Coeur d'Alene Mines Corporation -- Moody's rates Coeur's proposed senior unsecured notes B3, outlook stable

New York, June 26, 2012 -- Moody's Investors Service assigned first-time ratings to Coeur d'Alene Mines Corporation ("Coeur"), including a corporate family rating of B2, a probability of default rating of B2, and a B3 rating to the company's proposed $350 million of guaranteed senior unsecured notes. At the same time, Moody's assigned a speculative grade liquidity rating of SGL-2. The outlook is stable.

Assignments:

..Issuer: Coeur d'Alene Mines Corporation

.... Corporate Family Rating, Assigned B2

.... Probability of Default Rating, Assigned B2

.... Speculative Grade Liquidity Rating, Assigned SGL-2

....Senior Unsecured Regular Bond/Debenture, Assigned B3, 73 - LGD5

Outlook Actions:

..Issuer: Coeur d'Alene Mines Corporation

....Outlook, Stable

RATINGS RATIONALE

Coeur's B2 corporate family rating reflects its modest size and high concentration in two mines, relatively short reserve life, exposure to political risk in Bolivia, and uncertainties over potential new investments that the company may make to boost its reserves and productive capacity.

The company's properties consist of Kensington gold mine in Alaska, Rochester silver and gold mine in Nevada, Palmarejo silver and gold mine in Mexico, Endeavor silver mine in Australia, Martha silver and gold mine in Argentina, San Bartolome silver mine in Bolivia and 51% interest in Joaquin silver project in Argentina. Most of the company's production comes from Palmarejo and San Bartolome. Martha mine is at the end of its life and will not contribute to production beyond first half of 2012. Joaquin project is in early stages of development and will not contribute to the company's production in our rating horizon, or require substantial capital investments in the next eighteen months.

With roughly 19.1 million ounces of silver and 220,000 ounces of gold produced in 2011, Coeur represents a small portion of the global supply of silver and gold. In addition, approximately 70% of the company's silver production comes from its Palmarejo and San Bartolome mines, increasing the risk that operational or geological issues encountered at one of them would significantly impact the company. That said, positive factors for the rating include the company's diversification in two metals and production stream from five operating mines in diverse locations.

At December 31, 2011, proven and probable reserves at currently operating mines represented approximately twelve years of production at current production levels. Given the relatively short reserve lives at its existing mines, Coeur will need to continue to be successful in development of its reserves to maintain existing production levels. The ratings reflect the uncertainties over the nature and extent of capital investments that Coeur may make in the medium term to ensure adequate reserves in the long term.

While we acknowledge that the company has been able to generate healthy margins in the twelve months ended December 31, 2011, this was in large part attributable to the run-up in gold and silver prices, which are the price levels we view as unsustainable over the medium-term. The company's margins are less favorable than some of its peers, and in a less favorable pricing environment, the company could experience EBIT margin pressures.

Moody's also expects that in 2012 and 2013 the company will experience declining production levels at Palmarejo and declining silver recovery rates at San Bartolome, which could potentially increase costs at Coeur's two largest operating mines. Declining production volumes as the mines approach the end of their lives also have the potential to pressure margins over medium term.

Although we expect total metal production in 2012 to remain fairly consistent with 2011, as a result of increasing silver production from Rochester following mine expansion at the end of 2011, we note that this leach pad operation incurs high cash costs and as such, could become uneconomic if silver prices decline. Kensington gold mine, responsible for over 40% of the company's gold production, is also relatively high cost, even though at currently high gold prices, is expected to be profitable. In November 2011, management instituted a six months reduction in ore processing to implement several operating efficiency improvement initiatives. As such, production levels are expected to be suppressed and costs elevated in the first half of 2012, normalizing to the range of $900 - $1000 per ounce of gold after that. High cost production at some of the mines further increases the risk that the company's margins would experience pressure in a less favorable price environment, and highlight the need for the company to continue developing its reserves.

The fact that one of Coeur's largest mines, San Bartolome, is in Bolivia, is a negative factor for the rating. We consider the event risk surrounding the government's attitude to nationalization, revision of mining contracts and increasing royalty payment requirements to be high. The government of Bolivia has recently moved to nationalize a number of foreign assets, and is in process of drafting a new mining law which may redefine the structure of mining contracts in Bolivia. Any issues with property nationalization or material limitations on the company's mining operations could have a significant detrimental impact on the company's results and would put negative pressure on the ratings, given that San Bartolome is responsible for approximately quarter of the company's revenues.

As noted above, Coeur's continued success is dependent on its ability to develop its resources. That said, we expect the company to generate a reasonable amount of operating cash flows, which, in conjunction with the revolving credit facility and existing cash, should provide it with adequate liquidity to support these requirements over the rating horizon.

SGL-2 rating reflects our expectation that the company will have good liquidity, pro-forma for the proposed issuance. As of March 31, 2012, the company had $153 million in cash, which, pro-forma for the issuance, is expected to be $418 million. The company is also expected to enter into $100 million secured revolver agreement, the entire amount of which is expected to be available. The revolver is expected to contain financial maintenance covenants, and we expect the company to be in compliance over the next twelve months.

The B3 rating on senior unsecured notes reflects their junior position in the capital structure relative to the revolver.

The stable outlook reflects Moody's expectation that market conditions and prices for precious metals over the next twelve to fifteen months will remain favorable.

Going forward, the ratings could be lowered if Coeur experiences any significant operational difficulties, its capital requirements escalate, political risk increases, or if its liquidity position deteriorates. A downgrade would be considered if Debt/ EBITDA, as adjusted, is expected to exceed 5x on a sustainable basis, or if (CFO - Dividends)/ Debt is expected to fall below 9%. Upward rating pressure is limited at this time due to investments needed to diversify company's operations and increase reserves. That said, ratings could be upgraded once the company expands its productive capacity and increases diversification with new mines coming online.

The principal methodology used in rating Coeur was the Global Mining Industry Methodology published in May 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

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Anna Zubets-Anderson Vice President - Senior Analyst Corporate Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Brian Oak MD - Corporate Finance Corporate Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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