1. EBITDA, operating cash flow, adjusted earnings and cash operating costs are non-GAAP measures. Please see tables in the Appendix for reconciliation to U.S. GAAP. Total debt includes short and long-term indebtedness and excludes capital leases and royalty obligations.

Table 2: Operational Highlights: Production
(silver ounces in thousands)   2Q 2012   2Q 2011   Quarter Variance     YTD 2012   YTD 2011   YTD Variance
    Silver   Gold   Silver   Gold   Silver Gold     Silver   Gold   Silver   Gold   Silver   Gold
Palmarejo 2,366   31,258   2,370   33,389   % (6 %)     4,848   62,338   4,100   61,148   18 %   2 %
San Bartolomé 1,470 1,742 (16 %) n.a. 3,062 3,453 (11 %) n.a.
Rochester 713 10,120 333 1,397 114 % 624 % 1,154 15,412 677 2,848 70 % 441 %
Martha 108 97 101 112 7 % (13 %) 231 181 281 356 (18 %) (49 %)
Kensington 21,572 25,758 n.a. (16 %) 29,016 49,434 n.a. (41 %)
Endeavor 240     215     12 %

n.a.
    488     364     34 %   n.a.
Total 4,897 63,047 4,761 60,656 3 % 4 % 9,783 106,947 8,875 113,786 10 % (6 %)

Additional operating statistics are in the tables in the Appendix.
 

Table 3: Operational Highlights: Cash Operating Costs Per Ounce 1
  2Q 2012   2Q 2011  

QuarterVariance
  YTD 2012   YTD 2011  

YTDVariance
Palmarejo $ (0.85 )   $ (3.68 )   77 %   $ (1.58 )   $ (0.10 )   1,480 %
San Bartolomé 11.05 8.73 27 % 10.62 8.93 19 %
Rochester 9.83 4.34 126 % 15.00 7.31 105 %
Martha 55.07 38.79 42 % 50.50 29.60 71 %
Endeavor   17.50       20.04     (13 %)     17.07       18.85     (9 %)
Total $ 6.41 $ 3.39 89 % $ 6.35 $ 5.69 12 %
Kensington $ 1,348 $ 924 46 % $ 1,697 $ 955 78 %

Additional operating statistics are in the tables in the Appendix.
 

Palmarejo, Mexico - Strong Cash Flow
  • Second quarter production totaled 2.4 million ounces of silver and 31,258 ounces of gold, which was consistent with first quarter of 2012 and second quarter 2011 production.
  • Cash operating costs 1 per silver ounce in the second quarter were $(0.85) compared to ($2.27) in the first quarter. Higher costs in the second quarter compared to first quarter 2012 and second quarter 2011 were primarily due to higher maintenance costs and to downtime related to a temporary work stoppage at the mine in May.
  • Sales and operating cash flow 1 totaled $136.4 million and $63.6 million, respectively, in the second quarter. Capital expenditures were $11.2 million.

San Bartolomé, Bolivia - Consistent Performance
  • Silver production totaled 1.5 million ounces in the second quarter; consistent with first quarter production.
  • Cash operating costs 1 per silver ounce were $11.05 compared to $10.21 in the first quarter. Lower ore grade impacted cash operating costs 1 per ounce.
  • Sales and operating cash flow 1 totaled $53.4 million and $24.8 million, respectively, in the second quarter. Capital expenditures were $7.8 million.

1. EBITDA, operating cash flow, adjusted earnings and cash operating costs are non-GAAP measures. Please see tables in the Appendix for reconciliation to U.S. GAAP. Total debt includes short and long-term indebtedness and excludes capital leases and royalty obligations.

Kensington, Alaska - Production Accelerating as Costs Drop
  • Second quarter production returned to full-scale, almost tripling over the first quarter to 21,572 ounces of gold.
  • Cash operating costs 1 per gold ounce declined 50% from the first quarter to $1,348 and are expected to reach $900 by year-end.
  • Sustainable production levels are now being achieved and all major improvement projects have been completed.
  • Sales and operating cash flow 1 totaled $21.1 million and $0.6 million, respectively, in the second quarter. Capital expenditures were $9.3 million.

Rochester, Nevada - Rising Production Levels and Lower Costs
  • Second quarter silver production increased over the first quarter by 62% to 712,706 ounces and gold production increased 91% to 10,120 ounces.
  • Cash operating costs 1 in the second quarter declined 58% to $9.83 per silver ounce compared to the first quarter.
  • Sales and operating cash flow 1 totaled $34.2 million and $11.8 million, respectively, in the second quarter. Capital expenditures were $2.9 million.

The Martha mine in the Santa Cruz province of Argentina has continued to experience high operating costs and low production due to a short remaining expected mine life after ten years of production since 2002. The Company expects to cease active mining operations by September 30, 2012, and to commence reclamation activities after mining operations have concluded. Employees affected by the cessation of mining operations are expected to be placed with other mining companies in the region. As previously disclosed, the Company is evaluating strategic and operational alternatives for the Martha mine. As a result, the Company recorded an impairment charge of $4.8 million in the second quarter.

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