Cambior post loss on lower revenue

Cambior (CBJ-T) has posted lower earnings for the three months ended September 30, owing to lower revenues and adjustments in the valuation of its non-hedge derivative instruments.

During the three months ended September 30, the company suffered a net loss of US$8.5 million (or 9 per share) on revenue of US$48.4 million, compared with year-ago net earnings of US$10.5 million (14 per share) on US$51.8 million. Cash flow from remaining operations were US$1.3 million, a third of the pace set a year earlier.

The recent loss includes a US$8.2-million unrealized loss on derivative instruments, compared with a gain of US$24 million during the corresponding period of 2000.

For the first nine months of 2001, the loss tallies to US$20.3 million (22 per share), compared with a year-ago profit of US$20.1 million (28 per share). Revenue between the two periods fell to US$145.8 million from US$157.7 million.

During the latest quarter, the company was the recipient of a $1.3-million grant from the Quebec government. The funds are earmarked for advanced exploration at the Mouska, Doyon and Sleeping Giant gold mines in the Abitibi region.

Third-quarter gold production piled up to 148,900 oz. at a total cash cost of US$223 per oz., little changed from the 149,600 oz. at the same cost a year earlier. The company realized a price of US$293 per oz. for its production, a US$19 per oz. premium over the period’s average market price, but off the US$318 per oz. realized in the same period of 2000.

Gold production for the first three quarters was 454,200 oz. at US$226 per oz., compared with year-ago production of 458,300 oz. at $224 per oz. The realized cash price was US$287, US$18 higher than the average market price during the period, but down from US$324 per oz., the previous year.

The bulk of production again came from the Omai open-pit gold mine in Guyana, which spat out 88,600 oz. during the quarter and 263,200 oz. so far this year. Direct mining costs rang in at US$217 and $222 per oz., respectively, in both cases US$2 per oz. lower than a year earlier. During the same respective periods of 2000, Omai churned out 84,600 oz. and 243,200 oz. The improved performance is attributed to higher grades and increased tonnage processed. Omai is expected to produce a record 360,000 oz. of gold in 2001.

The Doyon division chipped in 52,400 oz. during the quarter, and 166,700 oz. during the first nine months. A year earlier the division’s contributions were 55,200 oz. and 173,000 oz., respectively. The drop in production is attributed to fewer tonnes being milled and a late-September labour stoppage at the Mouska mine. With a new three-year pact signed at Mouska on Oct. 16, Cambior expects the Doyon division to meet its 2001 production target of 225,000 oz.

At September 30, 2001, the company’s hedge book covered a total of 1.4 million oz. at a price of US$297 per oz. and total commitments of 2.1 million oz. at US$305 per oz., through 2007. The hedge positions include fixed forward contracts, spot deferred contracts, prepaid gold forward sales and the minimum quantity of variable-volume forward contracts.

Cambior’s share of third-quarter niobium production from the Niobec mine in Quebec was 354 tonnes, up 36% from the 2000 third quarter, thanks to the completion of the mine expansion in the fourth quarter of 2000. For the first nine months of 2001, Cambior’s share totalled 1,073 tonnes. The mine chipped in cash flows of $1.9 million during the quarter and $4.7 million year-to-date. After a ten-day strike at the mine this summer, a new three-year agreement was reached in August.

Also during the recent quarter, Cambior reduced its debt by $15.4 million to US$51 million from the proceeds of the disposition of the El Pachon copper project in Argentina and the conversion into shares of the remaining mortgage loan on its interest in Niobec due to Jipangu.

At the end of September, Cambior had cash and equivalents of US$7 million.