Cambior Inc.

Cambior Inc.

May 12, 2005 10:09 ET

Profitable Quarter for Cambior

LONGUEUIL, QUEBEC--(CCNMatthews - May 12, 2005) - Cambior Inc. (AMEX:CBJ)(TSX:CBJ) All amounts are expressed in US dollars, unless otherwise indicated.


- 10% increase in gold output to 166,500 ounces

- Revenues of $90.9 million, up 52%

- Cash flow from operating activities of $11.6 million, up 49%

- Net earnings of $1.6 million

- Strong performance at the Rosebel mine

- Consolidation of Sleeping Giant ownership

- Approval of the divestiture of the Carlota copper project

- 30% increase in resources at La Arena

Cambior Inc. (TSX & AMEX:CBJ) reports net earnings of $1.6 million ($0.01 per share) for the first quarter of 2005. Cash flow from operating activities increased by 49% to $11.6 million. The operating cash flow before changes in non-cash working capital amounted to $17.2 million, $11 million more than the corresponding period in 2004.

Louis P. Gignac, President and Chief Executive Officer of Cambior stated, "Our production was on target for the quarter, and we continued to benefit from a strong performance at Rosebel. The high price of oil and the strength of the Canadian dollar impacted our operating margins. With the expected improvements at our Canadian operations and the planned shutdown of the Omai mine in September, our unit costs should be lower in the coming quarters. We are executing the operation and development plan established at the beginning of the year and our recent decision to divest the Carlota copper project reinforces our focus on the selective acquisition and development of gold properties. With the acquisition of the remaining interest of the Sleeping Giant mine, we are increasing our 2005 production target to over 640,000 ounces of gold".



Cambior produced 166,500 ounces of gold at a mine operating cost of $269 per ounce in the first quarter of 2005, compared to 152,000 ounces at $240 per ounce for the corresponding quarter in 2004. The increase in gold production, despite the planned wind-down of operations at Omai, is due to the start-up of the Rosebel mine in the first quarter of 2004. Unit costs were higher in the first quarter of 2005, mainly because of higher commodity costs, particularly fuel, and the stronger Canadian dollar. The impact is especially significant at the Omai mine, which is scheduled to mill only low-grade stockpiled ore (0.92 g Au/t) until the shutdown of the operation in the third quarter of 2005, as it uses diesel generators to produce its own electric power.

The Rosebel mine in Suriname experienced a very strong quarter. A new milling record was established with some 1.8 million tonnes at an average grade of 1.55 g Au/t processed during the first quarter of 2005, for production of 87,950 ounces at $190 per ounce. This represents an average throughput of 20,400 tonnes per calendar day as compared to the previous record of 17,200 tonnes per day in the fourth quarter of 2004. Because of the increased processing rate, no further high grading is being performed at the mine and the average grade of the Pay Caro and Royal Hill pits is being processed at the mill. Gravity recovery improved and averaged 40% during the quarter and, combined with an improvement in the stripping circuit, enabled Rosebel to reduce the gold-in-circuit inventory by 2,000 ounces. Phase II construction is progressing well and the effluent treatment plant was commissioned at the end of the quarter. The primary crusher-stacker-reclaim arrangement is scheduled to be available for production in June, one month ahead of schedule. Underruns of $2 million are estimated for the Phase II construction.

The Omai mine produced 34,260 ounces of gold at a mine operating cost of $338 per ounce, compared to 72,000 ounces at a mine operating cost of $208 per ounce in the same period last year. The mill processed 1.3 million tonnes at 0.92 g Au/t from the low-grade ore stockpiles accumulated during the initial years of production. Recovery has remained above 90% in spite of a lower grade. Operations are normal, with unit costs affected by higher fuel prices in the first quarter and the low grade milled.

For the first quarter of 2005, the Doyon Division produced 37,100 ounces at a mine operating cost of $374 per ounce, compared to 43,500 ounces at $327 per ounce for the corresponding quarter in 2004. The first quarter 2005 production results are an improvement over the 31,300 ounces at $430 per ounce of the fourth quarter of 2004. The decline in production and the rise in operating unit costs when compared to first quarter of 2004 were mainly due to a 30% reduction in the underground throughput in the second half of 2004, as well as the stronger Canadian dollar. The Doyon Division focused entirely on underground production during the first quarter and processed some 195,000 tonnes at a grade of 6.2 g Au/t supplied by both the Doyon and Mouska underground mines. Continued improvements are planned in future quarters.

Cambior's share of gold production from the Sleeping Giant Division (50%) amounted to 7,150 ounces at a mine operating cost of $366 per ounce, compared to 8,700 ounces at $305 per ounce for the corresponding quarter last year. The development of the main accesses to the mineralized zones on the three additional levels generated by the mine-deepening program is nearly complete and preparation of new production areas has been initiated.

On April 15, 2005, Cambior entered into an agreement with Aurizon Mines Ltd. for the purchase of its remaining 50% interest in the Sleeping Giant gold mine for a cash purchase price of C $5 million. The transaction was closed on May 11, 2005 with an effective date of April 30, 2005. The acquisition is consistent with Cambior's strategy of focusing on its current assets for future growth. The acquisition cost of C $55 per ounce (US $45 per ounce) is reasonable and the acquisition provides greater flexibility in the future development and exploration of the Sleeping Giant mine. It is believed that further benefits may accrue from the potential to add to current reserves, especially in the extensions of the known mineralized lenses at depth.


Positioning for greater cash flows

Non-gold sales totaled $20.0 million in the first quarter of 2005, representing 22% of the Company's total revenue.

Cambior's niobium sales from the Niobec mine increased in the first quarter of 2005 to $12.7 million from $6.1 million in the corresponding quarter in 2004. This significant increase in sales is due to the July 2004 acquisition of the remaining 50% interest in the Niobec mine. The Niobec mine is producing at maximum capacity and continues to enjoy a very strong global market for ferroniobium. The investment program intended to improve recoveries in the concentrator and increase production is proceeding on time and within budget and should be completed in late September. A 20% increase in production is planned for the fourth quarter in order to maintain the Company's share of world consumption.

The initial full quarter of production at OMAI Bauxite Mining Inc. (OBMI) was successful with more than 44,000 tonnes of high-alumina calcined bauxite (RASC) produced and sold, an amount that is 18% above forecast. Sales for the first quarter of 2005 totaled $7.3 million. OBMI implemented a price increase in January that was supported by very strong demand for its products. A wholly-owned subsidiary of Cambior commissioned a new 14-megawatt power plant at Linden to supply power to OBMI and to the Government of Guyana for the Linden community. Power purchase agreements are in place to reimburse all operating costs and pay back capital with a competitive financial return. The project was commissioned on time with a $1 million under-run. It is anticipated that OBMI will generate sales of approximately $42 million in 2005. Ninety percent of sales will come from RASC production.


Cambior has planned an aggressive $28 million exploration and business development program for 2005, focused primarily on discovering new reserves and resources near its mine sites and at its advanced projects. During the first quarter of 2005, Cambior invested $7.8 million, which included an amount of $1.2 million allotted for off-site exploration. The majority of the work during the first quarter of 2005 is summarized as follows:

Rosebel Concession - Suriname

A development drilling program of 12,850 metres was completed on the Royal Hill deposit on the south limb of the Rosebel Concession. Results are positive to date and indicate the continuity of the ore zone. Block modeling is on-going and reserve estimation update is expected in the second half of 2005. Exploration drilling plans are being developed for the Roma area based on geochemical anomalies indicated by auger sampling and previous artisanal mining works. An initial program of approximately 2,100 metres and 14 holes is planned between the Mayo and Royal Hill deposits. Further plans will be developed for areas west of the Mayo deposit as auger and geophysical data are being compiled. The Company will be testing saprolite anomalies over a strike length of some 3 km and a width of up to 300 metres. Initial drilling on the North Trend on the Rosebel concession will focus on the Koolhoven-J zone trend, close to mine infrastructure. The renewal of the Headley's Reef and Thunder Mountain exploration concessions, surrounding the Rosebel mining concession, has recently been granted by the government of Suriname.

Camp Caiman - French Guiana

Capital expenditures are budgeted at $7.0 million for 2005, with $2.3 million invested in the first quarter of 2005. Focus was placed mainly on filing of the applications for the various operating permits required prior to initial construction as well as on the exploration drilling program to increase the resource base and the completion of various engineering and baseline studies, including the Environmental Impact Statement, in order to finalize the Feasibility Study during the summer.

Exploration drilling resumed on January 12, 2005, with two diamond drills and one reverse circulation (RC) rig. A total of 10,900 metres (174 holes) was drilled in the first quarter of 2005. Some 4,152 metres of RC drilling in 89 holes was completed to test the CC-08 and 4 Buses zones and the extensions of the Scout zone. Modelisation and resource update integrating all the results from the 2004-2005 campaign will soon be finalized.


Westwood - Quebec

The exploration drift from the 14th level of the Doyon mine progressed eastward towards the Westwood sector for a cumulative advancement of 894 metres. A 1,300-metre diamond drilling program was completed during the first quarter from the first drilling bay located approximately 2 kilometres west of the previously drilled Westwood sector to verify extensions of the Warrenmac-Westwood stratigraphic horizon (3,064 m). Holes intersected low-grade mineralization corresponding to the targeted horizons comprised of alteration zones of chlorite, sericite and garnet, which are typical of the sulphide environment of the Bousquet-LaRonde area. A drillhole was completed at the end of the quarter to test the presence of mineralization on the northern portion of the property. This 800-metre hole confirms the presence of mineralization corresponding to the east extension of the stratigraphic corridor containing the Mic-Mac zones further west.

Eastmain Property - Quebec

On April 26, 2005, Cambior signed a letter of intent with Azimut Exploration Inc.(Azimut) to earn up to 65% interest in the West Block of the Eastmain Property, which is currently held 100% by Azimut. This property is in the James Bay region of Quebec and is located south of the Eleonore gold discovery made by Virginia Gold Mines Inc. last year.

The property comprises 167 claims totaling 88.63 km2. The geologic setting is characterized by volcanics in contact with granitic intrusions. Multi-element geochemical anomalies indicate an exploration potential for gold. The Clearwater deposit, which lies approximately 20 km to the north, contains indicated and inferred resources of 990,000 ounces of gold (4.1 million tonnes at a grade of 7.72 g Au/t) according to a 2005 estimate by Eastmain Resources Inc. The West Block of the Eastmain property displays geological similarities with the Clearwater sector. Cambior can acquire 50% of Azimut's interest with payments totaling C $2.2 million over a period of five years. Cambior will be the operator. Upon acquiring a 50% interest, Cambior will have the option to gain an additional 15% interest by delivering a bankable feasibility study within a five-year period.

In addition, Cambior staked out approximately 400 claims covering 210 km2 in the central part of the James Bay area (Opinaca-Eastmain sector). These claims cover a number of lake bottom gold-bearing or multi-element anomalies coinciding with localised volcanogenics surrounding intrusions and/or associated with significant deformation corridors. Geological work and geochemical sampling of the lake bottoms and the tills is being planned for the summer season.


La Arena - A 30% increase in resources

Cambior announces an increase in mineral resources at the La Arena property in Peru. Measured and indicated resources are now in excess of 23.8 million tonnes grading 0.70 g Au/t, representing 536,000 ounces of gold contained, a 30% increase over the previous estimate of 414,000 ounces of gold. The resource estimation was based on a gold price of $400 per ounce.

The La Arena property is located near the town of Huamachuco, 480 kilometres north of Lima, Peru. Geologically, it lies within a multi-million ounce gold district that includes the Alto Chicama, Tres Cruces, Shahuindo and Comarsa deposits. The epithermal style of mineralization is located within highly-fractured sandstones and related porphyry intrusions.

Oxide measured and indicated resources now total 23.8 million tonnes at 0.70 g Au/t for a gold inventory of 536,000 ounces contained in a pit totaling 40 million tonnes of material for a waste to ore ratio of 0.68. This is an increase of 78% in tonnage over the previously released measured and indicated resources of 13.4 million tonnes, and a 30% increase in ounces (536,000 ounces versus 414,000 ounces).

Measured oxide resources constitute approximately 65% of the combined measured and indicated categories and are mostly located in the Calaorco area where drilling was done on 50 m x 50 m pattern or closer. The grade has diminished by 30% to 0.70 g Au/t because a significant portion of the 2005 delineation drilling that took place on the lower grade extensions of the orebodies. The higher grade ore is now defined within more numerous but narrower zones. There is good potential to increase the resources in the nearby La Ramada sector and between the intrusive bodies of La Arena and El Alizar, where lineaments visible on satellite images suggest the juncture of NW- and NE-trending structural zones. The La Arena property also includes a minor amount of sulphide resources that were not integrated into the current stated resources. No economic study has been done on these sulphide resources.

The resource estimate is based on results from 177 diamond drillholes totaling 26,500 metres since 1996, and over 4 kilometres of trenches. This new estimate includes 55 new holes (4,463 m) that were completed in 2004-05. Approximately 76% of the mineral resources identified to date are in the sandstones. Cambior will complete a pre-feasibility study based on open-pit mining and heap leaching of the bearing ore.

These new resources were re-estimated during the spring of 2005 under the supervision of Francis Clouston, P.Eng., Cambior Manager of Project Evaluations, in accordance with the Canadian Institute of Mining's "Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines" of 2003. Mr. Francis Clouston is a "Qualified Person" and has been employed by Cambior for 9 years.

Cambior has established an Analytical Quality Assurance Program to control and assure the analytical quality of assays in its gold exploration. This program includes the systematic addition of blank samples, field duplicates and certified standards to each batch of samples sent for analysis at commercial laboratories. Blank samples are used to check for possible contamination in laboratories, field duplicates quantify overall precision while certified standards determine the analytical accuracy. Samples were sent for assaying to ALS Chemex Laboratory in Lima, Peru, as a primary lab. Samples were assayed by fire-assay followed by atomic absorption or gravimetry according to industry standards. In addition, 10% of the pulps from the primary lab were sent to a second certified laboratory for analysis.


The El Toro deposit is located 15 kilometres northeast of the La Arena property. Mineralization is associated with oxidized, highly-fractured sediments and intrusives; it shows a similar style of mineralization to the La Arena property.

Structural controls oriented north-south and NW-SE are very significant and present throughout the mineralized zone. The gold anomaly on surface reaches 1.5 x 2.0 km. Work completed by Cambior in 2004 and 2005 includes detailed geological mapping, 1,700 metres of trenching, mapping, and sampling of 54 tunnels and 42 diamond drillholes (5,957 metres). A total of 92 drillholes (11,950 metres) have been drilled since 1995. Tunnel sampling shows high-grade results (up to 18 g Au/t over 1 metre) associated with narrow structures. An updated geological model is currently being completed and will result in the release of a resource estimate in the second quarter of 2005.


Capital expenditures for the first quarter of 2005 totaled $25.0 million compared to $28.9 million for the same period in 2004. Investments were principally for Rosebel Phase II construction ($2.9 million), mining equipment for operations and development drilling at Rosebel ($5.0 million), underground development and exploration at the Doyon Division ($2.1 million), exploration and development drilling and technical studies at the Camp Caiman gold project ($2.3 million), and expenditures at OMAI Bauxite Mining ($5.6 million) and Omai Services ($2.2 million).

The Company's cash and short-term investments were reduced to $37.3 million, mainly as a result of funding capital expenditures and the partial reimbursement of the credit facility according to the re-payment schedule.

Consolidated Financial Statements

The unaudited consolidated financial statements and the Management's Discussion and Analysis (MD&A) along with explanatory notes for the first quarter are available in PDF format on Cambior's website at or through the CCNMatthews website at (

Reminder for the First Quarter 2005 Results Conference Call

Cambior will host a conference call on May 13, 2005 at 10:30 a.m., local time, to discuss its first quarter results.

Financial analysts are invited to participate in the call by dialling 1-800-377-5794 in North America. Outside of North America, please dial (416) 641-6705. Media and all other interested individuals are invited to listen to the live webcast on the Cambior website at or through CCNMatthews at

The conference call will be available for replay for a period of 48 hours by calling (416) 626-4100, reservation #21243690. The webcast will also be archived on the Company's website.

Cambior Inc. is an international gold producer with operations, development projects and exploration activities throughout the Americas. Cambior's shares trade on the Toronto (TSX) and American (AMEX) stock exchanges under the symbol "CBJ". Cambior's warrants, "CBJ.WT.C" and "CBJ.WT.D", trade on the TSX.

Cautionary Note to U.S. Investors -- The United States Securities and Exchange Commission (the "SEC") permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use certain terms in this press release, such as "mineral resources", that the SEC guidelines strictly prohibit us from including in our filings with the SEC. U.S. investors are urged to consider closely the disclosure in Cambior's Annual Report on Form 40-F. A copy of the 2004 Form 40-F is available to shareholders, free of charge, upon written request addressed to the Investor Relations Department.

Caution Concerning Forward-Looking Statements

This press release contains certain "forward-looking statements", including, but not limited to, the statements regarding the Company's strategic plans, the disposal of the Carlota copper project, its anticipated benefits and the use of proceeds resulting thereof, the reduction of hedging, future commercial production, sales and financial results, construction and production targets and timetables, the evolution of mineral reserves and resources, mine operating costs, capital expenditures, work programs, development plans, and exploration budgets. Forward-looking statements express, as at the date of this press release, the Company's plans, estimates, forecasts, projections, expectations or beliefs as to future events and results. Forward-looking statements involve a number of risks and uncertainties, and there can be no assurance that such statements will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such statements. Risks and uncertainties that could cause results or future events to differ materially from current expectations expressed or implied by the forward-looking statements include, but are not limited to, factors associated with fluctuations in the market price of precious metals, mining industry risks, risks associated with foreign operations, environmental risks and hazards, uncertainty as to calculation of mineral reserves, requirement of additional financing or additional permits, authorizations or licences, risks of hedging strategies, risks of delays in construction and production and other risks referred to in Cambior's 2004 Annual Information Form filed with the Securities Commissions of all provinces in Canada, and with the United States Securities and Exchange Commission (under Form 40-F), as well as the Toronto Stock Exchange and the American Stock Exchange.


First quarter ended
(unaudited) March 31,
(All amounts are in US dollars) 2005 2004
RESULTS (in millions of $)
Revenues 90.9 59.9
Cash flow from operating activities 11.6 7.8
Net earnings 1.6 7.3
Net earnings 0.01 0.03
Basic weighted average number of common
shares outstanding (in millions) 274.2 241.0
Number of ounces produced (000) 166 152
Realized gold price ($per ounce) 401 363
Mine operating costs ($per ounce) 269 240

March 31, December 31,
2005 2004
FINANCIAL POSITION (in millions of $)
Cash and short-term investments 37 55
Total assets 584 590
Shareholders' equity 376 375
Total number of shares outstanding
(in millions) 274.2 274.2

First Quarter
(unaudited) 2005 2004

Rosebel (100%) (1)
Production (ounces) 87,950 27,300
Tonnage milled (t) 1,840,000 669,200
Grade milled (g Au/t) 1.55 1.59
Recovery (%) 94 91
Mine operating costs ($per tonne milled) 9 7
Mine operating costs ($per ounce) 190 163
Depreciation, depletion and
amortization ($per ounce) 65 41

OMAI (100%)
Production (ounces) 34,260 72,000
Tonnage milled (t) 1,275,100 1,389,400
Grade milled (g Au/t) 0.92 1.73
Recovery (%) 91 93
Mine operating costs ($per tonne milled) 9 11
Mine operating costs ($per ounce) 338 208
Depreciation, depletion and
amortization ($per ounce) 35 39

Doyon Division (2)
Production (ounces) 37,100 43,500
Tonnage milled (t)
Underground mines 194,630 303,500
Pit and low grade stockpile - 29,000
Total 194,630 332,500
Grade milled (g Au/t)
Underground mines 6.2 4.6
Pit and low grade stockpile - 1.0
Average 6.2 4.2
Recovery (%) 96 95
Mine operating costs ($per tonne milled) 71 43
Mine operating costs ($per ounce) 374 327
Depreciation, depletion and
amortization ($per ounce) 78 87

Sleeping Giant (50%)
Production (ounces) 7,150 8,700
Tonnage milled (t) 21,360 23,700
Grade milled (g Au/t) 10.7 11.8
Recovery (%) 97 97
Mine operating costs ($per tonne
milled) 122 112
Mine operating costs ($per ounce) 366 305
Depreciation, depletion and
amortization ($per ounce) 112 65
TOTAL GOLD PRODUCTION (ounces) 166,460 151,500
MINE OPERATING COSTS ($per ounce) 269 240
(1) Production began in February 2004.

(2) Includes the Doyon and Mouska mines. Production from Mouska was
temporarily suspended in late December 2003 to allow for shaft
deepening. Production resumed in October 2004.

First Quarter
($per ounce) (unaudited) 2005 2004
Direct mining costs 268 230
Deferred stripping costs - 10
Refining and transportation 2 2
By-product credits (1) (2)
Mine operating costs 269 240
Royalties 11 13
Total operating costs 280 253
Depreciation, depletion and amortization 64 55
Restoration 3 4
Total production costs 347 312

Contact Information

    Robert LaValliere
    Manager - Investor Relations and Communications
    (450) 677-2699 (Direct line) or (450) 677-0040
    (450) 677-3382 (FAX)
    1-866-554-0554 (Toll Free in North America)
    Bryan A. Coates
    Vice President Finance and Chief Financial Officer
    (450) 677-2912 (Direct line)