UPDATE 1-Lower prices, production hit Coeur d'Alene profit

Thu May 9, 2013 8:59am EDT

* First-quarter net income 14 cents per share

* First-quarter adj profit $0.08

* Sees 2013 costs $9.50-$10.50 per silver ounce

* Silver output at Palmarejo mine falls 34 pct

May 9 (Reuters) - Silver miner Coeur d'Alene Mines Corp reported a lower-than-expected quarterly profit due to a fall in production and lower prices and said it expects costs to increase this year.

Price volatility has squeezed margins for miners at a time when they are already grappling with high capital and operating costs due to rising wages, labor unrest and lower-grade ores.

Coeur d'Alene's silver output fell 22 percent to 3.8 million ounces in the first quarter due to lower-grade ore mined at Palmarejo in Mexico, the company's biggest mine by production.

Production at the mine fell by a third to about 1.6 million ounces.

The company expects operating costs per silver ounce to increase to $9.50-$10.50 this year from $8.00-$9.00 it had forecast earlier. ()

Coeur d'Alene, which also produces silver from mines in Bolivia, United States and Australia, said average realized prices for the metal fell 7 percent in the quarter.

Net income tripled to $12.3 million, or 14 cents per share. The company's profit was hit by a $23.1 million charge in the same quarter a year earlier.

Analysts on average had expected earnings of 22 cents per share, according to Thomson Reuters I/B/E/S.

The company said adjusted earnings were 8 cents a share.

Sales fell 16 percent to $171.8 million, missing the average analyst estimate of $211 million.

Coeur d'Alene shares closed at $15.22 on the New York Stock Exchange on Wednesday. They have fallen 38 percent this year.

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