ENGLEWOOD, Colo., Nov. 4 /PRNewswire/ -- Echo Bay Mines Ltd.
(Amex and TSE: ECO) today reported a net loss of $17.7 million ($0.14 per
share) in the third quarter of 1997 before a special one-time restructuring
provision of $309.8 million ($2.22 per share). The restructuring charge
brought the total quarterly loss to $327.5 million ($2.36 per share).
A year ago, Echo Bay had a third quarter net loss of $42.4 million ($0.31
per share), including a provision of $30.0 million ($0.22 per share) for waste
rock stabilization at the McCoy/Cove mine in Nevada.
The restructuring provision is a non-cash charge. It reduces the cost
basis of the company's assets on the consolidated balance sheet. It also
reduces the company's future gold production costs by an estimated $20-30 per
ounce of gold produced over the lives of the mines, as it reduces deferred
mining costs and future depreciation and amortization amounts. There is no
tax effect; the amount is the same pre-tax and after-tax.
The restructuring provision resulted from a previously reported
comprehensive review of the carrying values of the company's assets, including
four producing gold mines and a portfolio of exploration properties,
development projects and other assets, in light of current market conditions.
As reported, Echo Bay initiated the asset value review in the second quarter
of this year. (For details of the restructuring provision, see separate news
release issued today.)
Echo Bay's gold production fell and silver production rose in the third
quarter, as expected, principally reflecting the planned processing of
carbonaceous ores leaner in gold but richer in silver at the McCoy/Cove mine.
Company-wide quarterly gold production totaled 177,502 ounces this year, down
19% from 218,043 ounces last year, as planned. For the first nine months,
gold production topped 550,000 ounces, in line with the company's full-year
production target of 700-725,000 ounces. Silver production rose 56% to
3,271,677 ounces from 2,092,987 ounces a year ago, bringing silver production
for the first nine months to 7.6 million ounces _ easily achieving in the
first nine months the company's full-year 1997 production target of seven
million ounces.
Cash operating costs rose 3% to $251 per ounce of gold produced in the
quarter, principally reflecting the lower gold grades processed at the
McCoy/Cove mine.
Quarterly results also reflect lower gold prices this year than a year
ago. The average price realized by Echo Bay fell by $10 per ounce of gold
sold in the quarter, to $380 per ounce this year from $390 a year ago. Echo
Bay's $380 realized price was $56 better than the $324 average spot price per
ounce of gold on world markets during the quarter, a result of the company's
hedging programs. Third quarter revenue includes gains of $7.6 million from
closing out the company's gold and silver forward sales positions earlier in
the year. Gains from such transactions are recognized in revenue in the
periods in which the hedged gold and silver had been scheduled for delivery.
Exploration Activities Refocused
Echo Bay has refocused its search for new gold reserves and production.
The company's exploration program now is concentrated on those projects
believed to represent the most promising near-term prospects in its portfolio,
principally those located in the Americas where the company already has
extensive gold mining infrastructure. Particular emphasis is placed on those
prospects located near the company's four producing gold mines and two planned
new mines, located in Canada, the United States and Mexico, where extensive
processing facilities already exist or are planned.
To further this strategy, in the third quarter Echo Bay sold back its
right to buy a future 60% interest in a longer-term gold exploration project _
Dolores in Mexico -_ to Minefinders Corporation Ltd. (VSE: MFL) in exchange
for C$4.0 million in cash and 1.25 million common shares of Minefinders. The
transaction increased Echo Bay's ownership of Minefinders to 25% of the common
shares outstanding and repaid Echo Bay for all of its direct exploration
expenses at Dolores. In return, Echo Bay gave up its future right to acquire
a 60% interest in the Dolores project, which would have required Echo Bay to
fund all exploration and development costs on the property through completion
of a bankable feasibility study within two years and then to pay Minefinders a
minimum of US$12 million in cash to purchase 60% of the proven and probable
gold-equivalent ounces as defined in the feasibility study at US$20 per ounce.
During the third quarter, Echo Bay charged $11.2 million of exploration
expenses against current earnings and capitalized another $14.4 million to
advance its development programs, down from $17.1 million and $19.0 million
respectively in the third quarter of last year.
The company funded work on a number of promising projects in the Americas
in the third quarter. Among them are three early- to intermediate-stage
exploration projects in Nevada with encouraging results to date and excellent
upside potential -_ Ratto Canyon, Bald Peak and Jessup. Ratto Canyon is
located six miles south of the Ruby Hill property of Homestake Mining Company
(NYSE: HM). In Chile, Echo Bay owns 100% of the Etreus project, located near
the border of Argentina, where surface samples have exceeded 0.5 ounce per ton
of gold and drilling began early in October.
Round Mountain Mine: New Mining Plan Improves Profitability and Cash
Flows
The 50%-owned Round Mountain mine in Nevada was Echo Bay's largest and
lowest-cost gold producer in the third quarter. Echo Bay's share of gold
production rose to 62,803 ounces from 59,415 ounces a year ago. Cash
operating costs were reduced to $212 from $228 per ounce of gold produced.
During the quarter, Round Mountain approved a new mining plan that
increases cash flow and profitability and reduces cash operating costs. The
new, optimized open pit design eliminates the mining of more than 250 million
tons of waste rock and low-grade, high-cost material over the life of the
mine, reducing the up-front waste stripping by approximately 40% and enhancing
the economics significantly. Reduced waste stripping brings more ounces into
production earlier and decreases cash operating costs, future capital
requirements for equipment replacement, and ultimate reclamation costs.
The net result is an increase of 30-40% in cash flow over the life of the
mine and a near-doubling of the net present value of the project.
Reflecting the new mining plan, Round Mountain has increased its full-year
1997 production target to 440-460,000 ounces of gold (Echo Bay's 50% share,
220-230,000 ounces) from its earlier goal of 380-400,000 ounces.
The optimized open pit design will reduce the mine's current ore reserves
by approximately 1.2 million ounces of gold (Echo Bay's 50% share, 600,000
ounces). This revision will result in mining being completed in 10 years,
with ore processing continuing from stockpiles for another five years,
compared with the previous plan of 14 years of mining plus seven years of
stockpile processing. However, this life-of-mine plan is based on no more
gold being discovered at Round Mountain (which is unlikely _ given the growth
in reserves seen at the site over the last 12 years).
In July, Round Mountain produced its four millionth ounce of gold since
Echo Bay became the operator. The mine had less than half that much gold in
reserves -_ only 1.8 million ounces -_ when Echo Bay acquired its interest in
1985. With reserves of 9.1 million ounces at year-end 1996, Round Mountain
has twice as much gold remaining in the ground as the total amount mined in
the past 12 years.
In September, the new mill at Round Mountain achieved full production.
The mine stockpiled more than three million tons of nonoxidized material over
the last two years to supplement millfeed ore mined in future quarters. Mill
recoveries are currently averaging approximately 85% of the contained gold,
roughly double the recovery rates that could be achieved by heap leaching
these nonoxidized ores. As the open pit is gradually deepened at Round
Mountain, mill production from increasing tonnages of deeper, nonoxide ores is
expected to offset a reduction in heap leach production from decreasing
quantities of shallower oxide tonnages mined.
Round Mountain is also expanding its exploration efforts. An in-fill
drilling program will focus on upgrading material within the pit to proven and
probable reserves from its current categorization as other mineralization. In
addition, a program of exploration drilling is being directed at a deep target
to the northwest, thought to be one of the deposit's feeder structures, the
North Feeder zone. This zone, if economic, is believed to have good potential
for ore reserve additions in the future. Finally, several additional
exploration targets have been identified on the Round Mountain claim block,
only a small portion of which has been adequately explored.
McCoy/Cove Mine: Lower-Grade, Carbonaceous Ores
At McCoy/Cove in Nevada, gold production fell and silver production rose,
as expected, reflecting the planned processing of carbonaceous ores leaner in
gold but richer in silver. Carbonaceous ore types are processed in a more
complex milling circuit and have lower gold recovery rates. McCoy/Cove
produced 39,073 ounces of gold during the quarter as a result, down 54% from
85,754 ounces in 1996. However, silver grades in carbonaceous material were
significantly higher in the third quarter than a year ago, and silver
production rose 56% to 3,271,677 ounces from 2,092,987 ounces a year ago.
The area of the open pit being mined in the fourth quarter of 1997
contains less carbonaceous material. However, based on the results of mining
and milling this material during the third quarter, McCoy/Cove now expects to
produce a total of about 10% less gold and 30% more silver in 1997 than it had
originally targeted at the beginning of the year. The mine's full-year 1997
production goal is 190-200,000 ounces of gold, down from a target of 210-
220,000 ounces earlier, and 9-10 million ounces of silver, up from seven
million ounces targeted originally.
Cash operating costs were $270 per ounce of gold produced in the third
quarter, up 13% from $239 a year ago but down 15% from $317 in the second
quarter of this year. Cost reduction programs resulted in savings of $2.9
million in the third quarter compared with a year ago. Significant cost
savings components include a reduction in the number of employees, lower mill
reagent consumption, and reductions in a number of services and supplies.
Additional mineralization has been discovered just outside the planned
ultimate perimeter of the Cove open pit. This mineralization has the
potential of adding to production and extending mine life at McCoy/Cove.
Drill-indicated thicknesses of 75+ feet grading 0.07-0.09 ounce/ton of gold
and 1.5-5.8 ounce/ton of silver have encouraged the company to budget $800,000
to drill out this area on a grid of closely spaced holes sufficient to
determine by year-end 1997 whether or not this material can be classified as
ore reserves. A drilling program totaling 55 holes is currently being
completed, with mineralization found in most of the holes assayed to date.
The extension of the deposit remains open to the south.
During the third quarter, the McCoy/Cove team was awarded the 1996
Sentinels of Safety Award for operating the safest large open pit mine in the
United States. Presented annually since 1925, this award is mining's most
prestigious safety award. To qualify, a mine must have at least 30,000
injury-free hours of work. The McCoy/Cove team far exceeded that requirement,
having worked more than 800,000 employee-hours without a single lost-time
injury.
Lupin Mine: New Mining Method Makes Deeper Levels Economic
The Lupin mine in the Northwest Territories produced 42,072 ounces of gold
in the third quarter of 1997, compared with 41,295 ounces a year earlier.
Cash operating costs were reduced to $296 per ounce of gold produced from $310
a year ago.
Quarterly results are in line with Lupin's targeted 1997 production of
160-170,000 ounces of gold.
Lupin has introduced new mining and blasting methods at depth, including
mechanized cut-and-fill in addition to long-hole open stoping in some of the
deepest levels of the mine. These changes have proved highly successful in
reducing waste rock dilution, improving millhead ore grade and controlling
costs. Reflecting this success, a revision of the mining plan is currently
being finalized. The new mining plan will include the addition in late 1998
of a new winze (an internal shaft and hoist between underground levels of the
mine) to further improve cost-effectiveness of mining at depth in future
periods.
These improvements, in conjunction with other cost savings being put in
place at the site, indicate that mining can continue economically below the
1480-meter level into mineralization previously identified but considered
uneconomic. It is now believed that this deeper mineralization can extend
Lupin's life by 2-3 additional years at current production rates. The
necessary work is under way to upgrade as much of this mineralization as
possible by year-end 1998 (not 1997) to proven and probable reserves from its
current category of other mineralization.
Because deeper levels now are economic to mine at Lupin, there is no
immediate requirement to develop the satellite Ulu deposit, located about 100
miles away, as a source of supplemental feed for the Lupin mill. Development
of this deposit has accordingly been deferred.
In addition, a previously unknown area of mineralization has been
discovered at Lupin. Named the McPherson Zone after the underground mining
shift supervisor who was instrumental in its discovery, this mineralization
was initially identified at a depth of 1105 meters (3525 feet). About 2,000
ounces of gold have already been mined from the McPherson Zone at that level,
which is located about 90 meters (300 feet) east of the West Zone and 135
meters (440 feet) from the main shaft. The mineralization is currently being
explored in several directions to better determine its extent.
Kettle River Mine: More Tons Processed; Gold Production Is Higher
The Kettle River mine in Washington State produced 33,554 ounces of gold
in the third quarter, compared with 31,579 ounces a year ago. Kettle River
processed significantly increased tonnages during the quarter, offsetting
lower ore grades processed. The mill operated seven days a week in the third
quarter of this year, up from five days a week in 1996. Seven-day workweeks
are scheduled to continue. Kettle River expects to meet its full-year
production target of 130-140,000 ounces of gold.
Kettle River mines a series of deposits to feed a central mill. The fifth
and sixth deposits, Lamefoot and K-2, are now in concurrent production at a
ratio of about 3:1. As expected, cash operating costs rose to $218 per ounce
of gold produced in the quarter from $201 a year ago, reflecting the higher
mining costs and lower grades of the K-2 deposit, along with the increased
number of tons mined and milled.
Exploration is under way on both the northern extension of the Lamefoot
deposit and a new target identified as Zone 7. In addition, K-2 remains open
both to the north and to the south. Stepped-up exploration programs are now
planned in each of these areas. Early positive results indicate that the
potential is excellent to add minable ounces and additional years of life to
Kettle River in 1998 and beyond.
Aquarius and Paredones Amarillos Mines Deferred Until Gold Price Improves
During the third quarter, the company announced its decision to defer
final construction decisions on two planned gold mines, Aquarius in Canada and
Paredones Amarillos in Mexico, until the gold price improves from current 12-
year lows.
Deferral of final construction decisions beyond 1997 reduces the company's
1997 capital expenditure requirements to a total of not more than $49 million
from the originally planned $114 million for the two new mines.
At the 100%-owned Aquarius gold mine in the Timmins gold district of
Ontario, Echo Bay's 1997 capital expenditure requirements are reduced to $39
million from the originally planned $70 million. Of that, $26.4 million was
spent through Sept. 30. The remaining amount to be spent during 1997 will be
devoted primarily to completion of the frozen underground barrier system. The
barrier system is being constructed to block groundwater from flowing into the
proposed pit. The underground frozen earth barrier can be maintained
indefinitely at a nominal cost. Underground freezing is a proven, cost-
effective technology that has been used in tunneling and shaft boring for over
100 years.
At 60%-owned Paredones Amarillos, Echo Bay's share of 1997 capital
expenditures will not exceed $10 million, down from $44 million planned
originally. Of this, $5.5 million was spent through Sept. 30. The remaining
amount to be spent during 1997 will be devoted to detailed engineering work,
permitting activities, water development and other work required to maintain
the integrity of the project and enable development to proceed quickly and
smoothly to construction at such time as a final construction decision is
made.
Echo Bay and its 40% joint venture partner at Paredones Amarillos, Viceroy
Resource Corporation (TSE: VOY), estimate that less than $2 million will be
added to the total cost of the project by deferring the final construction
decision until early 1998. This amount is more than offset by a $15 million
reduction in capital costs that has been achieved by re-engineering the mill
process flowsheet, including elimination of the cyanide regeneration circuit;
purchasing used equipment; rede-signing the site layout; and optimizing a
number of other aspects of the project.
Echo Bay is a major gold producer with mines in Canada and the United
States. The primary markets for its shares are the American and Toronto stock
exchanges. Its shares are also listed on stock exchanges in Switzerland,
France, Germany and Belgium.
"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 Sept. 30 ended Sept. 30
U.S. dollars 1997 1996 1997 1996
Financial Data
Revenue (millions) $74.5 $94.9 $224.1 $257.8
Net loss (millions):
Before special
restructuring
provision $(17.7) $(42.4) $(55.2) $(73.2)
After special
restructuring
provision $(327.5) $(42.4) $(365.0) $(73.2)
Gold ounces sold (a) 156,862 217,686 515,098 589,759
Silver ounces
sold (a) 2,893,077 1,889,247 6,752,249 4,744,444
Average price realized:
Per ounce
of gold sold $380 $390 $366 $393
Per ounce
of silver sold $5.11 $5.29 $5.24 $5.53
Cash operating costs:
Per ounce of
gold produced $251 $243 $256 $247
Per ounce of
silver produced $3.77 $3.14 $4.06 $3.54
% of revenue from gold 80% 89% 84% 90%
% of revenue from silver 20% 11% 16% 10%
Production and Reserves
Production (ounces): (a)
Gold 177,502 218,043 551,227 584,890
Silver 3,271,677 2,092,987 7,642,678 4,917,206
Reserves (ounces): (b)
Gold 8,573,000 10,983,000
Silver 53,858,000 62,913,000
Per Share Data
Net loss
Before special
restructuring
provision $(0.14) $(0.31) $(0.43) $(0.55)
After special
restructuring
provision $(2.36) $(0.31) $(2.65) $(0.55)
Shares outstanding
(millions):
Weighted average 139.4 137.6 139.4 132.8
Period end 139.4 139.4 139.4 139.4
(a) Amounts sold differ from amounts produced due to inventory changes.
(b) Proven and probable reserves at the beginning of the year.
ECHO BAY MINES
Production and Costs
Three months Nine months
ended Sept. 30 ended Sept. 30
1997 1996 1997 1996
Gold Production (ounces)
McCoy/Cove 39,073 85,754 143,900 204,218
Round Mountain (50%) 62,803 59,415 183,912 156,748
Lupin 42,072 41,295 121,278 129,853
Kettle River 33,554 31,579 102,137 94,071
Total gold 177,502 218,043 551,227 584,890
Silver Production (ounces)
McCoy/Cove 3,271,677 2,092,987 7,642,678 4,917,206
Total silver 3,271,677 2,092,987 7,642,678 4,917,206
Cash Operating Costs (U.S. dollars per ounce of gold produced)
McCoy/Cove (a) $270 $239 $291 $263
Round Mountain 212 228 205 215
Lupin 296 310 294 287
Kettle River 218 201 217 196
Company average $251 $243 $256 $247
Consolidated Costs
(U.S. dollars per ounce of gold produced)
Cash operating costs $251 $243 $256 $247
Royalties 11 12 10 11
Production taxes 2 1 2 3
Total cash costs 264 256 268 261
Depreciation 57 58 61 65
Amortization 34 34 34 33
Reclamation
and mine closure 10 8 10 7
Total production costs $365 $356 $373 $366
(a) In 1997, cash operating costs per ounce of silver produced at
McCoy/Cove were $3.77 and $4.06 for the three-month and nine-month periods
respectively, based on average gold-to-silver price ratios of 71.7:1 and
71.6:1 respectively. In 1996, cash operating costs per ounce of silver
produced at McCoy/Cove were $3.14 and $3.54 for the three-month and nine-month
periods respectively, based on average respective price ratios of 76.0:1 and
74.2:1.
ECHO BAY MINES
Consolidated Earnings Statement
(Unaudited)
Thousands of Three months Nine months
U.S. dollars ended Sept. 30 ended Sept. 30
except for per share data 1997 1996 1997 1996
Revenue $74,450 $94,936 $224,103 $257,772
Expenses:
Operating costs 50,242 57,940 158,005 160,464
Royalties 2,335 3,021 6,653 7,253
Production taxes 491 253 1,153 1,749
Depreciation
and amortization 20,228 21,964 61,549 63,980
Reclamation
and mine closure 2,226 1,985 6,599 4,568
General and
administrative 1,955 2,850 8,943 9,732
Exploration
and development 11,145 17,107 27,575 49,128
Interest and other 3,039 2,105 7,080 3,249
Provision for
McCoy/Cove pit
wall stabilization _- 30,000 -_ 30,000
Provision for
impaired assets
and restructuring
costs 309,800 -_ 309,800 -_
401,461 137,225 587,357 330,123
Loss before
income taxes (327,011) (42,289) (363,254) (72,351)
Income tax
expense (recovery):
Current (68) 126 307 767
Deferred 582 _- 1,457 56
514 126 1,764 823
Net loss $(327,525) $(42,415) $(365,018) $(73,174)
Loss per share (1) $(2.36) $(0.31) $(2.65) $(0.55)
Weighted average
number of
shares outstanding139,370,031 137,603,507 139,365,715 132,794,837
Certain prior-year items have been reclassified to conform with the
current presentation.
(a) 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 loss for the period plus the interest on the $100 million
capital securities in the period (an amount which is charged directly to the
deficit in common shareholders' equity on the company's consolidated balance
sheet, rather than being charged against revenue 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 $1,492,000 and
$4,131,000 for the three months and nine months ended Sept. 30, 1997
respectively.
ECHO BAY MINES
Consolidated Balance Sheet
(Unaudited)
Sept. 30 Dec. 31 Sept. 30
Thousands of U.S. dollars 1997 1996 1996
Assets
Current assets:
Cash and cash equivalents $5,910 $103,196 $145,039
Short_term investments 13,828 -_ -_
Interest and
accounts receivable 18,293 9,739 13,213
Inventories 48,734 33,941 41,007
Prepaid expenses
and other assets 5,070 6,573 7,079
91,835 153,449 206,338
Plant and equipment 241,791 233,984 250,620
Mining properties 139,605 405,011 441,385
Long-term
investments
and other assets 9,717 39,701 41,741
$482,948 $832,145 $940,084
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable
and accrued
liabilities $81,319 $72,421 $54,867
Income and
mining taxes payable 3,441 3,651 4,228
Current portion
of gold and
other financings(a) 15,182 129,445 136,985
Current portion
of deferred income 16,041 876 15,576
115,983 206,393 211,656
Long-term gold
and other financings (a) 41,938 53,478 46,580
Long-term deferred income 45,112 1,581 11,561
Other long-term obligations 55,500 69,992 60,382
Deferred income taxes 9,993 8,392 8,166
Common shareholders' equity:
Common shares 709,593 709,534 709,510
Capital securities 95,974 -_ -_
Deficit (574,247) (201,931) (93,178)
Foreign currency
translation (16,898) (15,294) (14,593)
214,422 492,309 601,739
$482,948 $832,145 $940,084
(a) Total gold and other financings were $57.1 million at Sept. 30, 1997
(including current portion of $15.2 million), down $126.5 million from $183.6
million at Sept. 30, 1996 (including current portion of $137.0 million).
ECHO BAY MINES
Consolidated Statement Of Cash Flow
(Unaudited)
Three months Nine months
ended Sept. 30 ended Sept. 30
1997 1996 1997 1996
Thousands of U.S. dollars
Cash Provided by (Used in):
Operating Activities
Net loss $(327,525) $(42,415) $(365,018) $(73,174)
Add items not
affecting working capital:
Depreciation
and amortization 20,228 21,964 61,54 963,980
Non-cash portion
of exploration
and development
expense 144 1,279 436 3,837
Deferred income taxes 582 _- 1,457 56
Equity in
loss of affiliate -_ 1,078 -_ 2,632
Gain on sale of
assets (1,408) (65) (1,113) (2,383)
Provision
for McCoy/Cove
pit wall stabilization -_ 30,000 -_ 30,000
Provision for
impaired assets
and restructuring
costs 309,800 -_ 309,800 -_
Other (7,445) 796 (11,781) 1,878
(5,624) 12,637 (4,670) 26,826
Change in cash
invested in
operating assets
and liabilities:
Interest and
accounts receivable (9,890) 4,880 (9,856) 1,612
Inventories (2,115) 1,664 (12,107) (5,096)
Prepaid
expenses
and other
assets (773) (1,052) 2,266 (968)
Accounts
payable and
other liabilities 4,350 (5,682) (4,367) (7,784)
Income and
mining
taxes payable (276) (57) (210) 646
(14,328) 12,390 (28,944) 15,236
Financing Activities
Currency borrowings -_ 34,714 -_ 34,714
Debt repayments (4,706) (3,958) (127,585) (8,885)
Capital securities
issued, net of
issuance costs _- -_ 96,700 -_
Common share dividends -_ __ -- (4,895)
Common shares
issued on acquisition
of Santa Elina,
net of
issuance costs -_ 85,801 -_ 85,801
Common share issues, net
of issuance costs -_ -_ 60 4,745
Other (2,174) -_ (185) -_
(6,880) 116,557 (31,010) 111,480
Investing Activities
Mining properties,
plant and equipment (41,581) (26,724) (91,546) (75,483)
Proceeds on
repurchase
of the company's:
Gold and
silver forward
sales -_ -_ 54,963 -_
Gold swap -_ _- 8,107 -_
Foreign exchange
contracts _- _- 5,995 -_
Cost of Santa
Elina acquisition -_ (91,069) -_ (91,069)
Long-term
investments
and other assets (6,749) (599) (23,266) (7,317)
Proceeds on sale
of long-term
investments 7,894 _- 7,894 5,550
Other 416 210 521 799
(40,020) (118,182) (37,332) (167,520)
Net increase
(decrease) in
cash and cash
equivalents (61,228) 10,765 (97,286) (40,804)
Cash and cash equivalents,
beginning of period 67,138 134,274 103,196 185,843
Cash and cash
equivalents, end of
period $5,910 $145,039 $5,910 $145,039
ECHO BAY MINES
Mine Operating Data
Three months Nine months
ended Sept. 30 ended Sept. 30
U.S. dollars, 1997 1996 1997 1996
except where indicated
McCoy/Cove Mine (100% owned)
Gold produced (ounces):
Milled 25,564 66,256 105,706 155,397
Heap leached 13,509 19,498 38,194 48,821
Total gold 39,073 85,754 143,900 204,218
Silver produced (ounces):
Milled 3,174,066 1,965,862 7,353,652 4,533,767
Heap leached 97,611 127,125 289,026 383,439
Total silver 3,271,677 2,092,987 7,642,67 84,917,206
Ore and waste mined
(tons) 12,218,778 16,105,592 42,704,703 48,817,998
Mining cost/ton of
ore and waste $0.79 $0.70 $0.73 $0.70
Milling cost/ton of ore $9.08 $9.60 $9.01 $9.76
Heap leaching cost/ton
of ore $1.69 $1.35 $1.67 $1.64
Production cost per
ounce of gold produced: (a)
Direct mining expense $275 $238 $298 $291
Deferred stripping cost (2) 6 (12) (20)
Inventory movements
and other (3) (5) 5 (8)
Cash operating cost 270 239 291 263
Royalties 3 535
Production taxes _- _- 1 3
Total cash cost 273 244 295 271
Depreciation 67 58 72 72
Amortization 45 46 45 46
Reclamation and mine
closure 10 10 10 8
Total production
cost $395 $358 $422 $397
Average gold-to-silver
price ratio (a) 71.7:1 76.0:1 71.6:1 74.2:1
Milled:
Ore processed (tons/day)8,332 10,008 9,324 8,756
Gold grade (ounce/ton) 0.065 0.080 0.063 0.097
Silver grade (ounce/ton)6.74 3.30 4.23 3.41
Gold recovery rate (%) 59.9 80.4 67.1 80.9
Silver recovery rate (%)71.0 73.7 70.9 73.5
Heap leached:
Ore processed
(tons/day) 17,567 22,393 18,576 16,570
Gold grade (ounce/ton) 0.024 0.015 0.016 0.019
Silver grade
(ounce/ton) 0.36 0.23 0.26 0.30
Recovery rates (b)
Round Mountain Mine (50% owned)
Gold produced (ounces):
Reusable heap
leach pad (50%) 33,591 32,251 104,655 90,643
Dedicated heap
leach pad (50%) 26,573 24,681 76,618 61,365
Other (50%) 2,639 2,483 2,639 4,740
Total (50%) 62,803 59,4151 83,912 156,748
ECHO BAY MINES
Mine Operating Data (continued)
Three months Nine months
ended Sept. 30 ended Sept. 30
U.S. dollars, 1997 1996 1997 1996
except where indicated
Round Mountain
Mine (continued)
Ore and waste
mined (tons) (100%)18,871,000 12,119,000 53,625,00 40,868,226
Mining
cost/ton of
ore and waste $0.66 $0.79 $0.67 $0.71
Heap leaching
cost/ton of ore $0.64 $0.81 $0.63 $0.79
Production cost
per ounce of
gold produced:
Direct mining expense $205 $208 $202 $224
Deferred stripping cost 6 15 5 -_
Inventory
movements and other 1 5 (2) (9)
Cash operating cost 212 228 205 215
Royalties 24 37 23 32
Production taxes 7 3 4 4
Total cash cost 243 268 232 251
Depreciation 33 47 38 50
Amortization 18 18 18 18
Reclamation
and mine closure 7 5 7 5
Total production cost $301 $338 $295 $324
Reusable heap
leach pad:
Ore processed
(tons/day) (100%) 26,185 27,224 27,145 27,823
Grade (ounce/ton) 0.032 0.032 0.035 0.036
Recovery rate (%) 80.9 72.5 76.2 68.1
Dedicated heap leach pad:
Ore processed
(tons/day) (100%) 101,209 107,544 100,052 92,987
Grade (ounce/ton) 0.010 0.010 0.010 0.011
Recovery rate (b)
Lupin Mine (100% owned)
Gold produced (ounces) 42,072 41,295 121,278 129,853
Tons of ore mined
and milled 199,861 192,449 594,966 592,836
Mining cost/ton
of ore (Cdn dollars) C$50.82 C$47.76 C$46.75 C$42.90
Milling cost/ton
of ore (Cdn dollars) C$12.72 C$13.28 C$11.91 C$12.35
Production cost
per ounce of
gold produced:
Direct mining
expense (Cdn dollars) C$382 C$408 C$389 C$396
Deferred mine
development cost
(Cdn dollars) 28 13 17 (5)
Inventory movements
and other (Cdn dollars) _- 3 (1) 1
Cash operating
cost (Cdn dollars) C$410 C$424 C$405 C$392
Cash operating
cost (U.S. dollars)US$296 US$310 US$294 US$287
Royalties -_ -_ -- -_
Production taxes -_ -_ -_ -_
Total cash cost 296 310 294 287
Depreciation 72 71 74 68
Amortization 28 18 28 18
Reclamation and mine
closure 14 8 14 8
Total production
cost US$410 US$407 US$410 US$381
Milled:
Ore processed
(tons/day) 2,196 2,115 2,179 2,172
Total tons milled 199,861 192,449 594,966 592,836
Grade (ounce/ton) 0.226 0.231 0.221 0.237
Recovery rate (%) 93.0 92.9 92.4 92.5
ECHO BAY MINES
Mine Operating Data (continued)
Three months Nine months
ended Sept. 30 ended Sept. 30
U.S. dollars, except 1997 1996 1997 1996
where indicated
Kettle River Mine (100% owned)
Gold produced (ounces) 33,554 31,579 102,137 94,071
Tons of ore mined and
milled 185,137 148,406 581,446 430,256
Mining cost/ton of ore $20.95 $19.24 $21.30 $21.25
Milling cost/ton of ore $11.18 $12.93 $10.50 $12.48
Production cost per ounce
of gold produced:
Direct mining expense $229 $194 $221 $192
Deferred mine
development cost -- __ -- --
Inventory movements
and other (11) 7 (4) 4
Cash operating cost 218 201 217 196
Royalties 17 8 15 9
Production taxes 2 2 2 2
Total cash cost 237 211 234 207
Depreciation 60 58 58 59
Amortization 45 45 45 45
Reclamation and mine
closure 12 8 12 8
Total production cost $354 $322 $349 $319
Milled:
Ore processed (tons/day)2,034 1,631 2,130 1,576
Total tons milled 185,137 148,406 581,446 430,256
Grade (ounce/ton) 0.216 0.244 0.217 0.253
Recovery rate (%) 83.8 87.1 86.1 86.3
(a) 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.
(b) Recovery rates on dedicated pads can only be estimated, as actual
recoveries will not be known until leaching is complete. 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 30%
for crushed ore and 10% for uncrushed, run-of-mine ore. At the Round Mountain
mine, the gold recovery rate on the dedicated heap leach pad is estimated at
50%.
SOURCE Echo Bay Mines Ltd.
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CONTACT:
Robbin Lee of Echo Bay Mines, 303 714-8829,
http://www.echobay.com
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