Cambior still profitable though earnings fall (May 23, 2005)

Cambior (CBJ-T) has posted a first-quarter profit of US$1.6 million, which, despite a 10% increase in gold production, is down from the US$7.3 million earned in the comparable period of 2004.

Gold production climbed to 166,500 from 152,000 oz. between the two periods. The increase is due to the Rosebel mine in Suriname, which set a new milling record of 20,400 tonnes per day.

Rosebel processed 1.8 million tonnes grading 1.55 grams gold per tonne. The mine produced 87,950 oz. gold at a mine operating cost of US$190 per oz. Last year, during the same quarter, just 27,300 oz. gold were produced from 669,200 tonnes of ore grading 1.59 grams gold per tonne (Rosebel began producing gold in February 2004).

The Omai mine in Guyana saw the largest fall in production; the mine is set to close in September and current production is from lower-grade stockpiled ore. The operation still produced 34,260 oz. gold at a mine-operating cost of US$338 per oz. from 1.3 million tonnes grading 0.92 gram gold. In the first quarter of 2004, production was more than twice as high, largely because higher-grade ore (1.7 grams gold per tonne) was being processed.

Costs were up at all of Cambior’s operations, mainly because of higher fuel costs, though the strength of the Canadian dollar also had an impact.

At Cambior’s Quebec mines, Doyon and the 50%-owned Sleeping Giant, production fell 14.7% and 17.8%, respectively.

Doyon produced 37,100 oz. gold from 194,630 tonnes of ore grading 6.2 grams gold — all from underground (unlike a year ago). Mine operating costs rose US$47 per oz., to US$374 per oz. The recent production figure includes gold mined at the Mouska operation. Mouska was shut down and did not produce gold in the first three quarters of 2004 because the shaft was being deepened.

Cambior’s share of production from Sleeping Giant totalled 7,150 oz. gold from 21,360 tonnes of ore grading 10.7 grams gold per tonne. Cambior recently bought Aurizon Mines‘ (ARZ-T) half-interest in the mine in return for $5 million in cash. Cambior places the acquisition cost at US$45 per oz. gold. The company hopes to add reserves along extensions of known mineralized zones at depth.

Cambior sold gold for an average price of US$401 per oz., up from US$363 in the first quarter of 2004.

In exploration news, Cambior reports an increase in the amount of gold contained in the La Arena deposit, 480 km north of Lima, Peru. The measured and indicated resource totals 23.8 million tonnes grading 0.7 gram gold, including 18.29 million tonnes of 0.76 gram gold. There is also an inferred resource of 2.3 million tonnes grading 0.59 gram gold.

The estimate uses a gold price of US$400 per oz., a metallurgical recovery of 80%, a pit slope of 50 and a cutoff of 0.25 gram gold per tonne. Cambior is working on a pre-feasibility study for the project.

The company is also exploring the El Toro gold property 15 km northeast of La Arena. A resource estimate is scheduled to be completed this quarter.

A final feasibility study of the Camp Caiman property in French Guiana in expected this summer. Cambior drilled 174 holes on the deposit in the recent quarter.

Meanwhile, an exploration drift along the 14th level of the Doyon mine is advancing to test the Westwood structure.

Cambior had 274 million shares outstanding at the end of March, up 33 million from a year earlier.