Lupin mine mothballed
Move only temporary Echo Bay says
by Doug Ashbury
NNSL (Jan 07/98) - Lupin mine is the latest victim of low gold prices.
Echo Bay Mines Ltd. will shut down its Lupin gold mine, located 400 kilometres northeast of Yellowknife, the company revealed yesterday.
Some 497 people will be laid off -- 414 workers at the site and 83 people in the company's aviation arm.
But Echo Bay said the move is only temporary -- until gold price improves.
Gold hit $280.45 US yesterday -- an 18-year low.
The (Lupin) layoffs will "come in stages over the next two and one-half months," Echo Bay's manager for investor relations, Robin Lee, said Tuesday.
The decision had to be made now because the company transports a year's worth of supplies to the mine during a typical first quarter, Lee said.
Lee said the ice road will still need to be built this winter to transport supplies while the mine is in care and maintenance, she said.
Placing Lupin in care and maintenance, which will employ 20 people, is part of Echo Bay's efforts to save up to $35 million US in 1998. Care and maintenance will cost about $3 million a year.
The company is also scaling back operations at its McCoy-Cove mine in Nevada, where about 100 jobs are affected.
In Denver, at the Echo Bay's head office, the company will cut staff to 37 people from 93.
As well, Echo Bay will slash its 1998 new-projects budget to $3 million US from $21 million and cut exploration budget to $6 million from $11 million.
The company will take a $14-million charge as part of the changes.
Lupin and McCoy-Cove are Echo Bay's highest-cost mines. Both have operated at a loss for some time, the company said.
In the first nine months of 1997, cash operating costs were $294 US and $291 per ounce of gold respectively at Lupin and McCoy-Cove. The company's Nevada and Washington mines produced gold at $205 and $217 respectively over the same period.
Over the nine months, Lupin produced 121,278 ounces of gold.
Echo Bay expects to produce 175,000 ounces of gold this year, a drop of 25 per cent compared with 1997.
The move to temporarily mothball Lupin comes less than two weeks after Miramar Mining cut 130 jobs, laying off 120 people at its Con mine.
Royal Oak spokesman Graham Eacott said Tuesday he was not aware of any layoffs at the company's Giant mine, other than the 26 people cut in November.