Low prices hit Echo Bay

Despite an increase in gold and silver production and a decrease in operating costs, Echo Bay Mines (ECO-X) was unable to triumph over low gold prices in the first quarter.

Compared with the corresponding period of 1999, gold production was up 18% to 140,170 oz., while silver production jumped 44% to 3.8 million oz.. Cash operating costs fell US$45 to US$171 per oz. gold.

Higher gold and silver sales resulted in greater revenue. For the quarter, Echo Bay pulled in US$51.8 million, up 6% from a year ago. The company sold its gold at US$320 per oz., down from US$324 per oz., though silver sold for US$5.80 per oz., up from US$5.52 per oz.

Echo Bay reported a net loss of US$2.7 million (or 4 per share) in the first quarter, compared with a loss of US$5.1 million (6 per share) a year ago. The loss per share for each quarter included the equity portion of the interest on the company’s capital securities, amounting to US2 per share for each quarter.

Production was higher at two of the company’s active mines.

At the Round Mountain mine in Nevada, where Echo Bay holds a 50% operating interest, the company’s share of production increased 20% to 71,954 oz. Cash operating costs fell to US$185 per oz.

At the Cove-McCoy mine in Nevada, gold production increased 34% to 32,114 oz.; silver production, 44% to 3.8 million oz. Operating costs were US$149 per oz., or US$60 lower than a year ago.

However, a production shortfall was reported at the Kettle River mine in northern Washington state. During the 3-month period, it contributed 25,070 oz., down from 26,965 oz. in the year-ago period. Cash operating costs held steady at US$227 per oz.

In April, Echo Bay resumed operations at the Lupin mine, in Nunavut. Since deciding to reopen the mine late last year, the company has spent US$7.2 million on re-commissioning. Startup costs amounted to US$4.8 million. Lupin is expected to produce as much as 110,000 oz. gold in 2000.