Company will pay $3.6 million a year to keep Lupin ready
| Fact file | ||
| 1997 | 1998 | |
| Revenue | $436.3 | $481.8 |
| Expenses | $1034.4 | $733.4 |
| Assets | $17.0 | $103.2 |
| Profit(loss) | $420.5 | $176.7 |
| The 1997 expenses reflect a $494.3 million writedown and $23.9 million in severance costs and lower realized gold prices. | ||
Doug Ashbury
Northern News Services
NNSL (May 18/98) - "Terrible." That's how Echo Bay Mines boss Robert Leclerc characterized 1997.
"1997 was a terrible year for most people in the gold industry," Leclerc, Echo Bay's chairman and chief executive officer, said in the company's recently released annual report.
Echo Bay owns the Lupin gold mine. Citing low gold prices, the company mothballed the mine earlier this year, leaving about 80 Northerners from Kugluktuk, Cambridge Bay and Yellowknife out of work. The bulk of the miners commuted from Edmonton.
"Once profitable mines are unprofitable at today's gold price," he said.
"Some are being shut down. New mines are not being built; they cannot attract financing."
Echo Bay deferred further development of Ulu, a satellite deposit to the Lupin mine located along the Hood River.
Gold producers cannot raise capital at reasonable rates, Leclerc said, "even at unreasonable rates."
Despite the gloomy address to shareholders, there is reason for optimism when it comes to Lupin.
"By temporarily suspending operations at Lupin, we preserve the gold in the ground so it can be mined profitably when gold prices improve. Lupin is a valuable resource, too valuable to be squandered at these gold prices."
Echo Bay has hedged 1998 gold production at $340 US. For 1999, the company has hedged 330,000 ounces at $365 US.
Gold continues to languish around $300 US.
Once the price improves, Echo Bay plans to reopen Lupin. Leclerc said the company can afford to wait.
Lupin's 1997 reserves were 543,000 ounces of gold.
Since opening in 1982, Lupin has produced 2.8 million ounces of gold.
