Cambior sinks as Rosebel springs a leak

Milling operations have been temporarily suspended at Cambior‘s (CBJ-T, CBJ-X) flagship Rosebel open-pit gold mine in Suriname after a leak developed in the foundation of the operation’s thickener unit.

“There’s been no impact on the environment whatsoever,” said Cambior chief executive Louis Gignac during a short conference call with analysts. “The thickener has been emptied and there should be no further leakage.” Gignac said the leak had been contained in the safety berms and ponds at the mill site.

“The thickener will be out of commission for some period of time,” he said. “We need to assess, and obviously subsequent to that fix and repair what needs to be done.”

Gignac said that it was currently impossible to precisely predict how long repairs would take but figured that the thickener would be out of action for at least a month, with an “upside of a couple of months of downtime.”

He said that while the unit is down, milling would continue with ore travelling directly from the grinding circuit to the leach circuit without maximizing the density of the pulp. “The impact of that is that the mill throughput will be reduced and we’ll probably lose a few percentage points in recoveries in the mill during the thickener shutdown,” he explained.

Gignac expects recoveries to slip to around 91% from the current 94%. He also said that during previous thickener shutdowns for repairs or maintenance the mine was typically able to run at around 80% of capacity.

Mill throughput had been running around 21,000 tonnes per day before the leak. “Our guess at this stage is we will be at 80% of that, but again we think we can find ways of improving upon that.”

“We need a bit more time to assess everything but at this stage it is a very localized problem.”

“It will have some impact on production but we were ahead of plan until this morning, so we have a little leeway to compensate,” Gignac concluded.

During the third quarter, Rosebel produced 82,000 oz. of gold at a mine operating cost of US$226 per oz., up from the 79,000 oz. poured at US$195 apiece in the corresponding period of 2004. Cambior attributes the increase in production to higher mill throughput, which came thanks to the elimination of some processing bottlenecks and a circuit expansion during 2004.

Rosebel entered commercial production in the first quarter of 2004 and went on to produce some 273,700 oz. at US$170 per oz. in 11 months. Production for 2005 was projected at 320,000 oz. at US$193 per oz.

So far this year, Cambior has produced a total of 496,800 oz. of gold at US$284 apiece; the company previously said it was on track to produce 640,000 oz. during the entire year.

Shares in Cambior were a dime, or 3.8%, lower at $2.56 in afternoon trading in Toronto following the news on Nov. 21. The shares are off 17% so far this year, and trade in a 52-week range of $1.94-$3.82.