Cambior slides on Doyon news

Shares in Cambior were off 18, or nearly 5%, at $3.71 in late afternoon trading in Toronto on Sept. 13, after the company said that the lagging effects of a rock fall earlier this spring has forced the layoff of some 130 employees at its Doyon mine in northwestern Quebec.

In May, Doyon’s main ramp suffered extensive damage that disrupted development and production for four months. Despite rehabilitation, Cambior says production from some of the affected areas will be deferred until the operation’s final years.

The company also says that the mining rate between levels 8 and 12 will be reduced by 30% to 700,000 tonnes annually. Cambior hopes to boost the mine’s profitability by focussing on higher-grade areas running around 5.5 grams gold per tonne. The mine is expected to produce 120,000 oz. of gold per year beginning in 2005. The company will also move some 800,000 tonnes of reserves grading 3.3 grams gold into the resource category based on the current gold price and estimated cost of production.

Cambior says it plans to fill about 50 vacancies at the Mouska and Sleeping Giant mines with some of the displaced Doyon workers. The restructuring is expected to cost about $2.5 million. Mouska is nearly ready to resume production; a shaft-deepening program there is slightly under budget, and a month ahead of schedule. The deeper internal shaft will allow access to higher-grade ore.

In all, the 2004 production target for the Doyon division (Doyon and Mouska mines) has been trimmed by about 32,000 oz. to 160,000 oz.; thereafter the division is expected to produce 170,000 oz. per year at an estimated mine operating cost of $380 per oz.

Helping to offset the lower production from Canada is the company’s Rosebel mine in Suriname. That mine, which achieved commercial production in early February, has already surpassed its designed mill capacity of 14,000 tonnes per day hitting a record average daily throughput of 17,200 tonnes during August.

A recent evaluation of the mill circuit indicates that a throughput rate of 17,000 tonnes daily (around 300,000 oz. of gold per year) is sustainable over the long-term with no additions to the grinding circuit, and only minor additions and modifications to the carbon-in-leach and stripping circuit. A 2002 feasibility study had pegged the operation’s daily throughput at 12,000 tonnes once hard rock and transition ore were included to make up 50% of the mill feed 18 months along.

Cambior expects to spend some US$20 million (up from US$8 million estimated in a feasibility study) upgrading Rosebel’s mill, and installing a gyratory crusher, ore stacker, conveyor system, and effluent treatment plant over the next 12 months.

Meanwhile, results from development drilling on extensions of the Pay Caro, East Pay Caro and Royal Hill deposits, and an updated resource estimate are expected by the end of the year.

At the Omai mine in neighbouring Guyana, an increase in mineral reserves in the Fennell pit, and production delays owing to the rainy season will extend production into the fourth quarter; the pit was to have been depleted in August.

Omai is expected to produce about 240,000 oz. during 2004, slightly ahead of its original plan. Ore from Fennell is being supplemented with stockpiled, low-grade hard-rock ore. The operation is slated to run through 3.7 million tonnes grading 0.9 gram gold to produce about 100,000 oz. of gold during the first 9 months of 2005.

In all, Cambior still expects to pour about 705,000 oz. of gold in 2004; production is forecast to slip to 663,000 oz. and 570,000 oz. in 2005 and 2006. The company figures production will be rebound to the tune of 100,000 oz. to around 660,000 oz. a year once the Camp Caiman project in French Guiana cranks up in 2007. The increase also includes a contribution from the proposed acquisition of a 55% stake in the Poderosa mine in Peru. That deal is expected to close by the end of October.