NEVADA SPECIAL — Echo Bay expands mill at McCoy-Cove

During the past year, Echo Bay Mines (ECO-T) has expanded both its portfolio of international mineral projects as well as its McCoy-Cove operation in Nevada, the company’s largest gold producer.

The Nevada operation turned out 48,890 oz. gold during the first three months of 1996, compared with 78,871 oz. in the previous year.

Silver production amounted to 1.2 million oz. for the first quarter of 1996, compared with 2.7 million oz. in the same period in 1995.

The mine plan anticipated the drop in production, which was caused mainly by milling of lower-grade ores from the deeper levels of the Cove deposit. The last of the high-grade sulphides at Cove were depleted in late 1995.

Echo Bay notes, however, that increased mill capacity and improving grades and recoveries should result in higher production levels for the remainder of the year. Even so, full-year silver production is expected to be no better than 7.5-8.5 million oz., the lower end of the target range.

Although the company anticipates a 20-25% drop in gold production from the 310,016 oz. produced in 1995, this year’s production targets are being met.

Cash operating costs rose to US$314 per oz., compared with US$255 a year ago, a reflection of lower grades processed and fewer ounces produced. Unit costs for the rest of the year are expected to be lower than the first-quarter costs, as production increases and grades improve.

Expansion of the mill’s flotation circuit was completed in April, three months ahead of schedule. The US$4-million expansion is expected to provide increased retention time for sulphide ore in the circuit, improve recoveries and reduce unit costs. Mill capacity has been increased to 10,000 from 7,500 tons per day.

Also in April, mining of the original McCoy pit resumed. The material being mined is predominantly oxide, and will provide additional heap-leaching and milling ore.

Echo Bay also owns half of the Round Mountain gold mine in Nevada, where construction of a new mill is under way. The 8,000-ton-per-day mill will process large quantities of non-oxide ore with production of up to 100,000 oz. gold annually. Echo Bay’s share will be 50,000 oz.

In preparation for startup, Round Mountain has stockpiled 2.1 million tons of non-oxidized ore averaging 0.042 oz. gold. More ore will be added as the mill is being constructed.

For the first three months of this year, Echo Bay’s share of gold production from the existing Round Mountain operation totalled 39,716 oz., compared with 45,884 oz. in 1995. Operating costs were US$216 per oz., compared with US$177 a year earlier.

The company says lower production and higher costs resulted from a time-lag between loading ore on the dedicated heap-leach pad and the release of the contained gold over time. The dedicated pad is nearly a mile long, and several months are required to load one lift (one of six, 50-ft.-high layers) to capacity before leaching can begin. The benefits of the increased ore under leach are expected to be reaped in the remaining quarters of this year.

Production at Round Mountain in 1996 is expected to increase 5-10% over last year’s total of 172,217 oz.

Production from all of the company’s mines topped 161,246 oz. in the first quarter of 1996, compared with 182,826 oz. in the previous year’s first quarter. Silver production was 1.2 million oz., down from 2.7 million oz.

Cash operating costs rose to US$261 from US$234 per oz., a reflection of lower grades mined and fewer ounces produced.