Echo Bay’s first-quarter profit reflects jump in gold output

Despite a drop in gold prices, a 12% increase in gold production helped Echo Bay Mines (TSE) return to a profitable position in the first quarter of 1991.

The gold miner reported earnings of $4.4 million (four cents per share) on revenues of US$80.2 million compared with a net loss of US$37.9 million (38 cents per share) on US$73.6 million during the first quarter of 1990.

Last year’s quarterly loss reflects a US$42.4-million writeoff of Echo Bay’s investment in the Muscocho (TSE) group of companies.

Producing 196,305 oz. gold, Echo Bay realized an average price of US$401 per oz. compared with US$417 a year ago.

The most significant production gains came from the McCoy/Cove mine in Nevada, where output increased 66% to 81,506 oz. after completion of a new tailings treatment plant. At 57,459 oz., production at the Lupin mine reached an all-time record. In Washington, Echo Bay’s newest mine, Kettle River, more than doubled output to 24,742.

Production costs at the company’s mines dropped to an average of US$247 per oz., down from US$254 in the first quarter of 1990.

Echo Bay says the reduced production costs reflect the absence of last year’s unprofitable production from the Alta Bay joint venture. Echo Bay sold its interest in the venture last December.

Early in the second quarter, the gold producer completed a 5.5-year, single-payment, 55,000 oz. gold financing. The proceeds, totalling about US$20 million, are being used to prepay gold loans scheduled to come due in 1991 and 1992.