Echo Bay Mines (ECO-T) reported a substantial loss for the second quarter of 1997.
The Denver-based company lost US$20.7 million during the 3-Month period ended June 30, compared with a loss of US$14.6 million in the same period last year.
The loss is primarily the result of lower gold prices. The company’s average realized gold price was US$350 per oz. — US$42 lower than in the previous year. Consequently, revenues dropped to US$75.8 million, compared with US$95 million in the comparable period of 1996.
Gold production was 7% lower, at 190,397 oz., though silver production rose 17% to 1.9 million oz. Cash operating costs rose 10%, to US$262 per oz. gold — a reflection of the processing of lower-grade material.
With all of the bad news, the company has been forced to take a hard look at cost-Cutting in the hopes of turning itself around.
Toward this end, Echo Bay has produced a new mine plan at the Round Mountain gold mine in Nevada. The company has a 50% stake in the mine; the remainder is split equally between Homestake Mining (HM-N) and Case Pomeroy.
By discontinuing the mining of lower-grade ore and reducing the number of tons removed from the pit by 250 million tons over the life of the mine, the company hopes to reduce the reserves by 1.2 million oz. and decrease the mine life to 10 from 14 years.
The company is also considering deferring construction of the Paredones Amarillo gold project in Mexico and the Aquarius gold project in Canada until the price of gold climbs.
Meanwhile, Echo Bay says in a news release that it is facing the unfortunate task of “re-evaluating, refocusing and rationalizing” its portfolio of projects in Brazil. The company has had to face the music about the Kingking copper-gold project in the Phillipines after the initial feasibility study came back only marginally profitable at current metal prices.
The company admits that both the Kingking and the Chapada copper-gold project in Brazil “might be of more value to a copper producer.”
As another cost-Cutting measure, Echo Bay laid off 41 of its 116 employees at its head office in Denver.
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