ENGLEWOOD, Colo., Feb. 10 /PRNewswire/ -- Echo Bay Mines Ltd.
(Amex: ECO; Toronto) today reported a 1999 net loss of $37.3 million
($0.36 per share) including a $13.8 million loss on the disposition of
Paredones Amarillos, a development project in Mexico. This compares with a
1998 net loss of $20.1 million ($0.23 per share). The loss per share in each
year includes accrued but unpaid interest on the company's capital securities,
$13.7 million ($0.10 per share) in 1999 compared with $12.4 million ($0.09 per
share) in 1998.
Total gold production was 499,836 ounces, compared with 1998 production of
536,438 ounces. Silver production from McCoy/Cove was 8.4 million ounces
compared with 9.4 million ounces in 1998.
Despite the lower level of production, 1999 consolidated cash operating
costs increased only $7 per ounce to $215 per ounce from $208 in 1998.
Reduced Expenses
During 1999, the company continued its efforts to control costs and cut
expenses. Exploration and development expense was reduced to $8.8 million
from $12.0 million in 1998, although actual exploration spending did not
change significantly from the previous year's level. The $8.8 million in
aggregate spending included $3.4 million in costs associated with the care and
maintenance of Lupin, down from $4.6 million in 1998; as well as, reductions
in spending at other development projects. In addition, general and
administrative expense in 1999 was reduced to $7.4 million from $8.0 million
in 1998.
Reflecting the older, fully depreciated equipment at the company's mature
mines, depreciation and amortization expense decreased by $8.3 million to
$54.9 million in 1999 compared with 1998. Reclamation and closure accruals,
which are charged to earnings on a per-unit-of-production basis, increased by
$0.7 million. This increase was the result of a company-wide review of
reclamation and closure estimates.
Revenues benefit from hedging program
During 1999, revenues decreased by 9%, primarily due to lower gold sales
(486,592 gold ounces, against 553,130 ounces in 1998) and lower average prices
realized ($325 per ounce in 1999; $333 per ounce in 1998). The spot price for
gold averaged $279 per ounce in 1999 compared with $294 in 1998. The company
realized significant benefits from its hedging program in 1999, averaging a
cash price per ounce of gold sold of $335 ($325 per ounce on a revenue basis).
The company's current gold forward sales position, representing 25% of 2000
planned gold production, will realize a price of $310 per ounce for
approximately 168,000 ounces in 2000. In addition, the company has added
downside protection with the purchase of 268,750 ounces of gold put options,
at an average strike price of $273 per ounce. Approximately 5.9 million
ounces, or 60% of the 2000 planned silver production, is also hedged at an
average of $5.63 per ounce. With only 10% of proven and probable reserves
hedged, the company is highly leveraged to the gold price.
Debt and liquidity
The company ended 1999 with $3.4 million in cash and cash equivalents.
During 1999, total debt increased by $3.9 million. At December 31, 1999,
current debt was $13.8 million and long-term debt $42.9 million. Long-term
debt includes the present value, $5.4 million, of the company's $100 million
capital securities due in 2027. The present value of the future interest
payable on this security is treated as a separate component of shareholders'
equity, in accordance with Canadian generally accepted accounting principles,
the standard under which the company reports. The shareholders' equity
component, $124.6 million at December 31, 1999, also includes interest that is
currently being deferred. Interest during the period of deferral is accruing
at a rate of 12% per annum, compounded semiannually.
At December 31, 1999, the company had a $20 million undrawn balance under
its revolving credit line. Based on the trailing 90-day average spot price of
$296 per ounce gold, the company currently has no restrictions on borrowing
capacity under this $50 million credit facility.
Exploration and development projects
During the year, $3.3 million was spent on exploration, with a continued
focus on projects located principally in North America in areas where the
company already has existing gold mining infrastructure. Expanding the ore
reserves at or near these projects represents the greatest potential to
realize a near-term return with the limited exploration dollars available in
today's gold market.
The company is a 50/50 partner in a West Africa joint venture with Ashanti
Goldfields Company Ltd. At the Youga/Bitou property in Burkina Faso, after a
successful drilling program in early 1999, a feasibility study was undertaken
and completed. The study, which comprised additional drilling, engineering
and metallurgical work, has encouraged the joint venture partners to proceed
with further work aimed at increasing the reserves and resources at this
property. Ashanti has, on a preliminary basis, outlined a total of 15 million
tonnes of ore-bearing material, grading 2.6 grams/tonne or an equivalent of
1.2 million ounces of gold. Earlier, Ashanti identified the potential for an
open pit operation which would produce at an annual rate of 100,000 gold
ounces, with cash costs below $200 per ounce.
At the end of the third quarter 1999, the company entered into an
agreement with its joint venture partner Viceroy Resource Corporation for the
sale of Echo Bay's 60% interest in the Paredones Amarillos project. The
company has now exchanged its interest in the project for Viceroy's interest
in a decommissioned semi-autogenous grinding (SAG) circuit and a 2% royalty.
The $13.8 million loss recorded on the disposition was net of the value
attributable to the mill, which will be incorporated in development plans for
the company's Aquarius project located near Timmins, Ontario.
An in-house reengineering study on the Aquarius project indicated that
incorporating the SAG circuit in the development plan enhances the project's
economics. In January 2000, the company initiated a revised feasibility study
to be completed by the end of the second quarter. With the possibility of
enhanced project economics and the upside potential represented by the
company's land holdings in the region, Aquarius is a near-term opportunity in
an improving gold market.
Ore reserves at year end
In estimating year-end 1999 gold reserves, a long-term gold price
assumption of $325 per ounce was used, as was the case for 1998. A full year
of mining at the company's three producing mines depleted reserves by 686,500
ounces of gold. The year-end proven and probable gold reserves for 1999
amounted to 5.3 million ounces, compared with 5.9 million ounces in 1998. In
each case, no reserves have been attributed to Paredones Amarillos.
Silver reserves were 28.2 million ounces at year-end 1999, down from
38.8 million ounces at the beginning of the year, after production is taken
into account.
A detailed breakdown of year-end 1999 ore reserves and other
mineralization accompanies this release.
Lupin mine: production scheduled for April 2000
In November 1999, the company announced its decision to reopen the Lupin
mine, located in Nunavut, Canada. The recommissioning activities are well
underway and gold production is expected to begin this April. First mined in
1982, Lupin was placed on care and maintenance in early 1998 due to falling
gold prices and a high cost structure. A reengineering study, completed late
in 1998, identified savings that helped lower costs. The new life-of-mine
average cash operating costs are now anticipated to be at or lower than
$245 per ounce. Based on current reserves of 518,000 ounces and other
mineralization of 268,000 ounces, the initial mine plan projects production
through 2004 at an average annual rate of 150,000 ounces of gold. Drilling
indicates additional mineralization at depth, and confirmation drilling will
be done once the site is back in operation. The Ulu satellite deposit,
located approximately 100 miles north of Lupin, represents the potential for
additional mill feed for the site.
Round Mountain mine: record annual gold production
The company has a 50 percent ownership interest in, and is the operator
of, the Round Mountain mine in Nevada. The mine had an excellent year with
record gold production of 541,808 ounces, up 31,304 ounces from 1998, at a
cash operating cost of $200 per ounce. This is the highest production level
ever reached at Round Mountain and is mainly attributable to higher mill
grades. The company's share of the production was 270,904 ounces.
Beginning in the third quarter of 1998, Round Mountain entered a period of
high waste removal where the average ratio of waste to ore mined per ton of
gold was 2.0:1, in contrast to the life-of-mine average of 0.8:1. More waste
was removed and fewer tons of ore were placed under leach, resulting in
greater mining costs. Round Mountain completed this area of high stripping at
the end of the third quarter 1999 and has now returned to the life-of-mine
average ratio.
At year-end 1999, the company's portion of Round Mountain's gold reserves
comprised 2.9 million ounces, down from 1998 due to mining. Under the current
mine plan, if no new gold reserves are discovered, which is unlikely,
production will continue for approximately 11 years. The company and its
partners believe in the potential of the geological region around Round
Mountain. In 1999, close to $1 million was spent at the mine on target
identification and exploration in the large surrounding area of mutual
interest. This work identified a number of targets, six of which were drilled
during the year. The goal of this drilling was to better understand the
underlying geological structures of these targets and their ability to support
gold mineralization. In 2000, an exploration program of similar cost will
include further drilling.
Round Mountain's production target for 2000 is 550-570,000 ounces of gold
(Echo Bay's share, 275-285,000 ounces). Cash operating costs are targeted to
be $200 to $210 per ounce, similar to 1999.
McCoy/Cove mine: pit wall remediation and underground targets
At McCoy/Cove in Nevada, gold production was 124,536 ounces compared with
167,494 ounces in 1998 and silver production amounted to 8.4 million ounces
compared with 9.4 million ounces in the prior year, as a result of planned
lower mill grades. Cash operating costs were $221 per ounce, up only 9% from
1998 despite the 26% decrease in gold production and a 10% decrease in silver
production.
During the fourth quarter, the Cove East underground program was
completed, with 13,500 ounces of gold and 1.5 million ounces of silver
produced. Development of the Cove East deposit has been utilized to provide
access for exploration drifting and drilling on Cove South Deep.
At the end of June 1999, McCoy/Cove completed removal of the waste rock
associated with the portion of the Cove pit wall that collapsed in 1996. The
material mined from this portion of the deposit in the second half of 1999 was
mostly low-grade heap leach material. The grade of the material mined in 2000
is expected to increase significantly, resulting in higher production and
lower costs per ounce.
The production target for McCoy/Cove in 2000 is 200-210,000 ounces of gold
and 9-10 million ounces of silver. The higher production will contribute to
the reduction of cash operating costs to $170-180 per ounce.
Kettle River mine: fewer tons, lower grade
The 1999 results at Kettle River, located in Washington state, reflect the
challenges faced by maturing mines. Production was 104,396 ounces, down from
113,692 ounces in 1998. Despite the decrease in production, cash operating
costs per ounce were $238, down from $244 the year before.
At Kettle River, a series of deposits are mined with the ore feeding a
central mill. As mining continues deeper within these deposits and the
haulage distance gets longer, unit costs rise and production decreases. These
factors will contribute to anticipated lower gold production for 2000, in the
range of 85-95,000 ounces and the cash operating cost will increase to
$245-255 per ounce.
Exploration during 1999 was directed to testing zones to the east of the
K-2 deposit. This year evaluation will continue to determine the extent of
the mineralization. The company is also evaluating opportunities within the
region for extending the life of Kettle River.
2000 production and cost targets
Echo Bay's operations met the challenges of 1999 and achieved higher than
anticipated production at a cost considerably below the original projection of
$235-245 per ounce. The challenges continue as the gold price languishes
below $300 per ounce. As a result of the return to an average life-of-mine
strip ratio at Round Mountain, the completion of pit wall remediation at
McCoy/Cove and the recommencement of operations at Lupin, 2000 calls for a
company-wide production target of 660-700,000 ounces of gold and 9-10 million
ounces of silver at a consolidated cash operating cost of $200-210 per ounce
of gold produced.
Echo Bay mines gold and silver in North America. The primary markets for
its shares are the American and Toronto stock exchanges.
Contact: Echo Bay Investor Relations: 303-714-8829.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995
The statements herein that are not historical facts are forward-looking
statements. They involve risks and uncertainties that could cause actual
results to differ materially from targeted results. These risks and
uncertainties include, but are not limited to, future changes in gold prices
(including derivatives) and/or production costs which could render projects
uneconomic; ability to access financing; availability of hedging
opportunities; differences in ore grades, recovery rates and tons mined from
those expected; changes in mining and milling/heap leaching rates from
currently planned rates; the results of future exploration activities and new
exploration opportunities; changes in project parameters as plans continue to
be refined; success in startup of the Lupin mine and other factors detailed in
the company's filings with the Securities and Exchange Commission.
Echo Bay Mines
2000 Target 1999 Actual 1998 Actual
Production and Costs:
Gold production (ounces):
Round Mountain (50%) 275 - 285,000 270,904 255,252
McCoy/Cove 200 - 210,000 124,536 167,494
Kettle River 85 - 95,000 104,396 113,692
Lupin 100 - 110,000 -- --
660 - 700,000 499,836 536,438
Silver production
(ounces) 9 - 10 million 8.4 million 9.4 million
Cash operating costs
(US$ per ounce) $200 - 210 $215 $208
Significant Expenses
(US$ million):
Depreciation and amortization 55 - 60 55 63
Exploration and development (1) 9 - 10 9 12
General and administrative 7 - 8 7 8
Royalties 7 - 8 7 8
Reclamation and mine closure 10 - 11 7 6
Production taxes 2 - 3 -- 2
(1) 1999 includes holding costs of $4.1 million for Lupin, Aquarius and
Paredones Amarillos. 2000 target includes an estimated $1 million
for Aquarius and $5 million for Lupin re-commissioning costs in the
first quarter.
ECHO BAY MINES
Highlights
Three months Twelve months
ended Dec. 31 ended Dec. 31
U.S. dollars 1999 1998 1999 1998
Financial Data
Revenue (millions) $56.5 $58.4 $210.4 $232.2
Net loss (millions) $(5.2) $(8.5) $(37.3) $(20.1)
Gold ounces sold 139,990 137,215 486,592 553,130
Silver ounces sold 2,067,788 2,317,081 9,173,012 8,198,867
Average price
realized - revenue
basis:(1)
Per ounce of
gold sold $329 $334 $325 $333
Per ounce of
silver sold $5.08 $5.38 $5.69 $5.88
Average price realized
- cash basis:
Per ounce of
gold sold $309 $333 $335 $340
Per ounce of
silver sold $5.20 $5.06 $5.22 $5.36
Cash operating costs:
Per ounce of gold
produced $211 $214 $215 $208
Per ounce of silver
produced $3.72 $3.23 $4.12 $3.77
% of revenue from gold 81% 79% 75% 79%
% of revenue from silver 19% 21% 25% 21%
Production and Reserves
Production (ounces):
Gold 128,021 114,512 499,836 536,438
Silver 2,521,105 3,107,053 8,430,072 9,412,823
Reserves
(ounces): (3)
Gold -- -- 5,296,000 6,799,000
Silver -- -- 28,243,000 38,809,000
Per Share Data
Net loss $(0.06) $(0.08) $(0.36) $(0.23)
Shares outstanding
(millions):
Weighted average 140.6 140.6 140.6 140.1
Period end 140.6 140.6 140.6 140.6
(1) Includes non-cash items affecting gold and silver revenues, such as
the recognition of deferred income or deferral of revenue to future
periods for hedge accounting purposes.
(2) Prices reported are the cash amounts received per ounce of gold and
silver sold during each period.
(3) Proven and probable reserves at the end the year.
ECHO BAY MINES
Production and Costs
Three months Twelve months
ended Dec. 31 ended Dec. 31
1999 1998 1999 1998
Gold Production
(ounces)
Round Mountain (50%) 66,032 47,022 270,904 255,252
McCoy/Cove 33,673 41,993 124,536 167,494
Kettle River 28,316 25,497 104,396 113,692
Total gold 128,021 114,512 499,836 536,438
Silver Production
(ounces)
McCoy/Cove 2,521,105 3,107,053 8,430,072 9,412,823
Total silver 2,521,105 3,107,053 8,430,072 9,412,823
Cash Operating Costs
(U.S. dollars per
ounce of gold
produced)
Round Mountain $209 $236 $200 $198
McCoy/Cove (1) 207 192 221 203
Kettle River 228 257 238 244
Company average $211 $214 $215 $208
Consolidated Costs
(U.S. dollars per
ounce of gold
produced)
Cash operating costs $211 $214 $215 $208
Royalties 12 10 11 11
Production taxes -- 3 -- 2
Total cash costs 223 227 226 221
Depreciation 49 68 58 62
Amortization 21 23 20 25
Reclamation and
mine closure 11 9 11 9
Total production costs $304 $327 $315 $317
(1) In 1999, cash operating costs per ounce of silver produced at
McCoy/Cove were $3.72 and $4.12 for the three-month and twelve-month
periods respectively, based on average gold-to-silver price ratios of
55.6:1 and 53.6:1 respectively. In 1998, cash operating costs per
ounce of silver produced at McCoy/Cove were $3.23 and $3.77 for the
three-month and twelve-month periods respectively, based on average
respective price ratios of 59.5:1 and 53.8:1.
ECHO BAY MINES
Consolidated Statement of Operations
(Unaudited)
Thousands of U.S. Three months Twelve months
dollars, except for ended Dec. 31 ended Dec. 31
per share data 1999 1998 1999 1998
Revenue $56,496 $58,367 $210,351 $232,181
Expenses:
Operating costs 36,721 38,382 139,816 148,769
Royalties 2,155 1,648 7,197 7,547
Production taxes 42 566 256 1,618
Depreciation and
amortization 14,525 17,175 54,941 63,286
Reclamation and
mine closure 1,883 1,492 7,025 6,295
General and
administrative 1,799 1,776 7,429 8,027
Exploration and
development 2,856 3,766 8,754 12,010
Interest and other 1,689 2,027 8,194 11,845
Loss (gain) on sale
of interests in mining
and other properties -- -- 13,795 (7,447)
61,670 66,832 247,407 251,950
Loss before income
taxes (5,174) (8,465) (37,056) (19,769)
Income tax expense
(recovery):
Current 73 75 216 354
Deferred -- (20) -- --
73 55 216 354
Net loss $(5,247) $(8,520) $(37,272) $(20,123)
Net loss attributable
to common
shareholders $(8,876) $(11,749) $(50,969) $(32,555)
Loss per share (1) $(0.06) $(0.08) $(0.36) $(0.23)
Weighted average
number of shares
outstanding 140,607,145 140,607,145 140,607,145 140,083,751
(1) Echo Bay's financial statements are prepared in accordance with
accounting principles generally accepted in Canada. Earnings (loss)
per share equals the net earnings (loss) attributable to common
shareholders divided by the weighted average number of shares
outstanding during the period. The net earnings (loss) attributable
to common shareholders includes the interest on the $100 million
capital securities for the period, a portion of which is charged
directly to the deficit in common shareholders' equity, rather than to
interest expense on the consolidated earnings statement. The capital
securities were issued in March 1997; interest on these securities
that was charged to the deficit was $3.6 million and $13.7 million for
the three months and twelve months ended Dec. 31, 1999 respectively,
and $3.2 million and $12.4 million in the same periods in 1998
respectively.
ECHO BAY MINES
Consolidated Balance Sheet
(Unaudited)
Dec. 31 Dec. 31
Thousands of U.S. dollars 1999 1998
Assets
Current assets:
Cash and cash equivalents $3,401 $7,987
Short-term investments 2,042 3,336
Interest and accounts receivable 2,942 3,585
Inventories 37,204 37,929
Prepaid expenses and other assets 15,621 6,635
61,210 59,472
Plant and equipment 167,438 196,670
Mining properties 81,959 95,738
Long-term investments
and other assets 29,255 16,196
$339,862 $368,076
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and
accrued liabilities (1) $29,961 $43,609
Income and mining taxes payable 3,004 2,941
Gold and other financings 13,750 11,652
Deferred income (1) 10,525 1,727
57,240 59,929
Gold and other financings 42,919 41,119
Deferred income (1) 83,374 77,818
Other long-term obligations (1) 47,847 47,943
Deferred income taxes 7,381 7,513
Common shareholders' equity:
Common shares 713,343 713,343
Capital securities 124,616 110,862
Deficit (714,844) (663,875)
Foreign currency translation (22,014) (26,576)
101,101 133,754
$339,862 $368,076
(1) Certain prior period items have been reclassified to conform with
the current year presentation.
ECHO BAY MINES
Consolidated Statement of Cash Flow
(Unaudited)
Three months Twelve months
Thousands of ended Dec. 31 ended Dec. 31
U.S. dollars 1999 1998 1999 1998
Cash Provided from (Used in):
Operating Activities
Net loss $(5,247) $(8,520) $(37,272) $(20,123)
Add (deduct):
Depreciation and
amortization 14,525 17,175 54,941 63,286
Loss (gain) on sale
of interests in
mining properties
and other -- -- 13,795 (7,447)
Unrealized losses
on share investments -- 200 1,508 3,013
Deferred income
included in revenue (3,476) (1,792) (11,129) (5,381)
Deferral of gains
on restructuring of
hedge commitments 2,937 1,577 14,014 5,236
Net gain on sale
of other assets (551) (373) (736) (495)
Other (2,737) (560) 961 (90)
Change in cash invested
in operating assets
and liabilities:
Interest and accounts
receivable 818 (523) 864 1,898
Inventories 825 3,068 882 3,743
Prepaid expenses
and other assets (4) (576) 290 (2,309)
Accounts payable and
other liabilities 1,600 (1,276) (459) (26,748)
Income and mining
taxes payable 110 394 13 (512)
8,800 8,794 37,672 14,071
Investing Activities
Mining properties, plant
and equipment (9,366) (10,044) (33,265) (26,971)
Net proceeds from
(cost of) repurchase
of gold and silver
hedging contracts (4,834) -- (3,334) 8,673
Long-term investments
and other assets 40 36 (5,135) (534)
Proceeds on sale of
plant and equipment 570 579 972 3,763
Proceeds on sale of
investment in
Santa Elina -- -- -- 6,252
Proceeds on sale of
short-term investments -- -- 485 3,018
Proceeds on sale of
mining properties -- -- -- 1,195
Other (107) 399 (1,411) 342
(13,697) (9,030) (41,688) (4,262)
Financing Activities
Currency borrowings 6,000 -- 17,000 --
Debt repayments (3,125) (5,000) (16,181) (18,327)
Other -- (110) (1,389) (448)
2,875 (5,110) (570) (18,775)
Net decrease in cash
and cash equivalents (2,022) (5,346) (4,586) (8,966)
Cash and cash
equivalents, beginning
of period 5,423 13,333 7,987 16,953
Cash and cash
equivalents, end
of period $3,401 $7,987 $3,401 $7,987
ECHO BAY MINES
Mine Operating Data
Three months Twelve months
U.S. dollars, except ended Dec. 31 ended Dec. 31
where indicated 1999 1998 1999 1998
Round Mountain Mine (50% owned)
Gold produced (ounces):
Reusable heap leach
pad (50%) 19,571 14,144 70,494 91,189
Dedicated heap leach
pad (50%) 30,726 20,416 107,912 110,698
Milling (50%) 13,290 11,241 78,952 48,843
Other (50%) 2,445 1,221 13,546 4,522
Total (50%) 66,032 47,022 270,904 255,252
Ore and waste mined
(tons) (100%) 20,770,000 18,541,000 78,942,000 70,622,000
Mining cost/ton of
ore and waste $0.82 $0.69 $0.73 $0.66
Heap leaching cost/
ton of ore $0.63 $0.88 $0.68 $0.74
Milling cost/ton
of ore $2.70 $3.18 $2.92 $3.36
Production cost per
ounce of gold
produced:
Direct mining expense $254 $289 $221 $209
Deferred stripping
cost (38) (51) (19) (7)
Inventory movements
and other (7) (2) (2) (4)
Cash operating cost 209 236 200 198
Royalties 23 21 19 20
Production taxes 0 7 0 3
Total cash cost 232 264 219 221
Depreciation 54 65 48 46
Amortization 18 20 18 18
Reclamation and
mine closure 9 7 9 7
Total production
cost $313 $356 $294 $292
Reusable heap leach pad:
Ore processed
(tons/day) (100%) 18,219 13,218 15,602 18,953
Grade (ounce/ton) 0.031 0.029 0.034 0.036
Recovery rate (%) 76.9 76.7 73.4 70.6
Dedicated heap
leach pad:
Ore processed
(tons/day) (100%) 132,253 81,614 120,020 101,892
Grade (ounce/ton) 0.011 0.010 0.011 0.010
Recovery rate (1)
Milled:
Ore processed
(tons/day)(100%) 8,498 8,296 8,083 7,993
Gold grade
(ounce/ton) 0.064 0.042 0.067 0.045
Gold recovery rate (%) 86.1 83.4 87.0 77.9
McCoy/Cove Mine
(100% owned)
Gold produced
(ounces):
Milled 20,643 30,013 79,336 114,398
Heap leached 13,030 11,980 45,200 53,096
Total gold 33,673 41,993 124,536 167,494
Silver produced
(ounces):
Milled 2,350,498 3,026,189 8,033,644 9,014,817
Heap leached 170,607 80,864 396,428 398,006
Total silver 2,521,105 3,107,053 8,430,072 9,412,823
Ore and waste
mined (tons) 11,092,288 13,216,969 43,644,808 43,926,603
Mining cost/ton
of ore and waste $0.60 $0.75 $0.66 $0.71
Milling cost/ton
of ore $6.19 $6.54 $6.32 $6.09
Heap leaching
cost/ton of ore $2.09 $1.98 $1.82 $1.74
ECHO BAY MINES
Mine Operating Data (continued)
Three months Twelve months
U.S. dollars, except ended Dec. 31 ended Dec. 31
where indicated 1999 1998 1999 1998
McCoy/Cove Mine (continued)
Production cost per ounce
of gold produced: (2)
Direct mining
expense $261 $172 $252 $200
Deferred stripping
cost (49) 20 (35) (1)
Inventory movements
and other (5) -- 4 4
Cash operating cost 207 192 221 203
Royalties 3 3 2 3
Production taxes -- 2 -- 2
Total cash cost 210 197 223 208
Depreciation 40 46 48 52
Amortization 28 29 27 37
Reclamation and
mine closure 11 9 11 9
Total production
cost $289 $281 $309 $306
Average gold-to-silver
price ratio (2) 55.6:1 59.5:1 53.6:1 53.8:1
Milled:
Ore processed
(tons/day) 11,600 11,519 12,000 11,829
Gold grade
(ounce/ton) 0.049 0.052 0.038 0.046
Silver grade
(ounce/ton) 4.10 2.95 3.02 2.95
Gold recovery
rate (%) 47.8 58.6 45.8 57.8
Silver recovery
rate (%) 64.6 68.9 61.3 69.8
Heap leached:
Ore processed
(tons/day) 9,880 9,846 11,262 11,296
Gold grade
(ounce/ton) 0.021 0.023 0.022 0.021
Silver grade
(ounce/ton) 0.66 0.21 0.37 0.26
Recovery rates (1)
Kettle River Mine
(100% owned)
Gold produced (ounces) 28,316 25,497 104,396 113,692
Tons of ore mined 170,048 141,588 638,861 679,030
Mining cost/ton
of ore $22.37 $20.99 $23.57 $21.65
Milling cost/ton
of ore $10.83 $11.01 $11.22 $10.71
Production cost per
ounce of gold produced:
Direct mining expense $218 $241 $239 $238
Inventory movements
and other 10 16 (1) 6
Cash operating cost 228 257 238 244
Royalties 14 13 15 12
Production taxes 1 1 2 1
Total cash cost 243 271 255 257
Depreciation 12 90 55 77
Amortization 8 5 8 5
Reclamation and
mine closure 15 12 15 12
Total production
cost $278 $378 $333 $351
Milled:
Ore processed
(tons/day) 1,814 2,003 1,698 2,017
Total tons milled 177,729 182,246 629,902 734,053
Grade (ounce/ton) 0.196 0.169 0.198 0.187
Recovery rate (%) 81.2 82.7 83.7 82.8
(1) Recovery rates on dedicated pads can only be estimated, as actual
recoveries will not be known until leaching is complete. At the Round
Mountain mine, the gold recovery rate on the dedicated heap leach pad
is estimated at 50%. At the McCoy/Cove mine, the gold recovery rate
is estimated at 68% for crushed ore and 48% for uncrushed, run-of-mine
ore, and the silver recovery rate is estimated at 35% for crushed ore
and 10% for uncrushed, run-of-mine ore.
(2) To convert costs per ounce of gold into comparable costs per ounce of
co-product silver, divide by the period's average gold-to-silver price
ratio.
ECHO BAY MINES
Ore Reserves and Other Mineralization
PROVEN AND PROBABLE RESERVES(1) 1999
Tons(2) Grade(3) Content(4)
(000) (oz/ton) (000 oz)
Gold
Producing Mines:
Round Mountain (50%) 160,031 0.018 2,938
McCoy/Cove 11,832 0.043 514
Kettle River 779 0.208 162
Non-Producing Mines:
Lupin(5) 1,931 0.268 518
4,132
Development Properties:(6)
Aquarius 15,826 0.074 1,164
Paredones Amarillos
(60%) (7) -- -- --
15,826 0.074 1,164
Total gold 5,296
Silver
Producing Mines:
McCoy/Cove 11,832 2.387 28,243
Total silver 28,243
PROVEN AND PROBABLE RESERVES(1) 1998
Tons(2) Grade(3) Content(4)
(000) (oz/ton) (000 oz)
Gold
Producing Mines:
Round Mountain (50%) 179,299 0.018 3,188
McCoy/Cove 21,684 0.032 699
Kettle River 1,171 0.202 237
Non-Producing Mines:
Lupin(5) 2,018 0.269 543
4,667
Development Properties:(6)
Aquarius 19,159 0.066 1,263
Paredones Amarillos
(60%) (7) 26,830 0.032 869
2,132
Total gold 6,799
Silver
Producing Mines:
McCoy/Cove 21,684 1.790 38,809
Total silver 38,809
OTHER MINERALIZATION(1) 1999
Measured and Indicated
Tons(2) Grade(3) Content(4)
(000) (oz/ton) (000 oz)
Gold
Producing Mines:
Round Mountain (50%) 15,682 0.020 322
McCoy/Cove 100 0.350 35
Kettle River 17 0.235 4
Non-Producing Mines:
Lupin(5) 69 0.275 19
380
Development Properties:(6)
Aquarius -- -- --
Paredones Amarillos (60%) (7) -- -- --
Ulu(5) -- -- --
-- -- --
Total gold 380
Silver
Producing Mines:
McCoy/Cove 100 2.000 200
Total silver 200
OTHER MINERALIZATION(1) 1999 1998
Inferred
Total Total
Tons(2) Grade(3) Content(4)Content(4) Content(4)
(000) (oz/ton) (000 oz) (000 oz) (000 oz)
Gold
Producing Mines:
Round Mountain
(50%) 47,440 0.015 695 1,017 802
McCoy/Cove -- -- -- 35 62
Kettle River -- -- -- 4 42
Non-Producing Mines:
Lupin(5) 739 0.337 249 268 221
944 1,324 1,127
Development Properties:(6)
Aquarius 575 0.078 45 45 50
Paredones Amarillos
(60%) (7) -- -- -- -- 4
Ulu(5) 1,509 0.374 565 565 565
610 610 619
Total gold 1,554 1,934 1,746
Silver
Producing Mines:
McCoy/Cove -- -- -- 200 2,614
Total silver -- -- -- 200 2,614
(1) Echo Bay's share, estimated at year-end. Estimates for 1999 are based
on a long-term gold price assumption of $325 per ounce and long-term
silver price assumption of $5.50 per ounce. Estimates for 1998 were
based on a $325 gold price and $5.75 silver price assumption. If 1999
estimates were to be based on a $300 gold price assumption, Echo Bay
believes that ore reserves at producing mines would be approximately
the same, but reserves at the development properties would decrease
by 11%.
(2) To convert from tons to tonnes, multiply by 0.90718. To convert from
tonnes to tons, divide by 0.90718.
(3) To convert grade from ounces/ton to grams/tonne, multiply by 34.2857.
To convert grade from grams/tonne to ounces/ton, multiply by 0.029167.
(4) To convert content from ounces to tonnes, divide by 32,150.8.
To convert content from tonnes to ounces, multiply by 32,150.8.
(5) Lupin was placed on care and maintenance in January 1998. The Company
expects Lupin production to recommence in April 2000.
(6) Assumes the Company would successfully complete permitting and
financing for each property.
(7) In the third quarter of 1999, the Company agreed to sell its interest
in the Paredones Amarillos project. The Company's share of Paredones
Amarillos' gold reserves and other mineralization was removed from the
Company's estimates as of December 31, 1999.
Gold Hedge Position
At January 28, 2000
Put Strike
Forward Price options price
sales per purchased per
(ounces) ounce (ounces) ounce
1Q00 50,000 $302 81,250 $280
2Q00 50,417 311 62,500 270
3Q00 33,750 315 62,500 270
4Q00 33,750 315 62,500 270
2000 167,917 310 268,750 273
2001 105,000 315 -- --
2002 60,000 315 -- --
2003 60,000 315 -- --
2004 60,000 315 -- --
2005 15,000 315 -- --
467,917 $313 268,750 $273
Average
price Deferred
Total per revenue(1)
(ounces) ounce (millions)
1Q00 131,250 $289 $1.8
2Q00 112,917 288 4.4
3Q00 96,250 286 4.6
4Q00 96,250 286 6.5
2000 436,667 287 17.3
2001 105,000 315 17.3
2002 60,000 315 31.1
2003 60,000 315 (2.3)
2004 60,000 315 (6.8)
2005 15,000 315 (0.8)
736,667 $299 $55.8
(1) Gains (losses) on the repurchase or restructuring of gold hedge
positions are recognized as revenue in the period in which the gold
was originally scheduled for delivery. Amounts include gold option
premiums to be recognized.
Call Strike Call Strike
options price options price
sold per purchased(1) per
(ounces) ounce (ounces) ounce
1Q00 -- $-- 50,000 $322
2Q00 62,500 360 50,417 340
3Q00 62,500 360 33,750 349
4Q00 62,500 360 33,750 349
2000 187,500 360 167,917 338
2001 -- -- 105,000 351
2002 -- -- 60,000 360
2003 -- -- 60,000 360
2004 -- -- 60,000 360
2005 105,000 340 120,000 395
292,500 $353 572,917 $359
(1) Call options were purchased to reduce margin exposure and to allow
Echo Bay to participate in spot prices above the call option strike
price.
Silver Hedge Position
At January 28, 2000
Put
Forward options Strike
sales Price purchased price
(000 per (000 per
ounces) ounce ounces) ounce
1Q00 2,500 $5.65 250 $6.00
2Q00(2) 600 5.46 250 6.00
3Q00(2) 900 5.46 250 6.00
4Q00(2) 900 5.46 250 6.00
2000 4,900 5.56 1,000 6.00
2001(2) 1,800 5.79 1,000 6.00
6,700 $5.62 2,000 $6.00
Average
Total price Deferred
(000 per revenue(1)
ounces) ounce (millions)
1Q00 2,750 $5.68 $0.3
2Q00(2) 850 5.62 0.3
3Q00(2) 1,150 5.58 0.2
4Q00(2) 1,150 5.58 0.1
2000 5,900 5.63 0.9
2001(2) 2,800 5.86 (0.5)
8,700 $5.71 $0.4
(1) Gains on the repurchase or restructuring of silver hedge positions
are recognized in revenue in the period in which the silver was
originally scheduled for delivery. Amounts also include silver option
premiums to be recognized.
(2) 2.7 million ounces of forward sales at $5.46 are contingent on the
London silver fixing being above $4.85. The actual number of ounces
delivered will be based on the ratio of days the London silver
fixing is at, or above $4.85 compared to the total number of London
silver fixings.
Put Call Call
options Strike options Strike options Strike
sold(1) price sold price purchased(2) price
(000 per (000 per (000 per
ounces) ounce ounces) ounce (ounces) ounce
1Q00 1,750 $4.75 -- -- 1,500 $6.60
2Q00 250 4.75 -- -- -- --
3Q00 250 4.75 -- -- -- --
4Q00 250 4.75 -- -- -- --
2000 2,500 4.75 -- -- 1,500 $6.60
2001 2,500 4.75 -- -- 1,500 6.60
5,000 $4.75 -- -- 3,000 $6.60
(1) Put options were sold to finance the call options described in
footnote 2, and could result in Echo Bay receiving less than the full
forward price if silver's spot price falls below $4.75 per ounce.
(2) Call options were purchased to reduce margin exposure and to allow
Echo Bay to participate in spot prices above the call option strike
price.
SOURCE Echo Bay Mines Ltd.
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Related links:
http://www.echobay.com
CONTACT:
Echo Bay Investor Relations, 303-714-8829
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