Printer Friendly

ECHO BAY ANNOUNCES 1991 EARNINGS

 ECHO BAY ANNOUNCES 1991 EARNINGS
 TORONTO, Feb. 13 /PRNewswire/ -- Echo Bay Mines Ltd. (AMEX: ECO)


today reported net earnings of US$6.8 million (US$0.07 per share) in 1991, up from a net loss of US$59.7 million (US$0.60 per share) in 1990 when the company wrote off two investments.
 Revenues declined to US$315.6 million in 1991 from US$338.9 million in 1990, reflecting lower gold prices and production. The average price realized by Echo Bay per ounce of gold sold in 1991 was US$392, down from US$404 in 1990.
 Operating cash flow was US$87.8 million in 1991 compared with US$90.5 million in 1990, reflecting the lower gold price.
 Gold production was 733,907 ounces, down 10 percent from 816,978 ounces in 1990, mainly because the company eliminated unprofitable production. Production at Echo Bay's four remaining mines was 2 percent lower than a year earlier, and production of silver nearly tripled.
 The company eliminated production from the Alta Bay joint venture at year-end 1990, and mining was completed at the Borealis mine in Nevada late in 1990 as planned.
 Fourth quarter revenues were US$74.3 million in 1991 compared with US$93.7 million in 1990. The average realized gold price was US$390 per ounce in the fourth quarter of 1991 versus US$404 in the year-ago period. Quarterly gold production was 160,847 ounces in 1991 compared with 220,686 ounces in 1990, reflecting a lower grade of ore mined in 1991 at Round Mountain in Nevada and unusually good grade in the year- ago fourth quarter at McCoy/Cove in Nevada. Quarterly silver production more than doubled, to 1,983,846 ounces this year from 876,775 ounces a year ago.
 Company-wide cash production costs were US$249 per ounce of gold produced in 1991, compared with US$244 a year ago.
 Debt Reduction
 Echo Bay reduced its total debt to US$233.7 million at year-end 1991, down 37 percent from US$372.0 million a year earlier. The company has reduced debt by US$181.4 million, or 44 percent, from its peak of US$415.1 million at June 30, 1990.
 The debt reduction was accomplished by applying cash flow to debt repayment, by prepaying gold and silver bullion loans, and by offering to convert the company's Swiss franc bonds into common shares. The holders of more than 80 percent of the SFr110.0 million bond issue elected to convert into common shares during 1991, increasing Echo Bay's outstanding common shares by 6 percent.
 Year-End Reserves and Other Mineralization
 The company's proven and probable reserves totaled 12,535,000 ounces of gold and 116,944,000 ounces of silver at year-end 1991, compared with 12,462,000 ounces of gold and 135,881,000 ounces of silver at year-end 1990. Other mineralization totaled 3,158,000 ounces of gold and 7,529,000 ounces of silver at year-end 1991, compared with 3,352,000 ounces of gold and 8,758,000 ounces of silver at year-end 1990.
 Productivity Improvements and Reduced Costs
 McCoy/Cove in Nevada is the company's largest mine. In 1991, McCoy/Cove set new production records with 284,327 ounces of gold and 5,619,007 ounces of silver, up from 255,044 ounces of gold and 1,982,455 ounces of silver a year ago. The disproportionate increase in silver production resulted from the mining of more silver-rich ore from the Cove deposit in 1991 than 1990.
 Throughout 1991, numerous productivity efficiencies improved both mill production and heap leaching operations over the prior year. Cash production costs were reduced to US$253 per ounce of gold produced in 1991 from US$270 in 1990, reflecting cost containment and the greater number of ounces produced.
 At year-end 1991, a total of 349,000 ounces of gold were added to reserves at McCoy/Cove, replacing 80 percent of what was mined during the year. Within the Cove open pit, ore was added to reserves in areas that had been removed from reserves two years ago due to drill hole contamination. At McCoy, reserves were added at the southwest perimeter of the pit and also underground.
 Beginning late in 1990 and continuing through most of 1991, Echo Bay's mine at Lupin in the Northwest Territories mined portions of a "sill" of high-grade ore left over from earlier years. This contributed to record production levels in the fourth quarter of 1990 and the first three quarters of 1991. For the full year 1991, Lupin produced 216,877 ounces of gold, a record, up from 195,232 ounces in 1990. The greater number of ounces produced in 1991 could not offset the increased costs and stronger Canadian dollar, and cash production costs rose 6 percent to US$242 in 1991 from US$229 in 1990. Costs in Canadian dollars rose 3 percent.
 At 50 percent-owned Round Mountain in Nevada, Echo Bay's share of 1991 production was 169,512 ounces, down 30 percent from the all- time record of 241,596 ounces in 1990. The principal reason for the reduced production was lower ore grade. The grade varies widely from area to area within the massive 290-million-ton ore body. A year ago, a much higher-grade area of the open pit was being mined. The increased cash production costs per ounce of gold produced were a reflection of the reduced number of ounces produced, partly offset by lower operating costs per ton processed.
 Round Mountain is in the process of obtaining permits to construct a new "dedicated" (versus reusable) heap leach pad. It will be used to heap leach low-grade, uncrushed ore. Lower-grade material becomes economic when crushing costs are eliminated, so dedicated pads have the effect of converting some waste into ore. This adds low-grade material to reserves, lowering over-all reserve grade but adding millions of tons of material to reserves that would have to be mined as waste anyway. As a result, Round Mountain reduced the ore cutoff grade to 0.006 from 0.012 ounce/ton at year-end 1991, adding 50 million tons of low-grade material to reserves.
 In addition, Round Mountain is replacing some of its trucks and loaders with new larger equipment. The reduced cost per ton of material moved by the larger equipment also makes lower-grade rock economic to process.
 The combination of a dedicated leach pad and lower mining costs resulted in the addition of 820,000 ounces of low-grade material to reserves at year-end 1991 (Echo Bay's 50 percent share, 410,000 ounces).
 Because of the lower-than-anticipated grade of ore actually mined in the second half of 1991, Echo Bay and its partners reevaluated over-all reserves for the entire Round Mountain property at year-end and concluded that there is lower-grade ore in sections of the ore body beneath the water table than was thought at year-end 1990. As a result of the reevaluation, 870,000 ounces of gold were removed from reserves at year-end 1991 (Echo Bay's 50 percent share, 435,000 ounces).
 The net result is no significant change in the total ounces of contained gold in reserves at year-end 1991 over 1990 except for the ounces mined during the year.
 Echo Bay's newest gold producer is 70 percent-owned Kettle River in northeastern Washington State, which achieved commercial production in February 1990. Echo Bay's share of 1991 production was 63,191 ounces, compared with 58,317 ounces during the ll months of 1990 since Kettle River's startup. Cash production costs were US$303 per ounce of gold produced in 1991 versus US$247 in 1990. The higher costs reflect lower ore grades mined and higher mining expenditures despite significant cost-cutting measures.
 There is excellent exploration potential in the area. Four separate deposits of gold have been found so far on the properties. A fifth deposit, the new Lamefoot discovery, became part of the Kettle River joint venture at year-end 1991. Lamefoot is located about three miles from the Kettle River mill.
 The 1992 exploration program includes a planned underground ramp into the Lamefoot deposit to confirm surface drilling results and to provide easy exploration access to the south, where Lamefoot's limits have not yet been found.
 Echo Bay is one of the largest gold producers in North America. The company's shares are traded principally on the Toronto and American stock exchanges and on other major exchanges in North America and Europe.
 -0- 2/13/92
 /NOTE: Additional information is available by fax on request. Please call Sharon Taylor at 303-592-8075.
 /CONTACT: Paddy Broughton, 303-592-8048 or Ted Sheldon, 303-592-8049, both of Echo Bay Mines/
 (ECO) CO: Echo Bay Mines Ltd. ST: Colorado IN: MNG SU: ERN


BB -- DV003 -- 9784 02/13/92 13:25 EST
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Feb 13, 1992
Words:1462
Previous Article:MAN ROWS ACROSS PACIFIC OCEAN AS 46 MILLION WATCH VIA SATELLITE VIDEO NEWS RELEASE
Next Article:ANGELES CORP. REPORTS RESULTS FOR SECOND QUARTER FY 1992
Topics:


Related Articles
ECHO BAY REPORTS THIRD QUARTER EARNINGS
ECHO BAY REPORTS SECOND QUARTER RESULTS
ECHO BAY REPORTS THIRD QUARTER RESULTS
ECHO BAY REPORTS SECOND QUARTER EARNINGS
ECHO BAY REPORTS THIRD QUARTER RESULTS
ECHO BAY ANNOUNCES 1993 NET EARNINGS
ECHO BAY REPORTS THIRD QUARTER RESULTS
ECHO BAY ANNOUNCES 1994 NET RESULTS
ECHO BAY REPORTS THIRD QUARTER RESULTS
ECHO BAY ANNOUNCES 1995 RESULTS

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters