Mill operations at
The mill had been shut down for around eight hours during an initial assessment of the problem.
The milling process has since been modified so that the slurry is bypassing the thickener and passing directly from the grinding circuit to the leaching circuit. As a result, recoveries are currently running around 4% lower than the 94% rate before the leak.
Cambior said the lower throughput and recovery rate would see its gold output slip by about 2,300 oz. during repairs, but that production during the first half of the fourth quarter was around 5,300 oz. ahead of plan.
“It will have some impact on production, but we were ahead of plan until this morning, so we have a little leeway to compensate,” said Cambior chief executive Louis Gignac during a short conference call soon after the leak.
Gignac said the leak was a “very localized problem” and that it had been contained in the safety berms and ponds at the mill site.
“There’s been no impact on the environment whatsoever,” he added. “The thickener has been emptied and there should be no further leakage.”
The company expects repairs to be completed by Dec. 9.
Mill throughput had been running around 21,000 tonnes per day before the leak.
During the third quarter, Rosebel produced 82,000 oz. gold at a mine operating cost of US$226 per oz., up from the 79,000 oz. poured at US$195 apiece in the corresponding period of 2004. Cambior attributes the increase in production to higher mill throughput, which came thanks to the elimination of some processing bottlenecks and a circuit expansion during 2004.
Rosebel entered commercial production in the first quarter of 2004 and went on to produce some 273,700 oz. gold at US$170 per oz. in 11 months. Production for 2005 was projected at 320,000 oz. at US$193 per oz.
So far this year, Cambior has produced a total of 496,800 oz. gold at US$284 apiece; the company previously said it was on track to produce 640,000 oz. during the entire year.
The company also trimmed its third-quarter loss by about two-thirds thanks largely to its non-gold operations. The latest net loss of US$2.2 million (or a penny a share) compares with a year-ago loss of US$6.1 million (US2 per share). Revenue between the two periods increased by 14% to US$91.7 million thanks in large part to the Omai Bauxite operation in Guyana, where sales jumped 32% to US$9.6 million. Overall cash flow from operations tallied to US$11.7 million, off the year-ago US$16.9 million.
On the production side, Cambior poured 10% fewer ounces, or 158,300 oz. gold, during the recent quarter; mine operating costs jumped nearly 20% to US$314 per oz. Production suffered owing to the termination of mining at the Omai gold mine’s Fennell pit in September of 2004 and the subsequent processing of the low-grade stockpile material.
“We continue to face cost pressures arising from the record fuel prices, strong Canadian dollar and other inflationary increases, which are offsetting the improved gold market conditions,” said Gignac in a prepared statement.
The company’s total production costs surged around 15% to US$400 million year-over-year.
Gignac said that operating results from Omai, where production ceased in September, took a particular toll on the company. Company-wide production excluding Omai would have totalled 129,500 oz. gold at a mine operating cost of US$288 per oz.
With the closure of Omai, Cambior says it will be far less exposed to rising fuel prices and overall mine operating costs are expected to fall to their lowest level of the year during the fourth quarter.
Gignac also said that progress had been made at the Doyon division in Quebec, where production amounted to 37,700 oz. at US$360 per oz., compared with 28,900 oz. at US$442 a year earlier. The improvements come compliments of a major restructuring at the Doyon mine in September 2004.
The division is expected to continue to improve during the balance of the year, especially at the Mouska mine where higher grades are anticipated.
The Sleeping Giant mine in Quebec also continued its turnaround, with production climbing to 9,800 oz. at US$525 per oz., up from the year-ago 8,200 oz. at US$279.
On the sales side, the company realized an average of US$427 per oz., up from US$365 per oz. in 2004. By comparison, the quarter’s average market price was US$440 per oz.
At the end of September, Cambior’s hedge book contained 156,000 oz. gold, a 24% decrease from the end of 2004. The company plans to deliver the final 12,980 oz. of prepaid gold during the fourth quarter to terminate that portion of its delivery obligations.
The company’s cash and short-term investments totalled US$13 million at quarter’s end; long-term debt was US$67.8 million.
In the boardroom, Cambior has adopted a shareholder-rights plan aimed at discouraging “coercive or unfair takeover bids” and giving the company time to pursue alternative deals should an unsolicited takeover bid emerge. The move comes amid a renewed flurry of merger and acquisition activity sweeping the mining industry.
While the company says the plan has not been adopted in response to any specific bid, it does admit that its weak share price makes it ripe for such a move.
Shares in Cambior were a dime, or 3.8% lower at $2.56 in afternoon trading in Toronto following the news on Nov. 21. The shares rebounded after the resumption of milling was announced on Nov. 25, and were 12 better at $2.74 in mid-afternoon trading. The shares are off 17% so far this year, and trade in a 52-week range of $1.94-$3.82.
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