Cambior trims its loss, hedge book

A higher realized gold price helped Cambior (CBJ-T) to a lower first-quarter loss, as the Montreal-based gold miner trimmed its hedge book further 24% during the first three months of 2003.

The company’s net loss came to US$2.3 million (or a penny a share), compared with a US$10.4-million (a dime per share) net loss in the corresponding period of 2002. Revenue between the two periods slipped by US$3.9 million to US$45.6 million on lower gold sales.

Cash flow from operations came to just US$500,000, down from US$9.2 million the previous year. Cambior attributes the drop-off to higher fuel prices, increased energy consumption thanks to a harsh winter, repairs and higher transport costs at the Doyon mine (owing to a recent hoist failure), and a strengthening Canadian dollar.

Cambior’s first-quarter gold production tallied to 133,900 oz. at a cash cost of US$263 apiece, down from the 149,100 oz. at US$216 per oz. in 2002. The decrease in owing to lower production (but still 3% better than expected) at the Omai mine in Guyana and from the Doyon division in northwestern Quebec.

At Omai, production topped out at 74,400 oz. on higher grade and tonnage milled. Mine operating costs climbed to US$241 per oz. from US$208 per oz. mostly thanks to high fuel prices and a non-cash charge of US$17 per oz. for deferred stripping. Omai’s soft ores have also been depleted.

In April, operations at Omai were suspended for three days after protestors in the town of Linden blocked a road to Brazil that is normally used to haul fuel and supplies to the mine.

In Canada, higher grades at the Mouska and Sleeping Giant mines helped to offset lower production at the Doyon mine. The Doyon division churned out 51,800 oz. at a mine operating cost of US$272 per oz., a year earlier, the division delivered 58,100 oz. at US$208 each.

Cambior’s take from Sleeping Giant slipped 1,300 oz. to 7,700 oz. Mine operating costs jumped US$38 to US$235 per oz. The decrease in production reflects a shift from sub-level stoping to shrinkage stoping, and the associated lag time involved accumulating broken ore in the stopes.

Cambior and equal partner Aurizon Mines (ARZ-T) recently announced a shaft deepening plan at Sleeping Giant. The two plan to send the shaft 200 metres deeper to a depth of 1,060 meters to allow access to reserves and resources in Zones 8 and 30 below level 785. The project comes with a $7 million price tag.

Cambior’s quarterly half-share of niobium sales from the Niobec mine in Quebec rang in at US$5.2 million, down from US$6 million.

Meanwhile, mill and plant site preparations and permanent camp construction at the Rosebel gold project in Suriname clipped along on schedule. Detailed engineering is approximately 60-70% complete. Rosebel is slated to begin pumping out 269,000 oz. of gold annually in the first quarter of 2004, boosting Cambior’s total production to more than 700,000 oz. per year. Mine operating costs at Rosebel are pegged at US$157 per oz.

During March, Cambior further trimmed its hedge book by repurchasing 189,000 oz. of gold at an average of US$342 apiece; 134,000 of the ounces went to close hedging contracts in 2003, resulting in a US$1.7 million payout. The remaining ounces will be applied against hedging positions in subsequent years. About 42% of 2003 production remains unhedged.

So far this year, Cambior has chopped 24% or 313,000 oz. from its hedge book. At the end of March, the book contained commitments of 973,000 oz. at an average of US$296 per oz., including call options on 114,000 oz. at an average of US$301 apiece.

At quarter’s end, Cambior had US$27.3 million in cash and equivalents, down from US$42.8 million a year earlier. The company’s debt was US$56 million, compared with US$65 million.