Cambior raises $40.9 million, Ariane widens loss

Shares in Montreal-based Cambior (CBJ-T) shot up 22, or more than 5%, to 4.40 in early trading in Toronto on Nov. 25 after the intermediate gold producer announced that it has raised $40.9 million.

The windfall was thanks to the exercise of around 13.5 million series B warrants, which allow the holder to buy one Cambior share for $3. The warrants carried a Nov. 24 expiry date. Cambior says it now has 225.7 million shares outstanding.

Proceeds will be folded into the company’s working capital to fund future expansion growth opportunities.

In other news, shareholders of Ariane Gold (AGD-T) will vote on whether to accept Cambior’s merger offer on Nov. 26. If approved, those shareholders would receive one Cambior share for every 2.91 Ariane shares tendered. Under the transaction, Cambior would issue around 16.3 million shares.

Key to the deal is Ariane’s Camp Caiman gold project, about 45 km southeast of the French Guiana capital city of Cayenne. Measured and indicated resources there total 10.4 million tonnes running 2.9 grams gold per tonne for 975,700 contained oz. of gold. Another 1.8 million tonnes of inferred material grades 3.2 grams gold.

Earlier this year, Ariane tabled a positive preliminary assessment of Camp Caiman. Prepared by U.K.-based CSMA Consultants and Australian-based Bateman Minerals, the assessment considered the feasibility of a 4,000 tonne-per-day open-pit mine, processing 1.4 million tonnes of saprolite and oxide ore per year. In all, a mineable resource of 1.16 million oz of gold would be targeted.

Processing would include conventional semi-autogenous grinding milling, grinding, gravity concentration of coarse gold, and cyanide agitation leaching with gold recovery by carbon-in-pulp.

At annual production rate of 96,421 oz. of gold, and an average cash operating cost of US$172 per oz., the operation would deliver an internal rate of return of 24.1%, based on a gold price of US$340 per oz.

Ariane has applied for a mining license with the General Directorate for Energy & Raw Materials, and will advance the project to the full feasibility stage, which will include an aggressive exploration program.

Cambior owns the Omai gold mine in nearby Guyana, and the Rosebel gold project in neighbouring Suriname. Mining at Omai is expected to wrap up in 2005, after 12 years of production. Startup at Rosebel is slated for the first quarter of 2004. The mine is expected to churn out 269,000 oz. gold annually.

Ariane recently posted a wider third-quarter loss of $937,000 (or 2 per share), compared with a year-earlier loss of $582,000 (or 3 per share). During the first nine months of the year, the company earned $328,200 (or a penny a share), compared with a year-ago loss of $928,200.

At quarter’s end, Ariane had $5.8 million in cash and equivalents, with 44.1 million shares outstanding.

For their part, Ariane shares were trading 7, or 5%, higher in mid-afternoon trade in Toronto on Nov. 25.