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Gold/Mining/Energy : Royal Oak-RYO -- Ignore unavailable to you. Want to Upgrade?

To: Thomas P. Talbot who wrote (623)	1/7/1998 5:37:00 AM
From: Michael Bidder	Read Replies (1) \| Respond to of 1706

Not a good press releas today on ECO! Tuesday January 6, 4:01 pm Eastern Time Company Press Release SOURCE: Echo Bay Mines Ltd. Echo Bay Announces Series of Actions to Improve Cash Flow By $30-35 Million In Response to 18-Year Lows In Gold Price ENGLEWOOD, Colo., Jan. 6 /PRNewswire/ -- Echo Bay Mines Ltd. (Amex: ECO; Toronto) announced today a series of actions designed to improve cash flow by an estimated $30-35 million in 1998 in response to 18-year lows in the gold price. The company is temporarily suspending operations at its Lupin gold mine in the Northwest Territories, and is scaling back operations at its McCoy/Cove mine in Nevada, until the gold price improves. Echo Bay will also reduce its 1998 new-project expenditures budget to $3 million from $21 million and its exploration budget to $6 million from $11 million, pending an increase in gold prices. In addition, the company is reducing the number of executive, administrative and clerical staff based in the Denver corporate office by approximately 40% to a total of 37 persons. Taken together, these actions are expected to reduce the company's 1998 cash expenditures by an estimated total of $30-35 million. With the company's current gold hedge position, Echo Bay will realize a minimum average of $338 per ounce for its entire planned 1998 gold production. The current cash value of the company's gold and silver hedge position is $51 million ($24 million for 1998 and $27 million for the years 1999-2002), including $22 million for an interest rate swap that approximately halves the interest rate paid by the company on its $100 million capital securities through March 2002. The company will take an estimated $14 million charge in the fourth quarter of 1997 for the total cost of these overall reductions, including severance and related costs. Lupin and McCoy/Cove are the company's two highest-cost mines. Both have operated at a loss for some time. In the first nine months of 1997, cash operating costs were $294 and $291 per ounce of gold produced at Lupin and McCoy/Cove respectively. The market price of gold sank to an 18-year low of $280.45 today. Cash operating costs are considerably lower at the company's other two gold mines, Round Mountain in Nevada and Kettle River in Washington State ($205 and $217 per ounce respectively for the first nine months of 1997). The temporary mothballing of Lupin and scale-back of operations at McCoy/Cove is expected to reduce Echo Bay's 1998 cash operating costs to $240- 250 per ounce of gold produced, compared with the company's full-year 1997 target of $265-275 per ounce. The company's total gold production is expected to be reduced by approximately 25%, or 175,000 ounces of gold per year, until gold prices improve. In the first nine months of 1997, Lupin produced 121,278 ounces and McCoy/Cove produced 143,900 ounces of Echo Bay's total 551,227 ounces of gold production. With the actions announced today, Echo Bay's 1998 production targets are 500-525,000 ounces of gold and 7-8 million ounces of silver. The Lupin mine is being placed on ''care and maintenance'' to maintain the integrity of the mine and enable it to reopen when gold prices improve. Approximately 500 employees are affected. The underground mine is located 56 miles south of the Arctic Circle. It is the northernmost gold mine in the world outside of Russia. Annual care and maintenance costs are anticipated to be about $3 million. At the McCoy/Cove mine, operations are being scaled back and costs will be reduced significantly by implementation of a variety of actions until gold prices improve. Mining activities will be limited to the higher-grade portions of the Cove open pit. Mining is being discontinued in the smaller, higher-cost McCoy pit. Remediation work on the Cove pit wall is being postponed at least until the second half of 1998, pending an improvement in the gold price. There will be a reduction of approximately 20% of the 450 employees at the site. Other cost-saving measures will also be implemented. The outstanding success that has been achieved at these two mines in the past is due in large measure to the contributions of the highly skilled and dedicated employees at those locations. Echo Bay recognizes these contributions and will provide a compensation package to all affected employees. Echo Bay mines gold and silver in Canada and the United States. The primary markets for its shares are the American and Toronto stock exchanges. ''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 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. -------------------------------------------------------------------------------- More Quotes and News: Echo Bay Mines Ltd (AMEX:ECO - news) Related News Categories: mining/metals -------------------------------------------------------------------------------- Help -------------------------------------------------------------------------------- Copyright c 1998 PRNewswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. Important Disclaimers and Legal Information Questions or Comments?