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): February 17, 1998
ECHO BAY MINES LTD.
(Exact name of registrant as specified in its charter)
INCORPORATED UNDER THE LAWS 1-8542 NONE
OF CANADA (Commission (IRS Employee
(State or other jurisdiction File Number) Identification No.)
of incorporation)
6400 SOUTH FIDDLER'S GREEN CIRCLE, SUITE 1000, 80111-4957
ENGLEWOOD, CO (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (303) 714-8600
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99.1 Press release dated February 17, 1998
<PAGE>
SIGNATURES
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.
(Registrant)
Date February 20, 1998 By: /S/ PETER H. CHEESBROUGH
------------------------------------------
Name: Peter H. Cheesbrough
Title: Senior Vice President, Finance and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
99.1 Press release dated February 17, 1998
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
ECHO BAY ANNOUNCES 1997 RESULTS
Tuesday, Feb. 17, 1998 - Echo Bay Mines Ltd. (Amex and TSE: ECO) today reported
a 1997 net loss of $57.8 million ($0.46 per share) before a non-recurring
provision for impaired assets and other charges of $362.7 million ($2.60 per
share). Including the special charges, the loss for the year totaled $420.5
million ($3.06 per share).
The charges consisted of three previously reported provisions and
one announced today. The new one is a year-end 1997 non-cash provision of $36.2
million to write off Echo Bay's entire remaining investment in Santa Elina Mines
Corporation. Echo Bay has been attempting since midyear 1997 to sell part or all
of the company's non-strategic 58% interest in this gold exploration and
development company in Brazil. The market value of this investment dropped
precipitously in the wake of the decline in value of many junior exploration
companies and the decline in world gold prices to 18-year lows.
The previously reported provisions for 1997 consisted of $309.8
million in the third quarter to write down impaired assets as part of a major
asset reevaluation and downsizing program undertaken by the company in response
to gold market conditions, plus provisions totaling $16.6 million for severance
costs.
A year ago, Echo Bay had a net loss of $176.7 million ($1.31 per
share), including non-recurring charges of $77.1 million to write off the
Alaska-Juneau development project and $30.0 million to provide for waste rock
stabilization at the McCoy/Cove mine in Nevada.
RESULTS OF OPERATIONS
Echo Bay's gold production fell and silver production rose in
1997, as expected, reflecting the planned processing of carbonaceous ores leaner
in gold but richer in silver at the McCoy/Cove mine. Echo Bay produced 721,075
ounces of gold in 1997, meeting its gold production target of 700-725,000
ounces. Silver production was 11.0 million ounces, better than the company's
target range of 9-10 million ounces. Consolidated cash operating costs were $249
per ounce of gold produced, down from $254 a year ago. This was better than the
company's 1997 target of $265-275 per ounce, reflecting a series of company-wide
cost reduction programs.
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Echo Bay's revenues fell 9% to $305.4 million in 1997 from $337.3
million in 1996, reflecting the decline in gold prices to 18-year lows. The
average price realized by Echo Bay fell by $22 per ounce of gold sold, to $362
per ounce in 1997 from $384 in 1996. Echo Bay's $362 realized price was $30
better than the $332 average spot price per ounce of gold on world markets
during 1997, a result of the company's hedging programs.
SIGNIFICANTLY IMPROVED FOURTH QUARTER RESULTS BEFORE SPECIAL CHARGES
Echo Bay reported significantly improved fourth quarter results,
as the company's downsizing program and cost-cutting efforts reduced its net
loss to $8.1 million ($0.07 per share) from the year-ago $26.4 million ($0.19
per share) before the special provisions, even though the gold price fell by $67
per ounce to a quarterly average of $309 from $376 a year ago.
Quarterly cash operating costs were cut to $231 per ounce of gold
in 1997 from $279 per ounce a year earlier, despite an 8% reduction in gold
production due to the planned processing of lower-grade ores (169,848 ounces vs.
184,029 ounces). Silver production rose 55% to 3.4 million ounces.
SHARPLY REDUCED COSTS
In the fourth quarter, the company halved its general and
administrative expenses at the corporate consolidated level to $2 million, down
from $4 million a year earlier. For the full year 1997, these G&A expenses were
reduced to $11 million, down from $14 million in 1996. Additional staff
reductions and other cost-saving programs implemented in late 1997 are expected
to further reduce Echo Bay's consolidated G&A expenses to $9-10 million in 1998.
In addition, the company reduced by $5 million in 1997 the total
cost of corporate technical services, computer systems and other support
services provided by the company's corporate office to the producing mines and
charged to those mines. These cost savings are reflected in the mines' operating
costs per ounce of gold produced.
In 1998, additional cost reductions are expected to total about $6 million.
Depreciation and amortization expenses decreased to $18 million in
the fourth quarter from $23 million a year earlier, primarily a result of the
company's write-down of carrying values at three mines in the third quarter of
1997. For the full year, depreciation and amortization totaled $79 million in
1997, down from $86 million in 1996. In 1998, the company expects depreciation
and amortization expenses to be in the range of $65-70 million, reflecting lower
planned production levels and the 1997 reduction in carrying values.
PROTECTION AGAINST FURTHER GOLD PRICE DECLINES
With the company's current gold hedge position, Echo Bay will
realize a minimum average price of $340 per ounce for its entire planned 1998
gold production, regardless of the spot price
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of gold. In addition, the company has hedged 298,000 ounces of gold in 1999 at a
minimum average price of $370 per ounce.
The company's 1998 gold hedge position consists of 300,000 ounces
of put options at $310 per ounce, 150,000 ounces of put options at $345 per
ounce, and 138,000 ounces of gold production hedged at an average price of $387
per ounce through a combination of gold loans and forward sales. Echo Bay paid
for its put options largely by selling call options on 150,000 ounces of gold at
$399 per ounce and call options on four million ounces of silver at $5.74 per
ounce. (Echo Bay's put options give it the right, but not the obligation, to
deliver or "put" gold to the options' seller at a predetermined price on a
predetermined date. The call options give the holders the right, but not the
obligation, to buy or "call" the precious metal from Echo Bay at a predetermined
price on a predetermined date.)
This combination covers a total of 588,000 ounces of gold. Of
these, 530,000 ounces are designated for 1998 in order to cover the company's
entire planned production of 500-520,000 ounces, guaranteeing a minimum average
selling price of $340 per ounce for the year. The remaining 58,000 ounces are
scheduled to be rolled forward into the 1999 hedge position as the 1998 put
options expire. The 1999 hedge position also includes 240,000 ounces of gold
hedged at $382 per ounce through a combination of gold loans and forward sales,
guaranteeing Echo Bay a minimum average selling price of $370 per ounce for a
total of 298,000 ounces of gold.
One-quarter of the company's $310 put options expire in each
quarter of 1998. Half of its $345 put options and half of its gold call options
expire in each of the first two quarters of 1998. The silver call options expire
in the fourth quarters of 1998 and 1999.
CASH AND DEBT
The price of gold on world markets was $289 per ounce on Dec. 31,
1997. At that price, the cash value of the company's gold and silver hedge
position was approximately $40 million. The lower the gold price, the more the
hedges are worth. In January 1998, Echo Bay harvested $9 million in cash from
its hedge position by repurchasing 250,000 ounces of gold forward sales and
eliminating 225,000 ounces of contingent gold forwards. The company has no
current plans to cash in any more of its hedge position.
During 1997, Echo Bay reduced its total debt to $67 million, down
by $116 million from $183 million a year earlier. At Dec. 31, 1997, the
company's current debt was $15 million and its long-term debt was $52 million.
Long-term debt includes the present value, $4.2 million, of the Canadian gold
mining company's capital securities principal amount, in accordance with
Canadian generally accepted accounting principles. The present value of the
future interest payments, $95.8 million, is a separate component of
shareholders' equity. The $100.0 million of 11% capital securities are due in
2027.
The company is current in the repayment of all of its debt. The
company also expects to
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have sufficient cash flow to meet its 1998 debt repayment obligations as they
come due, regardless of how low the gold price might fall, since the company's
hedge position guarantees it a minimum average price of $340 per ounce for its
entire planned 1998 gold production.
Depressed gold prices limit the company's ability to borrow under its
revolving credit facility, which is measured at the end of each quarter. For
this reason, the company and its lenders are in discussions aimed at
restructuring the terms of its existing credit facilities. If these terms are
not renewed satisfactorily, and gold prices fall below current levels, it is
possible that the company would not be eligible for additional borrowing under
the existing facilities and could be required to reduce its outstanding
borrowings.
REFOCUSED EXPLORATION PROGRAM
Echo Bay has refocused its exploration effort, narrowing it to
those projects believed to represent the most promising near-term prospects in
the company's portfolio, principally those located in the Americas where Echo
Bay already has extensive gold mining infrastructure. Particular emphasis is
placed on those prospects located near the company's operating mines and
development projects, located in Canada, the United States and Mexico -
especially Nevada, home of the company's two largest mines.
To further this strategy, during the year Echo Bay significantly
reduced its exploration activities outside the Americas. In the fourth quarter
of 1997, exploration and development expenses totaled $7 million, down from $14
million a year earlier. For the full year 1997, exploration and development
expenses were $35 million, down from $64 million in 1996.
With depressed gold prices continuing near 18-year lows, the
company has further reduced its 1998 exploration budget to $7 million. The
budget will be reviewed if gold prices improve.
ORE RESERVES AT YEAR'S END
Echo Bay began the year 1997 with 8,573,000 ounces of gold in
proven and probable reserves, based on a gold price assumption of $375 per
ounce. Year-end 1997 reserves were estimated at a long-term gold price
assumption of $350 instead, which reduced ore reserves by an estimated 1%
(88,000 ounces). A full year of mining at the company's four producing mines
depleted reserves by 880,000 ounces of gold. Ore reserves were reduced by
585,000 ounces by the previously reported adoption of a new mining plan at Round
Mountain, which eliminated the mining of large quantities of lower-grade,
higher-cost material. The company added 459,000 ounces of gold to reserves
through the discovery of additional ore, the upgrading of material from other
mineralization, and other minor changes. The net effect was year-end proven and
probable reserves of 7,479,000 ounces of gold.
Silver reserves were 46,525,000 ounces at year-end 1997, down from
53,858,000 ounces at the beginning of the year, after producing 11,021,708
ounces of silver, in large part from stockpiles that contained significantly
more silver than had been estimated in reserve calculations.
-4-
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The company's other mineralization (called "possible reserves" in
Canada) totaled 5,429,000 ounces of gold at the beginning of 1997, based on a
gold price assumption of $375 per ounce. The decisions to write off the Kingking
project and Santa Elina Mines during 1997 removed 3,510,000 ounces of gold from
this category. The company added approximately 300,000 ounces from the discovery
of new mineralization during the year. Reducing the gold price assumption to
$350 at year-end 1997, along with other modeling changes, reduced other
mineralization by another 204,000 ounces. The net effect was year-end other
mineralization of 2,015,000 ounces. A detailed breakdown of year-end 1997 ore
reserves and other mineralization is given in the table on page 18.
ROUND MOUNTAIN MINE: NEW MINING PLAN IMPROVES PROFITABILITY AND CASH FLOW
The 50%-owned Round Mountain mine in Nevada is Echo Bay's largest
and lowest-cost gold producer. Echo Bay's share of gold production rose 13% to
54,928 ounces in the fourth quarter of 1997 from 48,739 ounces a year ago.
Quarterly cash operating costs were reduced to $213 from $238 per ounce of gold
produced.
For the full year, Echo Bay's 50% share of Round Mountain
production rose 16% to 238,840 ounces from 205,487 ounces in 1996. Cash
operating costs were reduced to $207 for the full year from $221 in 1996.
During 1997, Round Mountain adopted a new mining plan that
significantly increases cash flow, profitability, and the net present value of
the project. 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
over the life of the mine.
The optimized open pit design reduced the mine's year-end 1997 ore
reserves by 1,170,000 ounces of gold (Echo Bay's 50% share, 585,000 ounces).
This revision will result in planned mining being completed in nine years, with
ore processing continuing from stockpiles for another four 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).
During 1997, 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 total ore reserves - only 1.8 million ounces - when Echo Bay acquired
its interest in 1985. With total ore reserves of 7.0 million ounces at year-end
1997, Round Mountain has almost twice as much gold remaining in the ground as
the total amount mined in the past 12 years.
In 1997, Round Mountain completed a new mill to process large
quantities of nonoxide ore. Late in the fourth quarter, the mill achieved its
design throughput levels of 8,000 tons/day.
-5-
<PAGE>
Efforts are currently focused on fine-tuning mill operations to achieve targeted
recovery levels of as much as 80-85% of the contained gold, roughly double the
recovery rates that could be achieved by heap leaching nonoxidized ores.
Round Mountain's production target for 1998 is 460-480,000 ounces
of gold (Echo Bay's 50% share, 230-240,000 ounces).
MCCOY/COVE MINE: CARBONACEOUS ORES LEANER IN GOLD, RICHER IN SILVER
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 require more
complex processing and have lower gold recovery rates. McCoy/Cove produced
43,134 ounces of gold in the fourth quarter of 1997 as a result, down 36% from
67,513 ounces in the fourth quarter of 1996 and down 31% for the full year 1997
to 187,034 ounces from 271,731 ounces in 1996.
However, silver grades were significantly higher in 1997 than a
year earlier, and silver production rose 55% to 3,379,030 ounces in the fourth
quarter of 1997 from 2,185,142 ounces a year ago. For the full year, silver
output increased 55% to 11,021,708 ounces from 7,102,348 ounces in 1996.
Cash operating costs were trimmed to $221 per ounce in the fourth
quarter of 1997 from $294 a year earlier. Significant cost savings components
include a reduction in labor costs, lower mill reagent consumption, and
reductions in a number of services and supplies. For the full year, cash
operating costs were $271 per ounce in both years.
During the year, the McCoy/Cove team was awarded the 1996
Sentinels of Safety Award for operating the safest large surface mine in the
United States. Presented annually since 1925, this award is one of mining's most
prestigious safety awards. To qualify, a mine must have at least 30,000
injury-free hours of work. The McCoy/Cove team far exceeded that requirement,
having worked more than 800,000 employee-hours without a single lost-time
injury.
In January 1998, in response to 18-year lows in the gold price,
Echo Bay announced that it is scaling back operations at McCoy/Cove until the
gold price improves. Beginning in the first quarter of 1998, costs are expected
to be reduced from the full-year 1997 level by implementation of a variety of
actions. The 450-person workforce is being reduced by approximately 20%. Mining
activities are being refocused on the higher-margin mill ounces from the Cove
pit. Remediation work on the Cove pit wall is being postponed until the second
half of 1998, subject to an improvement in precious metals prices and other
factors. Mining was discontinued in the smaller McCoy pit in December 1997,
pending completion of optimization studies aimed at reducing costs. Based on a
reengineered McCoy pit design, mining is scheduled to resume at the McCoy pit
near the end of the first quarter at a lower cost.
These actions are expected to reduce McCoy/Cove's 1998 cash
operating costs to
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$260-270 per ounce of gold produced. The mine's production targets for 1998 are
160-170,000 ounces of gold and 7-8 million ounces of silver.
LUPIN MINE: PRESERVING THE ASSET FOR A BETTER GOLD PRICE
Production was up and costs were down at Lupin in the Northwest
Territories in the fourth quarter from a year earlier, principally due to the
non-sustainable processing of higher-grade ore at higher mill throughput rates.
Gold production rose 19% to 44,057 ounces from 36,938 ounces. Quarterly cash
operating costs were $255 per ounce of gold produced, compared with $343 a year
ago.
For the full year, production totaled 165,335 ounces in 1997,
compared with 166,791 ounces in 1996. Cash operating costs were $284 and $299
respectively per ounce of gold produced.
In January 1998, in response to 18-year lows in the gold price and
impending increases in production costs at Lupin, Echo Bay announced that it was
temporarily suspending operations at Lupin until the gold price improves. The
mine is being placed on "care and maintenance" to maintain its integrity and
enable it to reopen when gold prices permit. While operations are temporarily
suspended, the company plans to examine opportunities for reducing costs by
optimizing Lupin's mining methods and operating procedures. About 500 employees
are affected. Annual care and maintenance expenses are anticipated to be about
$3 million. The action preserves the resource so that Lupin can be mined
profitably when the gold price recovers. The mine has 543,000 ounces of gold in
proven and probable reserves, and significant other mineralization with the
potential to be upgraded to ore reserves.
KETTLE RIVER MINE: MORE TONS PROCESSED, FULL-YEAR GOLD PRODUCTION RISES
The Kettle River mine in Washington State produced 27,729 ounces
of gold in the fourth quarter, compared with 30,839 ounces a year ago. For the
full year, gold production totaled 129,866 ounces, up from 124,910 ounces in
1996. Kettle River processed significantly increased tonnages in the fourth
quarter and the full year 1997, helping to offset lower ore grades processed.
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 $264 per
ounce of gold produced in the fourth quarter from $217 a year ago, reflecting
higher mining costs and lower grades, along with the increased number of tons
mined and milled. Cash operating costs are expected to decline in the first half
of this year from the last quarter of 1997 as higher-grade areas of the ore
bodies are mined. For the full year 1997, cash operating costs rose to $227 from
$201 in 1996.
Kettle River's production target for 1998 is 100-110,000 ounces of
gold.
Exploration is under way on both the northern extension of the
Lamefoot deposit and a new target identified as Zone 7. Additional work is also
being done to investigate extensions of the
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K-2 deposit to the north and south. The potential remains good to add minable
ounces at Kettle River in 1998 and beyond.
1998 PRODUCTION AND COST TARGETS
With the temporary suspension of operations at Lupin and
scaled-back operations at McCoy/Cove, Echo Bay's 1998 company-wide production
and cost targets are 500-520,000 ounces of gold and 7-8 million ounces of silver
at a cash operating cost of $245-255 per ounce of gold produced.
AQUARIUS: CONSTRUCTION COMPLETED ON UNDERGROUND "FREEZE WALL"
In 1997, Echo Bay began construction on Aquarius, the company's
newest gold mine-to-be, located in the Timmins mining district of Canada. In the
fourth quarter, construction was nearly completed on the underground "freeze
wall" system designed to keep groundwater out of the open pit. In response to
the significant decline in gold prices during the year, the development pace of
Aquarius was slowed and further construction is currently being delayed until
gold prices improve.
During 1997, about $40 million was invested in the freeze wall and
acquisition of the necessary land rights and permits for Aquarius. When gold
prices improve, freezing can be in process while the mill facilities are being
built. This will allow the mine to start producing gold more quickly.
Echo Bay mines gold in North America. The primary markets for its
shares are the American and Toronto stock exchanges.
# # # # #
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 and/or production
costs, which could render projects uneconomic; ability to access financing;
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.
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<TABLE>
<CAPTION>
ECHO BAY MINES
1998 TARGETS
1998 TARGETS 1997 ACTUALS 1996 ACTUALS
------------ ------------ ------------
<S> <C> <C> <C>
PRODUCTION AND COSTS:
Gold production:
Round Mountain (50%) 230-240,000 oz. 238,840 oz. 205,487 oz.
McCoy/Cove 160-170,000 oz. 187,034 oz. 271,731 oz.
Lupin -- 165,335 oz. 166,791 oz.
Kettle River 100-110,000 oz. 129,866 OZ. 124,910 OZ.
--------------- ----------- -----------
500-520,000 oz. 721,075 oz. 768,919 oz.
Silver production 7-8 million oz. 11.0 million oz. 7.1 million oz.
Cash operating costs $245-255 per oz. $249 per oz. $254 per oz.
SIGNIFICANT EXPENSES:
Depreciation and amortization $65-70 million $79 million $86 million
Exploration and development $ 7 million $35 million $64 million
General and administrative $ 9-10 million $11 million $14 million
Royalties $ 8-9 million $ 8 million $10 million
Reclamation and mine closure $ 8-9 million $ 9 million $ 6 million
Production taxes $ 1 million $ 1 million $ 2 million
Please note "Safe Harbor" Statement on page 8.
</TABLE>
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<TABLE>
<CAPTION>
ECHO BAY MINES
HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------
Three months Twelve months
ended Dec. 31 ended Dec. 31
U.S. dollars 1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FINANCIAL DATA
Revenue (millions) $ 81.3 $ 79.5 $ 305.4 $ 337.3
Net loss (millions):
Before special charges /1/ $ (8.1) $ (26.4) $ (57.8) $ (69.6)
After special charges /1/ $ (55.5) $ (103.5) $ (420.5) $ (176.7)
- ----------------------------------------------------------------------------------------------------------------------------
Gold ounces sold /2/ 183,239 187,753 698,337 777,512
Silver ounces sold /2/ 3,285,505 2,353,973 10,037,753 7,098,417
- ----------------------------------------------------------------------------------------------------------------------------
Average price realized:
Per ounce of gold sold $ 349 $ 359 $ 362 $ 384
Per ounce of silver sold $ 5.31 $ 5.16 $ 5.26 $ 5.41
Cash operating costs:
Per ounce of gold produced $ 231 $ 279 $ 249 $ 254
Per ounce of silver produced $ 3.76 $ 3.80 $ 4.04 $ 3.60
- ----------------------------------------------------------------------------------------------------------------------------
% of revenue from gold 79% 85% 83% 89%
% of revenue from silver 21% 15% 17% 11%
============================================================================================================================
PRODUCTION AND RESERVES
Production (ounces): /2/
Gold 169,848 184,029 721,075 768,919
Silver 3,379,030 2,185,142 11,021,708 7,102,348
Reserves (ounces): /3/
Gold 7,479,000 8,573,000
Silver 46,525,000 53,858,000
============================================================================================================================
PER SHARE DATA
Net loss:
Before special charges /1/ $ (0.07) $ (0.19) $ (0.46) $ (0.52)
After special charges /1/ $ (0.41) $ (0.74) $ (3.06) $ (1.31)
Shares outstanding (millions):
Weighted average /4/ 139.4 139.4 139.4 134.4
Period end 139.4 139.4 139.4 139.4
============================================================================================================================
<FN>
/1/ These charges include provisions of $11.2 million in the fourth quarter of
1997 and $5.4 million in the first three quarters of 1997 for severance
costs, $309.8 million in the third quarter of 1997 for impaired assets,
$36.2 million in the fourth quarter of 1997 to write off the company's
investment in Santa Elina Mines Corporation, $77.1 million in the fourth
quarter of 1996 to write off the Alaska-Juneau development project, and
$30.0 million in the third quarter of 1996 for pit wall stabilization at
the McCoy/Cove mine.
/2/ Amounts sold differ from amounts produced due to inventory changes.
/3/ Proven and probable reserves at the end the year.
/4/ In July 1996, Echo Bay issued 8.8 million common shares in order to
increase the company's interest in Santa Elina Mines Corporation to 50%
from 7%.
</FN>
</TABLE>
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<TABLE>
<CAPTION>
ECHO BAY MINES
PRODUCTION AND COSTS
- ----------------------------------------------------------------------------------------------------------------------------
Three months Twelve months
ended Dec. 31 ended Dec. 31
1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GOLD PRODUCTION (OUNCES)
Round Mountain (50%) 54,928 48,739 238,840 205,487
McCoy/Cove 43,134 67,513 187,034 271,731
Lupin 44,057 36,938 165,335 166,791
Kettle River 27,729 30,839 129,866 124,910
- ----------------------------------------------------------------------------------------------------------------------------
Total gold 169,848 184,029 721,075 768,919
============================================================================================================================
SILVER PRODUCTION (OUNCES)
McCoy/Cove 3,379,030 2,185,142 11,021,708 7,102,348
- ----------------------------------------------------------------------------------------------------------------------------
Total silver 3,379,030 2,185,142 11,021,708 7,102,348
============================================================================================================================
CASH OPERATING COSTS (U.S. DOLLARS PER OUNCE
OF GOLD PRODUCED)
Round Mountain $213 $238 $207 $221
McCoy/Cove /1/ 221 294 271 271
Lupin 255 343 284 299
Kettle River 264 217 227 201
- ----------------------------------------------------------------------------------------------------------------------------
Company average $231 $279 $249 $254
============================================================================================================================
CONSOLIDATED COSTS (U.S. DOLLARS PER OUNCE
OF GOLD PRODUCED)
Cash operating costs $231 $279 $249 $254
Royalties 7 11 9 11
Production taxes (1) 3 1 3
- ----------------------------------------------------------------------------------------------------------------------------
Total cash costs 237 293 259 268
Depreciation 49 66 58 64
Amortization 25 37 32 34
Reclamation and mine closure 10 8 10 7
- ----------------------------------------------------------------------------------------------------------------------------
Total production costs $321 $404 $359 $373
============================================================================================================================
<FN>
/1/ In 1997, cash operating costs per ounce of silver produced at McCoy/Cove
were $3.76 and $4.04 for the three-month and twelve-month periods
respectively, based on average gold-to-silver price ratios of 58.8:1 and
67.1:1 respectively. In 1996, cash operating costs per ounce of silver
produced at McCoy/Cove were $3.80 and $3.60 for the three-month and
twelve-month periods respectively, based on average respective price ratios
of 77.4:1 and 75.2:1.
</FN>
</TABLE>
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<TABLE>
<CAPTION>
ECHO BAY MINES
CONSOLIDATED EARNINGS STATEMENT
(Unaudited)
- -------------------------------------------------------------------------------------------------------------------------
Three months Twelve months
Thousands of U.S. dollars, ended Dec. 31 ended Dec. 31
except for per share data 1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $ 81,326 $ 79,544 $ 305,429 $ 337,316
- -------------------------------------------------------------------------------------------------------------------------
Expenses:
Operating costs 55,115 60,662 213,120 221,126
Royalties 1,651 2,372 8,304 9,625
Production taxes (288) 691 865 2,440
Depreciation and amortization 17,767 22,511 79,316 86,491
Reclamation and mine closure 2,220 1,730 8,819 6,298
General and administrative 2,005 3,845 10,948 13,577
Exploration and development 7,352 14,491 34,927 63,619
Interest and other /1/ 3,566 (159) 5,191 3,090
Provision for impaired assets
and other charges /2/ 47,410 77,134 362,665 107,134
- -------------------------------------------------------------------------------------------------------------------------
136,798 183,277 724,155 513,400
- -------------------------------------------------------------------------------------------------------------------------
Loss before income taxes (55,472) (103,733) (418,726) (176,084)
Income tax expense (recovery):
Current 1,811 (454) 2,118 313
Deferred (1,793) 249 (336) 305
- -------------------------------------------------------------------------------------------------------------------------
18 (205) 1,782 618
- -------------------------------------------------------------------------------------------------------------------------
Net loss $(55,490) $(103,528) $(420,508) $ (176,702)
=========================================================================================================================
Loss per share /3/ $ (0.41) $ (0.74) $ (3.06) $ (1.31)
=========================================================================================================================
Weighted average number of shares outstanding /4/ 139,370,031 139,351,704 139,366,794 134,434,054
=========================================================================================================================
<FN>
/1/ Certain prior-period items have been reclassified to conform with the
current presentation. A total of $5.4 million of severance costs, which had
been recorded in "Interest and other" in the first three quarters of 1997,
were reclassified to "Provision for impaired assets and other charges" in
the fourth quarter.
/2/ Includes provisions of $11.2 million in the fourth quarter of 1997 and $5.4
million in the first three quarters of 1997 for severance costs, $309.8
million in the third quarter of 1997 for impaired assets, $36.2 million in
the fourth quarter of 1997 to write off the company's investment in Santa
Elina Mines Corporation, $77.1 million in the fourth quarter of 1996 to
write off the Alaska-Juneau development project, and $30.0 million in the
third quarter of 1996 for pit wall stabilization at the McCoy/Cove mine.
/3/ 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 to interest 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 $1.6
million and $5.7 million for the three months and twelve months ended Dec.
31, 1997 respectively.
/4/ In July 1996, Echo Bay issued 8.8 million shares in order to increase the
company's interest in Santa Elina Mines Corporation to 50% from 7%.
</FN>
</TABLE>
-12-
<PAGE>
<TABLE>
<CAPTION>
ECHO BAY MINES
CONSOLIDATED BALANCE SHEET
(Unaudited)
- --------------------------------------------------------------------------------------------------------------------
DEC. 31 Dec. 31
Thousands of U.S. dollars 1997 1996
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 16,953 $ 103,196
Short-term investments 10,325 -
Interest and accounts receivable 5,927 9,739
Inventories 41,168 33,941
Prepaid expenses and other assets 5,068 6,573
- --------------------------------------------------------------------------------------------------------------------
79,441 153,449
Plant and equipment 238,948 233,984
Mining properties 107,820 405,011
Long-term investments and other assets 6,558 39,701
- --------------------------------------------------------------------------------------------------------------------
$ 432,767 $ 832,145
====================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 82,371 $ 72,421
Income and mining taxes payable 3,494 3,651
Current portion of gold and other financings /1/ 14,779 129,445
Current portion of deferred income 7,461 876
- --------------------------------------------------------------------------------------------------------------------
108,105 206,393
Long-term gold and other financings /1/ 51,745 53,478
Long-term deferred income 54,708 1,581
Other long-term obligations 56,607 69,992
Deferred income taxes 7,941 8,392
Common shareholders' equity:
Common shares 709,593 709,534
Capital securities 95,753 -
Deficit (631,320) (201,931)
Foreign currency translation (20,365) (15,294)
- --------------------------------------------------------------------------------------------------------------------
153,661 492,309
====================================================================================================================
$ 432,767 $ 832,145
====================================================================================================================
<FN>
/1/ Total gold and other financings were $66.5 million at Dec. 31, 1997
(including current portion of $14.8 million), down $116.4 million from
$182.9 million at Dec. 31, 1996 (including current portion of $129.4
million).
</FN>
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
ECHO BAY MINES
CONSOLIDATED STATEMENT OF CASH FLOW
(Unaudited)
- ----------------------------------------------------------------------------------------------------------------------------
Three months Twelve months
ended Dec. 31 ended Dec. 31
Thousands of U.S. dollars 1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Net loss $ (55,490) $ (103,528) $ (420,508) $ (176,702)
Add (deduct):
Depreciation and amortization 17,767 22,511 79,316 86,491
Non-cash portion of exploration
and development expense - 201 436 7,035
Deferred income taxes (1,793) 249 (336) 305
Gain on sale of assets (7,734) (2,086) (8,847) (4,469)
Non-cash portion of provision for impaired
assets and other unusual charges 45,982 77,134 355,782 107,134
Other 5,465 4,457 (6,316) 5,970
Change in cash invested in operating assets and
liabilities:
Interest and accounts receivable 12,034 (1,796) 2,178 (184)
Inventories 6,354 6,464 (5,753) 1,368
Prepaid expenses and other assets 546 607 2,812 (361)
Accounts payable and other liabilities (4,457) 11,029 (8,824) 3,245
Income and mining taxes payable 1,066 (577) 856 69
- ----------------------------------------------------------------------------------------------------------------------------
19,740 14,665 (9,204) 29,901
- ----------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Currency borrowings 15,538 - 15,538 34,714
Debt repayments (4,164) (29,294) (131,749) (38,179)
Equity portion of interest on capital securities (4,270) - (4,270) -
Capital securities issued, net of issuance costs - - 96,700 -
Common share dividends - (5,225) - (10,120)
Common shares issued on acquisition
of Santa Elina, net of issuance costs - - - 85,801
Common share issues, net of issuance costs - 23 59 4,768
Other (112) - (296) -
- ----------------------------------------------------------------------------------------------------------------------------
6,992 (34,496) (24,018) 76,984
- ----------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Mining properties, plant and equipment (20,455) (28,184) (112,001) (103,667)
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 - (6,000) - (97,069)
Short-term investments 3,089 - 3,089 -
Long-term investments and other assets 1,640 3,818 (21,626) (3,499)
Proceeds on sale of long-term investments - 8,259 7,894 13,809
Other 37 95 558 894
- ----------------------------------------------------------------------------------------------------------------------------
(15,689) (22,012) (53,021) (189,532)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 11,043 (41,843) (86,243) (82,647)
Cash and cash equivalents, beginning of period 5,910 145,039 103,196 185,843
- ----------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 16,953 $ 103,196 $ 16,953 $ 103,196
============================================================================================================================
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
ECHO BAY MINES
MINE OPERATING DATA
- -------------------------------------------------------------------------------------------------------------------------------
Three months Twelve months
ended Dec. 31 ended Dec. 31
U.S. dollars, except where indicated 1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ROUND MOUNTAIN MINE (50% OWNED)
Gold produced (ounces):
Reusable heap leach pad (50%) 29,607 25,067 134,259 115,710
Dedicated heap leach pad (50%) 21,159 22,137 97,779 83,502
Milling (50%) 3,205 - 3,205 -
Other (50%) 957 1,535 3,597 6,275
---------- ---------- ---------- ----------
Total (50%) 54,928 48,739 238,840 205,487
Ore and waste mined (tons) (100%) 17,162,000 17,167,000 70,787,000 58,035,226
Mining cost/ton of ore and waste $ 0.60 $ 0.64 $ 0.65 $ 0.69
Heap leaching cost/ton of ore $ 0.57 $ 0.84 $ 0.61 $ 0.80
Milling cost/ton of ore $ 4.38 - $ 4.38 -
Production cost per ounce of gold produced:
Direct mining expense $ 230 $ 242 $ 208 $ 228
Deferred stripping cost (9) (11) 2 (2)
Inventory movements and other (8) 7 (3) (5)
---------- ---------- ---------- ----------
Cash operating cost 213 238 207 221
Royalties 17 30 22 32
Production taxes 3 4 4 4
---------- ---------- ---------- ----------
Total cash cost 233 272 233 257
Depreciation 40 53 39 51
Amortization 18 18 18 18
Reclamation and mine closure 7 5 7 5
---------- ---------- ---------- ----------
Total production cost $ 298 $ 348 $ 297 $ 331
========== ========== ========== ==========
Milled:
Ore processed (tons/day)(100%) 3,108 - N.A. -
Gold grade (ounce/ton) 0.041 - 0.041 -
Gold recovery rate (%) 60.0 - 60.0 -
Reusable heap leach pad:
Ore processed (tons/day) (100%) 24,956 27,475 26,608 27,737
Grade (ounce/ton) 0.039 0.034 0.036 0.036
Recovery rate (%) 71.3 62.8 74.9 66.1
Dedicated heap leach pad:
Ore processed (tons/day) (100%) 131,318 71,497 107,716 87,706
Grade (ounce/ton) 0.010 0.010 0.010 0.011
Recovery rate /1/
MCCOY/COVE MINE (100% OWNED)
Gold produced (ounces):
Milled 26,199 49,500 131,905 204,897
Heap leached 16,935 18,013 55,129 66,834
---------- ---------- ---------- ----------
Total gold 43,134 67,513 187,034 271,731
Silver produced (ounces):
Milled 3,271,128 2,055,354 10,624,780 6,589,121
Heap leached 107,902 129,788 396,928 513,227
---------- ---------- ---------- ----------
Total silver 3,379,030 2,185,142 11,021,708 7,102,348
Ore and waste mined (tons) 11,294,410 14,437,255 53,998,672 63,255,253
Mining cost/ton of ore and waste $ 0.78 $ 0.78 $ 0.74 $ 0.72
Milling cost/ton of ore $ 8.26 $ 8.80 $ 8.82 $ 9.50
Heap leaching cost/ton of ore $ 1.81 $ 1.80 $ 1.70 $ 1.68
-15-
<PAGE>
<CAPTION>
ECHO BAY MINES
MINE OPERATING DATA (CONTINUED)
- -------------------------------------------------------------------------------------------------------------------------------
Three months Twelve months
ended Dec. 31 ended Dec. 31
U.S. dollars, except where indicated 1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MCCOY/COVE MINE (CONTINUED)
Production cost per ounce of gold produced: /2/
Direct mining expense $221 $272 $276 $286
Deferred stripping cost (3) (5) (10) (16)
Inventory movements and other 3 27 5 1
---------- ---------- ---------- ----------
Cash operating cost 221 294 271 271
Royalties 3 5 3 5
Production taxes (5) 4 (1) 4
---------- ---------- ---------- ----------
Total cash cost 219 303 273 280
Depreciation 51 67 66 71
Amortization 40 46 44 46
Reclamation and mine closure 9 10 10 8
---------- ---------- ---------- ----------
Total production cost $319 $426 $393 $405
========== ========== ========== ==========
Average gold-to-silver price ratio /2/ 58.8:1 77.4:1 67.1:1 75.2:1
Milled:
Ore processed (tons/day) 9,288 9,859 9,315 9,031
Gold grade (ounce/ton) 0.056 0.056 0.061 0.086
Silver grade (ounce/ton) 5.48 2.44 4.54 3.14
Gold recovery rate (%) 54.8 73.1 64.3 79.5
Silver recovery rate (%) 66.7 73.2 69.7 73.5
Heap leached:
Ore processed (tons/day) 15,631 16,972 17,840 16,671
Gold grade (ounce/ton) 0.022 0.013 0.018 0.018
Silver grade (ounce/ton) 0.40 0.20 0.29 0.27
Recovery rates /1/
LUPIN MINE (100% OWNED)
Gold produced (ounces) 44,057 36,938 165,335 166,791
Tons of ore mined and milled 193,738 175,440 788,704 768,276
Mining cost/ton of ore (Cdn dollars) C$44.05 C$48.10 C$46.09 C$44.08
Milling cost/ton of ore (Cdn dollars) C$11.34 C$12.52 C$11.77 C$12.39
Production cost per ounce of gold produced:
Direct mining expense (Cdn dollars) C$358 C$464 C$381 C$411
Deferred mine development cost (Cdn dollars) - (2) 13 (4)
Inventory movements and other (Cdn dollars) - 1 (1) 1
---------- ---------- ---------- ----------
Cash operating cost (Cdn dollars) C$358 C$463 C$393 C$408
Cash operating cost (U.S. dollars) US$255 US$343 US$284 US$299
Royalties - - - -
Production taxes - - - -
---------- ---------- ---------- ----------
Total cash cost 255 343 284 299
Depreciation 64 81 71 71
Amortization 12 29 24 21
Reclamation and mine closure 14 8 14 8
---------- ---------- ---------- ----------
Total production cost US$345 US$461 US$393 US$399
========== ========== ========== ==========
Milled:
Ore processed (tons/day) 2,129 1,928 2,167 2,111
Total tons milled 193,738 175,440 788,704 768,276
Grade (ounce/ton) 0.244 0.228 0.226 0.235
Recovery rate (%) 93.2 92.3 92.6 92.5
-16-
<PAGE>
<CAPTION>
ECHO BAY MINES
MINE OPERATING DATA (CONTINUED)
- -------------------------------------------------------------------------------------------------------------------------------
Three months Twelve months
ended Dec. 31 ended Dec. 31
U.S. dollars, except where indicated 1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KETTLE RIVER MINE (100% OWNED)
Gold produced (ounces) 27,729 30,839 129,866 124,910
Tons of ore mined and milled 189,556 171,212 771,002 601,468
Mining cost/ton of ore $ 22.25 $ 20.79 $ 21.53 $ 21.12
Milling cost/ton of ore $ 10.82 $ 10.65 $ 10.58 $ 11.96
Production cost per ounce of gold produced:
Direct mining expense $ 267 $ 185 $ 231 $ 190
Deferred mine development cost - - - -
Inventory movements and other (3) 32 (4) 11
---------- ---------- ---------- ----------
Cash operating cost 264 217 227 201
Royalties 13 15 14 10
Production taxes 1 2 2 2
---------- ---------- ---------- ----------
Total cash cost 278 234 243 213
Depreciation 38 60 54 59
Amortization 5 45 36 45
Reclamation and mine closure 12 8 12 8
---------- ---------- ---------- ----------
Total production cost $ 333 $ 347 $ 345 $ 325
========== ========== ========== ==========
Milled:
Ore processed (tons/day) 2,083 1,881 2,118 1,652
Total tons milled 189,556 171,212 771,002 601,468
Grade (ounce/ton) 0.177 0.207 0.197 0.240
Recovery rate (%) 82.9 87.2 85.4 86.5
- -------------------------------------------------------------------------------------------------------------------------------
<FN>
/1/ 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 35% 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%.
/2/ 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.
</FN>
</TABLE>
-17-
<PAGE>
<TABLE>
<CAPTION>
ECHO BAY MINES
ORE RESERVES AND OTHER MINERALIZATION
- ----------------------------------------------------------------------------------------------------------------------------------
PROVEN AND PROBABLE RESERVES/1/ 1997 1996
-------------------------------------- --------------------------------------------
TONS/2/ GRADE/3/ CONTENT/4/ Tons/2/ Grade/3/ Content/4/
(000) (oz/ton) (000 oz) (000) (oz/ton) (000 oz)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GOLD
PRODUCING MINES:
Round Mountain (50%) 200,663 0.018 3,519 238,255 0.019 4,525
McCoy/Cove 24,737 0.037 915 35,379 0.033 1,183
Lupin 2,018 0.269 543 1,576 0.281 443
Kettle River 1,734 0.196 339 1,987 0.186 370
- ----------------------------------------------------------------------------------------------------------------------------------
5,316 6,521
- ----------------------------------------------------------------------------------------------------------------------------------
DEVELOPMENT PROPERTIES OWNED:/5/
Aquarius 19,977 0.064 1,274 21,730 0.059 1,277
Paredones Amarillos (60%) 28,196 0.032 889 23,972 0.032 775
- ----------------------------------------------------------------------------------------------------------------------------------
2,163 2,052
- ----------------------------------------------------------------------------------------------------------------------------------
Total gold 7,479 8,573
- ----------------------------------------------------------------------------------------------------------------------------------
SILVER
PRODUCING MINES:
McCoy/Cove 24,737 1.88 46,525 35,379 1.52 53,858
- ----------------------------------------------------------------------------------------------------------------------------------
Total silver 46,525 53,858
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
OTHER MINERALIZATION/1/ 1997 1996
------------------------------------------------------------------------------ ------------
MEASURED AND INDICATED INFERRED
--------------------------------- -------------------------------
TOTAL TOTAL
TONS/2/ GRADE/3/ CONTENT/4/ TONS/2/ GRADE/3/ CONTENT/4/ CONTENT/4/ CONTENT/4/
(000) (oz/ton) (000 oz) (000) (oz/ton) (000 oz) (000 oz) (000 oz)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GOLD
PRODUCING MINES:
Round Mountain (50%) 22,439 0.018 398 48,693 0.015 731 1,129 782
McCoy/Cove -- 635 0.025 16 16 42
Lupin 485 0.345 167 200 0.269 54 221 434
Kettle River -- 149 0.174 26 26 51
- -----------------------------------------------------------------------------------------------------------------------------------
565 827 1,392 1,309
- -----------------------------------------------------------------------------------------------------------------------------------
DEVELOPMENT PROPERTIES:/5/
Aquarius -- 826 0.062 51 51 --
Paredones Amarillos (60%) -- 399 0.018 7 7 --
Ulu -- 1,509 0.374 565 565 610
Chapada (50%)/6/ -- -- -- 660
Kingking (75%)/6/ -- -- -- 2,850
- -----------------------------------------------------------------------------------------------------------------------------------
-- 623 623 3,510
- -----------------------------------------------------------------------------------------------------------------------------------
Total gold 565 1,450 2,015 5,429
- -----------------------------------------------------------------------------------------------------------------------------------
SILVER
PRODUCING MINES:
McCoy/Cove -- 635 0.986 626 626 2,001
- -----------------------------------------------------------------------------------------------------------------------------------
Total silver -- 626 626 2,001
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
/1/ Echo Bay's share, estimated at year-end. Estimates for 1997 are based on a
long-term gold price assumption of $350 per ounce and long-term silver
price assumption of $5.00 per ounce. Estimates for 1996 were based on a
$375 gold price assumption and $5.00 silver price assumption. If 1997
estimates were to be based on a $375 gold price assumption (with no change
in the silver price), Echo Bay believes that ore reserves would be
approximately 3% higher. If 1997 estimates were to be based on a gold price
assumption as low as $300 per ounce (with no change in the silver price),
Echo Bay believes that ore reserves would be approximately 16% lower.
/2/ To convert from tons to tonnes, multiply by 0.90718. To convert from tonnes
to tons, divide by 0.90718.
/3/ To convert grade from ounces/ton to grams/tonne, multiply by 34.2857. To
convert grade from grams/tonne to ounces/ton, multiply by 0.029167.
/4/ To convert content from ounces to tonnes, divide by 32,150.8. To convert
content from tonnes to ounces, multiply by 32,150.8.
/5/ Assumes successful completion of permitting and financing for each
property.
/6/ Echo Bay wrote off its investments in Chapada and Kingking in 1997.
</FN>
</TABLE>
-18-
