SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 6, 1997
ECHO BAY MINES LTD.
(Exact Name of Registrant as Specified in Charter)
CANADA 1-8542 NONE
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
Suite 1000, 6400 S. Fiddler's Green Circle,
ENGLEWOOD, COLORADO 80111-4957
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 303-714-8600
<PAGE>
ITEM 5. OTHER EVENTS
Incorporated by reference herein is the text of the Company's press release
dated November 4, 1997, which is attached hereto as Exhibit 99.1 and the text of
the Company's press release dated November 4, 1997, which is attached hereto as
Exhibit 99.2.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(C) EXHIBITS
99.1 Press Release dated November 4, 1997.
99.2 Press Release dated November 4, 1997.
Page 2 of 3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ECHO BAY MINES LTD.
Dated: November 6, 1997 By /S/ TOM S. Q. YIP
----------------------------------
Tom S. Q. Yip
Controller and Principal Accounting Officer
Page 3 of 3
<PAGE>
Exhibit 99.1 - Press Release dated November 4, 1997
ECHO BAY MINES Contact: Robbin Lee
Suite 1000 303 714-8829
6400 S. Fiddler's Green Circle
Englewood, CO 80111-4957
www.echobay.com
FOR IMMEDIATE RELEASE
ECHO BAY ANNOUNCES $309.8 MILLION RESTRUCTURING CHARGE
Tuesday, Nov. 4, 1997 - Echo Bay Mines Ltd. (Amex and TSE: ECO) today announced
a special one-time restructuring charge of $309.8 million ($2.22 per share),
following completion of a previously reported comprehensive review of the
carrying values of the company's assets.
The restructuring charge is included in the company's third quarter net
loss of $327.5 million, or $2.36 per share. Before the restructuring provision,
the company had a net loss from operations of $17.7 million, or $0.14 per share.
(For details, see separate news release issued today.)
The restructuring provision is a non-cash charge. It reduces the cost basis
of the company's assets on the consolidated balance sheet. It also reduces the
company's future gold production costs by an estimated $20-30 per ounce of gold
produced over the lives of the mines, as it reduces deferred mining costs and
future depreciation and amortization amounts. There is no tax effect; the amount
is the same pre-tax and after-tax.
The restructuring provision resulted from a previously reported review of
the carrying values of the company's assets, including four producing gold mines
and a portfolio of exploration properties, development projects and other
assets, in light of current market
<PAGE>
conditions. As reported, Echo Bay initiated the asset value review in the second
quarter of this year.
Details of the non-cash charges follow:
o $107.4 million write-down of Echo Bay's investment in Santa Elina
Mines Corporation in Brazil to its current market value of $45.0
million.
o $50.0 million write-off of Echo Bay's entire investment in the
Kingking copper-gold project in the Philippines.
o $127.0 million reduction in the carrying values of three producing
mines in the United States and Canada (McCoy/Cove, Lupin and Kettle
River) as a result of continuing low gold prices.
o $25.4 million to write down certain other investments and assets to
market value and to provide for estimated legal and restructuring
expenses.
The company assessed the recoverability of the carrying values of all
assets in light of both short-term and long-term views of the gold price. A
brief discussion of each carrying value assessment follows. The attached tables
provide additional details.
SANTA ELINA MINES CORPORATION: The market value of Echo Bay's investment in
this gold exploration and development company in Brazil has dropped
precipitously in the wake of the decline in value of many junior exploration
companies and the plunge in world gold prices to 12-year lows. The company wrote
down its investment by $107.4 million to Santa Elina's estimated market value of
$45.0 million.
KINGKING: Echo Bay took a $50.0 million charge to write off its entire
investment in this copper-gold project in the Philippines. As reported, Echo Bay
and its joint venture partner,
-2-
<PAGE>
TVI Pacific Inc. (TSE: TVI), completed a feasibility study in April of this
year. The study concluded that Kingking would not meet the joint venture's
desired rates of return, principally due to the required payment of $67 million
in order to exercise the purchase option (Echo Bay's 75% share, $50.3 million).
The joint venture elected to let the option expire.
SHARE INVESTMENTS AND OTHER: This $25.4 million charge includes $15.6
million to write down Echo Bay's portfolio of share investments in other
companies, reflecting the decline in market value of many gold exploration and
development companies and continued low gold prices, and $9.8 million for
miscellaneous asset write-downs and estimated legal and restructuring expenses.
The share investments are principally common shares of exploration-oriented
companies acquired by Echo Bay as part of a global strategic-alliance strategy
over a period of years. Because Echo Bay has sharply refocused its exploration
strategy, most of these share investments now are non-core assets and will be
disposed of. The miscellaneous asset write-down (mostly leasehold improvements
related to office downsizings and closures) is $2.1 million, and the accrual for
estimated legal and restructuring expenses is $7.7 million. Echo Bay implemented
the final steps of a company-wide downsizing in the third quarter, reducing
Denver corporate office personnel from 116 to 75 and closing a number of
exploration offices around the world. The company expects a reduction of
approximately $4 million in annual cash operating costs and general &
administrative expenses as a result.
THREE PRODUCING MINES: As a result of continuing low gold prices, Echo Bay
reduced by a total of $127.0 million the carrying value of three gold mines -
McCoy/Cove, Lupin and Kettle River. The non-cash charge reduces Echo Bay's
consolidated gold production costs by an estimated $20-30 per ounce of gold
produced over the lives of the mines. Approximately half
-3-
<PAGE>
of the future cost reduction, $10-15 per ounce of gold produced, is in cash
operating costs (reflecting a $64.2 million reduction in deferred mining costs)
and the other $10-15 reduction in non-cash depreciation and amortization
expenses (reflecting a $62.8 million reduction in ore bodies, plant and
equipment).
In evaluating the carrying values of its producing gold mines, the company
restricted the basis of its calculations to proven and probable ore reserves,
excluding other mineralization (called "possible reserves" in Canada). For the
year 1998, the company used a gold price assumption of $325 per ounce. For 1999
and thereafter, a gold price of $375 was used for undiscounted cash flow
analysis (as required by Canadian generally accepted accounting principles) but
this price was effectively reduced to an average of approximately $350 per ounce
on a consolidated basis over the lives of the mines by application of
appropriate debt charges imputed to the assets at each mine and deducted from
the undiscounted cash flows.
Echo Bay noted that the write-down puts its gold mines in a position to
weather a prolonged period of low gold prices. All four mines continue to
perform well, and further improvements are anticipated. The Round Mountain mine
approved a new mining plan in the third quarter that increases cash flow and
profitability and reduces cash operating costs. At McCoy/Cove, additional
mineralization has been discovered just outside the Cove open pit that has the
potential of adding to production and extending mine life. Lupin has introduced
new mining and blasting methods at depth that make deeper levels economic,
potentially adding 2-3 additional years at current production rates. At Kettle
River, positive exploration results along extensions of two ore bodies indicate
the potential is excellent to add minable ounces and additional years of mine
life in 1998 and beyond.
-4-
<PAGE>
Echo Bay is a major gold producer with mines in Canada and the United
States. The primary markets for its shares are the American and Toronto stock
exchanges. Its shares are also listed on stock exchanges in Switzerland, France,
Germany and Belgium.
# # # # #
Two Tables Attached
"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 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.
-5-
<PAGE>
TABLE I
RESTRUCTURING PROVISION
<TABLE>
<CAPTION>
BEFORE AFTER
MILLIONS OF U.S. DOLLARS PROVISION PROVISION PROVISION
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET BOOK VALUE AT SEPT. 30, 1997:
PRODUCING MINES
Round Mountain:
Ore body, plant & equipment $ 110.2 $ -- $ 110.2
Deferred mining costs 12.2 -- 12.2
------------ ------------ -------------
Property, plant & equipment 122.4 -- 122.4
McCoy/Cove:
Ore body, plant & equipment 99.0 -- 99.0
Deferred mining costs 49.8 47.0 2.8
------------ ------------ -------------
Property, plant & equipment 148.8 47.0 101.8
Lupin:
Ore body, plant & equipment 93.6 47.8 45.8
Deferred mining costs 17.2 17.2 --
------------ ------------ -------------
Property, plant & equipment 110.8 65.0 45.8
Kettle River:
Ore body, plant & equipment 31.6 15.0 16.6
Deferred mining costs 2.5 -- 2.5
------------ ------------ -------------
Property, plant & equipment 34.1 15.0 19.1
Subtotal - Producing mines 416.1 127.0 289.1
DEVELOPMENT PROPERTIES
Aquarius 41.2 -- 41.2
Paredones Amarillos 8.3 -- 8.3
Kingking 50.0 50.0 -
------------ ------------ -------------
Subtotal - Development properties 99.5 50.0 49.5
INVESTMENTS AND OTHER ASSETS
Santa Elina Mines 152.4 107.4 45.0
Share investments and other (1) 33.7 25.4 16.0
------------ ------------ -------------
Subtotal - Investments and other assets 186.1 132.8 61.0
$ 701.7 $ 309.8 $ 399.6
------------ ------------ -------------
</TABLE>
(1) See details attached in Table II.
-6-
<PAGE>
TABLE II
SHARE INVESTMENTS AND OTHER
<TABLE>
<CAPTION>
COST NET BOOK
MILLIONS OF U.S. DOLLARS BASIS PROVISION VALUE (1)
- -------------------------------------------------------------- ---------------- -- --------------- --- ---------------
CARRYING VALUE AT SEPT. 30, 1997:
Common share investments:
<S> <C> <C> <C>
TVI Pacific $ 12.6 $ 10.2 $ 2.4
Minefinders (2) 5.1 - 5.1
Ashanti Goldfields 4.4 1.5 2.9
Canarc Resource 4.3 2.8 1.5
Rift Resources 1.4 1.1 0.3
Kit Resources 1.1 - 1.1
Sutton Resources 0.3 - 0.3
Mar-West Resources 0.2 - 0.2
------------------ ----------------- -----------------
29.4 15.6 13.8
Other (3) 4.3 9.8 2.2
------------------ ----------------- -----------------
$ 33.7 $ 25.4 $ 16.0
------------------ ----------------- -----------------
</TABLE>
(1) Net book value is the lower of market value on Sept. 30 or the company's
cost basis.
(2) Excludes an additional 1.25 million common shares of Minefinders with a
market value of $3.5 million that Echo Bay received on Oct. 3.
(3) Provision includes $2.1 million to write down miscellaneous assets,
principally leasehold improvements related to office downsizings and
closures, and a $7.7 million accrual for estimated legal and restructuring
expenses.
-7-
<PAGE>
Exhibit 99.2 - Press Release dated November 4, 1997
ECHO BAY MINES Contact: Robbin Lee
6400 S. Fiddlers Green Circle 303 714-8829
Suite 1000
Englewood, CO 80111-4957
www.echobay.com
FOR IMMEDIATE RELEASE
ECHO BAY REPORTS THIRD QUARTER RESULTS
Tuesday, Nov. 4, 1997 - Echo Bay Mines Ltd. (Amex and TSE: ECO) today reported a
net loss of $17.7 million ($0.14 per share) in the third quarter of 1997 before
a special one-time restructuring provision of $309.8 million ($2.22 per share).
The restructuring charge brought the total quarterly loss to $327.5 million
($2.36 per share).
A year ago, Echo Bay had a third quarter net loss of $42.4 million
($0.31 per share), including a provision of $30.0 million ($0.22 per share) for
waste rock stabilization at the McCoy/Cove mine in Nevada.
The restructuring provision is a non-cash charge. It reduces the cost
basis of the company's assets on the consolidated balance sheet. It also reduces
the company's future gold production costs by an estimated $20-30 per ounce of
gold produced over the lives of the mines, as it reduces deferred mining costs
and future depreciation and amortization amounts. There is no tax effect; the
amount is the same pre-tax and after-tax.
The restructuring provision resulted from a previously reported
comprehensive review of the carrying values of the company's assets, including
four producing gold mines and a portfolio of exploration properties, development
projects and other assets, in light of current
<PAGE>
market conditions. As reported, Echo Bay initiated the asset value review in the
second quarter of this year. (For details of the restructuring provision, see
separate news release issued today.)
Echo Bay's gold production fell and silver production rose in the third
quarter, as expected, principally reflecting the planned processing of
carbonaceous ores leaner in gold but richer in silver at the McCoy/Cove mine.
Company-wide quarterly gold production totaled 177,502 ounces this year, down
19% from 218,043 ounces last year, as planned. For the first nine months, gold
production topped 550,000 ounces, in line with the company's full-year
production target of 700-725,000 ounces. Silver production rose 56% to 3,271,677
ounces from 2,092,987 ounces a year ago, bringing silver production for the
first nine months to 7.6 million ounces - easily achieving in the first nine
months the company's full-year 1997 production target of seven million ounces.
Cash operating costs rose 3% to $251 per ounce of gold produced in the
quarter, principally reflecting the lower gold grades processed at the
McCoy/Cove mine.
Quarterly results also reflect lower gold prices this year than a year
ago. The average price realized by Echo Bay fell by $10 per ounce of gold sold
in the quarter, to $380 per ounce this year from $390 a year ago. Echo Bay's
$380 realized price was $56 better than the $324 average spot price per ounce of
gold on world markets during the quarter, a result of the company's hedging
programs. Third quarter revenue includes gains of $7.6 million from closing out
the company's gold and silver forward sales positions earlier in the year. Gains
from such transactions are recognized in revenue in the periods in which the
hedged gold and silver had been scheduled for delivery.
-2-
<PAGE>
EXPLORATION ACTIVITIES REFOCUSED
Echo Bay has refocused its search for new gold reserves and production.
The company's exploration program now is concentrated on those projects believed
to represent the most promising near-term prospects in its portfolio,
principally those located in the Americas where the company already has
extensive gold mining infrastructure. Particular emphasis is placed on those
prospects located near the company's four producing gold mines and two planned
new mines, located in Canada, the United States and Mexico, where extensive
processing facilities already exist or are planned.
To further this strategy, in the third quarter Echo Bay sold back its
right to buy a future 60% interest in a longer-term gold exploration project -
Dolores in Mexico - to Minefinders Corporation Ltd. (VSE: MFL) in exchange for
C$4.0 million in cash and 1.25 million common shares of Minefinders. The
transaction increased Echo Bay's ownership of Minefinders to 25% of the common
shares outstanding and repaid Echo Bay for all of its direct exploration
expenses at Dolores. In return, Echo Bay gave up its future right to acquire a
60% interest in the Dolores project, which would have required Echo Bay to fund
all exploration and development costs on the property through completion of a
bankable feasibility study within two years and then to pay Minefinders a
minimum of US$12 million in cash to purchase 60% of the proven and probable
gold-equivalent ounces as defined in the feasibility study at US$20 per ounce.
During the third quarter, Echo Bay charged $11.2 million of exploration
expenses against current earnings and capitalized another $14.4 million to
advance its development programs, down from $17.1 million and $19.0 million
respectively in the third quarter of last year.
-3-
<PAGE>
The company funded work on a number of promising projects in the
Americas in the third quarter. Among them are three early- to intermediate-stage
exploration projects in Nevada with encouraging results to date and excellent
upside potential - Ratto Canyon, Bald Peak and Jessup. Ratto Canyon is located
six miles south of the Ruby Hill property of Homestake Mining Company (NYSE:
HM). In Chile, Echo Bay owns 100% of the Etreus project, located near the border
of Argentina, where surface samples have exceeded 0.5 ounce per ton of gold and
drilling began early in October.
ROUND MOUNTAIN MINE: NEW MINING PLAN IMPROVES PROFITABILITY AND CASH FLOWS
The 50%-owned Round Mountain mine in Nevada was Echo Bay's largest and
lowest-cost gold producer in the third quarter. Echo Bay's share of gold
production rose to 62,803 ounces from 59,415 ounces a year ago. Cash operating
costs were reduced to $212 from $228 per ounce of gold produced.
During the quarter, Round Mountain approved a new mining plan that
increases cash flow and profitability and reduces cash operating costs. The new,
optimized open pit design eliminates the mining of more than 250 million tons of
waste rock and low-grade, high-cost material over the life of the mine, reducing
the up-front waste stripping by approximately 40% and enhancing the economics
significantly. Reduced waste stripping brings more ounces into production
earlier and decreases cash operating costs, future capital requirements for
equipment replacement, and ultimate reclamation costs.
The net result is an increase of 30-40% in cash flow over the life of
the mine and a near-doubling of the net present value of the project.
-4-
<PAGE>
Reflecting the new mining plan, Round Mountain has increased its
full-year 1997 production target to 440-460,000 ounces of gold (Echo Bay's 50%
share, 220-230,000 ounces) from its earlier goal of 380-400,000 ounces.
The optimized open pit design will reduce the mine's current ore
reserves by approximately 1.2 million ounces of gold (Echo Bay's 50% share,
600,000 ounces). This revision will result in mining being completed in 10
years, with ore processing continuing from stockpiles for another five years,
compared with the previous plan of 14 years of mining plus seven years of
stockpile processing. However, this life-of-mine plan is based on no more gold
being discovered at Round Mountain (which is unlikely - given the growth in
reserves seen at the site over the last 12 years).
In July, Round Mountain produced its four millionth ounce of gold since
Echo Bay became the operator. The mine had less than half that much gold in
reserves - only 1.8 million ounces - when Echo Bay acquired its interest in
1985. With reserves of 9.1 million ounces at year-end 1996, Round Mountain has
twice as much gold remaining in the ground as the total amount mined in the past
12 years.
In September, the new mill at Round Mountain achieved full production.
The mine stockpiled more than three million tons of nonoxidized material over
the last two years to supplement millfeed ore mined in future quarters. Mill
recoveries are currently averaging approximately 85% of the contained gold,
roughly double the recovery rates that could be achieved by heap leaching these
nonoxidized ores. As the open pit is gradually deepened at Round Mountain, mill
production from increasing tonnages of deeper, nonoxide ores is expected
-5-
<PAGE>
to offset a reduction in heap leach production from decreasing quantities of
shallower oxide tonnages mined.
Round Mountain is also expanding its exploration efforts. An in-fill
drilling program will focus on upgrading material within the pit to proven and
probable reserves from its current categorization as other mineralization. In
addition, a program of exploration drilling is being directed at a deep target
to the northwest, thought to be one of the deposit's feeder structures, the
North Feeder zone. This zone, if economic, is believed to have good potential
for ore reserve additions in the future. Finally, several additional exploration
targets have been identified on the Round Mountain claim block, only a small
portion of which has been adequately explored.
MCCOY/COVE MINE: LOWER-GRADE, CARBONACEOUS ORES
At McCoy/Cove in Nevada, gold production fell and silver production
rose, as expected, reflecting the planned processing of carbonaceous ores leaner
in gold but richer in silver. Carbonaceous ore types are processed in a more
complex milling circuit and have lower gold recovery rates. McCoy/Cove produced
39,073 ounces of gold during the quarter as a result, down 54% from 85,754
ounces in 1996. However, silver grades in carbonaceous material were
significantly higher in the third quarter than a year ago, and silver production
rose 56% to 3,271,677 ounces from 2,092,987 ounces a year ago.
The area of the open pit being mined in the fourth quarter of 1997
contains less carbonaceous material. However, based on the results of mining and
milling this material during the third quarter, McCoy/Cove now expects to
produce a total of about 10% less gold and 30%
-6-
<PAGE>
more silver in 1997 than it had originally targeted at the beginning of the
year. The mine's full-year 1997 production goal is 190-200,000 ounces of gold,
down from a target of 210-220,000 ounces earlier, and 9-10 million ounces of
silver, up from seven million ounces targeted originally.
Cash operating costs were $270 per ounce of gold produced in the third
quarter, up 13% from $239 a year ago but down 15% from $317 in the second
quarter of this year. Cost reduction programs resulted in savings of $2.9
million in the third quarter compared with a year ago. Significant cost savings
components include a reduction in the number of employees, lower mill reagent
consumption, and reductions in a number of services and supplies.
Additional mineralization has been discovered just outside the planned
ultimate perimeter of the Cove open pit. This mineralization has the potential
of adding to production and extending mine life at McCoy/Cove. Drill-indicated
thicknesses of 75+ feet grading 0.07-0.09 ounce/ton of gold and 1.5-5.8
ounce/ton of silver have encouraged the company to budget $800,000 to drill out
this area on a grid of closely spaced holes sufficient to determine by year-end
1997 whether or not this material can be classified as ore reserves. A drilling
program totaling 55 holes is currently being completed, with mineralization
found in most of the holes assayed to date. The extension of the deposit remains
open to the south.
During the third quarter, the McCoy/Cove team was awarded the 1996
Sentinels of Safety Award for operating the safest large open pit mine in the
United States. Presented annually since 1925, this award is mining's most
prestigious safety award. To qualify, a mine must have at least 30,000
injury-free hours of work. The McCoy/Cove team far exceeded that
-7-
<PAGE>
requirement, having worked more than 800,000 employee-hours without a single
lost-time injury.
LUPIN MINE: NEW MINING METHOD MAKES DEEPER LEVELS ECONOMIC
The Lupin mine in the Northwest Territories produced 42,072 ounces of
gold in the third quarter of 1997, compared with 41,295 ounces a year earlier.
Cash operating costs were reduced to $296 per ounce of gold produced from $310 a
year ago.
Quarterly results are in line with Lupin's targeted 1997 production of
160-170,000 ounces of gold.
Lupin has introduced new mining and blasting methods at depth,
including mechanized cut-and-fill in addition to long-hole open stoping in some
of the deepest levels of the mine. These changes have proved highly successful
in reducing waste rock dilution, improving millhead ore grade and controlling
costs. Reflecting this success, a revision of the mining plan is currently being
finalized. The new mining plan will include the addition in late 1998 of a new
winze (an internal shaft and hoist between underground levels of the mine) to
further improve cost-effectiveness of mining at depth in future periods.
These improvements, in conjunction with other cost savings being put in
place at the site, indicate that mining can continue economically below the
1480-meter level into mineralization previously identified but considered
uneconomic. It is now believed that this deeper mineralization can extend
Lupin's life by 2-3 additional years at current production rates. The necessary
work is under way to upgrade as much of this mineralization as possible by
year-end
-8-
<PAGE>
1998 (not 1997) to proven and probable reserves from its current category of
other mineralization.
Because deeper levels now are economic to mine at Lupin, there is no
immediate requirement to develop the satellite Ulu deposit, located about 100
miles away, as a source of supplemental feed for the Lupin mill. Development of
this deposit has accordingly been deferred.
In addition, a previously unknown area of mineralization has been
discovered at Lupin. Named the McPherson Zone after the underground mining shift
supervisor who was instrumental in its discovery, this mineralization was
initially identified at a depth of 1105 meters (3525 feet). About 2,000 ounces
of gold have already been mined from the McPherson Zone at that level, which is
located about 90 meters (300 feet) east of the West Zone and 135 meters (440
feet) from the main shaft. The mineralization is currently being explored in
several directions to better determine its extent.
KETTLE RIVER MINE: MORE TONS PROCESSED; GOLD PRODUCTION IS HIGHER
The Kettle River mine in Washington State produced 33,554 ounces of
gold in the third quarter, compared with 31,579 ounces a year ago. Kettle River
processed significantly increased tonnages during the quarter, offsetting lower
ore grades processed. The mill operated seven days a week in the third quarter
of this year, up from five days a week in 1996. Seven-day workweeks are
scheduled to continue. Kettle River expects to meet its full-year production
target of 130-140,000 ounces of gold.
-9-
<PAGE>
Kettle River mines a series of deposits to feed a central mill. The
fifth and sixth deposits, Lamefoot and K-2, are now in concurrent production at
a ratio of about 3:1. As expected, cash operating costs rose to $218 per ounce
of gold produced in the quarter from $201 a year ago, reflecting the higher
mining costs and lower grades of the K-2 deposit, along with the increased
number of tons mined and milled.
Exploration is under way on both the northern extension of the Lamefoot
deposit and a new target identified as Zone 7. In addition, K-2 remains open
both to the north and to the south. Stepped-up exploration programs are now
planned in each of these areas. Early positive results indicate that the
potential is excellent to add minable ounces and additional years of life to
Kettle River in 1998 and beyond.
AQUARIUS AND PAREDONES AMARILLOS MINES DEFERRED UNTIL GOLD PRICE IMPROVES
During the third quarter, the company announced its decision to defer
final construction decisions on two planned gold mines, Aquarius in Canada and
Paredones Amarillos in Mexico, until the gold price improves from current
12-year lows.
Deferral of final construction decisions beyond 1997 reduces the
company's 1997 capital expenditure requirements to a total of not more than $49
million from the originally planned $114 million for the two new mines.
At the 100%-owned Aquarius gold mine in the Timmins gold district of
Ontario, Echo Bay's 1997 capital expenditure requirements are reduced to $39
million from the originally planned $70 million. Of that, $26.4 million was
spent through Sept. 30. The remaining amount to be spent during 1997 will be
devoted primarily to completion of the frozen underground
-10-
<PAGE>
barrier system. The barrier system is being constructed to block groundwater
from flowing into the proposed pit. The underground frozen earth barrier can be
maintained indefinitely at a nominal cost. Underground freezing is a proven,
cost-effective technology that has been used in tunneling and shaft boring for
over 100 years.
At 60%-owned Paredones Amarillos, Echo Bay's share of 1997 capital
expenditures will not exceed $10 million, down from $44 million planned
originally. Of this, $5.5 million was spent through Sept. 30. The remaining
amount to be spent during 1997 will be devoted to detailed engineering work,
permitting activities, water development and other work required to maintain the
integrity of the project and enable development to proceed quickly and smoothly
to construction at such time as a final construction decision is made.
Echo Bay and its 40% joint venture partner at Paredones Amarillos,
Viceroy Resource Corporation (TSE: VOY), estimate that less than $2 million will
be added to the total cost of the project by deferring the final construction
decision until early 1998. This amount is more than offset by a $15 million
reduction in capital costs that has been achieved by re-engineering the mill
process flowsheet, including elimination of the cyanide regeneration circuit;
purchasing used equipment; rede-signing the site layout; and optimizing a number
of other aspects of the project.
Echo Bay is a major gold producer with mines in Canada and the United
States. The primary markets for its shares are the American and Toronto stock
exchanges. Its shares are also listed on stock exchanges in Switzerland, France,
Germany and Belgium.
# # # # #
-11-
<PAGE>
Statistical Tables Attached
"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 exploration
opportunities; conclusions of feasibility studies now under way; 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.
-12-
<PAGE>
ECHO BAY MINES
HIGHLIGHTS
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPT. 30 ENDED SEPT. 30
U.S. DOLLARS 1997 1996 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL DATA
<S> <C> <C> <C> <C>
Revenue (millions) $ 74.5 $ 94.9 $ 224.1 $ 257.8
Net loss (millions):
Before special restructuring provision $ (17.7) $ (42.4) $ (55.2) $ (73.2)
After special restructuring provision $ (327.5) $ (42.4) $ (365.0) $ (73.2)
- ------------------------------------------------ -------------- ------------- --------------- ---------------
Gold ounces sold (1) 156,862 217,686 515,098 589,759
Silver ounces sold (1) 2,893,077 1,889,247 6,752,249 4,744,444
- ------------------------------------------------ -------------- ------------- --------------- ---------------
Average price realized:
Per ounce of gold sold $ 380 $ 390 $ 366 $ 393
Per ounce of silver sold $ 5.11 $ 5.29 $ 5.24 $ 5.53
Cash operating costs:
Per ounce of gold produced $ 251 $ 243 $ 256 $ 247
Per ounce of silver produced $ 3.77 $ 3.14 $ 4.06 $ 3.54
- ------------------------------------------------ -------------- ------------- --------------- ---------------
% of revenue from gold 80% 89% 84% 90%
% of revenue from silver 20% 11% 16% 10%
- ------------------------------------------------ -------------- ------------- --------------- ---------------
PRODUCTION AND RESERVES
Production (ounces): (1)
Gold 177,502 218,043 551,227 584,890
Silver 3,271,677 2,092,987 7,642,678 4,917,206
Reserves (ounces): (2)
Gold 8,573,000 10,983,000
Silver 53,858,000 62,913,000
PER SHARE DATA
Net loss
Before special restructuring provision $ (0.14) $ (0.31) $ (0.43) $ (0.55)
After special restructuring provision $ (2.36) $ (0.31) $ (2.65) $ (0.55)
Shares outstanding (millions):
Weighted average 139.4 137.6 139.4 132.8
Period end 139.4 139.4 139.4 139.4
- ------------------------------------------------ -------------- ------------- --------------- ---------------
</TABLE>
(1) Amounts sold differ from amounts produced due to inventory changes.
(2) Proven and probable reserves at the beginning of the year.
-13-
<PAGE>
ECHO BAY MINES
PRODUCTION AND COSTS
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPT. 30 ENDED SEPT. 30
1997 1996 1997 1996
- ------------------------------------------------------------ --------------- ---------------- ---------------- ----------------
GOLD PRODUCTION (OUNCES)
<S> <C> <C> <C> <C>
McCoy/Cove 39,073 85,754 143,900 204,218
Round Mountain (50%) 62,803 59,415 183,912 156,748
Lupin 42,072 41,295 121,278 129,853
Kettle River 33,554 31,579 102,137 94,071
- ------------------------------------------------------------ --------------- ---------------- ---------------- ----------------
Total gold 177,502 218,043 551,227 584,890
============================================================ =============== ================ ================ ================
SILVER PRODUCTION (OUNCES)
McCoy/Cove 3,271,677 2,092,987 7,642,678 4,917,206
- ------------------------------------------------------------ --------------- ---------------- ---------------- ----------------
Total silver 3,271,677 2,092,987 7,642,678 4,917,206
============================================================ =============== ================ ================ ================
CASH OPERATING COSTS (U.S. DOLLARS PER
OUNCE OF GOLD PRODUCED)
McCoy/Cove (1) $ 270 $ 239 $ 291 $ 263
Round Mountain 212 228 205 215
Lupin 296 310 294 287
Kettle River 218 201 217 196
- ------------------------------------------------------------ --------------- ---------------- ---------------- ----------------
Company average $ 251 $ 243 $ 256 $ 247
============================================================ =============== ================ ================ ================
CONSOLIDATED COSTS (U.S. DOLLARS PER OUNCE OF GOLD
PRODUCED)
Cash operating costs $ 251 $ 243 $ 256 $ 247
Royalties 11 12 10 11
Production taxes 2 1 2 3
- ------------------------------------------------------------ --------------- ---------------- ---------------- ----------------
Total cash costs 264 256 268 261
Depreciation 57 58 61 65
Amortization 34 34 34 33
Reclamation and mine closure 10 8 10 7
- ------------------------------------------------------------ --------------- ---------------- ---------------- ----------------
Total production costs $ 365 $ 356 $ 373 $ 366
============================================================ =============== ================ ================ ================
</TABLE>
(1) In 1997, cash operating costs per ounce of silver produced at McCoy/Cove
were $3.77 and $4.06 for the three-month and nine-month periods
respectively, based on average gold-to-silver price ratios of 71.7:1 and
71.6:1 respectively. In 1996, cash operating costs per ounce of silver
produced at McCoy/Cove were $3.14 and $3.54 for the three-month and
nine-month periods respectively, based on average respective price ratios
of 76.0:1 and 74.2:1.
-14-
<PAGE>
ECHO BAY MINES
CONSOLIDATED EARNINGS STATEMENT
(UNAUDITED)
<TABLE>
<CAPTION>
THOUSANDS OF U.S. DOLLARS, THREE MONTHS NINE MONTHS
EXCEPT FOR PER SHARE DATA ENDED SEPT. 30 ENDED SEPT. 30
1997 1996 1997 1996
- --------------------------------------------- ------------------ ------------------ ----------------- -----------------
Revenue $ 74,450 $ 94,936 $ 224,103 $ 257,772
- --------------------------------------------- ------------------ ------------------ ----------------- -----------------
Expenses:
<S> <C> <C> <C> <C>
Operating costs 50,242 57,940 158,005 160,464
Royalties 2,335 3,021 6,653 7,253
Production taxes 491 253 1,153 1,749
Depreciation and amortization 20,228 21,964 61,549 63,980
Reclamation and mine closure 2,226 1,985 6,599 4,568
General and administrative 1,955 2,850 8,943 9,732
Exploration and development 11,145 17,107 27,575 49,128
Interest and other 3,039 2,105 7,080 3,249
Provision for McCoy/Cove pit wall
stabilization - 30,000 - 30,000
Provision for impaired assets and
restructuring costs 309,800 - 309,800 -
- --------------------------------------------- ------------------ ------------------ ----------------- -----------------
401,461 137,225 587,357 330,123
- --------------------------------------------- ------------------ ------------------ ----------------- -----------------
Loss before income taxes (327,011) (42,289) (363,254) (72,351)
- --------------------------------------------- ------------------ ------------------ ----------------- -----------------
Income tax expense (recovery):
Current (68) 126 307 767
Deferred 582 - 1,457 56
- --------------------------------------------- ------------------ ------------------ ----------------- -----------------
514 126 1,764 823
- --------------------------------------------- ------------------ ------------------ ----------------- -----------------
Net loss $ (327,525)$ (42,415) $ (365,018)$ (73,174)
Loss per share (1) $ (2.36)$ (0.31) $ (2.65)$ (0.55)
Weighted average number of shares 139,370,031 137,603,507 139,365,715 132,794,837
outstanding
============================================= ================== ================== ================= =================
</TABLE>
Certain prior-year items have been reclassified to conform with the current
presentation.
(1) Echo Bay's financial statements are prepared in accordance with accounting
principles generally accepted in Canada. Loss per share equals the sum of
the net loss for the period plus the interest on the $100 million capital
securities in the period (an amount which is charged directly to the
deficit in common shareholders' equity on the company's consolidated
balance sheet, rather than being charged against revenue on the
consolidated earnings statement) divided by the weighted average number of
common shares outstanding during the period. The capital securities were
issued in March 1997; interest on these securities that was charged to the
deficit was $1,492,000 and $4,131,000 for the three months and nine months
ended Sept. 30, 1997 respectively.
-15-
<PAGE>
ECHO BAY MINES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
SEPT. 30 DEC. 31 SEPT. 30
Thousands of U.S. dollars 1997 1996 1996
- ----------------------------------------------------------------------------------------------------------
Assets
Current assets:
<S> <C> <C> <C>
Cash and cash equivalents $ 5,910 $ 103,196 $ 145,039
Short-term investments 13,828 - -
Interest and accounts receivable 18,293 9,739 13,213
Inventories 48,734 33,941 41,007
Prepaid expenses and other assets 5,070 6,573 7,079
- -------------------------------------------------------------- ------------- -------------- -------------
91,835 153,449 206,338
Plant and equipment 241,791 233,984 250,620
Mining properties 139,605 405,011 441,385
Long-term investments and other assets 9,717 39,701 41,741
- -------------------------------------------------------------- ------------- -------------- -------------
$ 482,948 $ 832,145 $ 940,084
============================================================== ============= ============== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 81,319 $ 72,421 $ 54,867
Income and mining taxes payable 3,441 3,651 4,228
Current portion of gold and other financings(1) 15,182 129,445 136,985
Current portion of deferred income 16,041 876 15,576
- -------------------------------------------------------------- ------------- -------------- -------------
115,983 206,393 211,656
Long-term gold and other financings (1) 41,938 53,478 46,580
Long-term deferred income 45,112 1,581 11,561
Other long-term obligations 55,500 69,992 60,382
Deferred income taxes 9,993 8,392 8,166
Common shareholders' equity:
Common shares 709,593 709,534 709,510
Capital securities 95,974 - -
Deficit (574,247) (201,931) (93,178)
Foreign currency translation (16,898) (15,294) (14,593)
- -------------------------------------------------------------- ------------- -------------- -------------
214,422 492,309 601,739
- -------------------------------------------------------------- ------------- -------------- -------------
$ 482,948 $ 832,145 $ 940,084
============================================================== ============= ============== =============
</TABLE>
(1) Total gold and other financings were $57.1 million at Sept. 30, 1997
(including current portion of $15.2 million), down $126.5 million from
$183.6 million at Sept. 30, 1996 (including current portion of $137.0
million).
-16-
<PAGE>
ECHO BAY MINES
CONSOLIDATED STATEMENT OF CASH FLOW
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPT. 30 ENDED SEPT. 30
Thousands of U.S. dollars 1997 1996 1997 1996
- ----------------------------------------------- ----------------- ---------------- ------------------ ----------------
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net loss $ (327,525) $ (42,415) $ (365,018) $ (73,174)
Add items not affecting working capital:
Depreciation and amortization 20,228 21,964 61,549 63,980
Non-cash portion of exploration
and development expense 144 1,279 436 3,837
Deferred income taxes 582 - 1,457 56
Equity in loss of affiliate - 1,078 - 2,632
Gain on sale of assets (1,408) (65) (1,113) (2,383)
Provision for McCoy/Cove pit wall
stabilization - 30,000 - 30,000
Provision for impaired assets and
restructuring costs 309,800 - 309,800 -
Other (7,445) 796 (11,781) 1,878
- ----------------------------------------------- ----------------- ---------------- ------------------ ----------------
(5,624) 12,637 (4,670) 26,826
Change in cash invested in operating assets
and liabilities:
Interest and accounts receivable (9,890) 4,880 (9,856) 1,612
Inventories (2,115) 1,664 (12,107) (5,096)
Prepaid expenses and other assets (773) (1,052) 2,266 (968)
Accounts payable and other liabilities 4,350 (5,682) (4,367) (7,784)
Income and mining taxes payable (276) (57) (210) 646
- ----------------------------------------------- ----------------- ---------------- ------------------ ----------------
(14,328) 12,390 (28,944) 15,236
- ----------------------------------------------- ----------------- ---------------- ------------------ ----------------
FINANCING ACTIVITIES
Currency borrowings - 34,714 - 34,714
Debt repayments (4,706) (3,958) (127,585) (8,885)
Capital securities issued, net of issuance costs - - 96,700 -
Common share dividends - - - (4,895)
Common shares issued on acquisition of Santa
Elina, net of issuance costs - 85,801 - 85,801
Common share issues, net of issuance costs - - 60 4,745
Other (2,174) - (185) -
- ----------------------------------------------- ----------------- ---------------- ------------------ ----------------
(6,880) 116,557 (31,010) 111,480
- ----------------------------------------------- ----------------- ---------------- ------------------ ----------------
INVESTING ACTIVITIES
Mining properties, plant and equipment (41,581) (26,724) (91,546) (75,483)
Proceeds on repurchase of the company's:
Gold and silver forward sales - - 54,963 -
Gold swap - - 8,107 -
Foreign exchange contracts - - 5,995 -
Cost of Santa Elina acquisition - (91,069) - (91,069)
Long-term investments and other assets (6,749) (599) (23,266) (7,317)
Proceeds on sale of long-term investments 7,894 - 7,894 5,550
Other 416 210 521 799
- ----------------------------------------------- ----------------- ---------------- ------------------ ----------------
(40,020) (118,182) (37,332) (167,520)
- ----------------------------------------------- ----------------- ---------------- ------------------ ----------------
Net increase (decrease) in cash and cash
equivalents (61,228) 10,765 (97,286) (40,804)
Cash and cash equivalents, beginning of
period 67,138 134,274 103,196 185,843
- ----------------------------------------------- ----------------- ---------------- ------------------ ----------------
Cash and cash equivalents, end of period $ 5,910 $ 145,039 $ 5,910 $ 145,039
=============================================== ================= ================ ================== ================
</TABLE>
-17-
<PAGE>
ECHO BAY MINES
MINE OPERATING DATA
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPT. 30 ENDED SEPT. 30
U.S. dollars, except where indicated 1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------
MCCOY/COVE MINE (100% OWNED)
Gold produced (ounces):
<S> <C> <C> <C> <C>
Milled 25,564 66,256 105,706 155,397
Heap leached 13,509 19,498 38,194 48,821
---------------- ---------------- ----------------- -----------------
Total gold 39,073 85,754 143,900 204,218
Silver produced (ounces):
Milled 3,174,066 1,965,862 7,353,652 4,533,767
Heap leached 97,611 127,125 289,026 383,439
---------------- ---------------- ----------------- -----------------
Total silver 3,271,677 2,092,987 7,642,678 4,917,206
Ore and waste mined (tons) 12,218,778 16,105,592 42,704,703 48,817,998
Mining cost/ton of ore and waste $0.79 $0.70 $0.73 $0.70
Milling cost/ton of ore $9.08 $9.60 $9.01 $9.76
Heap leaching cost/ton of ore $1.69 $1.35 $1.67 $1.64
Production cost per ounce of gold produced: (1)
Direct mining expense $ 275 $ 238 $ 298 $ 291
Deferred stripping cost (2) 6 (12) (20)
Inventory movements and other (3) (5) 5 (8)
---------------- ---------------- ----------------- -----------------
Cash operating cost 270 239 291 263
Royalties 3 5 3 5
Production taxes - - 1 3
---------------- ---------------- ----------------- -----------------
Total cash cost 273 244 295 271
Depreciation 67 58 72 72
Amortization 45 46 45 46
Reclamation and mine closure 10 10 10 8
---------------- ---------------- ----------------- -----------------
Total production cost $ 395 $ 358 $ 422 $ 397
================ ================ ================= =================
Average gold-to-silver price ratio (1) 71.7:1 76.0:1 71.6:1 74.2:1
Milled:
Ore processed (tons/day) 8,332 10,008 9,324 8,756
Gold grade (ounce/ton) 0.065 0.080 0.063 0.097
Silver grade (ounce/ton) 6.74 3.30 4.23 3.41
Gold recovery rate (%) 59.9 80.4 67.1 80.9
Silver recovery rate (%) 71.0 73.7 70.9 73.5
Heap leached:
Ore processed (tons/day) 17,567 22,393 18,576 16,570
Gold grade (ounce/ton) 0.024 0.015 0.016 0.019
Silver grade (ounce/ton) 0.36 0.23 0.26 0.30
Recovery rates (2)
</TABLE>
-18-
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPT. 30 ENDED SEPT. 30
U.S. dollars, except where indicated 1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------
ROUND MOUNTAIN MINE (50% OWNED)
Gold produced (ounces):
<S> <C> <C> <C> <C> <C>
Reusable heap leach pad (50%) 33,591 32,251 104,655 90,643
Dedicated heap leach pad (50%) 26,573 24,681 76,618 61,365
Other (50%) 2,639 2,483 2,639 4,740
---------------- ---------------- ----------------- -----------------
Total (50%) 62,803 59,415 183,912 156,748
Ore and waste mined (tons) (100%) 18,871,000 12,119,000 53,625,00 40,868,226
Mining cost/ton of ore and waste $0.66 $0.79 $0.67 $0.71
Heap leaching cost/ton of ore $0.64 $0.81 $0.63 $0.79
Production cost per ounce of gold produced:
Direct mining expense $ 205 $ 208 $ 202 $ 224
Deferred stripping cost 6 15 5 -
Inventory movements and other 1 5 (2) (9)
---------------- ---------------- ----------------- -----------------
Cash operating cost 212 228 205 215
Royalties 24 37 23 32
Production taxes 7 3 4 4
---------------- ---------------- ----------------- -----------------
Total cash cost 243 268 232 251
Depreciation 33 47 38 50
Amortization 18 18 18 18
Reclamation and mine closure 7 5 7 5
---------------- ---------------- ----------------- -----------------
Total production cost $ 301 $ 338 $ 295 $ 324
================ ================ ================= =================
Reusable heap leach pad:
Ore processed (tons/day) (100%) 26,185 27,224 27,145 27,823
Grade (ounce/ton) 0.032 0.032 0.035 0.036
Recovery rate (%) 80.9 72.5 76.2 68.1
Dedicated heap leach pad:
Ore processed (tons/day) (100%) 101,209 107,544 100,052 92,987
Grade (ounce/ton) 0.010 0.010 0.010 0.011
Recovery rate (2)
LUPIN MINE (100% OWNED)
Gold produced (ounces) 42,072 41,295 121,278 129,853
Tons of ore mined and milled 199,861 192,449 594,966 592,836
Mining cost/ton of ore (Cdn dollars) C$50.82 C$47.76 C$46.75 C$42.90
Milling cost/ton of ore (Cdn dollars) C$12.72 C$13.28 C$11.91 C$12.35
Production cost per ounce of gold produced:
Direct mining expense (Cdn dollars) C$382 C$408 C$389 C$396
Deferred mine development cost (Cdn
dollars) 28 13 17 (5)
Inventory movements and other (Cdn
dollars) - 3 (1) 1
---------------- ---------------- ----------------- -----------------
Cash operating cost (Cdn dollars) C$410 C$424 C$405 C$392
Cash operating cost (U.S. dollars) US$296 US$310 US$294 US$287
Royalties - - - -
Production taxes - - - -
---------------- ---------------- ----------------- -----------------
Total cash cost 296 310 294 287
Depreciation 72 71 74 68
Amortization 28 18 28 18
Reclamation and mine closure 14 8 14 8
---------------- ---------------- ----------------- -----------------
Total production cost US$410 US$407 US$410 US$381
================ ================ ================= =================
</TABLE>
-19-
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPT. 30 ENDED SEPT. 30
U.S. dollars, except where indicated 1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------
Milled:
<S> <C> <C> <C> <C>
Ore processed (tons/day) 2,196 2,115 2,179 2,172
Total tons milled 199,861 192,449 594,966 592,836
Grade (ounce/ton) 0.226 0.231 0.221 0.237
Recovery rate (%) 93.0 92.9 92.4 92.5
KETTLE RIVER MINE (100% OWNED)
Gold produced (ounces) 33,554 31,579 102,137 94,071
Tons of ore mined and milled 185,137 148,406 581,446 430,256
Mining cost/ton of ore $20.95 $19.24 $21.3 $21.25
Milling cost/ton of ore $11.18 $12.93 $10.5 $12.48
Production cost per ounce of gold produced:
Direct mining expense $ 229 $ 194 $ 221 $ 192
Deferred mine development cost - - - -
Inventory movements and other (11) 7 (4) 4
---------------- ---------------- ----------------- -----------------
Cash operating cost 218 201 217 196
Royalties 17 8 15 9
Production taxes 2 2 2 2
---------------- ---------------- ----------------- -----------------
Total cash cost 237 211 234 207
Depreciation 60 58 58 59
Amortization 45 45 45 45
Reclamation and mine closure 12 8 12 8
---------------- ---------------- ----------------- -----------------
Total production cost $ 354 $ 322 $ 349 $ 319
================ ================ ================= =================
Milled:
Ore processed (tons/day) 2,034 1,631 2,130 1,576
Total tons milled 185,137 148,406 581,446 430,256
Grade (ounce/ton) 0.216 0.244 0.217 0.253
Recovery rate (%) 83.8 87.1 86.1 86.3
- ----------------------------------------------------------------- ---------------- ----------------- -----------------
</TABLE>
(1) To convert costs per ounce of gold into comparable costs per ounce of
co-product silver, divide by the period's average gold-to-silver price
ratio.
(2) Recovery rates on dedicated pads can only be estimated, as actual
recoveries will not be known until leaching is complete. At the McCoy/Cove
mine, the gold recovery rate is estimated at 68% for crushed ore and 48%
for uncrushed, run-of-mine ore, and the silver recovery rate is estimated
at 30% for crushed ore and 10% for uncrushed, run-of-mine ore. At the Round
Mountain mine, the gold recovery rate on the dedicated heap leach pad is
estimated at 50%.
-20-
