional paid-in capital.

NOTE 2 – 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. (“Coeur Alaska”), CDE Cerro Bayo Ltd., Coeur Argentina S.R.L. and CDE Australia Pty. Ltd. Intercompany balances and transactions have been eliminated in consolidation.

     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.

     Under our concentrate sales contracts with certain 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.

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

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. Revenue includes the sales of by-product gold from the Company’s mining operations.

     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 $2.7 million for the three months ended March 31, 2010 and $1.5 million for the three months ended March 31, 2009 were recorded as a reduction of revenue.

     At March 31, 2010, the Company had outstanding provisionally priced sales of $18.7 million, consisting of 1.0 million ounces of silver and 1,266 ounces of gold, which had a fair value of $19.3 million including the embedded derivative. For each one cent per ounce change in realized silver price, revenue would vary (plus or minus) approximately $10,000; and for each one dollar per ounce change in realized gold price, revenue would vary (plus or minus) approximately $1,300. At December 31, 2009, the Company had outstanding provisionally priced sales of $19.1 million consisting of 1.0 million ounces of silver and 1,227 ounces of gold, which had a fair value of approximately $19.1 million including the embedded derivative. For each one cent per ounce change in realized silver price, revenue would vary (plus or minus) approximately $10,000 and for each one dollar per ounce change in realized gold price, revenue would vary (plus or minus) approximately $1,200.

     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. 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 $22.7 million as of March 31, 2010. Of this amount, $7.7 million was reported as a current asset and $15.0 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.

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

     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 first quarter of 2010, the Company increased its estimated silver ounces contained in the heap inventory by 1.2 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 significant changes in estimates 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.

     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.

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

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 $1.3 million for the three months ended March 31, 2010 and $0.5 million and for the three months ended March 31, 2009, 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 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.

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

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 Assets: The Company, under the terms of its credit facility 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. Under the terms of the Company’s Credit Suisse obligation, it is required to reserve cash for three months of debt service costs. At March 31, 2010 and December 31, 2009, the Company held certificates of deposit and cash under these agreements of $27.4 million and $26.5 million, respectively, restricted for these purposes. 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 March 31, 2010 and December 31, 2009, the Company held certificates of deposit totaling $2.3 million that were pledged to support letters of credit to Mitsubishi International. These amounts are included in prepaids and other.

     Reclamation and Mine Closure 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.

     Foreign Currency: The assets and liabilities of the Company’s foreign subsidiaries are measured using U.S. dollars as their functional currency. All monetary assets and liabilities are translated at current exchange rates and resulting adjustments are included in other income and expenses. Revenues and expenses in foreign currencies are translated at the average exchange rate for the period. Foreign currency transaction gains and losses are included in the determination of net income (loss).

     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: The Company defines fair value, establishes a framework for measuring fair value and provides disclosures about fair value measurement in accordance with U.S. GAAP. Refer to Note 3 for further details regarding the Company’s assets and liabilities measured at fair value.

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

     Stock-based Compensation Plans: The Company estimates the fair value of each stock option and stock appreciation rights (“SARs”) award using the Black-Scholes option valuation model. The Company estimates the fair value of performance share and performance unit 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 March 31, 2010.

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

		Three Months
		Ended March 31,
		2010				2009
Net income (loss)		$	(8,017	)		$	6,058
Unrealized loss on marketable securities			(5	)			(1	)
Comprehensive income (loss)		$	(8,022	)		$	6,057

     Net Income (Loss) 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, the 1.25% Convertible Senior Notes due 2024, the 3.25% Convertible Senior Notes due 2028 and the Senior Term Notes due December 31, 2012 outstanding in the three month period ended March 31, 2010 and 2009 are as follows:

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

		Three Months Ended												Three Months Ended
		March 31, 2010												March 31, 2009
		(Loss)				Shares				Per-Share				Income				Shares				Per-Share
(In thousands except for EPS)		(Numerator)				(Denominator)				Amount				(Loss)				(Denominator)				Amount
Basic EPS
Income (loss) from continuing operations		$	(8,017	)			81,753			$	(0.10	)		$	4,385				61,145			$	0.07
Income from discontinued operations			—				—				—				1,673				61,145				0.03
Net income (loss)		$	(8,017	)			81,753			$	(0.10	)		$	6,058				61,145			$	0.10
Effect of Dilutive Securities
Equity awards			—				—				—				—				15				—
Diluted EPS
Income (loss) from continuing operations		$	(8,017	)			81,753			$	(0.10	)		$	4,385				61,160			$	0.07
Net income from discontinued operations			—				—				—				1,673				61,160				0.03
Net income (loss)		$	(8,017	)			81,753			$	(0.10	)		$	6,058				61,160			$	0.10

     For the three months ended March, 31, 2010, 7,009,035 common stock equivalents related to convertible debt and 531,843 options have not been included in the diluted per share calculation, as the Company has recorded a net loss for the period. The options which expire between 2010 and 2019 are outstanding at March 31, 2010. For the three months ended March 31, 2009, 2,076,974 common stock equivalents related to convertible debt were not included in the computation of diluted EPS because their effect was anti-dilutive and 655,571 options, at exercise prices between $8.00 and $70.90 were not included in the computation of diluted EPS because their exercise prices exceeded the average market price of the company’s common stock. Potentially dilutive shares issuable upon conversion of the 3.25% Convertible Senior Notes were not included in the computation of diluted EPS for the three months ended March 31, 2010 and 2009 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.

     Use of Estimates: The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in their consolidated financial statements and accompanying notes. The areas requiring significant management 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.

NOTE 3 – FAIR VALUE MEASUREMENTS

     The Company follows U.S. GAAP related to fair value measurements of financial assets and financial liabilities. U.S. GAAP 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 accounting principles include 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.

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

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).

     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 March 31, 2010
		Total				Level 1				Level 2				Level 3
Assets:
Cash equivalants		$	40,001			$	—			$	40,001			$	—
Restricted certificates of desposits			5,440				—				5,440				—
Other derivative instruments, net			2,421				—				2,421				—
Franco-Nevada warrant			7,643				—				7,643				—
Put and call options			7				—				7				—
		$	55,512			$	—			$	55,512			$	—
Liabilities:
Gold lease facility		$	18,705			$	—			$	18,705			$	—
Royalty obligation embedded derivative			79,699				—				79,699				—
Put and call options			1,427				—				1,427				—
		$	99,831			$	—			$	99,831			$	—

		Fair Value at December 31, 2009
		Total				Level 1				Level 2				Level 3
Assets:
Restricted certificates of deposits		$	5,440			$	—			$	5,440			$	—
Other derivative instruments, net			1,379				—				1,379				—
Franco-Nevada warrant			6,339				—				6,339				—
Put and call options			121				—				121				—
		$	13,279			$	—			$	13,279			$	—
Liabilities:
Gold lease facility		$	28,506			$	—			$	28,506			$	—
Royalty obligation embedded derivative			78,013				—				78,013				—
Put and call options			964				—				964				—
		$	107,483			$	—			$	107,483			$	—

     The Company’s cash equivalents, restricted certificates of deposits, Franco-Nevada warrant and other derivative instruments, net 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 obligation embedded derivative, 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.

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

     Effective July 1, 2009, the Company sold to Perilya Broken Hill Ltd. its 100% interest in the silver contained at the Broken Hill mine for $55.0 million in cash. As a result of this transaction, the Company realized an after tax gain on the sale of approximately $25.5 million, net of income taxes in 2009. Coeur originally purchased this interest from Perilya Broken Hill, Ltd. 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 from discontinued operations for the three months ended March 31, 2009 (in thousands):

		March 31,
		2009
Sales of metal		$	4,709
Production costs applicable to sales			(786	)
Depreciation and depletion			(747	)
Income tax expense			(1,503	)
Net income from discontinued operations		$	1,673

     Inventory consist of the following:

		March 31,				December 31,
		2010				2009
		(in thousands)
Concentrate and doré inventory		$	43,446			$	39,487
Supplies			28,308				28,225
Metal and other inventory		$	71,754			$	67,712

     Property, plant and equipment consist of the following (in thousands):

		March 31,				December 31,
		2010				2009
Land		$	1,133			$	1,133
Building improvements			395,802				384,107
Machinery and equipment			236,240				229,898
Capitalized leases for machinery and equipment and buildings			60,509				53,278
			693,684				668,416
Accumulated depreciation			(142,830	)			(129,379	)
		$	550,854			$	539,037

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

NOTE 7 – MINING PROPERTIES

		San
		Bartolomé				Martha				Cerro Bayo				Palmarejo				Rochester				Endeavor				Kensington				Other				Total
March 31, 2010
Operational mining properties:		$	67,327			$	10,000			$	43,556			$	117,201			$	97,435			$	—			$	—			$	—			$	335,519
Accumulated depletion			(6,401	)			(9,276	)			(25,679	)			(10,511	)			(97,435	)			—				—				—				(149,302	)
			60,926				724				17,877				106,690				—				—				—				—				186,217
Mineral interest(A)			26,642				—				—				1,657,188				—				44,033				—				—				1,727,863
Accumulated depletion			(2,507	)			—				—				(33,937	)			—				(5,557	)			—				—				(42,001	)
			24,135				—				—				1,623,251				—				38,476				—				—				1,685,862
Non-producing and development properties			—				—				—				—				—				—				382,548				142				382,690
Total mining properties		$	85,061			$	724			$	17,877			$	1,729,941			$	—			$	38,476			$	382,548			$	142			$	2,254,769

		San
		Bartolomé				Martha				Cerro Bayo				Palmarejo				Rochester				Endeavor				Kensington				Other				Total
December 31, 2009
Operational mining properties:		$	67,327			$	10,000			$	43,554			$	113,167			$	97,435			$	—			$	—			$	—			$	331,483
Accumulated depletion			(5,793	)			(8,968	)			(25,679	)			(7,232	)			(97,435	)			—				—				—				(145,107	)
			61,534				1,032				17,875				105,935				—				—				—				—				186,376
Mineral interest(A)			26,642				—				—				1,657,188				—				44,033				—				—				1,727,863
Accumulated depletion			(2,284	)			—				—				(24,171	)			—				(4,897	)			—				—				(31,352	)
			24,358				—				—				1,633,017				—				39,136				—				—				1,696,511
Non-producing and development properties			—				—				—				—				—				—				357,027				142				357,169
Total mining properties		$	85,892			$	1,032			$	17,875			$	1,738,952			$	—			$	39,136			$	357,027			$	142			$	2,240,056

Operational Mining Properties

     Palmarejo: Palmarejo is located in the State of Chihuahua in northern Mexico, and its principal silver and gold properties are collectively referred to as the “Palmarejo mine.” The Palmarejo mine commenced production in April 2009.

     San Bartolomé Mine: The San Bartolomé Mine is a silver mine located near the city of Potosi, Bolivia. The mineral rights for the San Bartolomé project are held through long-term joint venture/lease agreements with several local independent mining co-operatives and the Bolivian State owned mining company, (“COMIBOL”). The Company commenced commercial production in June 2008.

     Rochester Mine: The Company has conducted operations at the Rochester Mine, located in Western Nevada, since September 1986. The mine utilizes the heap-leaching process to extract both silver and gold from ore mined using open pit methods. Rochester’s primary product is silver with gold produced as a by-product.

     Martha Mine: The Martha Mine is an underground silver mine located in Argentina, approximately 270 miles southeast of Coeur’s Cerro Bayo mine. Coeur acquired a 100% interest in the Martha mine in April 2002. In July 2002, Coeur commenced shipment of ore from the Martha Mine to the Cerro Bayo facility for processing. In December 2007, the Company completed a 240 tonne per day flotation mill, which produces a flotation concentrate. The Company anticipates that operating activities will cease in late 2010 unless additional mineralization is discovered during the year.

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

     Cerro Bayo Mine: The Cerro Bayo Mine is a gold and silver underground mine located in southern Chile. Commercial production commenced on April 18, 2002. Operations were suspended in October 2008 in order to allow the Company to develop additional reserves and a new mine plan.

Mineral Interests

     Endeavor Mine: The Endeavor mine is an underground silver and base metal operation located in North Central New South Wales. On May 23, 2005, CDE Australia Pty. Ltd. (“CDE Australia”), a wholly-owned subsidiary of Coeur acquired all of the silver production and reserves, up to a maximum 17.7 million payable ounces, contained at the Endeavor Mine in Australia, which is owned and operated by Cobar Operations Pty. Limited (“Cobar”), a wholly-owned subsidiary of CBH Resources Ltd. (“CBH”), for $44.0 million, including transaction fees. Under the terms of the original agreement, CDE Australia paid Cobar $15.4 million of cash at the closing. In addition, CDE Australia agreed to pay Cobar approximately $26.5 million upon the receipt of a report confirming that the reserves at the Endeavor mine are equal to or greater than the reported ore reserves for 2004. In addition to these upfront payments, CDE Australia originally committed to pay Cobar an operating cost contribution of $1.00 for each ounce of payable silver plus a further increment when the silver price exceeds $5.23 per ounce. This further increment was to have begun on the second anniversary of this agreement and is 50% of the amount by which the silver price exceeds $5.23 per ounce. A cost contribution of $0.25 per ounce is also payable by CDE Australia in respect of new ounces of proven and probable silver reserves as they are developed. During the first quarter of 2007, $2.1 million was paid for additional ounces of proven and probable silver reserves under the terms of the contract. This amount was capitalized as a cost of the mineral interest acquired and is being amortized using the units of production method.

     On March 28, 2006, CDE Australia reached an agreement with CBH to modify the terms of the original silver purchase agreement. Under the modified terms, CDE Australia owns all silver production and reserves up to a total of 20.0 million payable ounces, up from 17.7 million payable ounces in the original agreement. The silver price-sharing provision was deferred until such time as CDE Australia has received approximately 2 million cumulative ounces of silver from the mine or June 2007, whichever is later. In addition, the silver price-sharing threshold increased to $7.00 per ounce, from the previous level of $5.23 per ounce. The conditions relating to the second payment were also modified and tied to certain paste fill plant performance criteria and mill throughput tests. In January 2008, the mine met the criteria for payment of the additional $26.2 million. This amount was paid on April 1, 2008, plus accrued interest at the rate of 7.5% per annum from January 24, 2008. During late November 2008, the mine exceeded the 2.0 million cumulative ounce thresholds and therefore, CDE Australia realized a reduction in revenues in the fourth quarter of 2008 of approximately $73,000 as a result of the silver price sharing provision. CDE Australia has received approximately 2.7 million payable ounces to-date and the current ore reserve contains approximately 9.8 million payable ounces based on current metallurgical recovery and current smelter contract terms. Expansion of the ore reserve will be required to achieve the maximum payable ounces of silver production as set forth in the modified contract. It is expected that future expansion to the ore reserve will occur as a result of the conversion of portions of the property’s existing inventory of mineralized material and future exploration discoveries. CBH conducts regular exploration to discover new mineralization and to define reserves from surface and underground drilling platforms.

Non-Producing and Development Properties

     Kensington: Kensington is a gold property located near Juneau, Alaska where production is expected to commence in July 2010. The mine has been constructed as an underground gold mine accessed by a horizontal tunnel and will utilize conventional and mechanized underground mining methods. The ore will be processed in a flotation mill that produces a concentrate which will be sold to third-party smelters.

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

NOTE 8 – LONG TERM DEBT AND ROYALTY OBLIGATION

		March 31,				December 31,
(In thousands)		2010				2009
3.25% Convertible Senior Notes due March 2028		$	79,584			$	125,323
1.25% Convertible Senior Notes due January 2024			1,859				22,232
Senior Term Notes due December 31, 2012			91,667				—
Capital lease obligations			33,866				30,305
Kensington term facility			28,233				15,464
Bank loans			6,643				7,476
Total			241,852				200,800
Less: current portion			(51,155	)			(15,403	)
Total long-term debt		$	190,697			$	185,397

3.25% Convertible Senior Notes due 2028

     As of March 31, 2010, the outstanding balance of the 3.25% convertible Senior Notes was $93.1 million or $79.6 million, net of debt discount. The notes are unsecured and bear interest at a rate of 3.25% per year, payable on March 15 and September 15 of each year. 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 such 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.

     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 first quarter of 2010, $55.3 million of the 3.25% Convertible Senior Notes due 2028 were repurchased in exchange for 3.6 million shares of the Company’s common stock. The Company recognized a loss on the repurchase of $5.1 million.

     The fair value of the notes outstanding, as determined by market transactions at March 31, 2010 and December 31, 2009, was $89.4 million and $131.3 million, respectively. The carrying value of the equity component at March 31, 2010 and December 31, 2009 was $20.9 million and $33.4 million, respectively.

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

     At March 31, 2010 and 2009, the Company had $13.5 million and $39.7 million, respectively, of debt discount remaining and the effective interest rate on the notes was 8.9%, as a result of adopting the new accounting standard.

     During the first quarters of 2010 and 2009, interest expense was $1.2 million and $1.8 million, respectively, and accretion of the debt discount was $1.4 million and $2.2 million, respectively.

1.25% Convertible Senior Notes due 2024

     As of March 31, 2010, the Company had outstanding $1.9 million of its 1.25% Convertible Senior Notes due 2024. The remaining $1.9 million principal amount of 1.25% Convertible Notes are convertible into shares of common stock at the option of the holder on January 15, 2011, 2014, and 2019, unless previously redeemed, at an initial 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 after January 18, 2011. 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.

     During the first quarter of 2010, $20.4 million of the 1.25% Convertible Senior Notes due 2024 were repurchased in exchange for 1.2 million shares of the Company’s common stock which reduced the principal amount of the notes outstanding to $1.9 million as of March 31, 2010. The Company recognized a loss on the repurchase of $1.7 million.

     The fair value of the notes outstanding, as determined by market transactions on March 31, 2010 and December 31, 2009, was $1.7 million and $22.8 million, respectively.

     Interest on the notes for the quarter ended March 31, 2010 was $0.01 million. Interest on the notes for the quarter ended March 31, 2009 was $0.5 million.

Senior Term Notes due December 31, 2012

     On February 5, 2010 the Company completed the sale of $100 million of Senior Term Notes due in quarterly payments through December 31, 2012. In conjunction with the sale of these notes, the Company also issued shares of its common stock valued at $4.2 million as financing costs. The principal of the Notes is payable in twelve equal quarterly installments, with the first such installment paid on March 31, 2010. The Company has the option of paying amounts due on the Notes in cash, shares of common stock or a combination of cash and shares of common stock.

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

The stated interest rate on the Notes is 6.50%, but the payments for principal and interest due on any payment date will be computed to give effect to recent share prices, valuing the shares of common stock at 90% of a weighted average share price over a pricing period ending shortly before the payment date. In March 2010, the Company paid $8.3 million in principal and $1.0 million in interest in exchange for 712,003 shares of the Company’s stock. The effective interest rate was approximately 13%, which includes a loss of $1.0 million in connection with this quarterly debt payment, recorded in gain (loss) on debt extinguishments.

Kensington Term Facility

     On October 27, 2009 the Company entered into a term facility with Credit Suisse whereby Credit Suisse agreed to provide Coeur Alaska, a wholly-owned subsidiary of Coeur, a $45 million, five-year term facility to fund the remaining construction at the Company’s Kensington Gold Mine in Alaska. The Company began drawing down the facility during the fourth quarter of 2009. Beginning three months after an approximate twelve month grace period commencing November 2009, Coeur Alaska will repay the loan in equal quarterly payments with interest based on a margin over the three-month LIBOR rate. The facility is secured by the mineral rights and infrastructure at Kensington as well as a pledge of the shares of Coeur Alaska owned by Coeur.

     As of March 31, 2010, the Company has $28.2 million outstanding bearing interest at 5.2% (three month Libor rate plus 5% margin). The Company is also subject to financial covenants including (i) guarantor tangible net worth; (ii) borrower tangible net worth; (iii) debt to equity ratio; (iv) debt service coverage ratio; and (v) maximum production cost. Events of default in the Kensington term facility include (i) a cross-default of other indebtedness; (ii) a material adverse event; (iii) loss of or failure to obtain applicable permits; or (iv) failure to achieve final completion date.

     As a condition of the Kensington term facility with Credit Suisse noted above, the Company agreed to enter into a gold hedging program which protects a minimum of 125,000 ounces of gold production over the life of the facility against the risk associated with fluctuations in the market price of gold. This program took the form of a series of zero cost collars which consist of a floor price and a ceiling price of gold. The required collars of 125,000 ounces of gold were entered into in November and December 2009. The collars mature quarterly beginning September 2010 and conclude in December 2014. The weighted average put feature of each collar is $862.50 per ounce and the weighted average call feature of each collar is $1,688.50 per ounce.

Bank Loans

     On November 27, 2009, the Company’s wholly owned Bolivian subsidiary, Empressa Minera Manquiri, received proceeds from short-term borrowings from Banco Bisa in the amount of $5.0 million bearing interest at approximately 6.5% to fund working capital requirements. The short-term bank loan matures on November 17, 2011.

     During 2008, 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.

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

Palmarejo Gold Production Royalty Obligation

     On January 21, 2009, the Company entered into a gold production royalty transaction with Franco-Nevada Corporation under which Franco-Nevada purchased a royalty covering 50% of the life of mine gold to be produced by Coeur from its Palmarejo silver and gold mine in Mexico. Coeur received total consideration of $78.0 million consisting of $75.0 million in cash, plus a warrant to acquire Franco-Nevada Common Shares (the “Franco-Nevada warrant”), which was valued at $3.0 million at closing of the Franco-Nevada transaction and is yet to be exercised. The royalty obligation is accreted to its expected value over the expected minimum payment period based on an implicit interest rate. The Company used an interest rate of 27.4% to discount the original obligation. The royalty obligation is payable in an amount equal to the greater of the minimum of 4,167 ounces of gold or 50% of actual gold production per month multiplied by the market price of gold in excess of $400 (increasing by 1% per annum beginning on the fourth anniversary of the transaction). The minimum royalty obligation commenced on July 1, 2009 and ends when payments have been made on a total of 400,000 ounces of gold. The price volatility associated with this minimum royalty obligation is considered an embedded derivative under U.S. GAAP and is described in Note 13, Derivative Financial Instruments and Fair Value of Financial Instruments, Palmarejo Gold production royalty. During the three months ended March 31, 2010, the Company paid $9.0 million of the Royalty Obligation. As of March 31, 2010 and December 31, 2009, the remaining obligation balance was $84.0 million and $84.8 million, respectively.

Capitalized Interest

     The Company capitalizes interest incurred on its various debt instruments as a cost of properties under development. For the three months ended March 31, 2010 and 2009, the Company capitalized interest of $4.1 million and $17.7 million, respectively.

NOTE 9 – RECLAMATION AND MINE CLOSURE

     Reclamation and mine closure costs are based principally on legal and regulatory requirements. Management estimates costs associated with reclamation of mining properties as well as remediation cost for inactive properties. The Company uses assumptions about future costs, mineral prices, mineral processing recovery rates, production levels and capital and reclamation costs. Such assumptions are based on the Company’s current mining plan and the best available information for making such estimates. On an ongoing basis, management evaluates its estimates and assumptions; however, actual amounts could differ from those based on such estimates and assumptions.

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

		Three Months Ended
		March 31,
		2010				2009
Asset retirement obligation – January 1		$	38,193			$	34,662
Accretion			835				770
Addition and changes in estimates			18				—
Settlements			(1,134	)			(245	)
Asset retirement obligation – March 31		$	37,912			$	35,187

     In addition, the Company has accrued $1.6 million and $1.7 million as of March 31, 2010 and December 31, 2009, respectively, for reclamation liabilities related to former mining activities. These amounts are also included in reclamation and mine closure liabilities.

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

NOTE 10 – INCOME TAXES

     For the three months ended March 31, 2010, the Company reported an income tax benefit of approximately $11.5 million compared to an income tax benefit of $0.1 million for the three months ended March 31, 2009. The following table summarizes the components of the Company’s income tax provision for the three months ended March 31, 2010 and 2009:

		Three Months Ended
		March 31,
		2010				2009
Current:
United States – Alternative minimum tax		$	—			$	(269	)
United States – Foreign withholding			(491	)			(260	)
Argentina			(13	)			(465	)
Australia			—				(158	)
Mexico			(50	)			(42	)
Bolivia			831				—
Deferred:
United States			1,571				1,549
Australia			(290	)			(327	)
Bolivia			(1,423	)			(4,418	)
Chile			(343	)			339
Mexico			11,703				4,136
Income tax benefit		$	11,495			$	85

     The income tax benefit for the three months ended March 31, 2010 and 2009 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, permanent differences and foreign exchange rate differences. The Company has U.S. net operating loss carryforwards which expire in 2010 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.

NOTE 11 – 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 compensation charged to operations and capital projects under these Plans was $2.2 million and $2.6 million for the three months ended March 31, 2010 and 2009, respectively.

     Stock options and Stock Appreciation Rights (“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 under the Company’s incentive plans 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 vested.

     Performance shares and performance units granted under the Company’s incentive plans 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 shares 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 vested.

     The compensation expense recognized in the Company’s consolidated financial statements for the three months ended March 31, 2010 and 2009 for stock based compensation awards was $1.4 million and $1.7 million, respectively. The SARs, 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 March 31, 2010, 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 1.96 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 March 31, 2010. There were no stock options granted during the first quarter of 2010. The assumptions used to estimate the fair value of the stock options and SARs using the Black-Scholes option valuation model are as follows:

		Date of Grant								As of March 31,
		SARs and
		Stock
		Options				SARs				SARs
		2009				2010				2010
Weighted average fair value of stock options granted and SARs outstanding		$	3.90			$	10.19			$	10.12
Expected volatility			70.8	%			73.7	%			75.2	%
Expected life		6.0 years				6.0 years				5.5 years
Risk-free interest rate			2.1	%			2.7	%			2.7	%
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 for the three months ended March 31, 2010:

		Stock Options								SARs
						Weighted								Weighted
						Average								Average
		Shares				Exercise Price				Shares				Exercise Price
Outstanding at December 31, 2009			392,678			$	23.48				112,471			$	10.00
Granted			—				—				151,287				15.40
Exercised			(3,978	)			10.00				(2,732	)			10.00
Canceled/forfeited			(27,435	)			19.56				(11,584	)			10.00
Outstanding at March 31, 2010			361,265			$	23.93				249,442			$	13.28

     Options to purchase 254,162 shares were exercisable at March 31, 2010 at a weighted average exercise price of $28.17.

     As of March 31, 2010, there was $1.0 million of unrecognized compensation cost related to non-vested stock options and SARs to be recognized over a weighted average period of 1.7 years.

     The following table summarizes restricted stock and restricted stock units activity for the three months ended March 31, 2010:

		Restricted Stock								Restricted Stock Units
						Weighted								Weighted
		Number of				Average Grant				Number of				Average
		Shares				Date Fair Value				Units				Fair Value
Outstanding at December 31, 2009			134,389			$	15.95				67,485			$	18.06
Granted			—				—				91,378				15.40
Vested			(53,198	)			20.82				(22,500	)			15.24
Cancelled/Forfeited			(11,585	)			10.31				(6,950	)			14.74
Outstanding at March 31, 2010			69,606			$	13.17				129,413			$	14.98

     As of March 31, 2010, there was $1.0 million of total unrecognized compensation cost related to restricted stock and restricted stock unit awards to be recognized over a weighted-average period of 1.7 years.

     The following table summarizes performance shares and performance units’ activity for the three months ended March 31, 2010:

		Performance Shares								Performance Units
						Weighted								Weighted
		Number of				Average Grant				Number of				Average
		Shares				Date Fair Value				Units				Fair Value
Outstanding at December 31, 2009			136,298			$	16.59				67,485			$	27.53
Granted			—				—				91,378				19.94
Vested			—				—				—				—
Cancelled/Forfeited			(35,326	)			17.94				(10,426	)			20.30
Outstanding at March 31, 2010			100,972			$	16.12				148,437			$	19.53

     As of March 31, 2010, there was $1.4 million of total unrecognized compensation cost related to performance shares and performance units to be recognized over a weighted average period of 2.3 years.

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

NOTE 12 – 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 $0.2 million and $0.2 million for the three months ended March 31, 2010 and 2009, respectively, which is 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 employee’s contribution up to an additional 2% of the employee’s compensation. Total plan expenses recognized in the Company’s consolidated financial statements for the three months ended March 31, 2010 and 2009 were $0.2 million and $0.2 million, respectively.

NOTE 13 – DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

Palmarejo Gold Production Royalty

     On January 21, 2009, the Company entered into the gold production royalty transaction with Franco-Nevada Corporation that is described in Note 8, Long Term Debt, Franco Nevada Royalty Obligation. The minimum royalty obligation ends when payments have been made on a total of 400,000 ounces of gold. The price volatility associated with minimum royalty obligation is considered an embedded derivative financial instrument under U.S. GAAP. The fair value of the embedded derivative at March 31, 2010 and December 31, 2009 was a liability of $79.7 million and $78.0 million, respectively. The Franco-Nevada warrant is a contingent option to acquire 316,436 common shares of Franco-Nevada for no additional consideration, once the mine satisfies certain completion tests stipulated in the agreement. The Franco-Nevada warrant is considered a derivative instrument. The fair value of the warrant at March 31, 2010 and December 31, 2009 was $7.6 million and $6.3 million, respectively. These derivative instruments are recorded in prepaid expenses and other, current or non-current royalty obligation on the balance sheet and adjusted to fair value through current earnings. During the three months ended March 31, 2010, mark-to-market adjustments for the embedded derivative and warrant amounted to a loss of $1.7 million and a gain of $1.3 million, respectively. During 2010, realized losses on settlement of the liabilities were $3.2 million. The mark-to-market adjustments and realized losses are included in fair value adjustments, net in the consolidated statement of operations.

Forward Foreign Exchange Contracts

     Prior to December 31, 2009, the Company had entered into forward foreign currency contracts to reduce the foreign exchange risk associated with forecasted Mexican peso (“MXP”) operating costs at its Palmarejo mine. At March 31, 2010, the Company had MXP foreign exchange contracts of $18.9 million in U.S. dollars. These contracts require the Company to exchange U.S. dollars for MXP at a weighted average exchange rate of 13.76 MXP to each U.S. dollar and had a fair value of $1.8 million at March 31, 2010. The Company recorded mark-to-market gains (losses) of $0.5 million and $(3.8) million for the three months ended March 31, 2010 and 2009, respectively, which is reflected in fair value adjustments, net. The Company recorded realized gains of $0.04 million and $0.6 million in production costs applicable to sales during the three months ended March 31, 2010 and 2009, respectively.

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

Gold Lease Facility

     On December 18, 2008, the Company entered into a gold lease facility with Mitsubishi International Corporation (“MIC”). Under the facility, the Company received proceeds of $20 million for the sale of 23,529 ounces of gold leased from MIC to the Company. During 2009, the Company repaid 2,000 ounces of gold and leased an additional 5,000 ounces of gold. As of March 31, 2010, the Company had 17,029 ounces of gold leased from MIC. The Company has committed to deliver this number of ounces of gold to MIC over the next four months on scheduled delivery dates. As of March 31, 2010 the Company is required to pledge certain collateral, including standby letters of credit of $2.3 million and $9.3 million of metal inventory held at its refiners. The Company accounts for the gold lease facility as a derivative instrument, which is recorded in accrued liabilities and other in the balance sheet.

     As of March 31, 2010 and December 31, 2009, based on the current futures metals prices for each of the delivery dates and using a 5.1% and 5.7% discount rate, respectively, the fair value of the instrument was a liability of $18.7 million and $28.5 million, respectively. The pre-credit risk adjusted fair value of the net derivative liability as of March 31, 2010 was $19.0 million. A credit risk adjustment of $0.3 million to the fair value of the derivative reduced the reported amount of the net derivative liability on the Company’s consolidated balance sheet to $18.7 million. For the three months ended March 31, 2010 and 2009, mark-to market adjustments for the gold lease facility amounted to a gain of a $1.4 million and a loss of $0.1 million, respectively. The Company recorded realized losses of $2.0 and $0.2 million, respectively. The mark-to-market adjustments and realized losses are included in fair value adjustments, net.

Concentrate Sales Contracts

     The Company enters into concentrate sales contracts with third-party smelters. The contracts, in general, provide for a provisional payment based upon provisional assays and quoted metal prices and the provisionally priced sales contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of concentrates at the forward price at the time of sale. The embedded derivative, which is the final settlement price based on a future price, does not qualify for hedge accounting. These embedded derivatives are recorded as derivative assets (in Prepaid expenses and other), or derivative liabilities (in Accrued liabilities and other), on the balance sheet and are adjusted to fair value through earnings each period until the date of final settlement. At March 31, 2010, the Company had outstanding provisionally priced sales of $18.7 million, consisting of 1.0 million ounces of silver and 1,266 ounces of gold, which had a fair value of $19.3 million including the embedded derivative. At December 31, 2009, the Company had outstanding provisionally priced sales of $19.1 million consisting of 1.0 million ounces of silver and 1,227 ounces of gold, which had a fair value of approximately $19.1 million including the embedded derivative.

Commodity Derivatives

     Prior to December 31, 2009, the Company had purchased silver put options to reduce the risk associated with potential decreases in the market price of silver. The cost of these put options was largely offset by proceeds received from the sale of gold call options. At March 31, 2010, the Company held put options allowing it to deliver 3.6 million ounces of silver at a weighted average strike price of $9.32 per ounce. The contracts will expire over the next six months.

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

     In connection with the Credit Suisse credit facility described in Note 8, Kensington Term Facility, at March 31, 2010, the Company had written outstanding call options requiring it to deliver 125,000 ounces of gold at a weighted average strike price of $1,688.50 per ounce if the market price of gold exceeds the strike price. In addition, the Company had purchased outstanding put options allowing it to sell 125,000 ounces of gold at a weighted average strike price of $862.50 per ounce if the market price of gold were to fall below the strike price. The contracts will expire over the next five years. As of March 31, 2010 the fair market value of these contracts was a net liability of $1.4 million.

     During the three months ended March 31, 2010, outstanding put options allowing it to deliver 1.8 million ounces of silver at an average strike price of $9.00 per ounce expired. The Company recorded realized losses of $0.7 million included in fair value adjustments, net.

     As of March 31, 2010, the Company had the following derivative instruments that settle in each of the years indicated in the table (in thousands except average rates, ounces and per share data):

		2010				2011				2012				Thereafter
Palmarejo gold production royalty			17,592				24,027				24,865				108,476
Average gold price in excess of minimum contractual deduction		$	469.09			$	480.51			$	497.27			$	494.90
Notional ounces			37,503				50,004				50,004				219,188
Franco-Nevada Warrant			5,000				—				—				—
Share price		$	15.80				—				—				—
Notional Shares			316,455				—				—				—
Mexican peso forward purchase contracts			18,900				—				—				—
Average rate (MXP/$)		$	13.76				—				—				—
Mexican peso notional amount			260,063				—				—				—
Gold lease forward purchase contracts			15,009				—				—				—
Average gold forward price		$	881.36				—				—				—
Notional ounces			17,029				—				—				—
Silver concentrate sales agreements			17,286				—				—				—
Average silver price		$	16.81				—				—				—
Notional ounces			1,028,570				—				—				—
Gold concentrate sales agreements			1,385				—				—				—
Average gold price		$	1,093.70				—				—				—
Notional ounces			1,266				—				—				—
Gold put options purchased			360				3,240				2,880				2,520
Average gold strike price		$	862.50			$	862.50			$	862.50			$	862.50
Notional ounces			5,000				45,000				40,000				35,000
Gold call options sold			360				3,240				2,880				2,520
Average gold strike price		$	1,688.50			$	1,688.50			$	1,688.50			$	1,688.50
Notional ounces			5,000				45,000				40,000				35,000
Silver put options			1,368				—				—				—
Average silver strike price		$	9.32				—				—				—
Notional ounces			3,600,000				—				—				—