Gold pouring again at Lupin
Five years of losses, AMEX reviews listing

Doug Ashbury
Northern News Services

Yellowknife ( May 29/00) - Recommissioning of the Lupin mine in Nunavut is complete.

The restart was accomplished "on time and on budget," said owner Echo Bay Mines in its recently released first-quarter financial results.

During first quarter, Echo Bay spent $11.1 million on inventory and other capital costs at the mine. Initial startup costs for Lupin were $7.4 million, compared to holding costs of $1.7 million in 1999.

Lupin was mothballed in January 1998 because of low gold prices. The company decided late last year to restart the mine and projected per ounce costs at about $245 US. At that time it appeared gold was settling in above $300 US an ounce, but it has since slipped to around $275 US.

Based on reserves of 518,000 ounces and other mineralization of 268,000 ounces, Lupin's current mine plan estimates production through 2004 at 150,000 ounces of gold per year.

Drilling indicates additional mineralization and confirmation drilling is to begin later this year. As well, Ulu -- a satellite deposit 160 kilometres north of Lupin -- could generate additional mill feed for the Lupin mine site.

"The first gold pour occurred in mid-April and total gold production is on target for 100,000 to 110,000 ounces in 2000," the company said in the report.

With Lupin restarted, Echo Bay has four operating mines in North America.

Based on its gold forward position, representing a third of expected 2000 production, Echo Bay will realize $314 US per ounce. For down-side protection -- in case the price of gold drops -- Echo Bay has purchased 187,500 ounces of gold and put options at an average strike price of $270 US per ounce.

For the three months ended March 31, the Colorado-based company lost $2.7 million (four cents per share) compared to a $5.1 million (six cents per share) loss in first- quarter 1999.

Echo Bay's stock trades on the Toronto Stock Exchange and the American Stock Exchange, and the share price was down to $1.44 on the TSE last Thursday. The company's stock has fallen from around $2.50 in January.

The AMEX has also advised Echo Bay that its stock exchange listing is under review.

The reason for that is because Echo Bay has fallen below two of the exchange's continued listing guidelines. Echo Bay has sustained net losses in its five most recent fiscal years and, in the exchange's view, Echo Bay's shareholders' equity is inadequate.

Earlier this month, the company said it was addressing the exchange's concerns, but the outcome of the review was uncertain.

Depending on gold and silver spot prices and anticipated production for the rest of 2000, Echo Bay does expect to be cash positive in the second half of the year.