Cambior rides Rosebel to record (August 02, 2004)

Full production at the new Rosebel gold mine in Suriname helped boost Cambior‘s (CBJ-T) revenues by 80% to US$78.3 million during the three months ended June 30.

Rosebel, which began commercial production in February, processed 1.3 million tonnes averaging 2 grams gold per tonne, from which were extracted 74,100 oz. gold. Mine operating costs were US$160 per oz.

Cambior earned US$1.7 million (or a penny a share) during the quarter, compared with a year-earlier loss of US$2.1 million (US1 per share). Cash flow from operations increased nearly six-fold to US$9.6 million.

Overall, Cambior produced 193,000 oz. gold at an operating cost of US$226 per oz., compared with 120,500 oz. at US$244 apiece a year earlier.

Higher production was also reported at the Omai mine in neighbouring Guyana, which turned out 67,000 oz. at US$225 per oz., compared with 57,200 oz. at US$227 per oz. a year earlier. The improvement reflects higher grades and mill throughput.

Mining at Omai’s Fennell pit is slated to finish by the end of August; thereafter the mill will process low-grade ore from stockpiles for another year. Lower production and higher mine operating costs are expected.

Production at the Doyon division in northwestern Quebec slipped by 24% to 42,800 oz., and costs jumped by 30% to US$334 per oz., largely because of a temporary shutdown of the Mouska mine, which allowed the shaft to be deepened. The project is a month ahead of schedule and on budget. Mining is expected to resume in early October. During the quarter, ground stability problems prevented crews from reaching two high-grade sectors; however, 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. During the quarter, the company trimmed 281,000 oz. 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,” says Cambior 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. gold for 2004.”

Cambior’s quarterly share of sales from the Niobec niobium mine in Quebec climbed 44% to US$6.9 million, owing 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.