ENGLEWOOD, Colo., July 30 /PRNewswire/ -- Echo Bay Mines Ltd.
(Amex: ECO; Toronto) today reported a loss of $0.01 per share in the second
quarter, compared with a loss of $0.17 per share a year ago.
The smaller loss includes an after-tax gain of $6.3 million ($0.05 per
share) on the sale of an investment. Without that sale, Echo Bay had a loss
of $0.06 per share.
In June, Echo Bay sold its investment in the assets and liabilities of
Santa Elina Mines Corporation, a gold exploration and development company in
Brazil, to a group of Brazilian investors for $6.3 million in cash and a 48%
retained interest in the Chapada copper-gold property in central Brazil. Last
year, Echo Bay had written off its entire investment in Santa Elina after
attempting unsuccessfully for the better part of a year to sell part or all of
Echo Bay's non-strategic interest in that company.
Sharply Improved Operating Results
In addition to the gain on the sale of Santa Elina, Echo Bay reduced the
amount of its quarterly loss by $16.5 million ($0.12 per share) from the
year-ago period. The improvement resulted from sharply reduced costs and
improved operating results. Faced with 18-year lows in gold prices, the
company cut expenses, reduced capital expenditures, restructured operations,
refocused exploration and development programs, eliminated marginal projects,
deferred construction of two new gold mines, temporarily suspended operations
at its highest-cost mine, scaled back operations at another mine, downsized
the corporate office and reduced the total workforce to about 1300 people from
2300 a year ago.
Cash operating costs were reduced to $208 per ounce of gold produced in
the second quarter from $262 per ounce a year ago. In total, cash operating
costs were trimmed to $42.4 million in the second quarter of this year from
$56.3 million a year ago, down by $13.9 million or 25%.
In addition, quarterly exploration and development expenses were cut by
$7.3 million to a total of $2.6 million; depreciation and amortization
expenses were reduced by $3.9 million to $17.4 million; and general &
administrative expenses were trimmed by $1.5 million to $2.1 million.
The sizable reduction in costs more than offset lower production and
reduced revenues caused by the company's temporary suspension of operations at
the Lupin mine in the Northwest Territories due to depressed gold prices. A
year ago, Lupin had produced 42,604 ounces of gold in the second quarter.
Quarterly gold production was higher at Round Mountain in Nevada, the
company's largest and lowest-cost mine, reflecting startup of a new mill late
last year, and lower at McCoy/Cove in Nevada due to the planned processing of
lower-grade ores. Production was about the same at the company's other
producing mine, Kettle River in Washington State.
The company produced a total of 140,198 ounces of gold and 2.1 million
ounces of silver in the second quarter. Echo Bay expects to meet or exceed
its full-year production targets of 500-520,000 ounces of gold and 7-8 million
ounces of silver.
Because of the sharp reduction in costs and improved operating results in
each of the first two quarters of 1998, Echo Bay now expects that for the full
year, the company is likely to beat by a wide margin the cash operating cost
target provided to investors at the beginning of the year. The company has
accordingly reduced its full-year 1998 cash operating cost target to $215-225
per ounce of gold produced, down from $245-255.
Gold and Silver Hedging Gives Higher Realized Prices
The price of gold on world markets fell by $43 per ounce to an average of
$300 per ounce in the second quarter from $343 a year ago. Echo Bay's hedging
program overcame all of the price erosion, obtaining a premium of $46 per
ounce above the average price of gold on world markets, or a total of $346 per
ounce. This is the cash amount received per ounce of gold sold during the
quarter. In addition, deferred revenue from the repurchase or restructuring
of forward positions is recognized in revenue in the period in which the
precious metal was originally scheduled for delivery.
The company has protected itself against continued low gold prices by
hedging its entire planned gold production for the full year 1998 at a minimum
average price of $341 per ounce. The company will receive more than $341 if
the gold price rises above $310 per ounce, because Echo Bay's hedge position
includes 75,000 ounces of put options at $310 per ounce for each of the
remaining two quarters of the year. If the gold price rises above $310, then
the company could sell its gold production at the higher spot price instead of
exercising its right to deliver the gold under the put options.
For 1999, the company has hedged approximately 330,000 ounces of gold at a
minimum average price of $363 per ounce.
In addition, Echo Bay has hedged 3.9 million ounces of silver at an
average price of $5.68 per ounce for the remaining two quarters of 1998. For
1999, the company has hedged 4.0 million ounces of silver at an average price
of $5.77 per ounce.
Unusually High Silver Prices
Echo Bay's McCoy/Cove mine in Nevada is primarily a gold mine, but it also
produces so much silver as a co-product that McCoy/Cove is one of the largest
silver mines in the world. Echo Bay took advantage of unusually high silver
prices in the first half of this year by selling forward 19 million ounces of
McCoy/Cove's anticipated silver production for delivery in the years 1998-2001
at an average price of $6.01 per ounce. Over the past 10 years, silver prices
have averaged $4.85 per ounce.
These forward sales of silver, combined with the company's gold forward
position, will provide sufficient revenue to pay for all of the planned future
cost of remediating the Cove pit wall instability. This guarantees the
profitability of mining 406,000 ounces of contained gold and 22 million ounces
of contained silver located at the bottom of the pit beneath the pit wall
instability, based on year-end 1997 ore reserves, current operating costs, and
all anticipated future costs. Remediation work was interrupted in late 1997
when gold prices neared 18-year lows. The company's hedging program allowed
work to resume during the latter part of the second quarter of this year.
Cash and Debt
The company reduced debt by $4 million during the quarter. At June 30,
Echo Bay's total debt was $60 million, of which $14 million was current debt
and $46 million was long-term debt. Long-term debt includes the present
value, $5 million, of the company's capital securities principal amount, in
accordance with Canadian generally accepted accounting principles. The
present value of the future interest payments on the capital securities,
$105 million, is a separate component of shareholders' equity.
The future interest payments on the capital securities include the
April 1, 1998 payment, which the company exercised its right to defer, as
previously announced. Under the terms of the securities, issued in
March 1997, the company has the right to defer interest payments for up to 10
consecutive semiannual periods. During the deferral period, interest on the
securities will accrue at the rate of 12% per annum, compounded semiannually.
Interest accrued during the deferral period will be paid in cash to the
capital securities holders at the end of the deferral period. At its
discretion, the company may satisfy its deferred interest obligation by
delivering common shares to a trustee for sale, the proceeds of which would be
used to pay the deferred interest to the securities holders. The company has
no current plans to deliver shares to the trustee for sale.
At June 30, the company had $20 million in cash and cash equivalents,
$5 million in short-term investments, and $32 million available under its
revolving credit facilities. Echo Bay's ability to borrow under these
facilities is limited by the facilities' covenants to a formula amount
determined at the end of each quarter partly on the basis of the average gold
price on world markets during the quarter. For this reason, the company and
its lenders began discussions in January 1998, as previously reported, aimed
at restructuring the terms of the credit facilities to provide more
flexibility during extended periods of depressed gold prices. Those
discussions continue. However, Echo Bay's flexibility has increased since
January under the existing covenants because of the company's reduced cost
structure, improved operating results, additional hedge position, and higher
spot gold and silver prices.
Settlement of Dispute
In the second quarter, Echo Bay paid $500,000 in cash and issued 1,237,114
shares of Echo Bay common stock to Nationwide Development Corporation to
settle a dispute relating to Echo Bay's termination of its investment in the
Kingking development project in the Philippines in 1997. The settlement
avoids protracted litigation. Echo Bay wrote off its entire investment in
Kingking in 1997 and, as part of that write-off, accrued an amount for this
item which has now covered the settlement.
Round Mountain, Nevada: Production Up, Costs Down
At 50%-owned Round Mountain in Nevada, Echo Bay's portion of gold
production totaled 73,020 ounces in the second quarter, up 12% from 64,948
ounces in the year-ago period. The increase in production resulted
principally from the successful startup of a new mill late last year to
process large quantities of nonoxide ore. The mill produced 24,802 ounces of
gold in the second quarter of this year (Echo Bay's 50% share, 12,401 ounces).
Round Mountain's cash operating costs were reduced to $187 per ounce of
gold produced, down from $194 a year ago, reflecting improved cost control and
more ounces produced under a new mining plan adopted late last year. The new
plan optimizes the design of the open pit, eliminating the mining of more than
250 million tons of waste rock and low-grade, high-cost material over the life
of the mine. The smaller pit means less pre-stripping expense, less capital
for new equipment and less reclamation expense. This increases profitability
and cash flow significantly over the life of the mine.
Round Mountain expects to meet or exceed its full-year production target
of 460-480,000 ounces of gold (Echo Bay's 50% share, 230-240,000 ounces). The
success of the new mining plan in reducing costs over the first half of 1998
has enabled Round Mountain to significantly lower its cash operating cost
target for the full year. The mine's new cash operating cost target for 1998
is $200-210 per ounce of gold produced, down from $230-240 originally targeted
at the beginning of the year.
The joint venture partners continue to advance a $1.7 million exploration
program at Round Mountain. Field work and data compilation have identified
several satellite targets. These are currently scheduled to be drilled during
the second half of 1998.
McCoy/Cove, Nevada: Significantly Reduced Costs
At McCoy/Cove in Nevada, gold production was 35,591 ounces in the second
quarter, down 32% from 52,541 ounces a year ago, reflecting the planned
processing of lower-grade ores. Silver production was 2,054,173 ounces, up 6%
from 1,933,588 ounces in the year-ago quarter, a function of 28% higher mill
throughput levels overcoming lower silver grades processed.
Cash operating costs were reduced sharply, to $221 per ounce of gold
produced in the second quarter of this year from $317 per ounce in the
year-ago period. Of the $96 reduction in cost per ounce of gold produced, $71
resulted from a series of operating improvements. In December 1997, the
450-person workforce was downsized by more than 20%. Mining was discontinued
in the smaller McCoy pit, and mining activities were refocused on mill ounces
from the Cove pit. After successful completion of optimization studies,
mining then resumed at McCoy in March 1998 at lower costs. Remediation work
on the Cove pit began in June 1998. During the second quarter, milling and
heap leaching costs were significantly reduced.
In addition, a $47.0 million write-down of McCoy/Cove's carrying value in
the third quarter of 1997 reduced deferred mining costs by a like amount over
the remaining life of the mine, resulting in a reduction of $40 per ounce in
McCoy/Cove's cash operating costs in each future quarter.
Finally, cash operating costs increased by $51 per ounce due to lower ore
grades and gold recovery. This was partly offset by a decrease of $36 per
ounce due to significantly lower gold prices relative to co-product silver
prices, which reduced the gold-to-silver price equivalency ratio to 52.5:1 in
1998 from 72.0:1 in 1997. The price equivalency ratio is used to calculate
co-product costs under co-product accounting principles.
Because of the cost reductions achieved in the first half of the year,
McCoy/Cove has reduced its full-year 1998 cash operating cost target to
$220-230 per ounce of gold produced, down from $260-270 targeted at the
beginning of the year. The mine expects to meet its full-year production
targets of 160-170,000 ounces of gold and 7-8 million ounces of silver.
Two exploration targets are currently being drilled at the periphery of
the Cove open pit. Both targets are located below the current bottom of the
pit, but above where the bottom of the pit will be in 1999 (and off to the
side). The gold and silver mineralization associated with these targets is
being investigated for both underground and open pit mining.
Kettle River, Washington: Costs Reduced
The Kettle River mine in Washington State produced 31,587 ounces of gold
in the second quarter, compared with 30,304 ounces a year ago. Ore grades
were higher, offsetting lower recovery rates and tonnages processed.
Cash operating costs were reduced to $225 per ounce of gold produced in
the second quarter from $256 a year ago, principally a function of higher ore
grades processed.
Results were in line with Kettle River's full-year production and cost
targets of 100-110,000 ounces of gold at a cash operating cost of $240-250 per
ounce.
Exploration drilling is currently under way to provide more information on
a southern extension of the K-2 deposit. In addition, regional exploration
data are being compiled as Kettle River continues its search for more ore in
this region, which hosts numerous deposits similar to those currently being
mined.
Lupin, Northwest Territories: Operations Temporarily Suspended
Operations were temporarily suspended at Lupin in the Northwest
Territories in January in response to 18-year lows in the gold price and
impending increases in production costs, as reported. The mine was placed on
"care and maintenance" to preserve its integrity and enable it to reopen when
gold prices permit. The company is examining a number of opportunities for
reducing costs by optimizing Lupin's mining methods and operating procedures.
A year ago, Lupin produced 42,604 ounces of gold in the second quarter at
a cash operating cost of $266 per ounce.
Echo Bay mines gold and silver in North America. The primary markets for
its shares are the American and Toronto stock exchanges.
"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 significant declines in
precious metals prices and/or increases in production costs, which could
render projects uneconomic; ability to access financing; changes in project
parameters as plans continue to be refined; differences in ore grades,
recovery rates and tons mined from those expected; changes in mining, milling
and/or heap leaching rates from currently planned rates; the results of
current exploration activities and new opportunities; and other factors
detailed in the company's 10-K Report and other filings with the Securities
and Exchange Commission.
ECHO BAY MINES
1998 Targets
Actions taken by the company in response to 18-year lows in gold prices
have resulted in sharply reduced costs and improved operating results in
each of the first two quarters of 1998. As a result, the company now
expects that for the full year, Echo Bay is likely to do significantly
better than the cash operating cost targets provided to investors at the
beginning of the year. These cost targets have accordingly been revised
as follows:
Current Original
1998 Targets 1998 Targets 1997 Actuals
Cash operating costs:
Round Mountain $200-210 per oz. $230-240 per oz. $207 per oz.
McCoy/Cove 220-230 per oz. 260-270 per oz. 271 per oz.
Lupin -- -- 284 per oz.
Kettle River 240-250 per oz. 240-250 per oz. 227 per oz.
$215-225 per oz. $245-255 per oz. $249 per oz.
Echo Bay expects to meet or exceed its full-year 1998 production targets,
which remain unchanged:
Gold production:
Round Mountain
(50%) 230-240,000 oz. 230-240,000 oz. 238,840 oz.
McCoy/Cove 160-170,000 oz. 160-170,000 oz. 187,034 oz.
Lupin -- -- 165,335 oz.
Kettle River 100-110,000 oz. 100-110,000 oz. 129,866 oz.
500-520,000 oz. 500-520,000 oz. 721,075 oz.
Silver production:
McCoy/Cove 7-8 million oz. 7-8 million oz. 11.0 million oz.
ECHO BAY MINES
Highlights
Three months Six months
ended June 30 ended June 30
U.S. dollars 1998 1997 1998 1997
Financial Data
Revenue (millions) $65.3 $75.8 $118.2 $149.7
Net earnings (loss)
(millions) $2.1 $(20.7) $(5.6) $(37.5)
Net loss attributable to
common shareholders
(millions) $(1.5) $(23.3) $(11.7) $(40.1)
Gold ounces sold (a) 157,277 187,004 275,871 358,236
Silver ounces
sold (a) 2,184,608 1,922,826 4,200,705 3,859,172
Average price
realized: (b)
Per ounce of gold sold $346 $346 $344 $351
Per ounce of silver
sold $5.43 $5.00 $5.59 $4.98
Cash operating costs:
Per ounce of gold
produced $208 $262 $208 $258
Per ounce of silver
produced $4.21 $4.40 $4.25 $4.21
% of revenue from gold 81% 86% 79% 86%
% of revenue from silver 19% 14% 21% 14%
Production and Reserves
Production (ounces): (a)
Gold 140,198 190,397 273,363 373,725
Silver 2,054,173 1,933,588 4,312,629 4,371,001
Reserves (ounces): (c)
Gold 7,479,000 8,573,000
Silver 46,525,000 53,858,000
Per Share Data
Loss per share $(0.01) $(0.17) $(0.08) $(0.29)
Shares outstanding
(millions):
Weighted average 139.8 139.4 139.6 139.4
Period end 140.6 139.4 140.6 139.4
(a) Amounts sold differ from amounts produced due to inventory changes.
(b) Prices reported are the cash amounts received per ounce of gold and
silver sold during each period.In addition, deferred revenue from the
repurchase or restructuring of forward positions is recognized in revenue
in the period in which the gold or silver was originally scheduled for
delivery.
(c) Proven and probable reserves at the beginning the year.
ECHO BAY MINES
Production and Costs
Three months Six months
ended June 30 ended June 30
1998 1997 1998 1997
Gold Production (ounces)
Round Mountain (50%) 73,020 64,948 139,087 121,109
McCoy/Cove 35,591 52,541 75,444 104,827
Kettle River 31,587 30,304 58,832 68,583
Lupin -- 42,604 -- 79,206
Total gold 140,198 190,397 273,363 373,725
Silver Production
(ounces)
McCoy/Cove 2,054,173 1,933,588 4,312,629 4,371,001
Total silver 2,054,173 1,933,588 4,312,629 4,371,001
Cash Operating Costs
(U.S. dollars per
ounce of gold produced)
Round Mountain $187 $194 $190 $201
McCoy/Cove (a) 221 317 211 301
Kettle River 225 256 241 216
Lupin -- 266 -- 294
Company average $208 $262 $208 $258
Consolidated Costs
(U.S. dollars per ounce
of gold produced)
Cash operating costs $208 $262 $208 $258
Royalties 12 10 11 10
Production taxes 2 1 2 2
Total cash costs 222 273 221 270
Depreciation 59 62 58 63
Amortization 25 34 25 34
Reclamation and mine
closure 9 10 7 10
Total production costs $315 $379 $311 $377
(a) Cash operating costs per ounce of silver produced at McCoy/Cove were
$4.21 and $4.25 for the three-month and six-month periods respectively,
based on average gold-to-silver price ratios of 52.5:1 and 49.6:1
respectively. In 1997, cash operating costs per ounce of silver produced
at McCoy/Cove were $4.40 and $4.21 for the three-month and six-month
periods respectively, based on average respective price ratios of 72.0:1
and 71.6:1.
ECHO BAY MINES
Consolidated Earnings Statement
(Unaudited)
Thousands of U.S. dollars, Three months Six months
except for per share data ended June 30 ended June 30
1998 1997 1998 1997
Revenue $65,346 $75,815 $118,201 $149,653
Expenses:
Operating costs 42,433 56,310 75,738 107,763
Royalties 2,218 2,074 3,940 4,318
Production taxes 329 223 683 662
Depreciation and
amortization 17,416 21,348 31,318 41,321
Reclamation and mine
closure 1,536 2,187 3,187 4,373
General and
administrative 2,067 3,570 4,324 6,988
Exploration and
development 2,602 9,940 5,782 16,430
Interest and other (a) (5,423) (905) (1,385) 1,736
Provision for impaired
assets and other
charges (a) -- 1,305 -- 2,305
63,178 96,052 123,587 185,896
Earnings (loss) before
income taxes 2,168 (20,237) (5,386) (36,243)
Income tax expense:
Current 102 57 174 375
Deferred -- 438 -- 875
102 495 174 1,250
Net earnings (loss) $2,066 $(20,732) $(5,560) $(37,493)
Net loss attributable
to common
shareholders $(1,458) $(23,256) $(11,717) $(40,132)
Loss per share (b) $(0.01) $(0.17) $(0.08) $(0.29)
Weighted average number
of shares
outstanding 139,750,681 139,370,031 139,560,356 139,363,557
(a) Certain prior-period items have been reclassified to conform with the
current presentation.
(b) Echo Bay's financial statements are prepared in accordance with
accounting principles generally accepted in Canada. Loss per share
equals the sum of the net earnings (loss) for the period plus the interest
on the $100 million capital securities in the period (a portion of which
is charged directly to the deficit in common shareholders' equity on the
company's consolidated balance sheet, rather than being charged to
interest on the consolidated earnings statement) divided by the weighted
average number of common shares outstanding during the period. The
capital securities were issued in March 1997; interest on these securities
that was charged to the deficit was $3.5 million in the second quarter of
1998 and $2.5 million in the second quarter of 1997.
ECHO BAY MINES
Consolidated Balance Sheet
(Unaudited)
June 30 Dec. 31 June 30
Thousands of U.S. dollars 1998 1997 1997
Assets
Current assets:
Cash and cash equivalents $19,958 $16,953 $67,138
Short-term investments 5,408 10,325 --
Interest and accounts
receivable 3,759 5,927 9,704
Inventories 38,942 41,168 45,865
Prepaid expenses and other
assets 3,759 5,068 4,497
71,826 79,441 127,204
Plant and equipment 217,858 238,948 241,113
Mining properties 102,533 107,820 403,557
Long-term investments and
other assets 13,548 6,558 54,944
$405,765 $432,767 $826,818
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued
liabilities $63,441 $82,371 $73,361
Income and mining taxes payable 4,041 3,494 3,717
Current portion of gold and
other financings (a) 14,379 14,779 14,961
Current portion of deferred
income 10,416 7,461 16,081
92,277 108,105 108,120
Long-term gold and other
financings (a) 45,774 51,745 47,116
Long-term deferred income 57,996 54,708 52,393
Other long-term obligations 49,588 56,607 66,203
Deferred income taxes 7,799 7,941 9,197
Common shareholders' equity:
Common shares 713,343 709,593 709,593
Capital securities 104,565 95,753 95,974
Deficit (643,037) (631,320) (245,230)
Foreign currency translation (22,540) (20,365) (16,548)
152,331 153,661 543,789
$405,765 $432,767 $826,818
(a) Total gold and other financings were $60.2 million at June 30, 1998
(including current portion of $14.4 million), down $1.9 million from
$62.1 million at June 30, 1997 (including current portion of
$15.0 million).
ECHO BAY MINES
Consolidated Statement Of Cash Flow
(Unaudited)
Three months Six months
ended June 30 ended June 30
Thousands of U.S.
dollars 1998 1997 1998 1997
Cash Provided From
(Used in):
Operating Activities
Net earnings (loss) $2,066 $(20,732) $(5,560) $(37,493)
Add (deduct):
Depreciation and
amortization 17,416 21,348 31,318 41,321
Non-cash portion of
exploration and
development expense -- 146 -- 292
Deferred income taxes -- 438 -- 875
Loss (gain) on sale of
assets (6,192) 135 (7,381) 295
Unrealized losses on
share investments 357 -- 1,206 --
Other (545) (1,555) (1,894) (4,336)
Change in cash invested
in operating assets and
liabilities:
Interest and accounts
receivable 3,444 31 2,126 34
Inventories 4,059 (1,608) 3,452 (9,992)
Prepaid expenses and
other assets 880 1,011 1,471 3,039
Accounts payable and
other liabilities (5,015) 2,893 (25,518) (8,717)
Income and mining taxes
payable 291 21 549 66
16,761 2,128 (231) (14,616)
Financing Activities
Debt repayments (4,164) (4,822) (8,328) (122,879)
Capital securities issued,
net of issuance costs -- -- -- 96,700
Common share issues, net
of issuance costs -- -- -- 60
Other (114) 1,989 (226) 1,989
(4,278) (2,833) (8,554) (24,130)
Investing Activities
Mining properties, plant
and equipment (5,237) (29,143) (9,866) (49,965)
Proceeds on repurchase
of the company's:
Gold and silver forward
sales -- -- 8,673 54,963
Gold swap -- -- -- 8,107
Foreign exchange
contracts -- (677) -- 5,995
Short-term investments 604 -- 3,018 --
Long-term investments and
other assets (975) (7,140) (453) (16,517)
Proceeds on sale of
investment in Santa
Elina 6,252 -- 6,252 --
Proceeds on sale of
plant and equipment 141 -- 2,450 64
Proceeds on sale
of mining properties -- -- 1,195 --
Deferral of gain on
restructuring of capital
securities swap 1,073 -- 1,073 --
Other (610) (44) (552) 41
1,248 (37,004) 11,790 2,688
Net increase (decrease)
in cash and cash
equivalents 13,731 (37,709) 3,005 (36,058)
Cash and cash
equivalents, beginning
of period 6,227 104,847 16,953 103,196
Cash and cash
equivalents, end of
period $19,958 $67,138 $19,958 $67,138
ECHO BAY MINES
Mine Operating Data
Three months Six months
U.S. dollars, except ended June 30 ended June 30
where indicated 1998 1997 1998 1997
Round Mountain Mine
(50% owned)
Gold produced (ounces):
Reusable heap leach pad
(50%) 28,238 39,119 58,645 71,064
Dedicated heap leach pad
(50%) 31,308 25,829 53,946 50,045
Milling (50%) 12,401 -- 24,640 --
Other (50%) 1,073 -- 1,856 --
Total (50%) 73,020 64,948 139,087 121,109
Ore and waste mined
(tons) (100%) 17,331,000 18,435,000 33,441,000 34,754,000
Mining cost/ton of ore
and waste $0.63 $0.64 $0.64 $0.67
Heap leaching cost/ton
of ore $0.60 $0.57 $0.63 $0.62
Milling cost/ton of ore $3.10 -- $3.50 --
Production cost per ounce
of gold produced:
Direct mining expense $179 $191 $186 $200
Deferred stripping cost 7 6 8 2
Inventory movements
and other 1 (3) (4) (1)
Cash operating cost 187 194 190 201
Royalties 21 20 19 23
Production taxes 1 3 1 3
Total cash cost 209 217 210 227
Depreciation 41 36 40 41
Amortization 18 18 18 18
Reclamation and mine
closure 7 7 7 7
Total production cost $275 $278 $275 $293
Reusable heap leach pad:
Ore processed (tons/day)
(100%) 19,869 28,340 23,118 27,630
Grade (ounce/ton) 0.042 0.035 0.039 0.036
Recovery rate (%) 69.7 83.0 72.0 74.4
Dedicated heap leach pad:
Ore processed (tons/day)
(100%) 128,231 110,154 118,495 99,467
Grade (ounce/ton) 0.010 0.010 0.010 0.010
Recovery rate (a)
Milled:
Ore processed (tons/day)
(100%) 8,460 -- 7,815 --
Gold grade (ounce/ton) 0.043 -- 0.048 --
Gold recovery rate (%) 76.2 -- 74.5 --
McCoy/Cove Mine (100% owned)
Gold produced (ounces):
Milled 22,459 39,248 47,881 80,142
Heap leached 13,132 13,293 27,563 24,685
Total gold 35,591 52,541 75,444 104,827
Silver produced (ounces):
Milled 1,945,022 1,824,003 4,081,171 4,179,586
Heap leached 109,151 109,585 231,458 191,415
Total silver 2,054,173 1,933,588 4,312,629 4,371,001
Ore and waste mined
(tons) 10,919,682 15,007,199 18,521,300 30,485,925
Mining cost/ton of
ore and waste $0.67 $0.74 $0.69 $0.71
Milling cost/ton of ore $5.82 $9.20 $6.05 $8.97
Heap leaching cost/ton of
ore $1.55 $1.67 $1.56 $1.66
Production cost per ounce
of gold produced: (b)
Direct mining expense $244 $330 $218 $310
Deferred stripping cost (30) (28) (14) (19)
Inventory movements and
other 7 15 7 10
Cash operating cost 221 317 211 301
Royalties 3 3 3 3
Production taxes 3 -- 2 1
Total cash cost 227 320 216 305
Depreciation 58 79 55 74
Amortization 40 45 39 45
Reclamation and mine
closure 9 10 8 10
Total production cost $334 $454 $318 $434
Average gold-to-silver
price ratio (b) 52.5:1 72.0:1 49.6:1 71.6:1
Milled:
Ore processed
(tons/day) 12,205 9,565 11,560 9,821
Gold grade (ounce/ton) 0.035 0.057 0.038 0.062
Silver grade (ounce/ton) 2.43 2.98 2.52 3.17
Gold recovery rate (%) 50.4 68.6 53.2 70.3
Silver recovery rate (%) 71.5 71.7 72.8 70.9
Heap leached:
Ore processed
(tons/day) 12,061 20,512 12,041 19,080
Gold grade (ounce/ton) 0.019 0.014 0.020 0.013
Silver grade (ounce/ton) 0.21 0.25 0.29 0.21
Recovery rates (a)
Kettle River Mine (100% owned)
Gold produced (ounces) 31,587 30,304 58,832 68,583
Tons of ore mined and
milled 179,586 218,134 371,355 396,309
Mining cost/ton of ore $22.44 $22.10 $21.65 $21.46
Milling cost/ton of ore $10.37 $9.06 $10.05 $10.19
Production cost per ounce
of gold produced:
Direct mining expense $222 $243 $240 $217
Deferred mine
development cost -- -- -- --
Inventory movements and
other 3 13 1 (1)
Cash operating cost 225 256 241 216
Royalties 14 17 13 14
Production taxes 1 2 1 2
Total cash cost 240 275 255 232
Depreciation 62 65 67 57
Amortization 5 45 5 45
Reclamation and mine
closure 12 12 12 12
Total production cost $319 $397 $339 $346
Milled:
Ore processed
(tons/day) 1,973 2,397 2,040 2,178
Total tons milled 179,586 218,134 371,355 396,309
Grade (ounce/ton) 0.210 0.162 0.193 0.198
Recovery rate (%) 83.6 85.5 82.1 87.2
Lupin Mine (100% owned)(c)
Gold produced (ounces) -- 42,604 -- 79,206
Tons of ore mined and
milled -- 202,175 -- 395,105
Mining cost/ton of
ore (Cdn. dollars) -- C$43.40 -- C$44.70
Milling cost/ton of ore
(Cdn. dollars) -- C$11.58 -- C$11.50
Production cost per ounce
of gold produced:
Direct mining expense
(Cdn. dollars) -- C$367 -- C$393
Deferred mine development
cost (Cdn. dollars) -- 4 -- 11
Inventory movements and
other (Cdn. dollars) -- (2) -- (1)
Cash operating cost
(Cdn. dollars) -- C$369 -- C$403
Cash operating cost
(U.S. dollars) -- US$266 -- US$294
Royalties -- -- -- --
Production taxes -- -- -- --
Total cash cost -- 266 -- 294
Depreciation -- 71 -- 75
Amortization -- 28 -- 28
Reclamation and mine
closure -- 14 -- 14
Total production cost -- US$379 -- US$411
Milled:
Ore processed (tons/day) -- 2,222 -- 2,171
Total tons milled -- 202,175 -- 395,105
Grade (ounce/ton) -- 0.228 -- 0.218
Recovery rate (%) -- 92.3 -- 92.2
(a) 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.
(b) 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.
(c) In January 1998, operations at Lupin were temporarily suspended until
gold prices improve.
SOURCE Echo Bay Mines Ltd.
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Related links:
http://www.echobay.com
Company News On-Call: http://www.prnewswire.com or
fax, 800-758-5804, ext. 269609
CONTACT:
Robbin Lee of Echo Bay Mines Ltd.,
303-714-8829
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