Cambior rides Rosebel to record (July 21, 2004)

A full quarter of production from the new Rosebel gold mine in Suriname helped Cambior (CBJ-T) boost revenues by 80% to US$78.3 million during the three months ended June 30.

Rosebel, which began commercial production on Feb. 11, processed around 1.3 million tonnes averaging 2 grams gold per tonne to produce 74,100 oz. of gold, slightly better than budget. Mine operating costs came in at US$160 per oz., the lowest of Cambior’s mines.

Paced by Rosebel, Cambior turned in net earnings of US$1.7 million (or a penny a share), compared with a year-ago net loss of loss of US$2.1 million (US1 per share). Cash flow from operations between the two periods increased nearly six-fold to US$ $9.6 million.

Overall, Cambior produced a quarterly record of 193,000 oz. of gold at an operating cost of US$226 apiece, a significant increase over the 120,500 oz. produced at US$244 per oz. a year earlier.

The Omai mine in neighbouring Guyana chipped in increased production as well, turning out 67,000 oz. at US$225 per oz., compared with 57,200 oz. at US$227 per oz. a year earlier. The improvement comes thanks to higher grades and mill throughput.

Mining in Omai’s Fennell pit is slated to wrap up by the end of August; thereafter the mill will continue to run through low-grade ore stockpiles for another year. Lower production and higher mine operating costs are expected.

Production from the Doyon division in northwestern Quebec slipped by 24% to 42,800 oz., and costs jumped by 30% to US$334 per oz., owing mostly to a temporary shutdown of the Mouska mine to allow for deepening of the mine’s internal shaft. The project is a month ahead of schedule and on budget. Mining is expected to resume in early October, earlier than planned. Production from the division also suffered after ground stability issues prevented access to two high-grade sectors at the Doyon mine. No reserves were lost and rehabilitation is ongoing.

On the sales side, Cambior realized US$361 per oz. for its second-quarter production, US$49 better than a year ago. By comparison, the gold spot price averaged US$393 per oz., up from US$347 per oz. During the quarter, the company trimmed 281,000 oz. of gold from its hedge book to leave just 217,000 oz., which represents four months of production and 5% of reserves at the end of 2003.

“Record gold production in the second quarter of 2004 resulted in our fourth consecutive profitable quarter and improving financial results," said Cambior’s CEO Louis Gignac. “Given the excellent performance of the Rosebel mine and the anticipated early resumption of operations at the Mouska mine, we are on target to achieve our production forecast of 705,000 oz. of gold for 2004.”

Cambior’s quarterly share of sales from the Niobec niobium mine in Quebec climbed 44% to US$6.9 million, thanks to increased demand from the steel industry. In early July, Cambior consolidated ownership of Niobec by acquiring Sequoia Minerals, and its half-interest, for $55.9 million in cash and 2.2 million shares. Gignac expects the Sequoia acquisition to boost earnings and cash flow during the second half of the year.

Cambior’s shares ended Wednesday’s trading session in Toronto 6, or 1.5%, lower at $3.97.