Cambior’s losses shrink

Emerging from a long period of restructuring, Cambior (CBJ-T) has significantly reduced the amount of red ink on its earnings statement.

For the year ended Dec. 31, 2000, Cambior’s net loss was US$81.6 million (US$1.12 per share) on total revenue of US$210.6 million. This compares with 1999’s whopping, hedge-book-related loss of US$373.6 million (US$5.29 per share) on revenue of US$229 million.

For the fourth quarter, Cambior posted a loss of US$71.3 million on revenue of US$52.9 million, compared with a loss of US$347.4 million during the corresponding period in 1999.

The company attributes most of its 2000 loss to weak gold prices, which forced a US$93.6-million writedown. The loss is attributed to three factors: a restatement of reserves, using a US$300-per-oz. gold price (down from US$325 per oz. in 1999); a depletion of gold reserves at the Doyon division in Quebec; and increased fuel costs at the Omai open-pit gold mine in Guyana.

Once a major player in the industry, Cambior now has only four producing assets: the wholly owned, underground Doyon division; a 50% stake in the underground Sleeping Giant gold mine in Quebec; an effective 100% interest in Omai; and a half-interest in the underground Niobec niobium mine in Quebec.

Overall during 2000, Cambior produced 613,000 oz. gold at an average direct mining cost of US$217 per oz., down from 630,000 oz. at US$215 per oz. in 1999.

The bulk of the production came from Omai, where higher grades, recoveries and tonnage milled pushed production 8% higher to 330,000 oz. Direct mining costs fell to US$226 per oz., from US$235 per oz. a year earlier.

Doyon produced 231,700 oz. gold in 2000, or 5% less than in the previous year. The drop is attributed to lower grades, caused in part by a change in the mining sequence and higher dilution. Consequently, direct mining costs rose US$11 to US$214 per oz.

The company realized a price of US$321 per oz. for its production in 2000 — lower than the US$356 per oz. seen in 1999 but still a US$42-per-oz. premium above 2000’s average spot price.

On Dec. 31, 2000, Cambior’s hedge book covered a total of 1 million oz. at an average price of US$302 per oz., including fixed-forward contracts, a prepaid gold-forward sale and variable-volume forward contracts.

In mid-January, Cambior completed its financial restructuring by simultaneously closing a US$65-million credit facility and a US$55-million prepaid gold-forward sale.

The company’s debt stands at US$68.2 million, compared with US$214.4 million at the end of 1999.

In late January, Cambior completed a US$6.3-million private placement of 15 million shares to its largest shareholder, Japan’s Jipangu, which now holds a 22% interest.

Proceeds from this private placement were used to repay part of Jipangu’s US$10-million mortgage on Cambior’s 50% interest in the Niobec mine. The mortgage loan was reduced to US$3.7 million and subordinated to the aforementioned credit facility.