Vancouver — Rising costs at the Seabee gold mine kept Claude Resources (CRJ-T, CGR-X) in the red to the tune of $3.5 million last year, despite a strong fourth-quarter performance that generated net earnings of $1 million.
Located in Saskatchewan’s La Ronge district, Seabee is a high-grade narrow-vein-type mine that poured its first gold in 1991. Remaining minable reserves total 684,400 tonnes grading 6.55 grams gold per tonne, with 1.5 million tonnes of inferred resources at 8.86 grams gold. Claude plans to carry out 70,000 metres of drilling this year to replace 2006 production and develop additional resources to feed the newly expanded mill.
Seabee produced 44,600 oz. last year, 9% above 2004 production levels. Fourth-quarter production of 15,100 oz. was 53% higher than the average production achieved in the previous three quarters.
Total cash operating costs came in at US$355 per oz. in the fourth quarter, up from US$313 per oz. a year earlier, and averaged US$358 per oz. for the full year.
The higher costs of the past year were attributed to the stronger Canadian dollar and rising costs for development, labour and consumables. Development costs reached a historic high of $7.6 million in 2005, reflecting the challenge of maintaining mill throughput at lower (stope) head-grades, which, in turn, required the expedited development of additional working places.
Claude posted a net loss of $3.5 million on revenue of $34.3 million for 2005, which includes net earnings of $1 million on revenue of $11.4 million in the fourth quarter. Some of the revenue is from the sale of oil and natural gas.
Claude expects to produce about 48,000 oz. gold from Seabee this year, which is a return to historic production levels. The company sees potential to lower development costs assuming the underground program is successful in laterally extending the Seabee deposit. Changes to the mining methods at depth are also proposed to lower dilution and operating costs.
The mill at Seabee was expanded to 1,100 tonnes per day from 550 tonnes by the end of 2005, in order to accommodate feedstock from satellite deposits within trucking distance of the mine. The company is drilling and advancing two such gold properties at the Santoy Lake and Porky Lake areas. Assuming favourable results from ongoing work programs, the company hopes to begin mining these satellite deposits in 2007.
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