Cambior back in black

Despite a US$5.4-million, fourth-quarter writedown related to its Omai gold mine in Guyana, Montreal-based Cambior (CBJ-T) managed to turn in a tidy profit during the last three months of 2001, its first quarterly earnings since the third quarter of 2000.

During the three months ended Dec. 31, the company posted net earnings of US$12.1 million (or 12 per share) on revenue of US$52.4 million, compared with a net loss of US$101.7 million ($1.35 per share) on US$52.9 million a year earlier. Cash flow from operations increased to US$5.2 million from US$3.7 million, thanks mostly to lower production costs and financial expenses.

For all of 2001, Cambior’s net loss rang in at US$8.2 million (9 per share), a vast improvement over the US$81.6 million ($1.12 per share) lost in the corresponding period of 2000. The recent loss before unusual items, including the Omai writedown, was US$1.2 million. The 2000 fourth quarter suffered from writedowns totalling US$94.3 million.

Revenue between the two periods slipped to US$198.2 million from US$210.6 million owing to a slightly lower realized gold price. Cash flow from operations climbed to US$32.4 million from US$25.7 million.

During the recent quarter, Cambior’s gold production tallied to 160,700 oz. at a total cash cost of US$203 per oz., up from the 154,600 oz. produced at US$230 apiece in the same period of 2000. Cambior’s share of fourth-quarter niobium production from the Niobec mine in Quebec was 430 tonnes, compared with 278 tonnes a year earlier.

For all of 2001, the company pumped out 614,900 oz. gold at US$220 each, up from 612,900 oz. at US$226 per oz. in 2000. Its share of ferroniobium production climbed to 1,503 tonnes from 1,085 in 2000. The company realized an average of US$294 per oz. for its quarterly gold production (down from US$312 per oz. a year earlier) and US$289 per oz. (US$321 per oz.) for the year.

The bulk of production again came from Omai, which churned out 91,100 oz. during the quarter and 354,300 for the year. Direct mining costs rang in at US$198 per oz. for the quarter and $214 per oz. for the year, both better than a year earlier. During the respective periods of 2000, Omai produced 86,800 oz. and 330,000 oz. The improved performance is attributed to higher grades and increased tonnage. Omai is expected to produce a record 360,000 oz. gold in 2001.

Last week, Cambior announced that a seven-year-old class action lawsuit related to a 1995 tailings spill at Omai was dismissed on Feb. 12. The spill released about 3 million cubic metres of waste water, containing 28 parts per million cyanide and large quantities of suspended silt, into watercourses that flowed into the Essequibo River. A Commission of Enquiry appointed by the Guyanese government subsequently found no criminal liability attached to the owners or contractors, but left the door open for civil actions.

During the year, Omai added only 50,000 oz. to its mineral reserves, thanks mostly to the complete definition of the two deposits currently being mined. The deposits are slated for depletion in 2005. An ongoing exploration program is aimed at finding a new gold deposit near the mine.

At the end of the year, Cambior recalculated the book value of its properties and reserves based on a gold price of US$300 per oz. The results included the US$5.4 million writedown at Omai.

The Doyon division chipped in 62,000 oz. during the quarter and 228,700 oz. during the year. A year earlier, the division contributed 58,700 oz. and 231,700 oz., respectively.

At Dec. 31 2001, the company’s hedge book covered a total of 1.25 million oz. at a price of US$298 per oz. and total commitments of 1.9 million oz. at US$306 per oz., through to 2007. The hedge positions include fixed forward contracts, spot deferred contracts, prepaid gold forward sales and the minimum quantity of variable-volume forward contracts.

At the end of 2001, Cambior’s total debt stood at US$51 million, virtually unchanged from the third quarter, but less than half the US$130 million at the end of 2000. Cash and equivalents were US$15 million.

Looking ahead, Cambior’s president and CEO Louis Gignac said, “We are pleased with the Company’s financial and operational performance in the fourth quarter and the increase in mineral reserves at year end. During 2002, we will pursue our objective to rebuild shareholder value through the creation of financial capacity while reducing our financial obligations.”Gignac added that total ongoing capital expenditures for 2002 are estimated at about US$15 million, well below those of 2001 owing mostly to minimal deferred stripping costs at Omai and lower development expenditures, reflecting the maturity level of the company’s Canadian mines.

Plans for US$7.3 million in exploration during 2002 focus on mine sites and on finalizing the feasibility study at Gross Rosebel.

Gold production for 2002 is forecasted at 547,000 oz. at a direct mining cost of US$225 per oz. The drop off in production is as expected with the planned decrease at Omai.