Seabee grades dog Claude (August 26, 2002)

Still struggling through lower grade ore from the D zone at the Seabee gold mine in Saskatchewan, Claude Resources (CRJ-T) finished the first half of 2002 in the red to the tune of $3 million.

The loss translates into 7 per basic and diluted share, and came on total revenue of $10.7 million, 32% off last year. Seabee chipped in $7.6 million worth of revenue. During the 2001 first-half, Claude posted a loss of $1.2 million (3 per share) on total revenue of $15.7 million — $9.4 million from Seabee. During the recent six-month period, Claude’s operations ate up $628,000, after generating $1.9 million the previous year.

Production at Seabee slipped to 16,500 oz. of gold from 106,400 tonnes of ore during the recent half-year, down from the 22,800 oz. derived from 133,000 tonnes in the first half of 2001. The drop in tonnes milled and ounces recovered sent cash operating costs soaring to US$309 per oz. from the year-ago US$233 per oz. Compounding Claude’s pain was a realized price for its production of US$301 per oz., which did represent an increase from the US$268 per oz. a year earlier.

Ore derived from Seabee’s D zone during the six-month period averaged just 4.8 grams gold per tonne, well off the mine’s historic average of 8.5 grams. Claude expects grades to climb to around 7 grams during the third quarter as accelerated development continues on 450- and 500-metre levels in the higher-grade B and C zones. By the end of the third quarter, Claude foresees grades of about 8 grams and annual production of 50-55,000 oz. gold. Cash cost are expected to improve to around US$200-US$210 per oz.

At the end of June, Claude’s short-term investments totalled $1.4 million — nearly double that at the beginning of the year. The company’s hedge book contained outstanding forward gold contracts covering 9,750 oz. of 2002 production at an average of US $296 per oz., for a market value loss of US$200,000.