About Coeur

TO OUR SHAREHOLDERS:

I am more optimistic about the company’s future than I have ever been. Here’s why: in 2005, the company 

• Returned to profitability with a record-setting fourth quarter performance and a strong balance sheet;

• Completed on-schedule permitting of the Kensington gold mine and began construction on July 1;

• Continued to move forward with the San Bartolome silver project;

• Completed two acquisitions of low-cost silver assets in Australia;

• Met our production goals for silver and gold;

• Boosted our proven and probable silver mineral reserves by 13 percent year over year;

• Enjoyed a bullish market for silver and gold, with the prospect for a continued favorable balance between supply and demand; and

• Made excellent progress in our effective safety and environmental programs.

These results are all the more remarkable when you consider that we posted this robust operating performance in the midst of what is a fundamental transformation of the company’s asset base.

Specifically, our strategy is to become a company with increased production levels, lower cash-production costs, larger reserves, and higher cash flows and earnings. We aim to do this through cost-competitive operations, internal development projects, exploration, and acquisition.

We are confident that the steps we took in 2005 have positioned Coeur to remain the world’s largest publicly traded primary silver producer. Let me cite additional detail in key areas.

Record-Level Financial Results – The company reported a record level of revenue and strong net income in 2005. Most of the company’s mines turned in a solid operating performance with overall production levels that were comparable to those of 2004. The operating performance was aided by healthy price levels. Average market prices for silver in 2005 were up 10 percent and gold prices were up 9 percent relative to 2004. In addition, interest income increased, and the commencement of construction at Kensington eliminated pre-development expenses. Moreover, Coeur ended the year with a balance sheet that provides us with the resources and financial stability we need to advance our two major development projects. At year-end 2005, the company had $240 million in cash, cash equivalents, and short-term investments. And, for the fifth consecutive year we reported an increase in shareholders’ equity in 2005. This key indicator reached $342 million at year-end 2005. That’s up 16 percent from the year-ago period. . .and represents an increase of more than 12-fold since 2001.

Successful Acquisitions in Australia – In 2005, we acquired an interest in two Australian silver mines that perfectly fit our growth strategy. The Endeavor and Broken Hill properties provide us with an increment of more than 3 million ounces of annual silver production capacity with attractive cash operating costs of well below $3.00 per ounce. In addition, the acquisitions provided us with almost 40 million ounces of additional silver reserves.

Significant Increase in Mineral Reserves – As a result of our $11.9 million investment in exploration drilling in 2005 – in combination with the Australian acquisitions – our proven and probable silver mineral reserves as of January 1, 2006 had increased by 13 percent to 221 million ounces relative to the year-ago reserve level. Our success in this area is the result not only of an aggressive and very focused program, but it reflects the fact that the properties controlled by Coeur are for the most part located in mineral-rich areas that offer the promise of additional increases in reserves and resources.

Progress on Development Projects – During the year, we made significant progress on both of our major development projects.

• At Kensington, we obtained all required permits by mid-year and then commenced construction activity in the third quarter, with an eye toward beginning production there in 2007. We remain confident that the mine, which is expected to produce more than 100,000 ounces of gold annually, will generate attractive returns at recent gold prices.

• In Bolivia, we continued with engineering and construction activity on the San Bartolome project in 2005, albeit at a slower pace than Kensington as we awaited further clarity in that country’s political landscape. We believe we can complete the project in 2007 at which time we expect San Bartolome to begin producing initially at a rate of 8 million annual ounces of silver.

Demonstrated Improvement in Safety Performance and Environmental Stewardship – Coeur continued to focus on its commitment to safety during the past year. For example, Coeur Silver Valley was nominated for the Sentinels of Safety Award and reached a mine-specific record of 680 days with no lost time accidents. Rochester continued to post safety statistics better than industry averages and our South American operations reported a reduction in incidents even as they transitioned from contract mining to owner mining. On the environmental front, we continue to enjoy a reputation for operating in accordance with the highest standards of environmental compliance.

Bullish Markets for Silver and Gold – Based on the very favorable market trends of 2005, Coeur continues to have a bullish outlook for silver and gold. Although full-year industry data was not yet available as this report went to print, fabrication demand for silver and gold was expected to show an increase of 4 percent or more in 2005 versus 2004, while mine production lagged that pace as it has for a number of years. Given the pattern of growth in demand for silver in jewelry and industrial applications – and the perennial demand for gold -- we believe the market prospects appear bright for 2006. 

The employees of Coeur d’Alene Mines Corporation have worked very hard to sustain solid operating performance, to reduce our costs, expand our reserves, and improve the company’s earnings. To them, I offer a sincere thank you for a job well done in 2005. I also want to commend your board of directors for the counsel they have provided to management. We look forward to the opportunities that lie ahead. We remain dedicated to building long-term value for our shareholders, and I thank you for your ongoing support.

Dennis E. Wheeler
Chairman, President and Chief Executive Officer

March 14, 2006

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