The sale of some investments helped offset lower gold production, and helped Cambior (CBJ-T, CBJ-X) post increased earnings of US$9.1 million (or US3 a share) during the first three months of 2006.
During the first stanza of 2005, earnings came to US$1.6 million (US1 a share). Revenue between the two periods slipped by US$3.4 million to US$87.1 million owing to the closure of the Omai gold mine in Guyana in September, and lower production from the Rosebel gold mine in Suriname. The latest bottom line benefited from a gain of US$6.7 million on the sale of investments for US$17.3 million. Cash flow from operations climbed by 12% to US$12.6 million, while mine operating profit fell by 22% to US$9.2 million.
The quarter’s gold production slipped by around 26% to 123,900 oz. at a mine operating cost of US$329 per oz. (up from US$269 apiece in 2005). The higher units costs reflect a higher proportion of production from the company’s costlier Canadian operations, higher energy and supply costs, and a stronger loonie.
Cambior said the lower production was in line with its 2006 production plan, which calls for a steady increase during the year.
At the flagship Rosebel mine, heavy rains limited the mining of higher-grade ore from lower benches in the pits and resulted in a 13% drop in average head. The mill managed to squeeze 75,100 oz. of gold out of 1.85 million tonnes of ore running 1.35 grams gold per tonne, down from the 87,950 oz. produced a year earlier. Operating costs jumped 37% to US$260 per oz.
A new milling record of 21,650 tonnes per day during March provided a glimmer of light. A mill optimization is aimed at boosting the rate to 8 million tonnes per year from 7 million tonnes.
Back in Canada, the Doyon division churned out 37,000 oz. of gold, off slightly from a year ago but on budget. Operating costs swelled to US$438 per oz. from US$374 per oz. thanks to higher energy and supply costs. Tonnes milled and average head grades were little changed.
Production from the Sleeping Giant mine jumped by 65% to 11,800 oz. at US$425 per oz. the dramatic increase comes compliments of the company’s consolidation of ownership in April of 2005.
On the labour front, Cambior says Sleeping Giant’s production and financial performance benefited from the addition of miners from the company’s ongoing training programs. Meanwhile, a net loss of US$1.9 million at the Omai bauxite operation in Guyana prompted staff reductions owing to a combination of higher costs and lower sales and production. The company says it plans to return the operation to profitability by reducing costs and developing new products.
On the sales side, the company realized an average of US$532 per oz. of gold sold, up from US$401 per oz. in 2005. By comparison, the quarter’s average spot price was US$544 per oz.
During the quarter, Cambior trimmed its hedge book by 34,619 oz. via the closing of forwards and gold purchase commitments. The 131,000 oz. remaining in the book carry an average strike price of US$338 per oz., for a fair value of minus US$33.8 million at the end of March.
At quarter’s end, Cambior had US$26.2 million in cash and equivalents; total debt was US$58.7 million.
Shares in Cambior were off 25, or 5.5%, at $4.32 amid a broader market downturn in late afternoon-trading in Toronto following the news on May 3. The shares trade in a 52-week window of $1.94-$4.74.
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