Strike prunes a week from Cambior’s Rosebel

Workers have returned to their posts at Cambior’s (CBJ-T, CBJ-X) flagship Rosebel open-pit gold mine in Suriname following an agreement with the union.

Cambior says the agreement provides the stability required to restart operations and begin talks on an initial labour pact. A large portion of the mine’s 949 employees had been off the job for five days after being led into what the company called an “illegal work stoppage” by an unofficial union representative.

The company asked the government to help clarify the workers representation at the mine, and had sought an injunction ordering the cessation of the illegal occupation of Rosebel’s facilities.

Cambior says the Rosebel Goldmines Werknemers Organisatie is now associated with Moederbond, one of Suriname’s largest trade unions.

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. 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 expected to produce 335,200 oz. 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 to 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 Rosebel, with the government of Suriname holding the remaining 5%.

In all, Cambior saw its gold production slip by around 26% to 123,900 oz. during the first three months of 2006. At the same time, mine operating costs jumped by 22% to US$329 per oz. thanks to a higher proportion of production from the company’s costlier Canadian operations, higher energy and supply costs, and a stronger loonie.

Cambior said the lower production was in line with its 2006 production plan, which calls for a steady increase during the year.

In Canada, the Doyon division churned out 37,000 oz. gold, off slightly from a year ago, but on budget. Operating costs swelled to US$438 per oz. from US$374 per oz. on energy and supply costs. Tonnes milled and average head grades were little changed.

Consolidation of ownership of the Sleeping Giant mine saw attributable production jump by 65% to 11,800 oz. at US$425 per oz. Sleeping Giant’s performance also benefited from the addition of miners from the company’s ongoing training programs.

Meanwhile, the company has trimmed staff at the Omai bauxite operation in Guyana after it posted a net loss of US$1.9 million. The company plans to reduce costs and develop new products.

On the sales side, Cambior realized an average of US$532 per oz. of gold sold during the quarter, up from US$401 per oz. in 2005. By comparison, the quarter’s average spot price was US$544 per oz.

During the quarter, Cambior trimmed some 34,619 oz. of gold from its hedge book via the closing of forwards and gold purchase commitments. The 131,000 oz. remaining in the book carry an average strike price of US$338 per oz., for a fair value of minus US$33.8 million at the end of March.

In the end, a US$6.7-million gain on the sale of some investments helped offset lower production, and helped Cambior post increased first-quarter earnings of US$9.1 million (or US3 a share). That’s up from the US$1.6 million (US1 a share) it pocketed a year earlier. 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. Cash flow from operations climbed by 12% to US$12.6 million, while mine operating profit fell by 22% to US$9.2 million.

At quarter’s end, Cambior had US$26.2 million in cash and equivalents; total debt was US$58.7 million.