ECHO BAY REPORTS THIRD QUARTER RESULTS
ECHO BAY REPORTS THIRD QUARTER RESULTS EDMONTON, Alberta, Nov. 5 /PRNewswire/ -- Echo Bay Mines Ltd.
(Toronto; AMEX: ECO) reported today a net loss of US$4.3 million (US$0.04 per common share) in the third quarter of 1992, compared with net earnings of US$2.3 million (US$0.02 per share) in the third quarter of 1991, reflecting sharply lower gold prices.
The US$0.04 net loss per common share is after the payment of a quarterly dividend totaling US$1.8 million (US$0.02 per common share) on the new issue of convertible preferred shares issued by Echo Bay's United States finance subsidiary in July. Operating cash flow per common share was US$0.16, compared with US$0.24 a year ago. The average price realized per ounce of gold sold in the quarter was US$361 this year, down US$30 from US$391 a year ago. The US$361 price was US$14 better than the US$347 average spot price per ounce of gold on world markets during the quarter. The higher price resulted from the company's hedging programs. Quarterly revenues were US$75.2 million, down from US$79.1 million a year ago, because of the drop in gold prices. Debt Reduction During the third quarter, Echo Bay reduced its net debt (total debt less cash and short-term investments) by US$136.3 million through the sale of a new issue of convertible preferred shares to the public. A portion of the net proceeds was used to eliminate the company's dollar- denominated debt. All of Echo Bay's remaining debt is denominated in gold and silver. Interest rates on gold and silver loans are lower than on currency loans. At Sept. 30, the average interest rate on the company's gold- and silver-denominated debt was 1.5 percent. The company's net debt was US$108.9 million at Sept. 30, down US$166.4 million from a year earlier. This is a reduction of US$305.3 million since June 30, 1990, when Echo Bay's net debt peaked at US$414.2 million. Strengthening the Balance Sheet The company's United States finance subsidiary, Echo Bay Finance Corp., sold a new issue of perpetual cumulative convertible preferred stock to the public on July 27. The objective of the issue was to reduce debt, further strengthening the balance sheet for the company's next growth phase. Echo Bay has two major development projects in southeast Alaska, Alaska-Juneau and Kensington. Together, they have the potential to increase Echo Bay's gold production by an amount on the order of 450,000 ounces annually, an increase of more than 60 percent. Production Up, Costs Down The company produced more gold at a lower production cost per ounce in the third quarter than a year ago. Production at its four mines in the third quarter totaled 183,320 ounces of gold compared with 178,385 ounces in 1991. The company's cash production cost per ounce of gold produced in the quarter was US$241 this year and US$243 last year. At Echo Bay's largest gold mine, McCoy/Cove in Nevada, gold production rose by 11 percent to 74,970 ounces in the third quarter of 1992 from 67,250 ounces a year ago. Quarterly silver output was 1.4 million ounces this year, down 29 percent from 2.0 million ounces last year. Quarterly cash production costs were reduced by US$11 per ounce of gold produced, to US$238 this year from US$249 last year. Successful cost containment efforts and improved operating efficiencies contributed to the improvement. Echo Bay's Lupin mine in the Northwest Territories produced 49,128 ounces of gold in the third quarter, compared with 55,792 ounces a year ago. The decrease was due to planned downtime for maintenance, and lower grade. Quarterly cash production costs were US$255 per ounce of gold produced this year, compared with US$223 last year. For the first nine months, Lupin's cash production costs are US$239 per ounce of gold produced this year vs. US$227 last year. Mill Expansion Planned Lupin plans to increase mill throughput by about 15 percent in early 1993. The rated capacity of the mill is being expanded to 2,300 tons/day from the current 2,000 tons/day at a cost of about US$6 million. As unit costs are largely volume-driven, the higher production is expected to help contain the increase in costs per ounce of gold produced from progressively deeper mine levels. At 50-percent owned Round Mountain in Nevada, Echo Bay's share of third quarter production was 43,414 ounces of gold, up 8 percent from 40,013 ounces a year ago. Round Mountain is Echo Bay's lowest-cost gold producer. In the third quarter, the cash production cost was further reduced to US$217 per ounce of gold produced, down US$15 from the year- ago unit cost of US$232 per ounce produced. The unit cost reduction is a function of the greater number of ounces produced and continuing cost- containment programs. Round Mountain is examining the feasibility of constructing a mill to recover the gold found in nonoxidized and high clay areas of the ore body. Results of this feasibility study are expected to be known early next year. New Facility Under Construction A new "dedicated" (not reusable) heap leach pad is under construction at Round Mountain. Completion is expected by the end of this year, with initial production targeted for early next year. The new pad is designed for low-grade, uncrushed, "run of mine" ore, which becomes economic when crushing costs are eliminated. This lower-grade material must be removed from the open pit anyway, as all rock is removed. In the future, this low-grade ore will be hauled to a leach pad; formerly, it went to a waste rock dump where its gold values were lost. At 70-percent owned Kettle River in northeastern Washington State, production totaled 22,583 ounces (Echo Bay's 70 percent share, 15,808 ounces), about the same as a year ago when Echo Bay's share was 15,330 ounces. Kettle River is Echo Bay's smallest gold mine, accounting for less than 10 percent of the company's production. Cash production costs were US$281 per ounce produced, down from US$313 a year ago, reflecting reduced mining costs and increased production. Permitting Advances in Alaska At the 100-percent owned Alaska-Juneau development property in southeast Alaska, the permitting process is in an advanced stage. Three major permits are needed before development can proceed, and all three are currently anticipated by year-end or early in the new year. A revised feasibility study is being completed, based on a modification of the proposed A-J mill flowsheet to maximize recovery of gold in the gravity circuit of the mill. This modification will reduce the estimated capital cost of the project and the cash production cost per ounce of gold produced. 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- 11/5/92 /NOTE TO EDITORS: Additional information is available on request. Contact Sharon Taylor at 303-592-8075 (phone) or 303-592-8090 (fax)/ /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
MC -- DV003 -- 2990 11/05/92 10:40 EST
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|Date:||Nov 5, 1992|
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