Echo Bay dips toe in red ink

It’s small, but a loss nonetheless for American gold producer Echo Bay Mines (ECO-T). The company lost US$400,000 in the second quarter of 2001, compared with net earnings of US$10.2 million a year earlier. First-half numbers were in the black to the tune of US$3.4 million, though down from net earnings of US$7.5 million a year earlier.

Echo Bay’s stable of mines produced a total of 176,284 oz. during the latest quarter ended June 30, 6% lower than the 188,475 oz. produced in the year-earlier period. The reduction is attributed to declining production at the aging McCoy-Cove mine in Nevada.

Cash operating costs edged up to US$218 per oz. in the latest quarter, from US$186 a year ago.

Echo Bay expects to produce 670,000 oz. gold from its mines this year, 18% higher than orginally forecast, owing to better grades at the Round Mountain mine in Nevada and more production from McCoy-Cove. Though mining was completed last year at McCoy-Cove, production is continuing as a result of the processing of low-grade stockpiles. Reclamation, including contouring of slopes and revegetation of 1,571 acres, is under way.

Echo Bay’s strongest performer in the second quarter was the 50%-owned Round Mountain mine, which churned out 97,770 oz., up from 76,408 oz. a year earlier. Cash costs fell to US$194 per oz., from US$202 in the second quarter of 2000.

The Lupin mine, in the Northwest Territories, produced its three-millionth ounce in the second quarter. The underground operation entered production in 1982 and, this year, is on-track to turn out 150,000 oz. gold. Meanwhile, the Kettle River mine in Washington state is expected to produce 60,000 oz. at a cash cost of US$240 per oz.

Echo Bay ended the quarter with US$10 million in cash after repaying debt of US$3.7 million. The company expects to conclude an agreement to refinance existing bank debt of US$19 million before early September of this year.