Echo Bay makes two Canadian acquisitions

Echo Bay Mines (TSE) has set its sights on two advanced gold properties in Canada.

The company will acquire the Ulu gold deposit in the Northwest Territories from BHP Minerals Canada, and, in a separate agreement, assume the remaining interest in the Aquarius gold property near Timmins, Ont., from Asarco (NYSE).

Echo Bay will gain control of Ulu in return for US$10 million in cash and a 5% net smelter return (NSR) after 675,000 oz. of gold are produced. A prefeasibility study, prepared by H.A. Simons of Vancouver, outlined a resource of 1.9 million tons grading 0.32 oz. per ton (or 308,000 oz. gold).

The Ulu gold deposit would likely be developed as a satellite to the company’s Lupin gold mine, 100 miles to the south. Ulu ore would be trucked south over an ice road for 12 weeks each winter and stockpiled at Lupin.

Asarco will sell its 49% interest and 1% NSR in Aquarius for US$7.75 million, giving Echo Bay total ownership and eliminating the royalty.

Discovered in 1979, the property was explored by previous operators for its underground potential. However, Echo Bay has focused on its prospects as an open-pit operation.

Recent drill results are extending mineralization into the overlying carbonate-altered cap. Echo Bay President Richard Kraus expects a resource estimate for the deposit by the end of the year, and a completed feasibility study by next year.

On the financial front, Echo Bay reported a third-quarter loss of US$8.7 million (or 8 cents per share), compared with a break-even third quarter in 1994.

The quarter was marked by high gold production, as well as high exploration expenditures.

The company produced 205,000 oz. gold (up 18% from last year) and 3.4 million oz. silver (up 68%). Revenues were up slightly, to US$93.5 million, although the company sold 16,245 fewer ounces of gold than it did in the same period of 1994.

Cash production costs were also slightly lower, at US$221 per oz. gold and US$2.85 per oz. silver.

The company spent US$13.8 million on exploration in the third quarter, compared with US$7.1 million for the same period last year.

These efforts appear to be paying off.

Along with 25% partner, TVI Pacific (TSE), Echo Bay completed agreements to acquire the Kingking copper-gold deposit in the Philippines. The company also increased its share position in two junior exploration companies: Santa Elina (TSE) and Etruscan Enterprises (VSE).

With Santa Elina, the company also secured an option to acquire a half interest in the Chapada copper-gold deposit in Brazil. And, as part of the agreement with Etruscan, Echo Bay can acquire a 44% interest in the Koma Bangou gold project in Niger.

Echo Bay has other projects at various stages of development in Africa and in North and South America.

For the first nine months of 1995, the company reported a loss of US$33.3 million (or 29 cents per share), compared with income of US$13.2 million (12 cents per share) for the same period last year.