Low grades continue to dog Claude

Lower gold grades at the Seabee gold mine in Saskatchewan dragged Claude Resources to a net loss of $698,000 during the three months ended Sept. 30.

The loss, which translates into 2 per share, compares with net earnings of $1 million (3 per share) for the same period of 2000. Revenue on gold sales between the two periods fell to $4.6 million from $5 million the year before. Cash flow from by operations during the third quarter was $634,000, down from $2 million a year earlier.

For the first three quarters of 2001, the company lost $1.9 million (5 per share) on revenue of $14 million, compared with net earnings of $1.1 million (3 per share) on $17.5 million. Cash from operations was nearly halved to $2.6 million.

The company’s third-quarter oil and gas revenue also suffered falling 18% from the 2000 period due falling petroleum prices.

During the recent quarter, Seabee production tailed off to 10,800 oz., from 11,700 oz. a year earlier. For the first three quarters of 2001, production tallied to 33,600 oz., down from the 41,800 oz. The company realized an average of US$270 per oz. for the nine-month period, off US$15 per oz. from the same period of 2000. The drop off was a result of lower gold grades. The lower production sent total cash costs to US$224 per oz. from US$197 per oz.

At the end of September, Claude had outstanding forward gold contracts covering 5,000 oz. gold at an average of US $288 per oz.

Looking into the fourth quarter, Claude will shift its attention to accessing the Claude 2B zone on the 495 level and a ramp extension to the 650 level. Mining and development on the Currie Rose 2A and 2D zones continues on the 60 and 400 levels. Drilling below the 500 level on the Claude 2B zone has been promising. The zone remains open along strike and at depth. Drilling will continue throughout the year.

With grades significantly improving in late September, Claude says it expects to hit its previously lowered production target of 50,000 oz. this year.

On the exploration front, drilling by Placer Dome (PDG-T) at Claude’s historic Madsen mine in Ontario’s Red Lake camp intersected four zones of gold mineralization. The holes were aimed at testing for an updip extension of the high-grade No. 8 zone. Three of the four zones cut yielded grades ranging between 4 and 5 grams gold per tonne over 1-3 metres. The remaining zone returned two intervals running up to 3 grams gold over 1.2 metres and 1.2 grams over 0.9 metre. The latest geological and geochemical studies outlined 10 km of strike length over the northeast strike extension of the mafic-ultramafic contact that hosts No. 8.

At Sept. 30, Claude had about 40.6 million common shares outstanding, and was running a deficit of $974,000.