Cambior Inc.

Cambior Inc.

August 05, 2005 16:00 ET

Cambior Reports Second Quarter Results Highlights

LONGUEUIL, QUEBEC--(CCNMatthews - Aug. 5, 2005) - Cambior Inc. (TSX:CBJ)(AMEX:CBJ) - All amounts are expressed in US dollars, unless otherwise indicated.


- Revenues of $89.4 million, up 14%

- Cash flow from operating activities of $11.3 million, up 18%

- Net earnings of $1.0 million

- Strong operating results at the Rosebel mine

- Gold hedging reduced by 18% during past 6 months

Cambior Inc. (TSX & AMEX:CBJ) reports net earnings of $1.0 million for the second quarter of 2005 compared to $1.7 million for the same period last year. Revenues for the second quarter totalled $89.4 million, 14.2% higher than in 2004 as a result of the consolidation of the ownership of the Niobec Mine in July 2004 and the initiation of bauxite mining activities in Guyana in December 2004.

Louis P. Gignac, President and Chief Executive Officer of Cambior stated, "Our gold production is on target, following another strong quarter at Rosebel, but we continue to be affected by increasing costs due to increased prices for energy and other raw materials, the strength of the Canadian dollar and the shortage of qualified miners at our Sleeping Giant and Mouska mines. During the quarter, we continued to make progress on increasing our reserve base and developing new projects to complement the Rosebel operation."

For the six months ended June 30, 2005, net earnings amounted to $2.6 million and revenues to $180.3 million, compared to $9.0 million and $138.3 million respectively in the first half of 2004. The decrease in net earnings of $6.4 million is mainly due to a variation in the tax provision of $8.5 million, following the recognition, in the first quarter of 2004, of a tax benefit for previously incurred losses at Rosebel.


The gold market remained strong with price averaging $427 per ounce for the second quarter and year-to-date compared to $393 and $401 respectively for the corresponding periods of 2004. As previously outlined, Cambior benefited from increase exposure to market price realizing an average price of $400 per ounce the first half of 2005 compared to $362 per ounce in 2004.

The Company further reduced its gold sales commitment through the delivery of 26,000 ounces of gold against the prepaid gold forward sales agreement and the closure, in the second quarter, of 9,500 ounces hedged. The gold delivery commitments stand at 169,000 ounces, a decrease of 17.6% since December 31, 2004.


Cambior produced 172,000 ounces at a mine operating cost of $273 per ounce in the second quarter of 2005, compared to 193,000 ounces at $226 per ounce in the corresponding period of 2004. For the first six months, gold production was 338,000 ounces at $271 per ounce compared to 345,000 ounces at $232 per ounce in 2004. The lower gold output in the second quarter is attributable to the termination of mining at Omai's Fennell pit in September 2004 and the subsequent processing of the low grade stockpile. Mining operations continue to be affected by higher costs, mainly fuel and raw materials, and by the stronger Canadian dollar.

Rosebel - Continued Strong Contribution

The Rosebel mine in Suriname maintained a strong contribution to Cambior's results by producing 89,600 ounces at a mine operating cost of $190 per ounce in the second quarter. Some 1.8 million tonnes (19,425 tonnes of ore per day at an average grade of 1.68 g Au/t) were processed during the period, compared to 1.3 million tonnes (14,467 tonnes per day at an average grade of 2.0 g Au/t) for a gold output of 74,100 ounces at an average cost of $160 per ounce in the second quarter of 2004. The ore processed was from the Pay Caro and Royal Hill pits. During the first six months of 2005, the mill throughput averaged 19,915 tonnes per day and yielded some 177,600 ounces of gold, compared to 101,400 ounces in the first half of 2004. The mill commenced commercial production on February 11, 2004. During the quarter, the capacity of the mining fleet was increased with the acquisition of a shovel, five haulage trucks and other ancillary equipment to increase mining capacity in accordance with the higher mill throughput. The Rosebel Phase 2 construction, consisting mostly of the crusher system to handle the hard-rock ore and the effluent treatment system, was completed at a final cost of $16.5 million, some $2.5 million below budget.

Production at Omai consisted of the processing of 1.3 million tonnes of low grade stockpiled ore accumulated in the early years of operations, yielding 33,800 ounces at a cash mine operating cost of $362 per ounce. In the second quarter of 2004, Omai contributed 67,000 ounces at a cost of $225 per ounce. Its year-to-date contribution is 68,100 ounces at a cost of $350 per ounce compared to 139,000 ounces at $216 per ounce in 2004. The 2004 figures relate to on-going mining operations from the Fennell pit which was fully depleted in September 2004. Since about 45% of current operating costs are fuel for power and mobile equipment, operating costs at Omai were strongly affected by high oil prices. Omai will cease its operations in late September 2005 following depletion of all available reserves. Closure activities are progressing according to plan, and facilities and equipment will be transferred to other Cambior operations and projects within the next 18 months, or sold to third parties.

For the second quarter of 2005, the Doyon Division produced 39,400 ounces at a mine operating cost of $345 per ounce, compared to 42,800 ounces at a cost of $334 per ounce in the corresponding period of 2004. Year-to-date production was 76,500 ounces at a cost of $359 per ounce versus 86,300 ounces at $330 per ounce for 2004. The tonnage processed was substantially lower in 2005 following the significant reorganization at Doyon in September 2004, and the grade processed improved by 47% due to the resumption of the processing of Mouska ore following the completion of the shaft deepening project in October 2004. Continued efforts are being deployed at the Doyon Division to enhance profitability and ensure a safe operation.

During the semester, higher operating costs combined with more conservative mining recovery of crown pillar and sill pillars based on recent geomechanics technical studies have resulted in the reclassification of some 90,000 ounces from the proven and probable category to resources. Disappointing results in the Doyon area are being partially offset by positive reserve development results at Mouska. The Company is also committing substantial investment on regional exploration at its Westwood-Mooshla Project located on the Doyon property.

Since the 30% reduction in underground production and the major restructuring at the Doyon Mine in September 2004, the production results of the Doyon Division have improved steadily quarter over quarter:

Mine Operating
Tonnage Milled Grade Production Costs
(t) (g Au/t) (oz Au) ($/oz)
4Q 2004 202,000 5.0 31,300 430
1Q 2005 194,600 6.2 37,100 374
2Q 2005 196,400 6.5 39,400 345

A special tribute must be made to our Doyon personnel for their determination in recovering from a very difficult situation.

Production at Sleeping Giant totalled 9,200 ounces during the second quarter of 2005 at a mine operating cost of $439 per ounce compared to 9,100 ounces at a cost of $260 in the second quarter of 2004. For the year-to-date, the mine produced 16,300 ounces at a mine operating cost of $407 ounce, versus 17,800 ounces at a cost of $282 per ounce for the corresponding period of 2004. The results reflect Cambior's increased ownership in the mine to 100% effective April 30, 2005. The disappointing performance at Sleeping Giant results from extremely high employee turnover and shortage of experienced miners since it is a relatively remote mining operation. Measures have been implemented to increase recruitment and train a large number of young miners. We anticipate that the Sleeping Giant operations will continue to be affected throughout 2005, but will progressively recover from this new problem.


Sales from the Niobec Division amounted to $12.2 million for the second quarter of 2005 and $24.9 million for the year-to-date compared to $6.9 million and $12.9 million, respectively, in the corresponding 2004 periods. The increase in revenues is attributable to the acquisition of the remaining 50% interest in the Niobec mine on July 2, 2004. The profitability of Niobec has been impacted by the strength of the Canadian dollar, major hoist, bin and headframe repairs, production disturbance and commissioning efforts at the expanded plant. Investments were made to optimize the performance of the plant and increase recovery at the concentator.

At Omai Bauxite Mining Inc., efforts were concentrated on the rehabilitation of Kiln 14 and the commissioning of the gensets relocated from Omai Gold Mines Limited. Sales from the quarter amounted to $7.3 million, less than planned, due to delays in vessels reaching Linden for product shipments. The mine incurred a loss of $437,000 during the quarter due to high fuel prices and maintenance costs.

With the commissioning of the expansion at Niobec, rehabilitation of Kiln 14 and the gensets being available for the full period at Omai Bauxite, it is expected that the non-gold assets will generate improved operating results in the second half of 2005.

Cash Flow from Operating Activities

The cash flow from operating activities amounted to $11.3 million in the second quarter of 2005 compared to $9.6 million in the same quarter of 2004. The results included an investment in working capital of $3.4 million due to delays in bauxite shipments and the recovery of VAT taxes in Canada. For the year-to-date, cash flows from operating activities amounted to $22.9 million, 32% higher than the corresponding period in 2004.


Cambior focus its efforts on reserve development and acquisition of new deposits. The main activities during the second quarter of 2005 included:

Camp Caiman - French Guiana

Work progressed on the preparation of the Camp Caiman feasibility study for submission to Cambior's Board of Directors in August 2005. The applications for operating permits for mining, processing and tailings disposal were submitted to the authorities. Management has had discussions with various stakeholders to improve the economic returns and secure the required authorizations for the project release.

Sarakreek Project - Suriname

The Company entered into an option agreement with two parties to acquire an interest of 75% in the Tapanahony (75,000 hectares) and Sarakreek (80,000 hectares) properties located some 75 kilometres south of the Rosebel project. The acquisition is subject to option payments and exploration work commitments to be invested over the next three years.

La Arena and El Toro - Peru

Work continued at the La Arena-El Toro project in the Huamachuco area in Peru. In early May 2005, Cambior announced measured and indicated resources of 23.8 million tonnes at La Arena at a grade of 0.70 g Au/t, representing approximately 536,000 ounces. The estimate was based on a gold price of $400 per ounce.

Recent work on the El Toro project including trenching, tunnel sampling and some 6,000 m of diamond drilling showed the presence of oxide mineralization with characteristics similar to La Arena. Additional work is required to estimate measured and indicated resources.

The encouraging results to date has led Cambior to approve an additional budget of $4.4M, to add some 26,000 metres of drilling, initiate pre-feasibility work on La Arena and complete additional work on El Toro. Included in this additional budget, Cambior will also investigate the Copper-Gold potential of the La Arena and El Alisar porphyries on which previous diamond drilling outlined positive results.

These new resources were 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 nine years.

Mr. Gignac further noted,"We are focused on increasing our gold output and reserves through organic growth and acquisitions and are pleased that our investments in exploration and development are providing positive results to our shareholders".

Consolidated Financial Statements

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

Reminder for the Second Quarter 2005 Results Conference Call

Cambior will host a conference call on Monday, August 8, 2005 at 10:00 a.m., local time, to discuss its second quarter results.

Financial analysts are invited to participate in the call by dialling 1-800-291-5032 in North America or, outside of North America, please dial (416) 641-6697. 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 #21250474. 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") allows 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, its anticipated benefits and the use of proceeds resulting thereof, in particular, the anticipated improvements at the Doyon mine, the Niobec Division and the bauxite operations, 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, in particular, the continued impact of the fuel price, the strength of the Canadian currency and the cost of raw materials, capital expenditures, work programs, development plans, and exploration programs, objectives and 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, exploration 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.


Second Quarter ended First Half ended
(unaudited) June 30, June 30,
(All amounts are in US dollars) 2005 2004 2005 2004
RESULTS (in millions of $)
Revenues 89.4 78.3 180.3 138.3
Cash flow from operating activities 11.3 9.6 22.9 17.4
Net earnings 1.0 1.7 2.6 9.0
Net earnings 0.00 0.01 0.01 0.04
Basic weighted average number
of common shares outstanding
(in millions) 274.3 241.8 274.2 241.4
Number of ounces produced (000) 172 193 338 345
Realized gold price ($per ounce) 400 361 400 362
Mine operating costs ($per ounce) 273 226 271 232

June 30, December 31,
2005 2004
FINANCIAL POSITION (in millions of $)
Cash and short-term investments 22 55
Total assets 590 590
Shareholders' equity 376 375
Total number of shares outstanding (in millions) 274.3 274.2

(unaudited) ended June 30, ended June 30,
2005 2004 2005 2004

Rosebel (100%) (1)
Production (ounces) 89,600 74,100 177,600 101,400
Tonnage milled (t) 1,764,700 1,316,500 3,604,700 1,985,700
Grade milled (g Au/t) 1.68 2.00 1.61 1.86
Recovery (%) 94 93 94 92
Mine operating costs
($per tonne milled) 10 9 9 8
Mine operating costs
($per ounce) 190 160 190 161
Depreciation, depletion
and amortization
($per ounce) 62 84 64 73

OMAI (100%)
Production (ounces) 33,800 67,000 68,100 139,000
Tonnage milled (t) 1,286,700 1,385,000 2,561,800 2,774,400
Grade milled (g Au/t) 0.90 1.61 0.91 1.67
Recovery (%) 91 93 91 93
Mine operating costs
($per tonne milled) 10 11 10 11
Mine operating costs
($per ounce) 362 225 350 216
Depreciation, depletion
and amortization
($per ounce) 35 37 35 38

Doyon Division (2)
Production (ounces) 39,400 42,800 76,500 86,300
Tonnage milled (t)
Underground mines 190,700 269,400 385,300 572,900
Pit and low
grade stockpile 5,700 45,000 5,700 74,000
Total 196,400 314,400 391,000 646,900
Grade milled (g Au/t)
Underground mines 6.6 4.8 6.4 4.7
Pit and low
grade stockpile 1.0 1.8 1.0 1.5
Average 6.5 4.4 6.3 4.3
Recovery (%) 96 96 96 96
Mine operating costs
($per tonne milled) 69 45 70 44
Mine operating costs
($per ounce) 345 334 359 330
Depreciation, depletion
and amortization
($per ounce) 84 89 81 88
Sleeping Giant(3)
Production (ounces) 9,200 9,100 16,300 17,800
Tonnage milled (t) 26,400 25,300 47,800 49,000
Grade milled (g Au/t) 11.2 11.4 10.9 11.6
Recovery (%) 97 97 97 97
Mine operating costs
($per tonne milled) 152 93 139 102
Mine operating costs
($per ounce) 439 260 407 282

Depreciation, depletion
and amortization
($per ounce) 105 59 108 62

TOTAL GOLD PRODUCTION 172,000 193,000 338,500 344,500
MINE OPERATING COSTS 273 226 271 232

(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.
(3) On April 30, 2005, Cambior purchased the remaining 50% interest in
the Sleeping Giant mine. Before that date, it was a 50% ownership
through a joint venture.

($per ounce) Second Quarter First Half
(unaudited) ended June 30, ended June 30,
2005 2004 2005 2004
Direct mining costs 272 218 270 223
Deferred stripping costs - 7 - 9
Refining and transportation 2 3 2 2
By-product credits (1) (2) (1) (2)
Mine operating costs 273 226 271 232
Royalties 12 11 12 12
Total operating costs 285 237 283 244
Depreciation, depletion
and amortization 64 68 64 62
Restoration 2 - 2 2
Total production costs 351 305 349 308
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Contact Information

  • Cambior Inc.
    Bryan A. Coates
    Vice President Finance and Chief Financial Officer
    (450) 677-2912 (Direct Line)
    (450) 677-0040 / 1-866-554-0554
    (450) 677-3382 (FAX)