On our call today we have Mitchell Krebs; Frank Hanagarne; Leon Hardy; Randy Buffington; and Don Birak.
With that, I’ll turn it over to Mitch.
Thanks, Wendy. Hello. And thanks for participating in our second quarter call. We delivered strong operating results during the quarter, which led to very robust free cash flow. We expect this performance to continue throughout the second half of the year and allow us to achieve the high end of our 2012 production guidance in the low end of our cash operating cost guidance.
Second quarter silver production remained consistent with the prior quarter and quarterly gold production was up 44%. Thanks to rising output from our Kensington mine in Alaska and Rochester mine in Nevada.
These strong operating results are driving solid financial performance and generating significant free cash flow for our shareholders, which are the primary factors that led to the unprecedented decision by the company’s Board of Directors to authorize $100 million share repurchase program, which represents approximately 5.5 million or just over 6% of the company’s outstanding shares. This program reflects the Board’s and management’s confidence in the company’s underlying cash flow and the long-term value the company represents for shareholders.
Controlling cost is a challenge throughout the mining industry. During the second quarter our cash operating cost per ounce of silver were flat, compared to the prior quarter and our cash operating cost per ounce of gold declined by 50%.
Although, we have seen cost pressures in areas such as labor, contractor costs and consumables, including cyanide and grinding media, we are offsetting this increases through operational efficiencies for the most part.
We are pleased with the success of our exploration program, which is the largest in the company’s history. We identified a new zone at Palmarejo located near the existing processing facilities and we continue to expand the Guadalupe deposit, which is located 6 kilometers away from the Palmarejo mine.