Claude sets production record — Earnings steady but writedowns hurt profit figures

A record year for production at the Seabee gold mine in northern Saskatchewan ensured an operating profit for Claude Resources (CRJ-T) in 1998, but writedowns taken on assets meant earnings were lower than in the previous year.

Claude earned a net $2.7 million (10 cents per share) on revenue of $29.7 million in 1998. In 1997, the company earned $5.1 million (29 cents per share) on revenue of $30.8 million.

Gross revenues from the company’s oil and gas assets declined to $5.6 million from $7.8 million in 1997. The $1.2-million writedown of those assets, and a $2.8-million provision for fluctuations in the foreign currency market, also cut into earnings.

The Seabee mine, 120 km northeast of La Ronge, produced 60,200 oz. gold last year, up from 58,500 oz. in 1997. Its cost performance improved, declining to US$168 per oz. in 1998 from US$215 the previous year. Claude’s corporate costs were also lower, falling to $1.5 million from last year’s $2 million.

Acquiring Madsen Gold in a 1998 stock-swap deal brought Claude’s assets to $72.9 million. The reopened Madsen mine, west of Red Lake, Ont., was at the preproduction stage at year-end, and did not contribute to earnings.

Exploration work at Madsen, where Claude is drilling structural extensions of mineralized zones in the mine’s West McVeigh section, has confirmed that more mineralization exists down-plunge. From a drill station on the mine’s 4 Level, 212 metres below surface, Claude has drilled 3,195 metres of core in 19 holes, and the eleven holes for which assays are now available all intersected the West McVeigh mineralization at depth.

The picture now forming is of two parallel mineralized zones, Main and Footwall, of which the former is the more persistent and usually the wider.

The 11 holes cut mineralized intersections in the Main zone that ranged from 0.6 to 5.5 metres long. Gold grades in the intersections were generally between 1 and 6 grams per tonne, but two drill holes hit considerably higher grades — 18.2 grams over 1.6 metres and 18.9 grams over 0.6 metre.

Intersections in the Footwall zone were 0.4 to 3.8 metres long, except for one that extended 10.9 metres with an average grade of 1 gram per tonne. In the other Footwall intersections, the gold grades ranged from 3.8 to 6.5 grams.

The widths and grades of the intersections below the 4 level are consistent with those encountered up-plunge on the same zones, between the 2 level and the surface. Samples from the eight remaining holes are being assayed, and drilling continues in the hope of better defining the size and shape of the two zones.