Earnings Summary
Dollar amounts in thousands of US dollars,
except amounts per share 2000 1999
THREE MONTHS ENDED SEPTEMBER 30:
Revenue $76,415 $54,211
Net earnings (loss) $8,998 $(19,893)
Net earnings (loss) attributable
to common shareholders $5,154 $(23,312)
Earnings (loss) per share $0.04 $(0.17)
Weighted average common
shares outstanding 140,607,145 140,607,145
ENGLEWOOD, Colo., Nov. 10 /PRNewswire/ -- Echo Bay Mines Ltd.
(Amex: ECO; Toronto) today reported third quarter 2000 net income of
$9.0 million ($0.04 per share). This compares with a net loss of
$19.9 million ($0.17 per share) in the third 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 184,449 ounces, 44 percent
higher than 1999 third quarter production of 127,995 ounces. This year's
quarter reflects the contribution from the Lupin mine of 40,696 ounces after
the successful re-commissioning completed in early April. Silver production
from McCoy/Cove was 2.7 million ounces, approximately double the 1.3 million
ounces produced in 1999.
With increased production during the quarter, consolidated cash operating
costs decreased to $197 per ounce from $220 in 1999. Average realized gold
prices were lower ($313 per ounce in 2000; $321 per ounce in 1999), as were
average realized silver prices ($5.13 per ounce against $7.10 per ounce in
1999).
In the third quarter, the successful completion of reclamation at the
Alaska-Juneau mine was achieved. The total cost of the reclamation, which had
been underway since 1997, was $2.0 million less than previously provided and
this positive difference is reflected as a credit to other income. In the
third quarter of 1999, the company recognized the exchange of its interest in
the Paredones Amarillos project for the remaining interest in a
de-commissioned mill, which resulted in a charge of $13.8 million.
Debt and liquidity
The company ended the quarter with $12.4 million in cash and cash
equivalents. During the third quarter, total debt decreased by approximately
$17 million. At September 30, 2000, the company had a $27 million undrawn
balance under its revolving credit line. Based on the trailing 90-day average
spot price for gold of $277 per ounce, the company currently has no
restrictions on borrowing capacity under this $50 million credit facility. In
October, the company repaid a further $4 million on this revolving credit
line.
The company's gold forward sales position, representing 29 percent of
remaining 2000 planned gold production, will realize a price of $314 per
ounce. Approximately 47 percent of the remaining 2000 planned silver
production is also hedged at an average of $5.46 per ounce.
As the existing credit facility is scheduled to mature in August 2001, all
bank indebtedness has been classified as a current liability. The company
will, over the next several months, be seeking to replace this facility.
Round Mountain: continues to be a strong performer
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 has resulted in 28 percent more
tons being placed on leach pads this year compared to last year. The
company's share of mine production was 79,987 ounces for the quarter compared
with 74,422 ounces in 1999. Cash operating cost per ounce for the quarter was
$201, compared with $178 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 39,362 ounces for the quarter
compared with 29,173 ounces in 1999. Silver production amounted to
2.7 million ounces compared with 1.3 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
25 percent for gold and 32 percent for silver. Heap leach operations continue
to produce ounces even though ore placement from the mine was completed in the
second quarter. With the higher production, cash operating costs for the
quarter were $189 per ounce, down $69 from 1999.
McCoy/Cove completed mining of the open pits in October. 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 encountered higher
than expected water flows during the quarter, but this issue has been overcome
and mining is expected to be completed in the second quarter of 2001.
Production of 40,000 equivalent gold ounces from this target is still on
track. The company continues to be encouraged by drill targets adjacent to
the existing resource. Additional information will be compiled by year end to
determine if these areas can be economically mined next year.
Lupin: steady and consistent
After the successful re-commissioning completed earlier this year, gold
production for the quarter was 40,696 ounces and cash operating costs were
$199 per ounce. This is the second quarter of production at Lupin and 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: lower mining costs
Production for the quarter was 24,404 gold ounces, similar to 1999.
Slightly higher grades offset lower mill tonnage. Cash operating costs per
ounce were $206, significantly lower than third quarter 1999 costs of $257 per
ounce, due to lower mining costs.
Work continues on a mine plan to develop an extension to the northeast of
the K-2 deposit as previously reported. The resource is approximately 400,000
tons grading 0.2 ounces per ton, which will extend the mine life of K-2 for
another year.
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
continues at the main zone on the Youga concession, as well as on nearby
ground, to extend known zones of mineralization. In addition, drilling
continues 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.
At the 100 percent owned Aquarius project, located near Timmins, Ontario,
the company is nearing completion of the permitting process. Development and
construction activities are being delayed until the spot price for gold
increases. Aquarius is, accordingly, on care and maintenance to preserve the
asset for a better economic environment.
Resignation of Director
At its meeting held November 8, 2000, the board of directors of the
company accepted with regret the resignation of Pierre Choquette as a member
of the board. Mr. Choquette, whose resignation was prompted by the needs of
his own business, had been a director since May 1996. The company thanks
Pierre for his contribution during his tenure on the board.
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.
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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