Jipangu boosts Cambior stake

Already ranked as the company’s largest shareholder, Jipangu has boosted its stake in Cambior (CBJ-T) by 2% to 28%.

Jipangu, a Japanese gold-oriented investment company, made the move by exercising 4.95 million share purchase priced at US83.3 per share. The warrants were issued under a private placement completed late last year.

Cambior plans to use the cash to help pay for construction and development of its Rosebel gold project in Suriname.

The funds will be added to a recently arranged commitment for US$65 million in new financing for Rosebel. That financing comes in the form of a US$55-million non-revolving term loan and a US$10-million revolving credit facility arranged with a group of banks led by Scotia Capital and including Standard Bank London, the Bank of Nova Scotia, Societe Generale and NM Rothschild and Sons Ltd. Both mature on Dec. 31, 2007. The term loan repayment schedule calls for quarterly payments ranging from US$2 to US$5 million from 2004 to 2007. Cambior plans on using money raised via the exercise of warrants and new share issuances to repay US$5 million during 2003.

Under the deal, Cambior must hedge 30% of its production at a minimum of US$290 per oz. during the life of the loan. The hedge requirement decreases in tandem with loan repayments. Delivery of ounces can be delayed until the loan’s final maturity. The hedge book is not subject to margin calls.

Cambior must also secure all necessary operating and development permits and subscribe to political risk insurance.

Cambior plans to use the facility mainly to repay US$22 million owed under its existing credit facility and to finance construction and development of the Rosebel project.

Development at Rosebel comes with an initial price tag of US$95 million. The company says the difference will be made up from cash on hand and cash flow. At the end of September, Cambior had US$35 million in cash.

Cambior hopes to begin construction at Rosebel before year-end. Slated for a 2004 startup, the mine will produce about 220,000 oz. annually, with average direct mining costs pegged at US$187 per oz. In all, the operation is expected to churn out 1.8 million oz. gold.

Rosebel’s reserves are pegged at 36.9 million tonnes running 1.63 grams gold per tonne, equivalent to 1.9 million contained ounces of gold based on an assumed, long-term gold price of US$300 per oz.

Cambior currently has 159.7 million common shares outstanding.