Claude buoyed by higher gold sales

Increased gold and sales and a higher gold price helped Claude Resources (CRJ-T) achieve net earnings of $1 million during the three months ended Sept. 30.

The profits translate into 2 per share, and compares with a year-earlier loss of $200,000, or nil per share. Revenue between the two periods jumped 30% to $9.1 million, while cash flow from operations (before non-cash working capital items) more than doubled to $2.6 million.

For the first three quarters of this year, Claude earned $1.6 million (3 per share) on revenue of $26.8 million, compared with a loss of $3.2 million (7 per share) on revenue of $17.6 million in the corresponding period of 2002. Operations generated $5.7 million in positive cash flow, $700,000 better than a year earlier.

The Seabee mine contributed $6.9 million to quarterly revenue, and $18.8 million over the first nine months of 2003, as sales rose 24% and 40%, respectively, over the corresponding periods of 2002. For the quarter, cash operating costs slipped US$4 per oz., to US$232 per oz., whereas for the 9-month period, they fell US$24, to US$256 per oz.

Mill feed from Seabee averaged 8.8 grams gold per tonne for the quarter and 8.4 grams for the first nine months — higher, in both cases, than in the corresponding periods of 2003. So far this year, the mill has met its target throughput rate of 550 tonnes per day. The rate is expected to hit 700 tonnes per day in November, with the completion of the Seabee shaft extension.

The company realized US$381 per oz. gold sold during the quarter (up from US$316 per oz.), and US$350 per oz. (US$306 per oz.) during the first three quarters.

Currently, mine development is ongoing on levels 510 and 630; plans to gain access to level 650 have been postponed as a result of the success achieved on level 510, and also because of the increase in size of the 5106 and 5107 stopes. Meanwhile, diamond drilling is progressing on levels 325 and 550, which should lead to further development of the 161 and 162 veins.

Claude has expanded its drill program in an effort to boost the mineral resource.

At the end of September, Claude was running a cash deficit of $992,000, compared with a year-earlier deficit of $2.3 million. Long- and short-term investments were relatively unchanged at around $2.7 million in all.

At quarter’s end, Claude had 7,000 oz. gold covered by forward gold contracts at an average price of US$363 per oz., representing a market-value loss of US$200,000. The company’s foreign exchange contracts amounted to a US$1 million gain.

Looking ahead, Claude expects mining costs to continue to improve through the fourth quarter as it begins pulling ore from larger, higher-grade stopes and as the shaft is extended.

CEO Arnie Hillier will retire in early March, 2004, to be replaced by Neil McMillan, currently the president. Richard (Rick) Johnson, corporate controller, will become vice-president finance and chief financial officer.