Lupin boosts Echo Bay

Denver — The Lupin mine in Nunavut contributed to a 42% increase in gold production in the fourth quarter for Echo Bay Mines (ECO-X), propelling the company to a profit for 2000.

The company’s gold production reached 181,569 oz. in the fourth quarter, of which nearly 20% came from Lupin. The company reopened the underground mine last year after a 2-year hiatus.

Higher production resulted in higher revenue, and the company posted net earnings of US$2.1 million (or 2 per share), compared with a loss of US$5.2 million (6 per share) in the last quarter of 1999.

For the year, Echo Bay reported net earnings of US$3.2 million (2 per share), compared with a net loss of US$51 million (36 per share) in 1999.

Echo Bay produced 694,663 oz. gold in 2000, up 39% over the previous year, and 12.3 million oz. silver, 46% more than in 1999.

Lupin, which resumed gold production in mid-April, contributed 117,729 oz. gold. Cash operating costs were US$213 per oz., including a $15-per-oz. benefit for closing out Canadian dollar contracts from 1997.

The company expects production to reach 150,000 oz. gold in 2001 at cash operating costs of US$240 per oz. Construction of an underground hoisting system should provide a more affordable method of transporting ore from the lower levels.

At the Round Mountain mine, in central Nevada, production hit a record 640,128 oz. in 2000. Echo Bay’s 50% stake amounts to 320,064 oz. Cash operating costs were US$195 per oz.

The company attributed the impressive performance to a 20% increase in the amount of ore placed on the heap-leach pad. The operation is expected to produce 600,000 oz. in 2001, at US$200 per oz. Reserves stand at 2.6 million oz., enough for at least eight more years.

Also in Nevada, Echo Bay ended mining at the McCoy-Cove operation with a bang, boosting gold production 31% and silver production 46% in its final full year. The mine produced 162,784 oz. gold and 12.3 million oz. silver. Cash operating costs plunged 42% to US$179 per oz.

Reclamation

The company ceased mining from the open pit in October and expects to complete mining from the Cove South Deep underground deposit by the second quarter of 2001. As a result, production for this year should fall to 60,000 oz. gold and 5 million oz. silver as the operation digs into lower-grade stockpiles. Cash operating costs should rise to US$275 per oz. Reclamation activities are under way and should continue for the next several years.

Echo Bay sees another year of mining at the Kettle River mine in northeastern Washington. Exploration has outlined another 500,000 tons of resources along a northeastern extension of the K-2 deposit, enough for one more year.

Also, the company has acquired a 75% stake in the Golden Eagle deposit from Newmont Mining (NEM-N) in exchange for the Kuranakh gold deposit in Russia. Situated 15 miles from the Kettle River mill, the property is believed to have good potential for expansion.

Kettle River contributed 94,086 oz. gold in 2000, down 10% from the previous year. Cash costs held steady at US$218 per oz. The Lamefoot deposit was mined out during the year; as a result, future production will have to come from lower-grade stockpiles and what is left at K-2. Echo Bay spent US$4.8 million on exploration in 2000, mostly at or near existing operations in North America.

In the development stage, the company has the Aquarius gold project, near Timmins, Ont. A revised feasibility study indicates capital costs will be US$90 million, and cash operating costs, US$148 per oz.

Farther afield, at the Youga-Bitou gold property in Burkina Faso, Echo Bay is participating in a joint venture with Ashanti Goldfields (ASL-N). A feasibility study indicates that the deposit contains a resource of 5.2 million tonnes grading 3.3 grams gold equivalent to 550,000 oz. (Echo Bay’s 50% share would be 275,000 oz.) Cash operating costs would be below US$200 per oz.