Earnings Summary
Dollar amounts in thousands of US dollars,
except amounts per share 2000 1999
THREE MONTHS ENDED DECEMBER 31:
Revenue $68,472 $56,496
Net earnings (loss) $2,069 $(5,247)
Net earnings (loss) attributable to
common shareholders $(2,012) $(8,875)
Earnings (loss) per share
$(0.01) $(0.06)
Weighted average common shares outstanding 140,607,145 140,607,145
YEAR ENDED DECEMBER 31:
Revenue $280,976 $210,351
Net earnings (loss) $18,561 $(37,272)
Net earnings (loss) attributable to
common shareholders $3,164 $(50,969)
Earnings (loss) per share $0.02 $(0.36)
Weighted average common shares outstanding 140,607,145 140,607,145
ENGLEWOOD, Colo., Feb. 15 /PRNewswire/ -- Echo Bay Mines Ltd.
(Amex: ECO; Toronto) today reported fourth quarter net earnings of
$2.1 million compared with a fourth quarter 1999 loss of $5.3 million,
reflecting increased gold sales. Including capital securities interest of
$4.1 million ($0.03 per share) in the current quarter and $3.6 million
($0.03 per share) in 1999, the loss per share was $0.01 in the fourth quarter
of 2000 and $0.06 in the same quarter of 1999.
Full year 2000 net earnings were $18.6 million ($0.02 per share) compared
with a 1999 net loss of $37.3 million ($0.36 per share), which included a
$13.8 million loss on the disposition of Paredones Amarillos, a development
project in Mexico. The per share amount in each year includes accrued but
unpaid interest on the company's capital securities, $15.4 million ($0.11 per
share) in 2000 compared with $13.7 million ($0.10 per share) in 1999.
Total gold production in the fourth quarter increased by 42 percent to
181,569 ounces due to the re-commissioned Lupin mine and higher dedicated pad
production at Round Mountain. Silver production in the quarter decreased by
14 percent to 2.2 million ounces. Quarterly cash operating costs increased to
$219 per ounce from $211 per ounce in 1999 reflecting the completion of pit
mining at McCoy/Cove and lower mill throughput at Kettle River, as planned.
Total gold production for the year was 694,663 ounces, 39 percent higher
than 1999 production of 499,836 ounces reflecting the production from the
re-commissioned Lupin mine as well as the higher grades at both Round Mountain
and McCoy/Cove. As a result of higher mill grades, silver production from
McCoy/Cove was 12.3 million ounces, 46 percent higher than the 8.4 million
ounces in 1999.
With the significant increase in production, 2000 consolidated cash
operating costs decreased to $193 per ounce compared to $215 per ounce in
1999.
Echo Bay's operations met and exceeded the targets for 2000 with higher
than anticipated production at a cost below the original projection of
$200-$210 per ounce. The challenges continue as the gold price languishes
well below $300 per ounce. With mining at McCoy/Cove completed, as previously
reported, the target for company-wide production in 2001 is 570,000 ounces of
gold and five million ounces of silver at a consolidated cash operating cost
of $225 per ounce of gold produced.
Revenues increase and benefit from hedging program
Despite lower average prices realized ($319 per ounce in 2000; $325 per
ounce in 1999), revenue in 2000 increased to $281.0 million dollars,
34 percent more than 1999 revenue of $210.4 million. The increase was
primarily due to higher gold sales (676,439 ounces, against 486,592 ounces in
1999).
The company realized benefits from its hedging program in 2000, averaging
a cash price per ounce of gold sold of $294 compared to the average spot price
of $279. With its current gold forward sales position, in 2001 the company
will realize a price of $312 per ounce for approximately 125,000 ounces --
22 percent of 2001 planned gold production. Approximately 2.5 million ounces
(50 percent) of the 2001 planned silver production is also hedged at an
average of $5.91 per ounce.
Debt and liquidity
The company ended 2000 with $14.3 million in cash and cash equivalents.
During 2000, total debt repayments were $24.8 million. At December 31, 2000,
current debt was $26.5 million, including $19 million on the revolving line of
credit. At December 31, 2000, the company had a $31 million undrawn balance
under its revolving credit line. Based on the trailing 90-day average spot
price for gold of $268 per ounce, the company currently is restricted to an
additional borrowing capacity of $4 million under this credit facility.
However, the company does not anticipate a need to draw on the revolving line
of credit at current gold prices.
As the existing credit facility matures in August 2001, all bank
indebtedness has been classified as a current liability. The company has
begun discussions with its bankers to replace this facility.
Long-term debt is the present value, $6.0 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, $140.1 million at December 31, 2000, also
includes interest that is currently being deferred. The company is entitled
to continue to defer interest for four additional semi-annual payments.
Interest during the period of deferral is accruing at a rate of 12 percent per
annum, compounded semiannually.
Early in 2000, The American Stock Exchange advised the company that its
listing eligibility was under review. The review was undertaken because the
company had fallen below two of the Exchange's continued listing guidelines:
-- the company had sustained net losses in its five most recent fiscal years
(1995 to 1999) and, in the Exchange's view, the company's shareholders' equity
under generally accepted accounting principles in the United States is
inadequate. The company is addressing the Exchange's concerns through
periodic progress reviews and currently the matter is in abeyance pending a
review of the company's Report on Form 10-K for 2000. This process will
continue for the foreseeable future.
Ore reserves at year end
In estimating year-end 2000 gold reserves, a long-term gold price
assumption of $300 per ounce was used. The lowering of this year's price from
last year's $325 level resulted in no reduction of reserves. A full year of
mining at the company's producing mines depleted reserves by nearly one
million ounces of gold. The year-end proven and probable gold reserves for
2000 amounted to 4.5 million ounces, compared with 5.3 million ounces in 1999.
Silver reserves were 10.9 million ounces at year-end 2000, down from
28.2 million ounces at the beginning of the year, after production is taken
into account.
Lupin mine: successful re-commissioning
In November 1999, the company announced its decision to reopen the Lupin
mine located in Nunavut, Canada. The re-commissioning was completed on time
and on budget. The first gold pour occurred mid-April 2000 and Lupin produced
117,729 ounces of gold for the year. Grade and recoveries were as planned
with lower than anticipated spending on equipment and labor costs. Cash
operating costs per ounce were $213, which included a $15 per ounce benefit
from a $6.0 million gain realized on closing out certain Canadian dollars
contracts for Lupin expenditures in 1997. The gain was deferred and will be
recognized through the third quarter of 2001.
An underground hoisting system (winze) is being constructed to provide a
more cost effective method of transporting ore to the bottom of the existing
shaft from lower levels of the mine. This project will be completed in the
first quarter of 2001 and will allow for development and mining of the orebody
which is defined to 200 meters below the shaft. The ore body is continuous
at depth and exploration targets will be defined now that the mine 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.
With the production experience of 2000, Lupin's production target for 2001
is 150,000 ounces at cash operating costs of $240 per ounce disregarding any
foreign exchange benefit.
Round Mountain mine: another annual production record
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 640,128 ounces, up 98,320 ounces from 1999, at a
cash operating cost of $195 per ounce. This is the highest production level
ever reached at Round Mountain and is mainly attributable to 20 percent more
ore tons placed on the leach pads. The company's share of the production was
320,064 ounces.
At year-end 2000, the company's portion of Round Mountain's gold reserves
comprised 2.6 million ounces, down from 1999 due to mining. Under the current
mine plan, if no new gold reserves are discovered, which is unlikely,
production will continue for approximately eight years.
During the year, drilling was completed to better understand the
underlying geological structures of targets identified the previous year.
Results were encouraging and additional drilling will continue in 2001 to
delineate the potential.
Round Mountain's production target for 2001 is 600,000 ounces of gold
(Echo Bay's share, 300,000 ounces). Cash operating costs are targeted to be
$200 per ounce, similar to 2000.
McCoy/Cove mine: stellar year
At McCoy/Cove in Nevada, gold production was 162,784 ounces, compared with
124,536 ounces in 1999, and silver production amounted to 12.3 million ounces,
compared with 8.4 million ounces in the prior year, as a result of higher mill
grades. Cash operating costs were $179 per ounce, down $42 per ounce
resulting from the 31 percent increase in gold production and the 46 percent
increase in silver production.
Underground mining of the Cove South Deep is expected to be completed by
the second quarter of 2001 with total production meeting the target of
40,000 equivalent gold ounces.
As previously reported, mining of the open pits was completed in October
2000. In 2001, lower grade stockpiles will be processed and this will
continue through mid 2002. Accordingly, production will decrease
significantly. The production target for McCoy/Cove in 2001 is 60,000 ounces
of gold and five million ounces of silver. Cash operating costs are expected
to increase to approximately $275 per ounce as a result of the lower
production. Reclamation activities are underway and will continue for the
next several years. By the end of 2001, 66 percent of the total surface
disturbance at McCoy/Cove will be in reclamation.
Kettle River mine: additional resource extends life at K-2
Production at the Kettle River operations located in north-east Washington
state was 94,086 ounces, down from 104,396 ounces in 1999. Despite the
decrease in production, cash operating costs per ounce were $218, down from
$238 the year before, reflecting lower mining costs.
At Kettle River, a series of deposits have been mined with the ore feeding
a central mill. Mining at the Lamefoot deposit was completed at year end
meaning that future production will be from existing stockpiles and the K-2
deposit. As mining continues deeper and the haulage distance gets longer,
unit costs rise and production decreases. These factors will contribute to
production for 2001 decreasing to approximately 60,000 ounces and the cash
operating costs increasing to $240 per ounce.
During the year, an extension to the northeast of the K-2 deposit was
delineated and approximately 500,000 tons of additional resources were
identified, adding one more year of mining. As well, during the year the
company entered into an agreement to exchange the company's interest in the
Kuranakh gold project located in eastern Russian for a 75 percent interest in
the Golden Eagle project. Golden Eagle is an advanced gold exploration
project located within 15 miles of the Kettle River mill and represents a good
opportunity to extend mine life at Kettle River.
Exploration and development projects
During the year, $4.8 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 also continues to review other exploration
projects in the western U.S. and the Timmins, Ontario area that have the
potential for short to intermediate term success.
At the Youga/Bitou property in Burkina Faso, West Africa (a 50/50 joint
venture with Ashanti Goldfields Company Ltd. as the operator), field
activities during 2000 were directed toward infill drilling and exploring
satellites to the main deposit at Youga. A geological resource of 15 million
tonnes grading 2.6 grams/tonne gold has been reported previously for the Youga
property. A feasibility study completed during the year now indicates that,
of that resource, an open pit operation would produce 5.2 million tonnes
grading 3.3 grams/tonne gold with cash costs below $200 per ounce. A number
of other exploration properties in the area are currently under review.
At the Aquarius project, 100 percent owned by the company near Timmins,
Ontario, a revised feasibility study was completed during the second quarter.
The study incorporated changes in processing method, improvements to the
mining plan and the use of certain mill equipment acquired by the company at
the end of last year. The study indicates a capital cost to construct
Aquarius of almost $90 million, excluding the value of owner equipment
contributions. Cash operating costs are estimated to be $148 per ounce based
on reserves of 1.2 million ounces.
Statistical information is available with this release at the press
release area of the company's web site, http://www.echobay.com.
Echo Bay mines gold and silver in North America. The primary markets for
its shares are the American and Toronto stock exchanges.
Contact: Lois-Ann L. Brodrick, Vice President and Secretary -
303-714-8838
"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; increasingly stringent reclamation security requirements imposed
by regulatory authorities; and other factors detailed in the company's filings
with the Securities and Exchange Commission.
SOURCE Echo Bay Mines Ltd.
 back to top
Related links:
http://www.echobay.com
CONTACT:
Lois-Ann L. Brodrick, Vice President and
Secretary of Echo Bay Mines Ltd., 303-714-8838
|
