Claude treads water in first quarter (May 28, 2003)

Riding higher gold prices and improved production, Claude Resources (CRJ-T) managed to post a first-quarter profit of $600,000 for the first three months of 2003.

The earnings, which comes to a penny per share, compare with a year-ago loss of $2 million (and net earnings of $1.7 million (4 per share) during the final three months of 2002).

Revenue between the two first quarters jumped to $8.9 million from $5.2 million. The increase reflects higher gold and oil and gas prices. The gold business generated $5.9 million in revenue (up from $3.8 a year earlier); revenue from the oil and gas business jumped 125% to $3 million.

Cash flow from operations staged a similar turnaround, hitting $1.7 million to the good, compared with the $600,000 consumed in the corresponding period of 2002.

Quarterly gold production from Claude’s main asset, the Seabee in mine in northern Saskatchewan, jumped 41% to 11,700 oz., while total cash costs slipped to US$272 per oz. from US$294 per oz. Production increased thanks to the milling of ore from the mine’s high-grade 2B zone between the 400 metre and 600 metre levels. Claude realized an average of average US$ $336 for each ounce produced, up from US$290 a year earlier.

While increased production helped to lower cash costs, total mine operating costs climbed 23% to $4.8 million thanks to increased development action and mining on more numerous but smaller stoping blocks.

Claude expects Seabee to produce 52,000 oz. of gold at around US$210-US$220 per oz. for all of 2003.

During the quarter, the company began a shaft-deepening program at Seabee. The shaft is headed another 200 metres deeper, to around 600 metres below surface. The goal is to access material from the 500- to 800-metre levels.

At the end of March, Claude had $9.4 million in working capital and bank debt of $984,000.

The company’s hedge book contained outstanding forward gold contracts on 8,750 oz. of 2003 production at an average of US $321 per oz., equating to a market value loss of US $252,000.