Echo Bay Announces Second Quarter 2000 Results Earnings Summary Dollar amounts in thousands of US dollars, except amounts per share 2000 1999 THREE MONTHS ENDED JUNE 30: Revenue $84,293 $50,862 Net earnings (loss) $10,168 $(7,031) Net earnings (loss) attributable to common shareholders $6,320 $(10,455) Earnings (loss) per share $0.04 $(0.07) Weighted average common shares outstanding 140,607,145 140,607,145
ENGLEWOOD, Colo., Aug 2, 2000 /PRNewswire via COMTEX/ -- Echo Bay Mines Ltd. (Amex: ECO chart, msgs; Toronto chart, msgs) today reported second quarter 2000 net income of $10.2 million ($0.04 per share). This compares with a net loss of $7.0 million ($0.07 per share) in the second 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 188,475 ounces, 51 percent higher than 1999 second quarter production of 125,056 ounces. This year's quarter reflects the contribution from the Lupin mine of 38,359 ounces after the successful re-commissioning completed in early April. Silver production from McCoy/Cove was 3.6 million ounces, 87 percent higher than the 1.9 million ounces produced in 1999.
With increased production during the quarter, consolidated cash operating costs decreased to $186 per ounce from $213 in 1999. Revenues were 66 percent higher than in 1999 despite the company realizing lower average gold prices ($322 per ounce in 2000; $326 per ounce in 1999), and lower average silver prices ($5.23 per ounce against $5.27 per ounce in 1999).
With the better than anticipated silver production achieved during the first half of 2000, silver production for the full year is now expected to total 12 million ounces, 20 percent better than originally forecast. The company expects to meet the upper end of forecast gold production for 2000 and to achieve the lower end of planned cash operating costs.
Debt and liquidity
The company ended the quarter with $11.0 million in cash and cash equivalents. During the second quarter, total debt decreased by approximately $7 million. At June 30, 2000, the company had a $14 million undrawn balance under its revolving credit line. Based on the trailing 90-day average spot price for gold of $280 per ounce, the company currently has no restrictions on borrowing capacity under this $50 million credit facility. In July, the company repaid $4 million on this revolving credit line and expects to generate positive cash flow from operations for the rest of the year at current gold prices.
The company's gold forward sales position, representing 32 percent of remaining 2000 planned gold production, will realize a price of $314 per ounce. Approximately 39 percent of the remaining 2000 planned silver production is also hedged at an average of $5.46 per ounce.
Round Mountain: mining more ore tons
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 resulted in 34 percent more tons being placed on leach pads this quarter, compared with the same period last year. The company's share of mine production was 76,408 ounces for the quarter compared with 70,765 ounces in 1999. Cash operating cost per ounce for the quarter was $202, compared with $195 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 49,448 ounces for the quarter compared with 29,576 ounces in 1999. Silver production amounted to 3.6 million ounces compared with 1.9 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 80 percent for gold and 53 percent for silver. Silver grades to the heap leach were also significantly higher. With the higher production, cash operating costs for the quarter were $163 per ounce, down $59 from 1999.
McCoy/Cove is on schedule to complete mining of the open pits by the end of the year. 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 continued during the quarter and is expected to be completed in the first quarter of 2001. The Company remains encouraged by underground targets below the existing Cove pit.
Lupin: smooth re-commissioning
The decision to reopen the Lupin mine, located in Nunavut, Canada, was made late in 1999. Re-commissioning activities were completed on time and on budget, and the first gold pour occurred mid-April. Gold production for the quarter was 38,359 ounces and cash operating costs were $213 per ounce. 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: extension of K-2 mine and new area exploration opportunity
Production for the quarter was 24,260 gold ounces, similar to the 24,715 ounces in the 1999 quarter. Slightly higher grades and recovery offset lower mill tonnage. Cash operating costs per ounce were $201, $42 lower than second quarter 1999 costs, due to lower mining costs.
Preliminary results of exploration efforts to test zones to the northeast of the K-2 deposit have indicated a resource of approximately 400,000 tons grading 0.2 ounces per ton. A mine plan will be developed during the last half of the year that should extend the mine life of K-2 for another year. This is important to the operation, as mining of the Lamefoot deposit will be completed late this year.
During the quarter, the company entered into an agreement with Newmont Gold Company to exchange its 50 percent interest in the Kuranakh gold project located in eastern Russia for Newmont's 75 percent interest in the Golden Eagle project located in the Republic district of Washington State. The company may also receive up to an additional $7 million, depending on whether certain permitting, financing and project completion conditions are achieved in respect of Kuranakh. Further, each party will be required to pay a production royalty to the other, starting at 0.5 percent of its share in production at a $350 per ounce gold price and increasing to one percent at $400 per ounce.
Golden Eagle is an advanced gold exploration project located approximately 15 miles from the Kettle River millsite and represents a good opportunity to extend mine life at Kettle River. The company plans to commence a drilling program during the third quarter to further advance knowledge of the previously identified mineralization.
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 is being completed at the main zone on the Youga concession as well as on nearby ground to extend known zones of mineralization. In addition, drilling has commenced 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.
The Minister of the Environment for Canada has announced his approval of the environmental assessment for the company's 100 percent owned Aquarius project, located near Timmins, Ontario. The Company expects to complete the permitting process in the third quarter. A revised feasibility report was completed during the second quarter by an independent contractor. The study incorporated changes in processing method, improvements to the mining plan and the use of certain mill equipment acquired by the company at the end of last year. The study indicates a cash operating cost of $148 per ounce based on reserves of 1.2 million ounces.
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, 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. |
