Rosebel suffers strike, occupation

Shares in Cambior (CBJ-T, CBJ-X) were off 15, or nearly 4%, at $3.70 in mid-afternoon trading in Toronto on May 12, after the Quebec-based gold miner suspended operations at its flagship Rosebel open-pit gold mine in Suriname following an illegal work stoppage.

The company said an unofficial union representative has led a significant number of employees into the stoppage. The mine employs around 949 workers.

“There is to date no official union accredited by the government of Suriname to represent Rosebel’s group of workers. Rosebel’s employees have yet to table demands to Rosebel management,” Cambior said in a brief prepared statement.

The company has requested all of its workers to return to work, and has asked the government to help clarify the workers representation at the mine. It is also seeking an injunction ordering the cessation of the illegal occupation of Rosebel’s facilities.

Rosebel produced 15% fewer ounces of gold during the first quarter of 2006 than a year earlier as heavy rains limited the mining of higher-grade ore from lower benches in the pits. The mill managed to squeeze 75,100 oz. of gold out of 1.85 million tonnes of ore running 1.35 grams gold per tonne, down from the 87,950 oz. produced a year earlier. Operating costs jumped 37% to US$260 per oz.

The mine had been scheduled to produce 335,200 oz. of gold at US$240 per oz. during 2006. The higher estimated costs are in anticipation of an increased stripping ratio and a larger hard rock component of mill feed.

Rosebel entered commercial production in the first quarter of 2004 and went on to produce some 273,700 oz. gold at a mine operating cost of US$170 per oz. in the remaining 11 months of the year. In 2005, the mine poured 341,400 oz. of gold at US$208 apiece.

Late last year, mill operations at Rosebel were interrupted following a leak in the foundation of the operation’s thickener unit. The leak was contained in the safety berms and ponds, with no impact on the environment.

Cambior owns 95% of the mine, with the government of Surinam holding the remaining 5%.

Cambior’s earnings soared to US$9.1 million (or US3 a share) during the recent first quarter, up from US$1.6 million (US1 a share) a year earlier. The sharp increase is partly attributed to the sale of some investments. Revenue between the two periods slipped by US$3.4 million to US$87.1 million owing to the closure of the Omai gold mine in Guyana in September, and lower production from Rosebel.