Earnings Summary
Dollar amounts in thousands of US dollars
except amounts per share 2001 2000
THREE MONTHS ENDED MARCH 31:
Revenue $64,461 $51,797
Net earnings/(loss) $3,793 $(2,673)
Net loss attributable to common shareholders $(537) $(6,298)
Loss per share $-- $(0.04)
Weighted average common shares outstanding 140,607,154 140,607,154
ENGLEWOOD, Colo., May 3 /PRNewswire/ -- Echo Bay Mines Ltd.
(Toronto; Amex: ECO) today reported first quarter 2001 net earnings of
$3.8 million compared with a 2000 first quarter net loss of $2.7 million. On
a per share basis, the company had breakeven net earnings of $0.00 for the
quarter compared to a loss of $0.04 in 2000. The per share amount includes
the equity portion of the interest on the company's capital securities,
$4.3 million ($0.03 per share) in 2001 compared with $3.6 million
($0.02 per share) in 2000.
Total gold production for the quarter was 173,470 ounces, 24 percent
higher than 2000 first quarter production of 140,170 ounces. Silver
production from McCoy/Cove was 1.6 million ounces, 58 percent less than the
3.8 million ounces produced in 2000. The Lupin mine contributed 37,954 ounces
to first quarter 2001 gold production. No gold was contributed by Lupin in
the prior period, as the mine was then in the process of being recommissioned.
Consolidated cash operating costs for the quarter were $212 per ounce
compared with $171 in 2000. The higher cost structure primarily reflects the
lower production level from McCoy/Cove, consistent with the 2001 forecast
announced by the company earlier this year.
During the quarter, revenues increased by 24 percent. Gold sales were
higher, but silver sales were lower (172,086 gold ounces, against
116,794 ounces in 2000; offset by 2,093,800 silver ounces, against
2,488,000 ounces in 2000). The company realized lower average gold prices
($310 per ounce in 2001; $320 per ounce in 2000), and lower average silver
prices ($5.28 per ounce in 2001; $5.80 per ounce in 2000). The average
realized price of gold was $46 better than the average market price of
$264 during the quarter.
There were two major differences in expenses, quarter to quarter. Last
year, Lupin start-up costs of $4.8 million were incurred during the first
quarter and were treated as development costs. In 2001, interest expense was
lower, as the level of bank debt had been reduced from last year.
Round Mountain: a record production quarter
The company has a 50 percent ownership interest in, and is the operator
of, the Round Mountain mine in Nevada. The mine had a record production
quarter, which is attributable to placing more ore on the dedicated pads
during the fourth quarter of 2000, better grades on the reusable pads and
higher tonnage processed through the mill. The company's share of mine
production was 100,368 ounces for the quarter compared with 71,954 ounces in
2000. Cash operating costs for the quarter were $185 per ounce, the same as
the previous year. The higher production helped offset the increase in fuel
and related costs experienced this year.
During the quarter, a new fleet of eight 240-ton haul trucks was
commissioned replacing several older 85-ton and 150-ton haul trucks. These
trucks will help maintain a low cost profile as the pit becomes deeper and
haul distances become longer.
McCoy/Cove: completion of underground and processing from stockpiled ore
At McCoy/Cove in Nevada, gold production was 22,303 ounces for the quarter
compared with 43,146 ounces in 2000 and silver production amounted to
1.6 million ounces compared with 3.8 million ounces in the prior year. As
previously reported, open pit mining was completed in 2000 and now production
comes primarily from a large stockpile of low-grade ore. Cash operating costs
per ounce were $257 compared with $149 in 2000, reflecting a 48 percent
decrease in gold production and a 58 percent decrease in silver production.
Underground mining at 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.
Reclamation on a further 50 acres was completed during the quarter,
bringing the total number of acres on which reclamation is underway to more
than 1,600. Re-contouring waste dumps and seeding, the two key components of
surface reclamation, are expected to continue for another two years.
Lupin: successful year of operation after recommissioning
Gold production for the quarter was 37,954 ounces with cash operating
costs of $217 per ounce. The cash operating costs include a $0.9 million
($24 per ounce) benefit from a $6.0 million gain realized on closing out
certain Canadian dollar contracts for Lupin expenditures in 1997. The gain
was deferred and will be recognized through the third quarter of 2001.
An underground hoisting system (called a winze) was completed in late
April 2001 and will provide a more cost effective method of transporting ore
to the bottom of the existing shaft from lower levels of the mine. The winze
will also allow for development and mining of the orebody which is defined to
200 meters below the bottom of the hoist position.
Ongoing ramping continues to provide encouraging results, and development
of areas below the winze continues to prove up continuity of the ore body in
strike length, width and grades. In addition, ongoing exploration continues
in the upper portion of the mine.
Kettle River: development plans for K-2 extension
Gold production for the quarter was 12,845 ounces, down from 25,070 ounces
in 2000, reflecting the fact that the mill operated for only two of the three
months in the quarter. The mill was shut down for January, and power that
would have otherwise been consumed by the mill was sold back to the local
power authority. The company received approximately $400,000 for the power
sale. During the shutdown, the mine performed preventative maintenance that
would have ordinarily been performed later in the year. Kettle River is,
despite the January shutdown, anticipated to meet its 2001 production target.
With the lower production and the benefit of the power sale, cash
operating costs per ounce were $242 per ounce compared with $227 per ounce in
2000. The higher costs per ounce result only from the lower production as
actual spending was 55 percent less than in 2000.
Underground development and additional exploration of the previously
reported north east extension to the K-2 mine is currently being conducted.
Debt and liquidity
The company ended the quarter with $14.6 million in cash and cash
equivalents. During the first quarter, total debt decreased by approximately
$3.8 million. At March 31, 2001, the company had $19 million outstanding
under its revolving credit line. Based on the trailing 90-day average spot
price for gold of $264 per ounce, the company currently is restricted to a
minimal amount of additional borrowing capacity. However, assuming current
spot prices of gold and silver and the anticipated production from the mines
for the rest of 2001, the company does not expect to draw on this facility
before its maturity in August. The company is in discussions with its bankers
to replace this facility but has not yet entered into a final agreement.
During the quarter, the company elected to exercise its option to defer
the April 2001 interest payment on the $100 million capital securities.
During the period of deferral, interest is accruing at a rate of 12 percent
per annum, compounded semiannually.
The company is highly leveraged to gold prices, as the current gold
forward sales position represents approximately ten percent of the remaining
2001 planned gold production at a price of $302 per ounce.
Exploration and development projects
With the ongoing low gold price environment, the company continues its
focused approach to exploration and development activities primarily within
close proximity to the existing mine sites as well as in the western United
States and the Timmins area of Ontario.
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.
For further information please contact Lois-Ann L. Brodrick, Vice
President and Secretary of Echo Bay Mines Ltd., 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 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.
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Related links:
http://www.echobay.com
CONTACT:
Lois-Ann L. Brodrick, Vice President and
Secretary of Echo Bay Mines Ltd., 303-714-8838
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