Hedging keeps Cambior in black

Despite lower production, Montreal-based Cambior (CBJ-T) remained in the black during the second quarter, owing to a successful gold-hedging program.

The company earned US$100,000 on revenue of US$80 million during the second quarter, compared with earnings of $US2.1 million on revenue of US$92 million in the corresponding period of 1998.

In the first half of 1999, earnings were US$1.1 million (or 2 cents per share) on revenue of US$166 million, compared with US$11.7 million (17 cents per share) on US$184 million in revenue during the first six months of last year.

Gold production slipped to 148,000 oz. from the year-ago record of 163,000 oz., while the average cash cost dropped to US$233 from US$237 per oz.

The Doyon mine in northwestern Quebec produced 60,500 oz. gold in the second quarter, down from 61,900 oz. a year earlier, while cash costs fell to $205 per oz., down 14%. The mill processed 340,000 tonnes in the recent quarter, the average grade being 5.7 grams gold per tonne, including a 16% contribution of ore from the low-grade stockpile.

The Omai open-pit mine in Guyana produced 71,900 oz. gold in the recent quarter, down from 82,700 oz. a year ago, reflecting lower average grades. The average direct cash cost was US$244 per oz gold.

The 65%-held Sleeping Giant mine in northwestern Quebec added 7,700 oz. of gold to Cambior’s production total. Cash costs fell to US$209 per oz. from US$216 in the second quarter of 1998.

The company’s gold hedging program realized an average price of US$370 per oz. during the recent 3-month period. On June 30, the company’s hedging program ensured an average price of US$350 per oz. on 1.3 million oz. gold. The program ensures full coverage for the year’s remaining production at US$364 per oz. and 80% coverage of next year’s production at US$322 per oz.

Zinc production dropped at the company’s Bouchard-Hebert and Langlois mines, both of which are also in northwestern Quebec.

Bouchard-Hebert produced 8,400 tonnes of zinc and 1,600 tonnes of copper, compared with 10,000 tonnes and 1,600 tonnes, respectively, a year earlier. The Langlois mine produced 7,200 tonnes of zinc and 250 tonnes of copper in the latest quarter, compared with 8,300 tonnes and 340 tonnes.

This quarter, Cambior’s 50% share of production from the Niobec mine in northeastern Quebec was 287 tonnes of niobium, compared with 270 tonnes in the second quarter of 1998.