ECHO BAY REPORTS THIRD QUARTER EARNINGS
ECHO BAY REPORTS THIRD QUARTER EARNINGS EDMONTON, Alberta, Nov. 7 /PRNewswire/ -- Echo Bay Mines Ltd.
(AMEX: ECO) reported today net earnings of US$2.3 million (US$0.02 per share) in the third quarter of 1991, compared with US$5.1 million (US$0.05 per share) in the third quarter of 1990. Quarterly revenues were US$79.1 million this year and US$88.9 million last year.
Operating cash flow per share was US$0.24, the same as in the third quarter of 1990 and the second quarter of 1991. Earnings were lower than a year ago mainly because of the lower gold price. The average price realized per ounce of gold sold during the third quarter was US$391 this year, down US$15 from US$406 a year ago. The US$391 price realized by Echo Bay was US$29 better than the US$362 average spot price per ounce of gold on world markets during the quarter. The higher price resulted from the company's hedging programs. In addition to the company's operating earnings of US$7.2 million, Echo Bay reported non-operating income of US$1.3 million in the third quarter of 1991. Included as income is US$10.2 million of deferred revenue (less US$0.4 million of deferred costs) from the expiration on Sept. 30 of gold purchase warrants issued in 1986 with the company's Swiss franc 3-7/8 percent bonds. Conversion of 66.3 percent of the Swiss franc bonds into common shares during the quarter resulted in an additional gain of US$1.2 million. Included as an expense is a provision totaling US$8.6 million for possible further reclamation costs at properties in which Echo Bay owns an interest but which are not in production currently. At Sept. 30, total debt was US$277.0 million, a reduction of US$68.8 million during the third quarter. Of this reduction, US$44.5 million resulted from the conversion of debt into equity through the company's previously announced Swiss franc bond conversion offer. By Sept. 30, a total of 66.3 percent of the bonds had been converted into common shares. Between the end of the third quarter on Sept. 30 and the offer's expiration on Oct. 28, an additional 14.3 percent of the bonds were converted into common shares, bringing to 80.6 percent the total percentage of outstanding bonds retired. As a result, the number of outstanding common shares increased from 99.1 million at the beginning of the third quarter to a total of 104.1 million shares as of Sept. 30 and 105.1 million as of Oct. 28. Echo Bay has launched a company-wide program to improve productivity and reduce costs. A large number of changes have been made throughout the organization. Historically, earnings and cash flow in the gold mining industry have always suffered during the down cycles of precious metal prices. By reducing costs and improving efficiency in the current down cycle, Echo Bay is positioning itself to benefit more fully from the up cycles. The company produced 178,385 ounces of gold at its four mines in the third quarter, compared with 192,206 ounces at these mines a year ago. The 7 percent reduction reflected a lower grade of ore mined this year at Round Mountain in Nevada and Kettle River in Washington State, partly offset by higher production levels at McCoy/Cove in Nevada and Lupin in the Northwest Territories. Overall quarterly gold production of 178,385 ounces was lower than the year-ago consolidated total of 208,507 ounces. About half of the 30,122-ounce decline was due to the absence of last year's unprofitable production at the Alta Bay joint venture and the since- depleted Borealis mine in Nevada, a total of 16,301 ounces. Echo Bay sold or wrote down its Alta Bay interests last December, eliminating about 50,000 ounces of unprofitable annual gold production. Consolidated cash production costs were US$243 per ounce of gold produced in the third quarter vs. US$244 a year ago. At McCoy/Cove, the company's largest producer, gold output rose by 14 percent to 67,250 ounces in the third quarter of 1991 from 58,799 ounces a year ago. Quarterly silver output rose more than six-fold, to about 2 million ounces this year from 300,162 ounces last year. The disproportionate increase in silver production resulted from the mining of more silver-rich ore from the Cove deposit this year than last year. Cash production costs fell by US$42 per ounce of gold produced during the quarter, to US$249 this year from US$291 last year. Numerous productivity efficiencies improved both mill production and heap leaching operations, resulting in the third consecutive quarter of higher production and lower costs vs. prior- year results at McCoy/Cove. At 50 percent-owned Round Mountain, Echo Bay's share of third quarter production was 40,013 ounces of gold, down 30,330 ounces from 70,343 ounces in the third quarter of 1990. This is a 43 percent decline. The main reason was lower ore grade. The grade varies widely from area to area within the massive 250-million-ton ore body. In the third quarter of last year, an unusually high-grade area of the open pit was being mined -- 0.042 ounce/ton. By comparison, the area mined during the third quarter of this year averaged 0.029 ounce/ton, or 31 percent lower. Cash production costs rose to US$232 per ounce of gold produced in the third quarter of this year from US$186 a year ago. The increased costs per ounce were a function of the reduced number of ounces produced, partly offset by lower operating costs per ton processed. Echo Bay's Lupin mine produced 55,792 ounces of gold in the third quarter, a near-record. Compared with production of 45,312 ounces a year ago, production increased by 10,480 ounces in the third quarter, or 23 percent. Quarterly cash production costs were reduced by US$14 per ounce of gold produced, to US$223 this year from US$237 last year, principally due to the increased number of ounces produced. During the third quarter, the Centre Zone of the Lupin mineralization was intersected at a depth of about 3,620 feet. This is nearly 600 feet beneath the deepest mineralization included in the property's ore reserves at year-end 1990. The mineralization appears to be quite similar to what has been encountered on the upper levels of the ore body. At 70 percent-owned Kettle River, production totaled 15,330 ounces (Echo Bay's 70 percent share) in the third quarter of this year, down 14 percent from a year earlier. Cash production costs rose by US$82 per ounce produced, to US$313 this year from US$231 last year. Total costs were lowered by a cost-reduction program, but costs were higher per ounce of gold produced because of lower grade (0.154 ounce/ton vs. 0.225 last year). 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. Additional information is available by fax on request. Please call Renee Coffin at 303-592-8058. -0- 11/7/91 /CONTACT: Paddy Broughton, 303-592-5448 or Ted Sheldon, 303-592-5449, both of Echo Bay Mines/ (ECO) CO: Echo Bay Mines Ltd. ST: Colorado IN: MNG SU: ERN SG -- DV003 -- 2209 11/07/91 12:13 EST
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|Date:||Nov 7, 1991|
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