Rising Canadian dollar affects Cambior

The combination of a stronger Canadian dollar and lower gold production hampered third-quarter earnings for Cambior (CBJ-T).

The company’s profits slipped to US$700,000 (or nil per share) on revenue of US$48.7 million during the period, compared with year-earlier earnings of US$4 million (3 a share) on revenue of US$52.6 million. The recent quarter’s earnings included a non-cash accounting loss of $2.4 million, compared with a gain of US$800,000 a year earlier. Cash flow from operating activities was more than halved to US$4.6 million between the two periods.

For the first three quarters of this year, Cambior’s net loss amounted to US$3.7 million (2 a share), compared with a net loss of US$9.5 million (7 a share) in the corresponding period of 2002. The non-hedge derivative loss was US$1 million, versus US$14.8 million in 2002. Revenue between the two 9-month periods slipped US$12.1 million, to US$138.7 million, and cash flow fell 63% to US$6.8 million.

Gold production between the two third quarters slipped by 25,700 oz., to 124,000 oz., at a mine operating cost of US$238 per oz. For the first three quarters, 378,400 oz. were poured at US$245 apiece, down from 435,800 oz. at US$218 per oz. a year earlier.

The drop in production reflects the milling of fewer tonnes at the Omai gold mine in Guyana, where soft-rock reserves are being depleted. Omai’s third-quarter production fell 31% to 62,200 oz., and costs climbed US$3 to US$213 per oz. For the first nine months, cash costs were up US$12 at US$228, while production fell 21% to 193,800 oz.

Meanwhile, in neighbouring Suriname, construction of the Rosebel open-pit gold mine is on schedule and budget. By the quarter’s end, the company had spent US$64.6 million, with another US$6.8 million committed. More than 1,200 workers are on site carrying out various construction projects, including:

— the erection of power transmission towers and sub-stations (commissioning is planned for November);

— Mechanical, electrical and piping installations in the mill area;

— Leaching tanks (around 80% complete); and

— Laying out the pipeline to the tailings area;

Cambior says the sample preparation and analysis laboratory is operational and that preproduction mining has begun at the Pay Caro deposit. The company has also begun building a tailings dams. Commissioning at Rosebel is slated for January, with commercial production expected in early 2004.

Quarterly production from the Doyon division edged up by 900 oz., to 53,000 oz. at US267 apiece (up from US$224 per oz.), reflecting higher mill grades (up about 10% at 6 grams gold per tonne). Slightly fewer tonnes were milled, owing to the unavailability of several load-haul-dump units in July.

Cambior plans to deepen the shaft at the division’s Mouska mine by 210 metres, to 880 metres below surface. The 10-month, $11-million project will require that the mine be closed as existing infrastructure cannot accommodate the simultaneous hoisting of mined material during shaft-deepening. The plan is designed to provide access to 142,000 tonnes of probable reserves grading 15.4 grams gold plus 173,000 tonnes of inferred resources running 14.6 grams. The deepening program, which includes lateral and vertical development work, will begin in January.

Cambior recently extended the current collective agreement with its employees at Mouska by three years to Oct. 17, 2007.

So far this year, the company has trimmed some 469,000 oz., or 36%, from the pages of its hedge book. In August, the company eliminated the hedging covenant under its credit facilities after closing a $100-million equity financing. At the end of September, total commitments totalled 817,000 oz. at an average of US$304 per oz.

On the exploration front, wedge drilling at the Westwood property in northwestern Quebec continues to intersect gold zones that appear to correlate with those at the Doyon gold mine, 2 km to the west.

Selected results from the North corridor include:

— 3.9 grams gold and 8.9 grams silver over 4.1 metres;

— 12.1 grams gold over 2.9 metres; and

— 2.5 grams gold and 2.6 grams silver over 6.1 metres.

The Westwood corridor returned up to 5.2 grams gold and 2.4 grams silver over 7.5 metres, including 23.6 grams gold and 5.2 grams silver over 0.8 metre.

Plans at Westwood call for a new deep hole to test the lower extension of the current mineralization to a depth of 2,600 metres. Cambior also intends to drive an exploration drift from level 14 of the Doyon mine toward the Westwood area to allow exploration of Doyon’s eastern sector.

Cambior’s quarter-ending cash and equivalent position totalled US$68.6 million; the common share count stood at 212.1 million.