Cambior exercises option at La Granja — Reports $3.1-Million profit for first quarter

Montreal-based Cambior (CBJ-T) is exercising its option to acquire the Peruvian copper deposit known as La Granja.

In accordance with the 1994 option agreement with state-owned Minera Peru, Cambior has submitted a feasibility study and has spent more than US$35 million on the project, plus another US$7 million in option payments. Minera will retain a net smelter return royalty of 5%.

La Granja is described as one of the world’s largest copper deposits, with a resource of 2.3 billion tonnes grading 0.59% copper, or about 30 billion lb.

of contained copper.

The capital expenditures required to bring the project to commercial production are estimated at US$1.1 billion.

Cambior is analyzing the viability of integrating the mine with a smelter and refinery at the Peruvian port of Bayovar. Completion of this study is expected before the fourth quarter.

After the study, Cambior may seek out a partner interested in purchasing a 50% interest in the project. It is hoped such a partner would also bring smelter expertise and financing support.

For the first quarter, Cambior earned US$3.1 million (or US5 cents per share) on revenue of US$80.9 million, compared with US$1 million (2 cents per share) on US$60.7 million in the same period of 1996.

Cambior attributes the increases to its gold-hedging strategies and to the performance of the expanded Omai gold mine in Guyana.

Hedging generated an average realized price of US$452 per oz. during the quarter. By the end of the 3-Month period, the hedging program had a net position ensuring a minimum price of US$454 per oz. on 343,000 oz. over the next four years, including 135,000 oz. at a minimum price of US$420 for the next nine months.

Omai produced 90,000 oz. gold during the first quarter, with an average daily throughput of 20,000 tonnes. Gold recoveries reached 94.7%, with direct mining costs pegged at US$236 per oz.

Cambior’s total gold production for the first quarter of 1997 was 132,000 oz., compared with 90,000 oz. during the same period in the previous year.

Zinc, copper and niobium production for the first quarter of 1997 amounted to 7,200 tonnes, 2,200 tonnes and 273,000 kg, respectively, compared with 12,800 tonnes, 1,600 tonnes and 294,000 kg for the same period in 1996.

Cambior’s share of first-quarter production from the Doyon mine, east of Rouyn-Noranda, Que., totalled 16,300 oz. gold, down slightly from the same period last year.