Cambior finally back on even keel

It’s been a turbulent year and half, but Cambior (CBJ-T) seems finally to have settled into a familiar pattern of gold production and respectable quarterly reports.

Gold production attributable to the Montreal-based company during the first three months of 2001 rose slightly from a year earlier, to 152,000 oz., while direct mining costs edged down to US$219 per oz.

Production at the Omai mine in Guyana was up 22% in the quarter to 88,600 oz., thanks to a higher head grade of 1.53 grams gold per tonne, which more than offset higher operating costs.

On the down side, the company, which has been recovering only gradually from the hedging debacle of 1999, recently entered into an ill-timed agreement with the Guyanese government. Just a week before the gold price rallied in mid-May to the US$290-per-oz. range, Cambior and the government reached a deal that reduced the federal royalty on gold mined from Omai to 4% from 5% — but only if the London gold price does not exceed $280 per oz.

Closer to home, Cambior’s Doyon division in Quebec added 55,000 oz. gold to the company’s account during the past quarter, similar to levels a year ago. The division processed 291,700 tonnes grading 6 grams gold from the underground mines during the quarter, plus another 48,800 tonnes from low-grade stockpiles.

Cambior’s half-share of production from the Sleeping Giant mine, co-owned by Aurizon Mines (ARZ-T), was 8,300 oz. gold, down slightly from last year, owing to falling head grades.

At the half-owned Niobec mine, Cambior’s production amounted to 364 tonnes of niobium, up 30% over the corresponding quarter in 2000. The increase is due to an expansion program completed in late 2000. The remainder of the mine is held by Mazarin (MAZ-T), which acquired its stake from Teck (TEK-T) last fall.

Cambior posted a net loss of US$900,000 (a loss of US1 per share) on revenue of US$47.5 million in the recent quarter, compared with a profit of US$16.4 million (US23 per share) on revenue of US$50.2 million a year ago.

Cambior’s hedging program generated US$5 million, or US$32 per oz., in additional cash flow during the recent quarter. However, a realized gain of US$2.4 million over the market price will be deferred until the scheduled delivery of the positions.

Given the improved performance of Omai, Cambior has revised its 2001 production target upward by 15,000 oz. to 600,000 oz.

The company’s expenses have fallen substantially as a result of the simultaneous closing, in mid-January, of a US$65-million revised credit facility and a US$55-million forward gold sale.

Planned sales of further non-producing assets are said to be progressing well, and should be concluded in the third quarter. Proceeds will be used to reduce debt, which, at March 21, was US$68 million.