Earnings Summary
Dollar amounts in thousands of
US dollars, except amounts per share 2000 1999
THREE MONTHS ENDED JUNE 30:
Revenue $84,293 $50,862
Net earnings (loss) $10,168 $(7,031)
Net earnings (loss) attributable
to common shareholders $6,320 $(10,455)
Earnings (loss) per share $0.04 $(0.07)
Weighted average common
shares outstanding 140,607,145 140,607,145
ENGLEWOOD, Colo., Aug. 2 /PRNewswire/ -- Echo Bay Mines Ltd.
(Amex: ECO; Toronto) today reported second quarter 2000 net income of
$10.2 million ($0.04 per share). This compares with a net loss of
$7.0 million ($0.07 per share) in the second quarter of 1999. The results for
each quarter include the equity portion of the interest on the company's
capital securities, $3.8 million ($0.03 per share) in 2000 compared with
$3.4 million ($0.02 per share) in 1999.
Total gold production for the quarter was 188,475 ounces, 51 percent
higher than 1999 second quarter production of 125,056 ounces. This year's
quarter reflects the contribution from the Lupin mine of 38,359 ounces after
the successful re-commissioning completed in early April. Silver production
from McCoy/Cove was 3.6 million ounces, 87 percent higher than the 1.9 million
ounces produced in 1999.
With increased production during the quarter, consolidated cash operating
costs decreased to $186 per ounce from $213 in 1999. Revenues were 66 percent
higher than in 1999 despite the company realizing lower average gold prices
($322 per ounce in 2000; $326 per ounce in 1999), and lower average silver
prices ($5.23 per ounce against $5.27 per ounce in 1999).
With the better than anticipated silver production achieved during the
first half of 2000, silver production for the full year is now expected to
total 12 million ounces, 20 percent better than originally forecast. The
company expects to meet the upper end of forecast gold production for 2000 and
to achieve the lower end of planned cash operating costs.
Debt and liquidity
The company ended the quarter with $11.0 million in cash and cash
equivalents. During the second quarter, total debt decreased by approximately
$7 million. At June 30, 2000, the company had a $14 million undrawn balance
under its revolving credit line. Based on the trailing 90-day average spot
price for gold of $280 per ounce, the company currently has no restrictions on
borrowing capacity under this $50 million credit facility. In July, the
company repaid $4 million on this revolving credit line and expects to
generate positive cash flow from operations for the rest of the year at
current gold prices.
The company's gold forward sales position, representing 32 percent of
remaining 2000 planned gold production, will realize a price of $314 per
ounce. Approximately 39 percent of the remaining 2000 planned silver
production is also hedged at an average of $5.46 per ounce.
Round Mountain: mining more ore tons
The company has a 50 percent ownership interest in, and is the operator
of, the Round Mountain mine in Nevada. The mine continues to have an
excellent year, which is attributable to mining more ore rather than waste
tons when compared to the prior year. This resulted in 34 percent more tons
being placed on leach pads this quarter, compared with the same period last
year. The company's share of mine production was 76,408 ounces for the
quarter compared with 70,765 ounces in 1999. Cash operating cost per ounce
for the quarter was $202, compared with $195 in 1999, reflecting increased
diesel costs and the costs associated with processing more heap leach ore.
McCoy/Cove: higher grades and continued progress on underground targets
At McCoy/Cove in Nevada, gold production was 49,448 ounces for the quarter
compared with 29,576 ounces in 1999. Silver production amounted to
3.6 million ounces compared with 1.9 million ounces in the prior year. In
1999, McCoy/Cove completed removal of the waste rock associated with the
portion of the Cove pit wall that collapsed in 1996, allowing access to higher
grade ore. As expected, mill grades were much higher than last year; up by
80 percent for gold and 53 percent for silver. Silver grades to the heap
leach were also significantly higher. With the higher production, cash
operating costs for the quarter were $163 per ounce, down $59 from 1999.
McCoy/Cove is on schedule to complete mining of the open pits by the end
of the year. In 2001, lower grade stockpiles will be processed, and this will
continue through mid 2002. Production will accordingly decrease next year.
Underground mining of the Cove South Deep upper zone continued during the
quarter and is expected to be completed in the first quarter of 2001. The
Company remains encouraged by underground targets below the existing Cove pit.
Lupin: smooth re-commissioning
The decision to reopen the Lupin mine, located in Nunavut, Canada, was
made late in 1999. Re-commissioning activities were completed on time and on
budget, and the first gold pour occurred mid-April. Gold production for the
quarter was 38,359 ounces and cash operating costs were $213 per ounce.
Grades and recovery achieved during the quarter were as planned with lower
than anticipated spending on equipment and labor. The cash operating costs
include a $0.6 million benefit ($15 per ounce) from hedging Canadian dollars
for Lupin expenditures. A $6.0 million gain was realized when certain
contracts were closed during the first quarter of 1997. The gain was deferred
and will be recognized through the third quarter of 2001.
Kettle River: extension of K-2 mine and new area exploration opportunity
Production for the quarter was 24,260 gold ounces, similar to the
24,715 ounces in the 1999 quarter. Slightly higher grades and recovery offset
lower mill tonnage. Cash operating costs per ounce were $201, $42 lower than
second quarter 1999 costs, due to lower mining costs.
Preliminary results of exploration efforts to test zones to the northeast
of the K-2 deposit have indicated a resource of approximately 400,000 tons
grading 0.2 ounces per ton. A mine plan will be developed during the last
half of the year that should extend the mine life of K-2 for another year.
This is important to the operation, as mining of the Lamefoot deposit will be
completed late this year.
During the quarter, the company entered into an agreement with Newmont
Gold Company to exchange its 50 percent interest in the Kuranakh gold project
located in eastern Russia for Newmont's 75 percent interest in the Golden
Eagle project located in the Republic district of Washington State. The
company may also receive up to an additional $7 million, depending on whether
certain permitting, financing and project completion conditions are achieved
in respect of Kuranakh. Further, each party will be required to pay a
production royalty to the other, starting at 0.5 percent of its share in
production at a $350 per ounce gold price and increasing to one percent at
$400 per ounce.
Golden Eagle is an advanced gold exploration project located approximately
15 miles from the Kettle River millsite and represents a good opportunity to
extend mine life at Kettle River. The company plans to commence a drilling
program during the third quarter to further advance knowledge of the
previously identified mineralization.
Development projects
At the Youga/Bitou property in Burkina Faso, West Africa, (a 50/50 joint
venture with Ashanti Goldfields as the operator) an infill drilling program is
being completed at the main zone on the Youga concession as well as on nearby
ground to extend known zones of mineralization. In addition, drilling has
commenced on adjacent concessions where surface sampling has indicated
extensive zones of gold mineralization. The drilling program is expected to
be completed by year's end.
The Minister of the Environment for Canada has announced his approval of
the environmental assessment for the company's 100 percent owned Aquarius
project, located near Timmins, Ontario. The Company expects to complete the
permitting process in the third quarter. A revised feasibility report was
completed during the second quarter by an independent contractor. 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 cash operating cost of $148 per ounce based on
reserves of 1.2 million ounces.
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, http://www.echobay.com
"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; and other factors detailed in the company's filings with the
Securities and Exchange Commission.
ECHO BAY MINES
Highlights
Three months Six months
ended June 30 ended June 30
U.S. dollars 2000 1999 2000 1999
Financial Data
Revenue (millions) $84.3 $50.9 $136.1 $99.6
Net earnings (loss)
(millions) $10.2 $(7.0) $7.5 $(12.1)
Gold ounces sold 182,372 112,399 299,166 222,110
Silver ounces sold 4,886,675 2,708,016 7,374,682 5,101,111
Average price
realized - revenue
basis: (1)
Per ounce of
gold sold $322 $325 $321 $325
Per ounce of
silver sold $5.23 $5.27 $5.42 $5.38
Average price
realized - cash
basis: (2)
Per ounce of
gold sold $302 $345 $301 $348
Per ounce of
silver sold $5.18 $5.19 $5.35 $5.26
Cash operating costs:
Per ounce of
gold produced $186 $213 $179 $215
Per ounce of
silver produced $2.96 $4.17 $2.81 $3.98
% of revenue from gold 70% 72% 71% 72%
% of revenue form silver 30% 28% 29% 28%
Production and Reserves
Production (ounces):
Gold 188,475 125,056 328,645 243,820
Silver 3,581,898 1,918,479 7,424,844 4,583,317
Reserves (ounces): (3)
Gold 5,296,000 6,799,000
Silver 28,243,000 38,809,000
Per Share Data
Net earnings (loss) $0.04 $(0.07) $0.00 $(0.13)
Shares outstanding
(millions):
Weighted average 140.6 140.6 140.6 140.6
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 beginning of the year.
ECHO BAY MINES
Production and Costs
Three months Six months
ended June 30 ended June 30
2000 1999 2000 1999
Gold Production (ounces)
Round Mountain (50%) 76,408 70,765 148,362 130,450
McCoy/Cove 49,448 29,576 92,594 61,690
Lupin 38,359 -- 38,359 --
Kettle River 24,260 24,715 49,330 51,680
Total gold 188,475 125,056 328,645 243,820
Silver Production
(ounces)
McCoy/Cove 3,581,898 1,918,479 7,424,844 4,583,317
Total silver 3,581,898 1,918,479 7,424,844 4,583,317
Cash Operating Costs
(U.S. dollars per
ounce of gold produced)
Round Mountain (50%) $202 $195 $194 $207
McCoy/Cove 163 222 156 215
Lupin 213 -- 213 --
Kettle River 201 243 214 235
Company average $186 $213 $179 $215
Consolidated Costs
(U.S. dollars per
ounce of gold produced)
Cash operating cost $186 $213 $179 $215
Royalties 10 10 9 10
Production taxes 3 -- 3 --
Total cash cost $199 $223 $191 $225
Depreciation 31 60 34 60
Amortization 20 20 21 21
Reclamation 12 11 11 11
Total production cost $262 $314 $257 $317
ECHO BAY MINES
Consolidated Statement of Operations
(Unaudited)
Thousands of
U.S. dollars, Three months Six Months
except for per ended June 30 ended June 30
share data 2000 1999 2000 1999
Revenue $84,293 $50,862 $136,090 $99,644
Expenses:
Operating costs 48,880 34,833 79,089 67,246
Royalties 2,440 1,567 4,002 3,315
Production taxes 807 43 1,332 129
Depreciation and
amortization 14,231 13,616 25,929 26,417
Reclamation and
mine closure 2,979 1,709 5,248 3,525
General and
administrative 2,043 2,034 3,629 3,907
Exploration and
development (1) 1,407 1,889 7,430 4,006
Interest and other 1,613 2,106 3,636 3,060
74,400 57,797 130,295 111,605
Earnings (loss)
before income taxes 9,893 (6,935) 5,795 (11,961)
Income tax expense
(recovery):
Current 25 96 100 171
Deferred (300) -- (1,800) --
(275) 96 (1,700) 171
Net earnings (loss) $10,168 $(7,031) $7,495 $(12,132)
Net earnings (loss)
attributable to
common shareholders $6,320 $(10,455) $22 $(18,781)
Earnings (loss)
per share (2) $0.04 $(0.07) $0.00 $(0.13)
Weighted average
number of shares
outstanding 140,607,145 140,607,145 140,607,145 140,607,145
(1) Includes Lupin start-up costs of $4.8 million in 2000 and Lupin
holding costs of $1.1 million in 1999.
(2) 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 $3.8 and $7.5 million
for the three and six months ended June 30, 2000 and $3.4 and
$6.6 million for the three and six months ended June 30, 1999.
ECHO BAY MINES
Consolidated Balance Sheet
(Unaudited)
June 30 December 31 June 30
Thousands of U.S. dollars 2000 1999 1999
Assets
Current assets:
Cash and cash equivalents $10,954 $3,401 $6,237
Short-term investments 1,992 2,042 2,755
Interest and accounts
receivable 3,189 2,942 2,874
Inventories 48,427 37,204 39,391
Prepaid expenses and
other assets 14,042 15,621 8,296
78,604 61,210 59,553
Plant and equipment 152,006 167,438 182,582
Mining properties 76,028 81,959 87,439
Long-term investments
and other assets 23,187 29,255 29,960
$329,825 $339,862 $359,534
Liabilities and shareholders equity
Current liabilities:
Accounts payable and
accrued liabilities $27,625 $29,961 $27,267
Income and mining
taxes payable 4,274 3,004 2,903
Gold and other financings 15,000 13,750 12,128
Deferred income 10,512 10,525 25,951
57,411 57,240 68,249
Gold and other financings 41,717 42,919 44,137
Deferred income 67,312 83,374 68,807
Other long term obligations 51,202 47,847 45,246
Deferred income taxes 5,391 7,381 7,822
Common shareholders' equity:
Common shares 713,343 713,343 713,343
Capital securities 132,120 124,616 117,538
Deficit (714,822) (714,844) (682,656)
Foreign currency translation (23,849) (22,014) (22,952)
106,792 101,101 125,273
$329,825 $339,862 $359,534
ECHO BAY MINES
Consolidated Statement of Cash Flow
(Unaudited)
Thousands of
U.S. dollars, Three months Six Months
except for per ended June 30 ended June 30
share data 2000 1999 2000 1999
Cash Provided from
(Used in):
Operating Activities
Net earnings (loss) $10,168 $(7,031) $7,495 $(12,132)
Add (deduct):
Depreciation and
amortization 14,231 13,616 25,929 26,417
Deferred income
included in revenue (7,155) (2,144) (10,935) (3,613)
Deferral of gains
on restructuring of
hedge commitments 751 3,877 874 7,659
Deferred income taxes (300) -- (1,800) --
Net gain on sale
of other assets (189) (61) (204) (524)
Other 214 2,113 423 3,555
Change in cash invested
in operating assets
and liabilities:
Interest and
accounts receivable (171) 1,469 (250) 865
Inventories 1,902 1,307 (11,912) (438)
Prepaid expenses
and other assets 789 1,167 801 1,026
Accounts payable
and other
liabilities (2,427) (1,473) 2,765 (4,495)
Income and mining
taxes payable 800 (83) 1,294 (76)
18,613 12,757 14,480 18,244
Investing Activities
Mining properties,
plant and equipment (3,113) (7,750) (7,775) (15,839)
Long-term investments
and other assets (150) (15) (545) (5,014)
Proceeds on repurchase
of gold forward sales -- -- -- 1,500
Short-term investments -- -- -- 485
Proceeds on sale of
plant and equipment 291 193 335 261
Other 41 (605) 1,308 (1,227)
(2,931) (8,177) (6,677) (19,834)
Financing Activities
Currency borrowings 2,000 3,000 12,000 11,000
Debt repayments (9,125) (4,773) (12,250) (9,771)
Other -- -- -- (1,389)
(7,125) (1,773) (250) (160)
Net decrease in cash
and cash equivalents 8,557 2,807 7,553 (1,750)
Cash and cash
equivalents,
beginning of period 2,397 3,430 3,401 7,987
Cash and cash
equivalents,
end of period $10,954 $6,237 $10,954 $6,237
ECHO BAY MINES
Mine Operating Data
U.S. dollars, Three months Six months
except where ended June 30 ended June 30
indicated 2000 1999 2000 1999
Round Mountain (50% owned)
Gold produced (ounces):
Heap leached -
reusable pad (50%) 18,452 16,619 36,220 35,957
Heap leached -
dedicated pad (50%) 41,114 24,198 73,487 49,433
Milled (50%) 16,842 27,970 36,720 43,082
Other (50%) -- 1,978 1,935 1,978
Total (50%) 76,408 70,765 148,362 130,450
Mining cost/ton
of ore and waste $0.82 $0.69 $0.82 $0.71
Heap leaching
cost/ton of ore $0.63 $0.65 $0.60 $0.69
Milling cost/ton of ore $2.80 $3.03 $2.85 $3.17
Production cost per
ounce of gold produced:
Direct mining expense $206 $194 $211 $214
Deferred stripping
costs (4) (4) (11) (16)
Inventory movements
and other -- 5 (6) 9
Cash operating costs 202 195 194 207
Royalties 23 14 17 17
Production taxes 1 -- 1 --
Total cash costs 226 209 212 224
Depreciation 45 45 46 46
Amortization 18 18 18 18
Reclamation and
mine closure 9 9 9 9
Total production costs $298 $281 $285 $297
Heap leached on
reusable leach pads:
Ore processed
(tons/day) (100%) 27,630 10,536 27,784 14,669
Tons ore processed
(000 tons) (100%) 2,514 959 5,057 2,670
Grade (ounce/ton) 0.030 0.034 0.028 0.036
Recovery rate (%) 58.1 73.1 59.9 73.8
Heap leached on
dedicated leach pads:
Ore processed
(tons/day) (100%) 145,198 118,334 145,236 104,991
Tons ore processed
(000 tons) (100%) 13,213 10,768 26,433 19,108
Grade (ounce/ton) 0.011 0.011 0.011 0.011
Recovery rate (1)
Milled :
Ore processed
(tons/day) (100%) 8,581 7,711 8,322 7,493
Tons ore processed
(000 tons) (100%) 781 702 1,515 1,364
Grade (ounce/ton) 0.051 0.079 0.049 0.083
Recovery rate (%) 82.9 88.5 83.9 87.7
(1) Estimated at 50%. Actual recoveries will not be known until leaching
is complete.
ECHO BAY MINES
Mine Operating Data (continued)
U.S. dollars, Three months Six months
except where ended June 30 ended June 30
indicated 2000 1999 2000 1999
McCoy/Cove (100% owned)
Gold produced (ounces):
Milled 33,005 16,039 61,703 36,696
Heap leached 16,443 13,537 30,891 24,994
Total gold 49,448 29,576 92,594 61,690
Silver produced
(ounces):
Milled 3,229,514 1,848,331 6,844,790 4,432,671
Heap leached 352,384 70,148 580,054 150,646
Total silver 3,581,898 1,918,479 7,424,844 4,583,317
Mining cost/ton
of ore and waste $0.70 $0.60 $0.72 $0.66
Milling cost/ton
of ore $6.75 $5.57 $6.77 $6.10
Heap leaching
cost/ton of ore $1.91 $1.56 $1.80 $1.63
Production cost
per ounce of
gold produced:
Direct mining
expense $155 $244 $160 $213
Deferred stripping
costs 5 (26) (3) (10)
Inventory movement
and other 3 4 (1) 12
Cash operating costs 163 222 156 215
Royalties 3 2 3 2
Production taxes 6 -- 5 --
Total cash cost 172 224 164 217
Depreciation 22 52 23 50
Amortization 28 27 28 27
Reclamation 11 11 11 11
Total production cost $233 $314 $226 $305
Average gold-to-silver
price ratio (1) 55.1:1 53.4:1 55.5:1 53.9:1
Milled:
Ore processed
(tons/day) 11,313 13,664 11,257 12,590
Tons ore processed
(000 tons) 1,029 1,243 2,049 2,291
Gold grade
(ounce/ton) 0.054 0.030 0.057 0.032
Silver grade
(ounce/ton) 3.78 2.46 4.44 2.77
Gold recovery
rate (%) 52.2 36.3 54.0 40.5
Silver recovery
rate (%) 72.7 58.7 72.5 62.7
Heap leached:
Ore processed
(tons/day) 9,010 14,029 9,942 12,809
Tons ore processed
(000 tons) 820 1,277 1,809 2,331
Gold grade
(ounce/ton) 0.019 0.019 0.024 0.022
Silver grade
(ounce/ton) 0.83 0.22 0.96 0.23
Recovery rates (2)
(1) To convert cost per ounce of gold into comparable costs per ounce of
co-product silver, divide the production cost per ounce of gold by
the period's average gold-to-silver price ratio.
(2) Dedicated leach pads are used at this site. Recovery rates can only
be estimated, as actual recovery rates will not be known until
leaching is complete. The ultimate recovery rate is estimated to be
about 68% for crushed and 48% for uncrushed gold and 35% for crushed
and 10% for uncrushed silver.
ECHO BAY MINES
Mine Operating Data (continued)
U.S. dollars, Three months Six months
except where ended June 30 ended June 30
indicated 2000 1999 2000 1999
Lupin (100% owned)
Gold produced
(ounces) 38,359 n/a 38,359 n/a
Mining cost/ton of ore
(Canadian dollars) C$38.50 n/a C$38.50 n/a
Milling cost/ton of ore
(Canadian dollars) C$14.45 n/a C$14.45 n/a
Production cost per
ounce of gold produced:
Direct mining cost
(Canadian dollars) C$341 n/a C$341 n/a
Deferred mine
development cost
(Canadian dollars) (4) n/a (4) n/a
Inventory movement
and other
(Canadian dollars) -- n/a -- n/a
Cash operating cost
(Canadian dollars) C$337 n/a C$337 n/a
Cash operating cost
(U.S. dollars) $213 n/a $213 n/a
Royalties -- n/a -- n/a
Production taxes -- n/a -- n/a
Total cash cost $213 n/a $213 n/a
Depreciation 28 n/a 28 n/a
Amortization 9 n/a 9 n/a
Reclamation 17 n/a 17 n/a
Total production cost $267 n/a $267 n/a
Milled:
Ore processed
(tons/day) 1,934 n/a 1,934 n/a
Tons ore processed
(000 tons) 176 n/a 176 n/a
Grade (ounce/ton) 0.235 n/a 0.235 n/a
Recovery rate (%) 92.9% n/a 92.9% n/a
Kettle River (100% owned)
Gold produced (ounces) 24,260 24,715 49,330 51,680
Mining cost/ton of ore $20.01 $23.91 $21.06 $24.05
Milling cost/ton of ore $11.15 $11.21 $11.51 $11.16
Production cost per
ounce of gold produced:
Direct mining expense $238 $254 $238 $242
Deferred mine
development -- -- -- --
Inventory movement
and other (37) (11) (24) (7)
Cash operating costs 201 $243 214 $235
Royalties 13 18 13 15
Production taxes 1 1 1 1
Total cash cost 215 262 228 251
Depreciation 10 72 10 69
Amortization 8 8 8 8
Reclamation 15 15 15 15
Total production cost $248 $357 $261 $343
Milled:
Ore processed
(tons/day) 1,378 1,624 1,443 1,641
Tons ore processed
(000 tons) 125 148 263 299
Grade (ounce/ton) 0.223 0.200 0.221 0.204
Recovery rate (%) 86.9 83.7 85.0 85.0
Gold Hedge Position
At July 28, 2000
Strike
Forward Price Put options price
sales per purchased per
(ounces) ounce (ounces) ounce
3Q00 63,750 $313 42,500 $270
4Q00 53,750 314 42,500 270
2000 117,500 314 85,000 270
2001 115,000 312 -- --
2002 60,000 310 -- --
2003 60,000 310 -- --
2004 60,000 310 -- --
2005 15,000 310 -- --
427,500 $312 85,000 $270
Average
price Deferred
Total per revenue(1)
(ounces) ounce (millions)
3Q00 106,250 $296 $4.6
4Q00 96,250 295 6.8
2000 202,500 295 11.4
2001 115,000 312 17.0
2002 60,000 310 30.9
2003 60,000 310 (2.5)
2004 60,000 310 (7.0)
2005 15,000 310 (1.3)
512,500 $305 $48.5
(1) Gains (losses) on the repurchase or restructuring of gold hedge
positions are recognized in revenue in the period in which the gold
was originally scheduled for delivery. Amounts also include gold
option premiums to be recognized.
Strike Strike
Call options price Call options price
sold per purchased(2) per
(ounces) ounce (ounces) ounce
3Q00 42,500 $360 33,750 $349
4Q00 42,500 360 33,750 349
2000 85,000 360 67,500 349
2001 -- -- 105,000 351
2002 -- -- 60,000 360
2003 -- -- 60,000 360
2004 -- -- 60,000 360
2005 105,000 340 120,000 395
190,000 $349 472,500 $365
(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.
Silver Hedge Position
At July 28, 2000
Forward Put options Strike
sales(1) Price purchased price
(000 per (000 per
ounces) ounce ounces) ounce
3Q00 900 $5.46 250 $6.00
4Q00 900 5.46 250 6.00
2000 1,800 5.46 500 6.00
2001 1,800 5.79 1,000 6.00
3,600 $5.62 1,500 $6.00
Average
Total price Deferred
(000 per revenue(2)
ounces) ounce (millions)
3Q00 1,150 $5.58 $0.2
4Q00 1,150 5.58 0.1
2000 2,300 5.58 0.3
2001 2,800 5.87 (0.5)
5,100 $5.73 $(0.2)
(1) 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.
(2) Gains (losses) 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.
Put options Strike Call options Strike
sold(1) price purchased(2) price
(000 per (000 per
ounces) ounce ounces) ounce
3Q00 250 $4.75 -- $--
4Q00 250 4.75 -- --
2000 500 4.75 -- --
2001 2,500 4.75 1,500 6.60
3,000 $4.75 3,000 $6.60
(1) Put options were sold to finance the call options described in
footnote 3 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:
Lois-Ann L. Brodrick, Vice President and
Secretary of Echo Bay Mines Ltd., 303-714-8838
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