Echo Bay defers mine construction plans

Low gold prices have derailed plans by Echo Bay Mines (ECO-T) to construct two new gold mines — Paredones Amarillos in Mexico and Aquarius in Canada — and develop the Ulu gold project in Canada’s Northwest Territories.

Echo Bay and its 40% joint-venture partner at Paredones Amarillos, Viceroy Resource (VOY-T), plan to defer final construction until early 1998. While this is expected to add about $2 million to total costs, the companies say the amount will be offset by a $15-million reduction in capital costs, to be achieved largely by re-engineering the mill process flowsheet and eliminating the cyanide regeneration circuit. Other savings will be incurred through the purchase of used, rather than new, equipment, redesigning the site layout, and optimizing certain aspects of the project.

Echo Bay has deferred construction at its wholly owned Aquarius project in the Timmins camp of Ontario, which will reduce this year’s capital expenditures at the site to about $39 million from $70 million. The company intends to complete an underground barrier system, which is being constructed to block groundwater from flowing into the proposed pit. This will be achieved by underground freezing, a proven technique used in tunnelling and shaft-boring.

The deferral of development at Ulu — a satellite deposit to the company’s nearby Lupin gold mine — will limit this year’s costs to the $8.5 million already spent (down from the $12.5 million planned).

Later this year, Echo Bay intends to release details of a revised mine plan for Lupin, which will incorporate new mining and blasting methods that are expected to allow for the economic extraction of resources below the 1,400-metre level that were previously considered uneconomic.