ENGLEWOOD, Colo., Nov. 1 /PRNewswire/ -- Echo Bay Mines Ltd.
(Amex: ECO; Toronto) today reported a third quarter net loss of $6.1 million
before a $13.8 million loss on the disposition of its interest in a
development project. The total loss for the quarter was $19.9 million. This
compares with a net loss of $6.0 million the same quarter a year ago. After
including the equity portion of the interest on the company's capital
securities, the loss per share for the current quarter was $0.17 per share,
compared with a $0.06 per share loss a year ago.
Revenue was down slightly this quarter compared with a year ago
($54.2 million compared with $55.6 million) as a result of fewer gold ounces
sold. As expected, gold production from McCoy/Cove was down as the mill
processed fewer and lower grade tons from stockpiles as the next phase of
development was being prepared. The lower gold sales were mostly offset by
higher gold and silver prices realized on a revenue basis, a result of the
company's hedging program, and more silver ounces sold. Echo Bay's hedge
program helped it to achieve an average cash price of $340 per ounce of gold
and $5.14 per ounce of silver. These prices compared favorably with the
average spot prices during the quarter of $257 per ounce gold and $5.24 per
ounce of silver.
Gold production was 127,995 ounces, compared with 148,563 ounces in the
same quarter in 1998. The principal reason for the decrease was the
processing of low grade stockpile materials at McCoy/Cove. Silver production
was 1.3 million ounces, compared with 2.0 million ounces the previous year.
Silver ounces sold increased to 2.0 million ounces, compared with 1.7 million
ounces in the same period the previous year. The difference in ounces sold
and ounces produced relates to inventory changes.
Consolidated cash operating costs rose by $18 per ounce in the third
quarter when compared with the same quarter the previous year. Higher
production and lower costs at the Round Mountain mine only partially offset
lower production at both McCoy/Cove and Kettle River. Cost saving efforts
helped site spending remain relatively flat but, due to the smaller number of
ounces produced, cost per ounce rose.
The company ended the quarter with cash and short-term investments of
$7.4 million. The company generated $10.6 million from operations during the
quarter and invested $8.2 million, principally on deferred stripping and plant
and equipment additions. During the quarter, the company made scheduled debt
repayments of $3.3 million and did not draw from the $26 million remaining on
its $50 million revolving credit facility. Subsequent to the end of the
quarter, $6.0 million was borrowed on this facility, the majority for
transactions related to the partial repurchase and restructuring of the
company's gold and silver hedge positions discussed below.
Paredones Amarillos Mill to Benefit Aquarius Economics
In October, Echo Bay 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, located in Baja California Sur, Mexico.
Upon completion of the transaction, Echo Bay will exchange its interest in the
project for Viceroy's interest in a decommissioned semi-autogenous grinding
(SAG) circuit and a 2% royalty. Echo Bay will incorporate the circuit in its
development plans for Aquarius (100%), located in Ontario, Canada, lowering
the project's capital requirements.
Paredones Amarillos is a relatively small project with 1.45 million ounces
of fully-defined gold reserves. Development of the project was halted in
1997 after the gold price declined to below $300 per ounce. Prior to that
decision, the joint venture partners had purchased a used mill for the
project. Over the last two years, the partners have evaluated different
development and operating alternatives for Paredones Amarillos and found them
limited. With the economics reflected in the project's existing feasibility
study, an acceptable rate of return on investment would only occur at gold
prices above $375 per ounce.
Since becoming involved in 1995, Echo Bay had capitalized $13.4 million
relating to the Paredones Amarillos project and had a $3.0 million receivable
from Viceroy's carried interest in the project. The loss recorded on the
disposition in the quarter was net of the value attributable to the mill,
which will be transferred to the Aquarius project upon completion of this
transaction.
An in-house reengineering study on the Aquarius project indicates that
incorporating the SAG circuit in the development plan enhances the project's
economics. Bids are being solicited to complete a detailed feasibility study,
which will take into account this improvement and others identified by the
reengineering study.
A construction decision was made on Aquarius in early 1997 but activities
were suspended later in the year as gold prices fell. Construction of a
freeze wall was completed and resulted in a $40 million investment in the
project. With the promise of enhanced project economics, the investment made
to date and the upside potential represented by the company's extensive land
holdings in the region, Aquarius represents an excellent near-term opportunity
in an improving gold market. The revised feasibility study will be completed
mid-2000.
Revised Hedge Program Reflects Improving Gold Market
Late in September, the gold price began to rise as a result of the
announcement by 15 European central banks that they would limit both gold
sales and gold leasing over the next five years. This positive news helped
the gold price rise above $300 per ounce for the first time in almost a year.
Echo Bay closed some of it hedge positions and revised others late in
September. The goal was to provide some downside protection while allowing
participation in the improving market and giving full consideration to margin
deposit requirements. As a result, the company reduced its forward sales
position by a third and bracketed them with purchased calls to allow for
upside participation. The company also bought put options to provide downside
protection and eliminated half of its long-term call options sold. Please see
the tables at the end of this press release for a detail breakout of the
company's gold and silver hedge positions.
Over the last three years, Echo Bay's hedging program has contributed over
$120 million to the company's cash flow. Echo Bay uses hedging to allow it to
guarantee cash flows, helping ensure that the company can meet its
obligations. The net cash cost to the company of buying back certain of it
hedge positions was $4.8 million. The gains and losses comprising the net
loss will be reflected in revenues in the periods in which the hedged
production was originally scheduled for delivery. The company continually
monitors its hedge position in light of changing market conditions and with
the goal of mitigating the associated risks.
Exploration and Development
Exploration at and around the operating mines and development sites has
identified a number of targets for additional work. Outside of the operating
properties, Echo Bay has secured a number of favorable land positions in
Nevada, Arizona and Utah with limited up front costs. It considers these
properties an investment in the future and opportunities that can be advanced
more aggressively with higher gold prices.
Echo Bay's most advanced exploration property is Youga, located in Burkina
Faso, West Africa (a 50/50 joint venture, with Ashanti Goldfields as the
operator). A feasibility study is currently under way and will include
additional development drilling and metallurgical work. Based on the
identified geological resource, preliminary work by Ashanti has identified the
potential for a 100,000 ounce per year open pit operation (100% basis) with
cash costs below $200 per ounce. Other targets on the Youga concession are
being investigated as well as on the adjacent Bitou concession.
Round Mountain - Higher Production, Lower Cash Cost
Production from the Round Mountain mine, located in central Nevada
(Echo Bay 50%), was almost 8% higher than the same quarter a year ago. Echo
Bay's portion of total gold production rose to 74,422 ounces from
69,143 ounces in the same quarter of 1998. The majority of the increase came
from improved mill recoveries and in-process inventory carryovers from the
previous quarter. The ore was associated with a high-grade feeder structure.
This ore contributed to the mill producing 22,580 ounces of gold, compared
with 12,962 ounces in 1998. This feeder structure was also the source for
over 9,000 ounces of nuggety gold that was recovered from the site's gravity
plant. Cash costs were down as a result of the higher production.
Tons of ore and waste mined during the period increased by over 9% as
compared to the third quarter of 1998. The expansion of the northwestern
portion of the pit is nearly complete, which resulted in the strip ratio
declining as mining reached ore during the quarter. Loading of the dedicated
pads increased by 55% quarter over quarter with the majority of this ore being
placed on the recently expanded west dedicated pad. Leaching will begin on
this portion of the pad mid-November with production expected in the first
quarter of 2000.
In July the site produced its five millionth ounce of gold (100%) since
Echo Bay took over as operator of the property in 1985. Exploration efforts
are ongoing and have proven successful at adding to reserves through the
years. The joint venture partners are now in the second year of a multi-year
exploration program directed at identifying and exploring targets within the
area of mutual interest associated with Round Mountain. Several targets have
been identified as promising and exploration drilling continues.
McCoy/Cove - Lower Grade Stockpiles Processed During the Quarter
At McCoy/Cove in Nevada, gold production was better than planned but down
by 42% when compared with the same quarter a year ago. This was the result of
fewer tons and lower grades being processed through the mill as well as fewer
tons being placed under leach. The majority of the ore treated during the
quarter was from stockpiles as the site was preparing the next phase of mining
and was moving mostly waste. This phase of mining only became accessible
after completion of the remediation of the Cove high wall in June.
During the quarter, low-grade ore types, with corresponding lower
recoveries, were milled. The ore types processed reduced throughput by
approximately 11%. These factors, when combined with fewer tons placed under
leach, resulted in cash operating costs increasing $57 per ounce this quarter
over the same quarter the previous year. Cost reduction efforts helped offset
some of the increase from lower production. Higher-grade ores, with
corresponding higher recoveries, will be accessed by the end of the year and
will improve both production and cash operating costs in 2000.
The Cove East underground will have produced over 23,000 gold-equivalent
ounces when mining of this particular area is completed in the fourth quarter.
Drifting done for the development of the Cove East deposit has been utilized
to provide access for exploration drilling on the Cove South Deep target.
The Cove South Deep target has two zones of mineralization. The upper
zone is smaller and relatively well defined. Exploration drifting has allowed
the company to verify ore continuity, obtain bulk samples for metallurgical
evaluation and perform additional underground definition drilling. Economics
for the upper zone appear favorable and warrant development. The company
anticipates 45,000 gold-equivalent ounces of production from this area
starting in early 2000. Additional work is currently under way to determine
the economic viability of the lower zone of mineralization. Other underground
targets have also been identified and will be explored over the next several
months.
Kettle River: Deeper Mining Producers Fewer Tons for Processing
At Kettle River in the state of Washington, gold production declined from
29,363 ounces in the third quarter of 1998 to 24,400 ounces in the third
quarter of 1999. Mining slows as it continues deeper in the ore bodies and as
haul distances increase. This slower mining rate resulted in fewer tons
available for processing, down almost 15% from the same quarter the previous
year. Grades and recoveries remained relatively unchanged. Cost controls
helped the site limit the impact of the lower production on their cost per
ounce, which increased to $257 per ounce from $241 per ounce the same period
the previous year.
Additional mineralization is being investigated to the east of the K-2
deposit. Drilling will be done on this material within the next several
months. While this mineralization appears to be limited in nature, it has the
potential to extend the life of Kettle River allowing additional regional
exploration to continue.
Year 2000 Update
As required by the Toronto Stock Exchange, Echo Bay is providing in this
release an update on its Year 2000 preparedness. The company has completed
the planned modification to its information technology and the related user
testing, as well as modifications to critical operating systems and equipment.
The company has also developed contingency plans for other equipment and for
the short-term interruption of power and critical operating supplies.
Echo Bay believes that its systems are Year 2000 compliant but
acknowledges that additional upgrades may be required after December 31, 1999.
It is not possible to be certain that all aspects of the Year 2000 issue
affecting the company, including those related to the efforts of suppliers or
other third parties, have been fully resolved.
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 future changes in gold
prices, which could render projects uneconomic; differences in ore grades,
recovery rates, and tons mined from those expected; changes in mining and
milling rates from currently planned rates; the results of future exploration
activities and new exploration opportunities; conclusions of feasibility
studies now under way; 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 Nine months
ended September 30 ended September 30
U.S. dollars 1999 1998 1999 1998
Financial Data
Revenue (millions) $54.2 $55.6 $153.9 $173.8
Net loss (millions) $(19.9) $(6.0) $(32.0) $(11.6)
Gold ounces sold (1) 124,492 140,044 346,602 415,915
Silver ounces
sold (1) 2,004,113 1,681,081 7,105,224 5,881,786
Average price
realized - revenue
basis: (2)
Per ounce of
gold sold $321 $318 $324 $332
Per ounce of
silver sold $7.10 $6.59 $5.87 $6.08
Average price
realized - cash
basis: (3)
Per ounce of
gold sold $340 $338 $345 $342
Per ounce of
silver sold $5.14 $5.18 $5.23 $5.47
Cash operating costs:
Per ounce of
gold produced $220 $202 $216 $206
Per ounce of
silver produced $5.26 $3.60 $4.30 $4.05
% of revenue
from gold 74% 80% 73% 79%
% of revenue
from silver 26% 20% 27% 21%
Production and Reserves
Production
(ounces): (1)
Gold 127,995 148,563 371,815 421,926
Silver 1,325,650 1,993,141 5,908,967 6,305,770
Reserves
(ounces): (4)
Gold -- -- 6,799,000 7,479,000
Silver -- -- 38,809,000 46,525,000
Per Share Data
Net loss $(0.17) $(0.06) $(0.30) $(0.15)
Shares outstanding
(millions):
Weighted average 140.6 140.6 140.6 139.9
Period end 140.6 140.6 140.6 140.6
(1) Amounts sold differ from amounts produced due to inventory changes.
(2) Includes non-cash items affecting gold and silver revenue, such as the
recognition of deferred income or deferral of revenue to future
periods for hedge accounting purposes.
(3) Prices reported are the cash amounts received per ounce of gold and
silver sold during each period.
(4) Proven and probable reserves at the beginning the year (includes
869,000 ounces of reserves associated with Paredones Amarillos, which
the company agreed to sell during the quarter).
ECHO BAY MINES
Production and Costs
Three months Nine months
ended September 30 ended September 30
1999 1998 1999 1998
Gold Production
(ounces)
Round Mountain (50%) 74,422 69,143 204,872 208,230
McCoy/Cove 29,173 50,057 90,863 125,501
Kettle River 24,400 29,363 76,080 88,195
Total gold 127,995 148,563 371,815 421,926
Silver Production
(ounces)
McCoy/Cove 1,325,650 1,993,141 5,908,967 6,305,770
Total silver 1,325,650 1,993,141 5,908,967 6,305,770
Cash Operating Costs
(U.S. dollars per
ounce of gold
produced)
Round Mountain $178 $186 $197 $189
McCoy/Cove (1) 258 201 227 208
Kettle River 257 241 242 241
Company average $220 $202 $216 $206
Consolidated Costs
(U.S. dollars per
ounce of gold
produced)
Cash operating costs $220 $202 $216 $206
Royalties 11 11 10 11
Production taxes 1 2 -- 2
Total cash costs 232 215 226 219
Depreciation 63 59 61 60
Amortization 19 27 20 26
Reclamation and
mine closure 10 9 9 10
Total production
costs $324 $310 $316 $315
(1) In 1999, cash operating costs per ounce of silver produced at
McCoy/Cove were $5.26 and $4.30 for the three-month and nine-month
periods respectively, based on average gold-to-silver price ratios of
49.0:1 and 52.7:1 respectively. In 1998, cash operating costs per
ounce of silver produced at McCoy/Cove were $3.60 and $4.05 for the
three-month and nine-month periods respectively, based on average
respective price ratios of 55.8:1 and 51.4:1.
ECHO BAY MINES
Consolidated Statement of Operations
(Unaudited)
Thousands of U.S.
dollars, except
for per share Three months Nine months
data ended September 30 ended September 30
1999 1998 1999 1998
Revenue $54,211 $55,613 $153,855 $173,814
Expenses:
Operating costs 35,849 34,649 103,095 110,387
Royalties 1,727 1,959 5,042 5,899
Production taxes 85 369 214 1,052
Depreciation and
amortization 13,999 14,793 40,416 46,111
Reclamation and
mine closure 1,617 1,616 5,142 4,803
General and
administrative 1,723 1,927 5,630 6,251
Exploration and
development 1,892 2,462 5,898 8,244
Loss (gain) on
sale of interests
in mining and other
properties (1) 13,795 -- 13,795 (7,447)
Interest and
other (1) 3,445 3,756 6,505 9,818
74,132 61,531 185,737 185,118
Loss before
income taxes (19,921) (5,918) (31,882) (11,304)
Income tax expense
(recovery):
Current (28) 105 143 279
Deferred -- 20 -- 20
(28) 125 143 299
Net loss $(19,893) $(6,043) $(32,025) $(11,603)
Net loss
attributable
to common
shareholders $(23,312) $(9,089) $(42,093) $(20,806)
Loss per
share (2) $(0.17) $(0.06) $(0.30) $(0.15)
Weighted average
number of shares
outstanding 140,607,145 140,607,145 140,607,145 139,909,286
(1) Certain of the comparative figures have been reclassified to conform
with the current period's presentation.
(2) Echo Bay's financial statements are prepared in accordance with
accounting principles generally accepted in Canada. Loss per share
equals the net loss attributable to common shareholders for the
period, which includes the equity portion of the interest on the
$100 million capital securities in the period (a portion of the
interest is charged directly to the deficit in common shareholders'
equity on the company's consolidated balance sheet, rather than being
charged to the interest on the consolidated earnings statement of
operations), 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 $3.4 million and $3.0 million in the third quarters of
1999 and 1998 respectively, and $10.1 million and $9.2 million in the
nine months ended September 30, 1999 and 1998 respectively.
ECHO BAY MINES
Consolidated Balance Sheet
(Unaudited)
Sept. 30 Dec. 31 Sept. 30
Thousands of U.S. dollars 1999 1998 1998
Assets
Current assets:
Cash and cash equivalents $5,423 $7,987 $13,333
Short-term investments 1,999 3,336 3,624
Interest and accounts
receivable 3,771 3,585 3,063
Inventories 37,348 37,929 42,786
Prepaid expenses and
other assets 14,320 6,635 6,470
62,861 59,472 69,276
Plant and equipment 175,169 196,670 207,850
Mining properties 78,305 95,738 97,922
Long-term investments
and other assets 32,279 16,196 15,012
$348,614 $368,076 $390,060
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and
accrued liabilities (1) $36,001 $43,609 $57,382
Income and mining
taxes payable 2,876 2,941 2,547
Current portion of gold
and other financings (2) 13,125 11,652 12,602
Current portion of
deferred income (1) 33,169 15,182 14,975
85,171 73,384 87,506
Long-term gold and
other financings (2) 40,374 41,119 43,856
Long-term deferred income (1) 64,835 64,363 64,757
Other long-term obligations (1) 46,034 47,943 42,142
Deferred income taxes 7,225 7,513 7,664
Common shareholders' equity:
Common shares 713,343 713,343 713,343
Capital securities 121,123 110,862 107,879
Deficit (705,968) (663,875) (652,126)
Foreign currency
translation (23,523) (26,576) (24,961)
104,975 133,754 144,135
$348,614 $368,076 $390,060
(1) Certain prior-period items have been reclassified to conform with
current presentation.
(2)Total gold and other financings were $53.5million at September 30,
1999 (including current portion of $13.1 million), down $3.0 million
from $56.5 million at September 30, 1998 (including current portion of
$12.6 million).
ECHO BAY MINES
Consolidated Statement Of Cash Flow
(Unaudited)
Three months Nine months
Thousands of ended September 30 ended September 30
U.S. dollars 1999 1998 1999 1998
Cash Provided
From (Used in):
Operating Activities
Net loss $(19,893) $(6,043) $(32,025) $(11,603)
Add (deduct):
Depreciation and
amortization 13,999 14,793 40,416 46,111
Loss on sale of
interest in
development
property 13,795 -- 13,795 --
Deferred income
included in
revenue (4,040) (2,377) (7,653) (3,589)
Deferral of gains
on restructuring
of hedge
commitments 3,418 2,586 11,077 3,659
Loss (gain) on
sale of assets 339 (188) (185) (7,569)
Unrealized losses
on share
investments 731 1,607 1,508 2,813
Other 920 1,152 3,698 470
Change in cash
invested in
operating assets
and liabilities:
Interest and
accounts receivable (819) 295 46 2,421
Inventories 495 (2,777) 57 675
Prepaid expenses
and other assets (732) (3,204) 294 (1,733)
Accounts payable
and other
liabilities 2,436 46 (2,059) (25,472)
Income and mining
taxes payable (21) (1,455) (97) (906)
10,628 4,435 28,872 5,277
Investing Activities
Mining properties,
plant and equipment (8,060) (7,061) (23,899) (16,927)
Long-term investments
and other assets (161) (117) (5,175) (570)
Proceeds on repurchase
of gold forward sales -- -- 1,500 8,673
Short-term investments -- -- 485 3,018
Proceeds on sale of
plant and equipment 141 734 402 3,184
Proceeds on sale of
investment in Santa
Elina -- -- -- 6,252
Proceeds on sale of
mining properties -- -- -- 1,195
Other (77) 495 (1,304) (57)
(8,157) (5,949) (27,991) 4,768
Financing Activities
Currency borrowings -- -- 11,000 --
Debt repayments (3,285) (4,999) (13,056) (13,327)
Other -- (112) (1,389) (338)
(3,285) (5,111) (3,445) (13,665)
Net decrease in cash
and cash equivalents (814) (6,625) (2,564) (3,620)
Cash and cash
equivalents,
beginning of period 6,237 19,958 7,987 16,953
Cash and cash
equivalents, end of
period $5,423 $13,333 $5,423 $13,333
ECHO BAY MINES
Mine Operating Data
U.S. dollars, Three months Nine months
except where ended September 30 ended September 30
indicated 1999 1998 1999 1998
Round Mountain Mine
(50% owned)
Gold produced (ounces):
Reusable heap
leach pad (50%) 14,966 18,400 50,923 77,045
Dedicated heap
leach pad (50%) 27,753 36,336 77,186 90,282
Milled (50%) 22,580 12,962 65,662 37,602
Other (50%) 9,123 1,445 11,101 3,301
Total (50%) 74,422 69,143 204,872 208,230
Ore and waste mined
(tons) (100%) 20,371,000 18,640,000 58,172,000 52,081,000
Mining cost/ton of
ore and waste $0.69 $0.66 $0.70 $0.65
Heap leaching
cost/ton of ore $0.70 $0.89 $0.70 $0.70
Milling cost/ton
of ore $2.70 $3.25 $3.00 $3.42
Production cost
per ounce of
gold produced:
Direct mining
expense $206 $199 $211 $190
Deferred mining
cost (7) (7) (13) 3
Inventory movements
and other (21) (6) (1) (4)
Cash operating
cost 178 186 197 189
Royalties 17 20 17 20
Production taxes -- 2 -- 2
Total cash cost 195 208 214 211
Depreciation 45 44 46 42
Amortization 18 17 18 18
Reclamation and
mine closure 9 7 9 7
Total production
cost $267 $276 $287 $278
Reusable heap
leach pad:
Ore processed
(tons/day) (100%) 14,734 16,167 14,691 20,801
Grade (ounce/ton) 0.037 0.032 0.036 0.037
Recovery rate (%) 69.2 61.6 72.4 69.6
Dedicated heap
leach pad:
Ore processed
(tons/day) (100%) 137,308 88,297 115,763 108,429
Grade (ounce/ton) 0.011 0.010 0.011 0.010
Recovery rate (1)
Milled:
Ore processed
(tons/day) (100%) 8,815 8,055 7,934 7,895
Gold grade
(ounce/ton) 0.043 0.044 0.068 0.047
Gold recovery
rate (%) 86.5 79.4 87.4 76.6
McCoy/Cove Mine
(100% owned)
Gold produced (ounces):
Milled 21,997 36,504 58,693 84,385
Heap leached 7,176 13,553 32,170 41,116
Total gold 29,173 50,057 90,863 125,501
Silver produced
(ounces):
Milled 1,250,475 1,907,457 5,683,146 5,988,628
Heap leached 75,175 85,684 225,821 317,142
Total silver 1,325,650 1,993,141 5,908,967 6,305,770
Ore and waste
mined (tons) 8,087,857 12,188,334 32,552,520 30,709,634
Mining cost/ton
of ore and waste $0.78 $0.68 $0.69 $0.69
Milling cost/ton
of ore $6.94 $5.74 $6.36 $5.94
Heap leaching
cost/ton of ore $2.04 $1.90 $1.74 $1.67
ECHO BAY MINES
Mine Operating Data (continued)
U.S. dollars, Three months Nine months
except where ended September 30 ended September 30
indicated 1999 1998 1999 1998
McCoy/Cove Mine
(continued)
Production cost
per ounce of
gold produced: (2)
Direct mining
expense $332 $198 $246 $211
Deferred mining
cost (74) -- (28) (9)
Inventory movements
and other -- 3 9 6
Cash operating
cost 258 201 227 208
Royalties 2 3 2 3
Production taxes -- 2 -- 2
Total cash cost 260 206 229 213
Depreciation 56 50 51 54
Amortization 26 42 27 40
Reclamation and
mine closure 10 9 11 9
Total production
cost $352 $307 $318 $316
Average gold-to-silver
price ratio (2) 49.0:1 55.8:1 52.7:1 51.4:1
Milled:
Ore processed
(tons/day) 11,251 12,675 12,144 11,932
Gold grade
(ounce/ton) 0.040 0.054 0.035 0.044
Silver grade
(ounce/ton) 2.39 2.95 2.65 2.67
Gold recovery
rate (%) 52.8 63.0 44.9 57.4
Silver recovery
rate (%) 51.3 66.3 59.5 70.3
Heap leached:
Ore processed
(tons/day) 9,655 11,255 11,758 11,779
Gold grade
(ounce/ton) 0.021 0.021 0.022 0.020
Silver grade
(ounce/ton) 0.45 0.23 0.29 0.27
Recovery rate (1)
Kettle River Mine
(100% owned)
Gold produced
(ounces) 24,400 29,363 76,080 88,195
Tons of ore mined 155,011 171,932 468,813 537,442
Mining cost/ton
of ore $24.02 $22.30 $24.04 $21.86
Milling cost/ton
of ore $11.79 $11.76 $11.37 $10.61
Production cost
per ounce of
gold produced:
Direct mining
expense $260 $233 $248 $237
Inventory movements
and other (3) 8 (6) 4
Cash operating
cost 257 241 242 241
Royalties 15 11 15 12
Production taxes 3 1 2 1
Total cash cost 275 253 259 254
Depreciation 77 86 71 73
Amortization 8 5 8 5
Reclamation and
mine closure 15 12 15 12
Total production
cost $375 $356 $353 $344
Milled:
Ore processed
(tons/day) 1,688 1,983 1,656 2,021
Total tons milled 153,588 180,452 452,173 551,807
Grade (ounce/ton) 0.190 0.193 0.199 0.193
Recovery rate (%) 83.8 84.1 84.6 82.8
(1) Recovery rates on dedicated pads can only be estimated, as actual
recoveries will not be known until leaching is complete. At the Round
Mountain mine, the gold recovery rate on the dedicated heap leach pad
is estimated at 50%. At the McCoy/Cove mine, the gold recovery rate
is estimated at 68% for crushed ore and 48% for uncrushed, run-of-mine
ore, and the silver recovery rate is estimated at 35% for crushed ore
and 10% for uncrushed, run-of-mine ore.
(2) To convert costs per ounce of gold into comparable costs per ounce of
co-product silver, divide by the period's average gold-to-silver price
ratio.
Gold Hedge Position
US$ at October 26, 1999
Put
Forward Price options Price
sales per purchased per
(ounces) ounce (ounces) ounce
1999 (2) 89,112 $326 -- $--
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 -- --
557,029 $315 268,750 $273
Average
price Deferred
Total per revenue (1)
(ounces) ounce (millions)
1999 (2) 89,112 $326 $2.4
2000 436,667 287 19.3
2001 105,000 315 17.3
2002 60,000 315 29.1
2003 60,000 315 (2.3)
2004 60,000 315 (6.8)
2005+ 15,000 315 (2.9)
825,779 $302 $56.1
(1) Gains (losses) on the repurchase or restructuring of forward and
option positions and gold loans are recognized in revenue in the
period in which the gold was originally scheduled for delivery.
Amounts also include option premiums to be recognized. The deferred
revenue will be recognized when the originally hedged ounces are
produced.
(2) Represents hedging for 4th quarter of 1999.
Put Average Call Strike Call Strike
options price options price options price
sold per purchased per sold per
(ounces)(1) ounce (ounces)(2) ounce (ounces) ounce
1999 (3) 33,333 $290 33,333 $322 -- $--
2000 66,667 290 167,917 338 187,500 360
2001 -- -- 105,000 351 -- --
2002 -- -- 60,000 360 -- --
2003 -- -- 60,000 360 -- --
2004 -- -- 60,000 360 -- --
2005+ -- -- 120,000 395 105,000 340
100,000 $290 606,250 $357 292,500 $353
(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 gold's spot price falls below $290 per ounce.
(2) Call options were purchased to allow Echo Bay to participate in spot
prices above the call option strike price.
(3) Represents hedging for 4th quarter of 1999.
Silver Hedge Position
US$ at October 26, 1999
Put
Forward options
sales Price purchased Price
(000 per (000 per
ounces) ounce ounces) ounce
1999 (2) 750 $5.34 -- $--
2000 1,500 5.85 1,000 6.00
2001 1,500 5.85 1,000 6.00
3,750 $5.75 2,000 $6.00
Average
Total price Deferred
(000 per revenue (1)
ounces) ounce (millions)
1999 (2) 750 $5.34 ($0.3)
2000 2,500 5.91 0.9
2001 2,500 5.91 (0.5)
5,750 $5.84 $0.1
(1) Gains on the repurchase of forward and option positions are recognized
in revenue in the period in which the silver was originally scheduled
for delivery. Amounts also include option premiums to be recognized.
(2) Represents hedging for 4th quarter of 1999.
Put Call Call
options Strike options Strike options Strike
sold price sold price purchased price
(000 per (000 per (000 per
ounces)(1) ounce ounces) ounce ounces)(2) ounce
1999 (3) -- $-- 835 $5.50 -- $--
2000 2,500 4.75 -- -- 1,500 6.60
2001 2,500 4.75 -- -- 1,500 6.60
5,000 $4.75 835 $5.50 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 allow Echo Bay to participate in spot
prices above the call option strike price.
(3)Represents hedging for 4th quarter of 1999.
SOURCE Echo Bay Mines Ltd.
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Related links:
http://www.echobay.com
Company News On-Call:
http://www.prnewswire.com/comp/269609.html or fax,
800-758-5804, ext. 269609
CONTACT:
Robbin Lee of Echo Bay Mines Ltd.,
303-714-8829
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