LITERATURE REVIEW — Echo Bay writes down past to focus on its mining future

The writeoff of the Alaska-Juneau gold project took its toll on the 1996 earnings of Colorado-based gold producer Echo Bay Mines (ECO-T).

The company reported a net loss of US$69.6 million before special charges.

The total loss for the year was US$176.7 million, compared with a loss of US$50.1 million in 1995, after including the non-recurring charges.

These charges include US$77.1 million to write off the Alaska-Juneau development project in Alaska, which a recent feasibility study found to be uneconomic, and US$30 million for waste rock stabilization at the McCoy-Cove mine in Nevada.

On a positive note, Echo Bay invested in its future through exploration and development programs. More than US$100 million was directed to acquiring, evaluating and advancing new projects during the year.

Early this year, Echo Bay announced plans to place two new mines in production: Aquarius in Canada, and Paredones Amarillos in Mexico. When full production is reached (anticipated for 1999), these projects together will add 240,000-250,000 oz. gold to the company’s annual production.

Echo Bay turned out 768,919 oz. gold last year, along with 7.1 million oz.

silver. Cash costs were US$254 per oz. of gold produced — an 11% increase over 1995.

The company continues to explore and develop new projects around the world.

This year, it hopes to complete feasibility studies on five such projects: Kingking in the Philippines, and the Chapada, Sao Francisco, Fazenda Nova and Sao Vicente projects in Brazil.