Seabee grades dog Claude (September 02, 2002)

Beset with lower-grade ore from the Seabee gold mine in Saskatchewan, Claude Resources (CRJ-T) finished the first half of 2002 about $3 million in the red.

The loss translates into 7 per basic and diluted share on revenue of $10.7 million, or 32% less than in the first half of last year. Of that US$10.7 million, Seabee contributed $7.6 million. During the first half of 2001, Claude posted a loss of $1.2 million (or 3 per share) on total revenue of $15.7 million — $9.4 million from Seabee. During the recent 6-month period, Claude’s operations ate up $628,000 after generating $1.9 million in the year-earlier period.

Production at Seabee slipped to 16,500 oz. gold derived from 106,400 tonnes of ore during the half-year, down from the 22,800 oz. pulled from 133,000 tonnes a year earlier. The drop in tonnes milled and ounces recovered sent cash operating costs soaring to US$309 per oz. from US$233 per oz. a year earlier. Compounding Claude’s pain was a realized price for its production of US$301 per oz., which did represent an increase from the US$268 per oz. reported for the first half of 2001.

Ore derived from Seabee’s D zone during the recent 6-month period averaged just 4.8 grams gold per tonne, well off the mine’s historic average of 8.5 grams. Claude expects grades to climb to around 7 grams during the third quarter as accelerated development continues on the 450- and 500-metre levels in the higher-grade B and C zones. By the end of the third quarter, Claude foresees grades of about 8 grams and annual production of 50-55,000 oz. gold. Cash costs are expected to improve to around US$200 per oz.

At the end of June, Claude’s short-term investments totalled $1.4 million — nearly double what they were at the beginning of the year. The company’s hedge book contained outstanding forward gold contracts covering 9,750 oz. of 2002 production at an average of US$296 per oz., for a market-value loss of US$200,000.