Cambior Announces its Third Quarter Financial Results.Business Editors LONGUEUIL Longueuil, city (1991 pop. 129,874), S Que., Canada, on the St. Lawrence River opposite Montreal. It is a residential and industrial suburb of Montreal. It annexed Montreal South in 1961, and merged with the city of Jacques-Cartier in 1969. , Quebec--(BUSINESS WIRE)--Oct. 25, 2001 Cambior Cambior Inc. was a Canadian based international gold producer with operations, development projects and exploration activities in the Americas. Cambior’s shares traded on the Toronto (TSX) and American (AMEX) stock exchanges under the symbol “CBJ”. Inc. (AMEX AMEX See: American Stock Exchange :CBJ CBJ Columbus Blue Jackets (NHL team) CBJ Central Bank of Jordan CBJ Conflict-Directed Backjumping CBJ Circuit Board Jack CBJ Code-Breakers Journal CBJ Class Broker for Java CBJ Color Bubble Jet )(TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :CBJ.) - Reduction in debt of $15.4 million; - Initiation of deliveries on the prepaid gold forward sale agreement for $3.1 million reduction; - Steady Gold production; - Increase in niobium production; - Implementation of aggressive investment program for the renewal of reserve base. THIRD QUARTER Gold production for the third quarter of 2001 totalled 149,000 ounces at a direct mining cost of $216 per ounce ounce, in zoology ounce, in zoology: see leopard. ounce, unit of measurement ounce: see English units of measurement. , similar to the corresponding quarter in 2000. Cambior also reports production of 354 tonnes of niobium niobium (nīō`bēəm), metallic chemical element; symbol Nb; at. no. 41; at. wt. 92.9064; m.p. about 2,468°C;; b.p. 4,742°C;; sp. gr. 8.57 at 20°C;; valence +2, +3, +4, or +5. , a 36% increase over the corresponding quarter in 2000 due to the successful completion of the Niobec mine expansion in late 2000. Revenues for the period amounted to $48.4 million compared to $51.8 million in 2000. The lower revenue is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a $25 per ounce decrease in the realized price of gold sold. The Company's EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (1) amounted to $9.9 million, $3.3 million less than the corresponding period as a result of the lower gold revenues. (1) EBITDA: earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
Contracts such as options and futures whose price is derived from the price of an underlying financial asset. . Cash flows from operating activities were $1.3 million; as a result of delivery of gold under the terms of the Prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. Gold Forward Sale
Agreement. No cash flow is recognized for these deliveries as the
proceeds thereof were received on January January: see month. 12, 2001. After adjustment for
the value of gold delivered, cash flows from operating activities were
$4.4 million compared to $3.9 million for the corresponding quarter in
2000.Cambior is making steady progress towards returning to profitability as its loss prior to non-cash adjustment in the valuation of non-hedge derivative instruments was $0.3 million compared to a loss of $1.4 million in the second quarter of 2001 and a $13.5 million loss for the corresponding period in 2000. Including this adjustment, the Company incurred a net loss of $8.5 million compared to restated net earnings of $10.5 million in the corresponding period of 2000. (By way of comparison, based on the closing gold price of $276 an ounce on October October: see month. 24, 2001, the non-cash adjustment would have resulted in a gain of $2.5 million instead of the loss of $8.2 million). The same adjustment was favourable by $24.0 million in 2000 when the reduction in market price from the previous quarter was $14 per ounce. During the period, the Company reduced its debt by $15.4 million from the proceeds of the disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of of the El Pachon copper project and the conversion into common shares of the remaining mortgage loan due to Jipangu Inc. FIRST NINE MONTHS Gold production for the first nine months of 2001 totalled 454,200 ounces at a direct mining cost of $218 per ounce, compared to 458,300 ounces produced in the same period last year at a cost of $215 an ounce. Cambior's share of production from the Niobec mine amounted to 1,073 tonnes of niobium, a 33% increase over the same period last year. Revenues for the first nine months of 2001 totalled $145.8 million compared to $157.7 million for the same period in 2000. EBITDA for the first nine months was $25.8 million compared to $40.3 million for the corresponding period in 2000. The decrease in 2001 resulted from a $37 per ounce decrease in the realized price of gold sold. Cash flows from operating activities amounted to $76.1 million including a net amount of $51.9 million from the Prepaid Gold Forward Sale Agreement. Excluding this prepaid amount, the operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. were $24.1 million, $2.1 million higher than those generated in the corresponding period last year. During the first nine months of 2001, capital investments totalled $15.9 million, including $5.7 million for development at the Doyon Division and $7.3 million mainly for deferred stripping costs at Omai. At September September: see month. 30, 2001, cash and cash equivalents were $7.2 million and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. was $93.7 million or $0.96 (Cdn$1.51) per share. OPERATIONS REVIEW The Omai mine continued its strong performance exceeding both the plan and production from the corresponding period in 2000. Gold production totalled 88,600 ounces, 5% higher than 2000 as a result of higher grade and additional tonnage TONNAGE, mar. law. The capacity of a ship or vessel. 2. The act of congress of March 2, 1799, s. 64, 1 Story's L. U. S. 630, directs that to ascertain the tonnage of any ship or vessel, the surveyor, &c. processed, at a cost of $217 per ounce. The first nine months production of 263,200 ounces has exceeded budget by 20,000 ounces, with production costs amounting to $219 per ounce, $5 less than in 2000. In September, his Excellency HIS EXCELLENCY. A title given by the constitution of Massachusetts to the governor of that commonwealth. Const. part 2, c. 2, s. 1, art. 1. This title is customarily given to the governors of the other states, whether it be the official designation in their constitutions and laws or not. Bharrat Jagdeo Bharrat Jagdeo (born 23 January 1964) is the socialist President of Guyana (since 11 August 1999). He had previously been a member of Janet Jagan's cabinet, and became president after Jagan resigned for health reasons. He is the youngest head of state of the Caricom countries. , President of the Republic of Guyana Guyana (gīăn`ə, –än`–), officially Co-operative Republic of Guyana, republic (2005 est. pop. 765,000), 83,000 sq mi (214,969 sq km), NE South America. , visited the mine to celebrate the 10th anniversary of the signing of the Omai Mineral Agreement. Omai is targeted to produce 360,000 ounces in 2001, thereby achieving a production record. The Doyon Division produced 52,400 ounces of gold in the third quarter at a direct mining cost of $214 per ounce. The Division processed 272,000 tonnes at an average grade of 6.1 g Au/t from the underground mines and 65,400 tonnes at a grade of 1.0 g Au/t from the low-grade low-grade Of or relating to debt that has a credit rating of B or below. Low-grade debt offers an above-average yield but entails substantial risk because promised payments may not be made in a timely manner. stockpile stock·pile n. A supply stored for future use, usually carefully accrued and maintained. tr.v. stock·piled, stock·pil·ing, stock·piles To accumulate and maintain a supply of for future use. . For the first nine months of 2001, the Doyon Division produced 166,700 ounces of gold at a cost of $217 an ounce. The underground production was lower as a result of lower manpower availability due to summer vacations Summer vacation (also called summer holidays or summer break) is a vacation in the summertime between school years in which students are off for 3 months, depending on the country and district. and a labor stoppage stoppage - /sto'p*j/ Extreme lossage that renders something (usually something vital) completely unusable. "The recent system stoppage was caused by a fried transformer." at the Mouska mine, which commenced September 25, 2001. The Company reached a three-year agreement with its hourly employees at Mouska on October 16, 2001. It is anticipated that the Doyon Division will meet its production target of 225,000 ounces for the year. Cambior's share of production from the Sleeping Giant Sleeping Giant may refer to: In geology:
For the third quarter of 2001, Cambior's share of production from the Niobec mine was 354 tonnes of niobium, a 36% increase over the corresponding quarter in 2000 due to the completion of the mine expansion in the fourth quarter of 2000. For the first nine months of 2001, Cambior's share of production totalled 1,073 tonnes of niobium. The mine generated operating cash flows of $1.9 million during the quarter and $4.7 million year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. . A three-year agreement was reached with the unionized employees in August after a short 10-day strike. IMPROVED FINANCIAL POSITION On September 28, 2001, Cambior completed the sale of its interest in the El Pachon copper project for cash proceeds of $13.0 million and a $2.0 million payment due no later than September 28, 2005. The cash proceeds were mainly applied to the reduction of the credit facility. The Company converted the remaining $3.7 million mortgage loan due to its largest shareholder, Jipangu Inc., into common shares at a premium of 30% over the market price. The Company further strengthened its capital base through the issuance of Cdn$800,000 ($520,000) in flow through shares in July July: see month. to fund exploration projects. Cambior now has 97,854,000 common shares outstanding, compared to 90,563,000 shares at June June: see month. 30, 2001 and 75,563,000 shares at December December: see month. 31, 2000. REVENUE PROTECTION PROGRAM AND GOLD MARKET The tragic terrorist attacks of September 11, 2001 in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. resulted in an increase in the month-end gold price to $293 an ounce compared to $271 per ounce price on June 30, 2001. During the quarter, gold averaged $274 per ounce, up $6 per ounce over the average of the previous quarter. The recent events clearly demonstrated the volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the of the gold price caused by geopolitical ge·o·pol·i·tics n. (used with a sing. verb) 1. The study of the relationship among politics and geography, demography, and economics, especially with respect to the foreign policy of a nation. 2. a. and economic events. In order to secure the cash operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: at its mines and reduce the unfavourable exposure to the volatility of the gold price, the Company maintains a Revenue Protection Program for its gold operations. The effectiveness of the strategy can be measured through the comparison of the average realized price to the average market price over time. During the third quarter, the Company realized a price of $293 per ounce compared to an average market price of $274 per ounce. For the year-to-date, the realized price was $287 per ounce, $18 higher than the average market price during the period. The Company calculates the mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. value of all instruments used in the establishment of its Revenue Protection Program. The valuation is calculated independently, based on the market conditions at the end of the period, of which the gold price is a major component. In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with recently adopted accounting principles in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , the Company records in the income statement the change in the valuation of its variable volume forward and call options commitments ("optionalities"). Due to a gold market price increase of $22 an ounce, the mark-to-market value of these optionalities has been reduced by $8.2 million. This charge has no impact on cash flow and will decrease as these instruments expire expire /ex·pire/ (ek-spi´er) 1. to exhale. 2. to die. ex·pire v. 1. To breathe one's last breath; die. 2. To exhale. with the delivery of the ounces under these optionalities. At September 30, 2001, the Company had gold commitments of 969,000 ounces at an average price of $328 per ounce with minimum delivery obligation of 306,000 ounces at $338 per ounce under these optional instruments, which is 19% higher than current market price. In order to avoid these non-cash adjustments in future, the Company has decided to minimize In a graphical environment, to hide an application that is currently displayed on screen. For example, in Windows and Mac, the application's window is removed from the screen and represented by an icon on the Windows Taskbar. In the Mac, the icon is placed in the Dock. See Win Minimize windows. the use of these optionalities and the mark-to-market value of these instruments will become nil and have no further impact on the Company's earnings subsequent to 2004. As at September 30, 2001, optionalities declined by 30% from the beginning of the year. At September 30, 2001, the Company had minimum delivery obligations of 1,413,000 ounces of gold at a price of $297 per ounce and total commitments of 2,076,000 ounces at a price of $305 per ounce. The commitments include the optionalities described above. RESERVE DEVELOPMENT AND EXPLORATION The Company has committed to an investment of $6.5 million in 2001 towards the search for new gold mineral reserves and resources. More than 80% of these funds are targeted on or near the Company's operating mines. The program is partially funded by a $1.3 million grant from the Quebec Quebec, city, Canada Quebec, Fr. Québec, city (1991 pop. 167,517), provincial capital, S Que., Canada, at the confluence of the St. Lawrence and St. Charles rivers. Government and a reduction in the gold royalty Compensation for the use of property, usually copyrighted works, patented inventions, or natural resources, expressed as a percentage of receipts from using the property or as a payment for each unit produced. rate payable to the Government of Guyana on Omai production. More than 10 drills are currently active in the execution of these surface and underground programs. This initiative has yielded early results with the development of the new high-grade High-grade Credit quality of AAA or AA. high-grade Of, relating to, or being a bond with little risk of default on the part of the issuer. High-grade is usually reserved for bonds rated AAA or AA by the rating services. gold lenses at the Sleeping Giant Mine, which will add a minimum of two additional years to the mine life. Discovery and development of new gold lenses at Sleeping Giant In September, Cambior and Aurizon Mines Ltd, partners in the Sleeping Giant Mine, announced a significant increase in mineral reserves and resources following the discovery of new gold lenses. Lense 8, located approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 100 meters to the west of the shaft shaft (shaft) a long slender part, such as the diaphysis of a long bone. shaft n. 1. An elongated rodlike structure, such as the midsection of a long bone. 2. , constitutes the most important of the three lenses recorded to date (lenses 6, 7 and 8). The drilling program has allowed the definition to-date of 218,000 tonnes of proven and probable PROBABLE. That which has the appearance of truth; that which appears to be founded in reason. mineral reserves with an average grade of 12.1 g Au/t, representing 85,000 ounces of gold contained and inferred mineral resources Noun 1. mineral resources - natural resources in the form of minerals natural resource, natural resources - resources (actual and potential) supplied by nature of 140,000 tonnes at 13.4 g Au/t for 60,000 ounces of gold contained in the southern portion of the structure. The gold zone remains open to the south and at depth. Development and initial stopes Stopes , Marie Carmichael 1880-1958. British social reformer who opened England's first birth control clinic (1924) in London and later promoted family planning in east Asia. confirm the grades obtained by drilling and the continuity of this mineralized min·er·al·ize v. min·er·al·ized, min·er·al·iz·ing, min·er·al·iz·es v.tr. 1. To convert to a mineral substance; petrify. 2. To transform a metal into a mineral by oxidation. 3. zone. The discovery cost per ounce of gold of mineral reserves and resources for these new lenses at the Sleeping Giant mine is only $17. This discovery cost should decrease with the addition of new mineral reserves and resources following the ongoing drilling program. Gross Rosebel - Suriname Suriname (s  rĭnäm`, –năm`), officially Republic of Suriname, republic (2005 est. pop. 438,000), 63,037 sq mi (163,266 sq km), NE South America, on the Atlantic Ocean. Cambior and its partner Golden Star Resources Ltd. have reviewed various scenarios to optimize optimize - optimisation the return of the Gross Rosebel low-cost open-pit gold project. A pre-feasibility study was completed which reduced the scope of the mining and only processing soft rock and transition ore ore, metal-bearing mineral mass that can be profitably mined. Nearly all rock deposits contain some metallic minerals, but in many cases the concentration of metal is too low to justify mining the ore. , thereby reducing significantly the capital cost of the project to $80 million from the $175 million contemplated in the 1997 feasibility study The analysis of a problem to determine if it can be solved effectively. The operational (will it work?), economical (costs and benefits) and technical (can it be built?) aspects are part of the study. Results of the study determine whether the solution should be implemented. . Cambior intends to pursue aggressively the development of this gold project and to bring it to a construction stage in 2002. Discovery of a new gold zone at La Grande Gran·de 1 , Rio A river, about 1,046 km (650 mi) long, flowing from southeast Brazil generally northwest to the Paranaíba River, with which it forms the Paraná River. Sud The Company recently announced the discovery of a new gold zone at the La Grande Sud Project in the James Bay James Bay, shallow southern arm of Hudson Bay, c.300 mi (480 km) long and 140 mi (230 km) wide, E central Canada, in Nunavut Territory between Ont. and Que. Numerous rivers flow into the bay; many of these have been developed for hydroelectric power in Quebec (see region of Quebec. Cambior is currently in the process of earning a 50% interest in the Project from Virginia Virginia, state, United States Virginia, state of the south-central United States. It is bordered by the Atlantic Ocean (E), North Carolina and Tennessee (S), Kentucky and West Virginia (W), and Maryland and the District of Columbia (N and NE). Gold Mine Limited. Further drilling is planned for late October. In accordance with a strategy to build on its strong operating bases in Quebec and the Guiana Shield The Guiana[1] Shield (Spanish: Guayana) is one of the three cratons of the South American Plate. It is a 1.7 billion year old Precambrian geological formation in northeast South America that forms a portion of the northern coast. , the Company is pursuing the evaluation of various business opportunities, which would complement the assets currently held in these areas. OUTLOOK Louis Louis, titular duke of Burgundy Louis, 1682–1712, titular duke of Burgundy; grandson of King Louis XIV of France. He became heir to the throne on the death (1711) of his father, Louis the Great Dauphin. P. Gignac Gignac is the name or part of the name of several communes in France:
Cambior Inc. is an international gold producer with operations, development projects and exploration activities throughout the Americas A·mer·i·cas , the See America. . Cambior's shares trade on the Toronto Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing (TSE) and American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of (AMEX) stock exchanges under the symbol "CBJ". This press release contains certain "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. ", as defined in the United States Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Such risks and uncertainties are disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). under the heading "Risk Factors" in Cambior's 2000 Annual Report on Form 20-F filed as its Annual Information Form with the securities commissions of all provinces in Canada, and with the United States Securities and Exchange Commission, as well as the TSE and the Amex. Cautionary Note to U.S. Investors - The United States Securities and Exchange Commission permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically ec·o·nom·i·cal adj. 1. Prudent and thrifty in management; not wasteful or extravagant. See Synonyms at sparing. 2. Intended to save money, as by efficient operation or elimination of unnecessary features; economic: and legally extract To decompress. WinZip and other decompression utilities use the term to mean "pulling out" the original files from the compressed archive. See WinZip and data compression. or produce. We use certain terms in this document, such as "mineral resources," that the SEC guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. strictly prohibit pro·hib·it tr.v. pro·hib·it·ed, pro·hib·it·ing, pro·hib·its 1. To forbid by authority: Smoking is prohibited in most theaters. See Synonyms at forbid. 2. us from including in our filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Annual Report on Form 20-F.
CAMBIOR INC.
HIGHLIGHTS
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Three months Nine months
ended September 30, ended September 30,
All amounts in US dollars 2001 2000 2001 2000
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RESULTS (in millions of $)
Total revenues 48.4 51.8 145.8 157.7
EBITDA(1) 9.9 13.2 25.8 40.3
Cash flows from
operating activities 1.3 3.9 76.1 22.0
Adjusted cash flows from
operating activities(2) 4.4 3.9 24.1 22.0
Net loss before unrealized
loss/gain on derivative
instruments (0.3) (13.5) (7.1) (16.5)
Net earnings (loss) (8.5) 10.5 (20.3) 20.1
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PER SHARE ($)
Cash flows from
operating activities 0.01 0.05 0.84 0.30
Adjusted cash flows from
operating activities(2) 0.05 0.05 0.27 0.30
Net loss before unrealized
loss/gain on derivative
instruments - (0.18) (0.08) (0.23)
Net earnings (loss) (0.09) 0.14 (0.22) 0.28
Weighted average number of
common shares (in millions) 91.6 75.6 90.3 72.3
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GOLD PRODUCTION
Number of ounces produced
(000) 149 150 454 458
Number of ounces sold (000) 142 144 457 471
Accounting realized price
($ per ounce) 293 318 287 324
Average market price
($ per ounce) 274 277 269 282
Direct mining cost
($ per ounce) 216 214 218 215
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FINANCIAL POSITION
(in millions of $) September 30, 2001 December 31, 2000
Cash and cash equivalents 7 4
Total assets 247 283
Total debt 51 130
Deferred revenue 52 -
Shareholders' equity 94 108
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This data concerns continuing operations only except for the net
earnings (loss) and gold production statistics.
(1) Earnings before interest, taxes, depreciation and amortization and
unrealized loss/gain on derivative instruments (Note 3 of the
notes to unaudited financial statements).
(2) Cash flows from operating activities in 2001 are presented without
the deferred revenue.
CAMBIOR INC.
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GOLD PRODUCTION STATISTICS Three months Nine months
ended September 30, ended September 30,
2001 2000 2001 2000
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Omai (100%)
Production (ounces) 88,600 84,600 263,200 243,200
Tonnage milled (t) 1,994,000 1,936,700 5,889,400 5,865,300
Grade milled (g Au/t) 1.48 1.46 1.50 1.38
Recovery (%) 93 93 93 94
Direct mining costs
($ per tonne milled) 10 10 10 9
Direct mining costs
($ per ounce) 217 222 219 224
Depreciation ($ per ounce) 52 81 53 86
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Doyon Division (1)
Production (ounces) 52,400 55,200 166,700 173,000
Tonnage milled (t)
Underground mines 272,000 314,200 872,500 935,100
Low grade stockpile 65,400 32,300 131,500 69,100
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Total 337,400 346,500 1,004,000 1,004,200
Grade milled (g Au/t)
Underground mines 6.1 5.5 6.1 5.9
Low grade stockpile 1.0 1.7 1.0 1.5
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Average 5.1 5.2 5.4 5.6
Recovery (%) 95 96 95 96
Direct mining costs
($ per tonne milled) 33 34 36 37
Direct mining costs
($ per ounce) 214 212 217 216
Depreciation ($ per ounce) 70 82 68 81
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Sleeping Giant (50%)
Production (ounces) 7,900 9,800 24,300 29,900
Tonnage milled (t) 25,800 25,800 79,800 81,800
Grade milled (g Au/t) 9.9 12.2 9.8 11.7
Recovery (%) 97 97 97 97
Direct mining costs
($ per tonne milled) 68 63 65 63
Direct mining costs
($ per ounce) 221 166 212 173
Depreciation
($ per ounce) 57 55 54 52
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Bouchard-Hebert/Langlois
(ounces) (2) - - - 12,200
Direct mining costs
($ per ounce) - - - 127
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TOTAL GOLD PRODUCTION
(ounces) 148,900 149,600 454,200 458,300
DIRECT MINING COSTS
($ per ounce) 216 214 218 215
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CONSOLIDATED GOLD PRODUCTION COSTS
($ per ounce)
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Direct mining costs 216 214 218 215
Refining and transportation 2 2 2 3
By-product credits (3) (1) (2) (2)
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Operating costs 215 215 218 216
Royalties 8 8 8 8
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Total cash costs 223 223 226 224
Depreciation 57 80 58 81
Reclamation 3 3 3 3
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Total production costs 283 306 287 308
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METAL PRODUCTION
Niobec (50 %)
Production of Ferroniobium
(tonnes Nb) 354 261 1,073 807
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(1) Includes the Doyon and Mouska mines. (2) Gold and silver produced at the Bouchard-Hebert and Langlois Langlois is a surname, and may refer to:
are reported in gold equivalent. Amounts shown reflect results to April 30, 2000. The Bouchard-Hebert and Langlois mines were sold as of May 1, 2000. THIRD QUARTER 2001 MANAGEMENT'S DISCUSSION AND ANALYSIS Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial The following discussion and analysis should be read in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the Management's Discussion and Analysis (MD&A) for the year ended December 31, 2000, the Company's annual audited consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge , the notes relating thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. , supplementary financial information contained in the Company's Annual Report, and the quarterly financial statements and notes contained in this report. During the third quarter, the Company continued its efforts to reduce debt and return to profitability. Highlights for the quarter were: - Reduction in debt of $15.4 million; - Initiation of deliveries on the prepaid gold forward sale agreement for $3.1 million reduction; - Steady Gold production; - Increase in niobium production; - Implementation of aggressive investment program for the renewal of reserve base. CONSOLIDATED con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: OPERATIONS Gold production for the third quarter of 2001 totalled 148,900 ounces similar to the corresponding quarter in 2000. Cambior also produced 354 tonnes of niobium, a 36% increase over the corresponding quarter in 2000 due to the successful completion of the Niobec mine expansion in late 2000. Revenues from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the totalled $48.4 million in the third quarter of 2001 as compared to $51.8 million for the same quarter last year. The operating margin (EBITDA(1)) was $9.9 million as compared to $13.2 million for the corresponding quarter of 2000. Revenues and EBITDA for the third quarter of 2001 were lower than the third quarter of last year mainly due to a lower realized gold price of $293 per ounce compared to $318 per ounce in 2000. These amounts exclude the base metals assets, which are accounted for as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . (1) EBITDA: Earnings before interest, taxes, depreciation and amortization and unrealized loss/gain on derivative instruments (Note 3 of the notes to unaudited consolidated financial statements). For the first nine months of 2001, gold production totalled 454,200 ounces, compared to 458,300 ounces produced in the same period last year. Cambior's share of production from the Niobec mine amounted to 1,073 tonnes of niobium, a 33% increase over the same period last year. Revenues from continuing operations totalled $145.8 million as compared to $157.7 million for the same period last year. The EBITDA was $25.8 million as compared to $40.3 million for the corresponding period of 2000. Lower realized gold price per ounce sold contributed to the revenue decline in 2001. Cambior is making steady progress towards returning to profitability as its loss for the third quarter of 2001, prior to the non-cash adjustment in the valuation of non-hedge derivative instruments was $0.3 million compared to a loss of $1.4 million in the second quarter of 2001 and $13.5 million loss for the corresponding period in 2000. Including this adjustment, the Company incurred a net loss $8.5 million (9 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. ) for the third quarter of 2001 compared to restated net earnings of $10.5 million (14 cents per share) for the corresponding quarter in 2000, including a $9.7 million loss from discontinued operations. (By way of comparison, based on the closing gold price of $276 an ounce on October 24, 2001, the non-cash adjustment would have resulted in a gain of $2.5 million instead of the loss of $8.2 million). The same adjustment was favourable by $24.0 million in 2000 when the reduction in market price from the previous quarter was $14 per ounce. The net loss was $20.3 million (22 cents per share) for the first nine months of 2001 compared to net earnings $20.1 million (28 cents per share), for the corresponding period in 2000, taking into consideration a net loss from discontinued operations of $7.3 million. The net loss before the non-cash adjustment on derivative instruments was $7.1 million for the nine months of 2001 compared to a loss of $16.5 million in 2000. EXPENSES Mine operating costs operating costs npl → gastos mpl operacionales in the third quarter of 2001 totalled $36.9 million, slightly lower than the third quarter of 2000. In terms of cost per ounce, direct mining costs were $216 per ounce in the third quarter of 2001, higher than the $214 per ounce of the corresponding quarter of 2000. Mine operating costs for the first nine months of 2001 totalled $115.3 million and direct mining costs were $218 per ounce. The operating statistics for the gold operations are as follows:
---------------------------------------------------------------------
Three months ended September 30,
2001 2000
---------------------------------------------------------------------
Ounces Direct Ounces Direct
mining cost mining cost
($/ounce) ($/ounce)
---------------------------------------------------------------------
Omai mine 88,600 217 84,600 222
Doyon Division 52,400 214 55,200 212
Sleeping Giant mine (50%) 7,900 221 9,800 166
Bouchard-Hebert/Langlois
mines (1) - - - -
---------------------------------------------------------------------
148,900 216 149,600 214
---------------------------------------------------------------------
Nine months ended September 30,
2001 2000
---------------------------------------------------------------------
Ounces Direct Ounces Direct
mining cost mining cost
($/ounce) ($/ounce)
---------------------------------------------------------------------
Omai mine 263,200 219 243,200 224
Doyon Division 166,700 217 173,000 216
Sleeping Giant mine (50%) 24,300 212 29,900 173
Bouchard-Hebert/Langlois
mines (1) - - 12,200 127
---------------------------------------------------------------------
454,200 218 458,300 215
---------------------------------------------------------------------
(1) The Bouchard-Hebert and Langlois mines were sold in the second
quarter of 2000.
Depreciation, depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able and amortization amounted to $8.9 million in the third quarter of 2001 compared to $12.3 million in the corresponding quarter of 2000. The decrease in the third quarter of 2001 resulted from the writedown writedown A reduction in the value of an asset carried on a firm's financial statements. For example, the firm's accountants, believing the inventory is overvalued, may decide to take a writedown by reducing inventory valuation. of mining assets at the end of 2000. Depreciation depletion and amortization amounted to $28.0 million for the first nine months of 2001 compared to $37.3 million in 2000. Financial expenses for the quarter amounted to $1.2 million compared to $4.5 million in 2000, and $4.7 million for the first nine-month period versus $12.3 million in 2000. The lower charges are mainly attributable to the reduction in debt from the proceeds from the Prepaid Gold Forward Sale Agreement ($55.0 million), the disposal of the La Granja La Granja, Spain: see San Ildefonso. Project in December 2000 ($35.0 million) and lower interest rates. Benefiting from significant tax pools and losses, the Company is not subject to cash taxes on its earnings. The Company is however liable liable adj. responsible or obligated. Thus, a person or entity may be liable for damages due to negligence, liable to pay a debt, liable to perform an act for which he/she/it contracted to do, or liable to punishment for commission of a crime. for capital taxes and taxes on large corporation in Canada. REVENUE PROTECTION PROGRAM AND GOLD MARKET The tragic terrorist attacks of September 11, 2001 in the United States resulted in an increase in the month-end gold closing price to $293 an ounce compared to $271 per ounce price on June 30, 2001. During the quarter, gold averaged $274 per ounce, up $6 per ounce over the average of the previous quarter. The recent events clearly demonstrated the volatility of the gold price caused by geopolitical and economic events. In order to secure the cash operating margins at its mines and to reduce unfavourable exposure to the volatility of the gold price, the Company maintains a Revenue Protection Program for its gold operations. The effectiveness of the strategy can be measured through the comparison of the average realized price to the average market price over time. During the third quarter, the Company realized a price of $293 per ounce compared to an average market price of $274 per ounce. For the year-to-date, the realized price was $287 per ounce, $18 higher than the average market price during the period. The Company calculates the mark-to-market value of all instruments used in the establishment of its Revenue Protection Program. The valuation is calculated independently, based on the market conditions at the end of the period, of which the gold price is a major component. In accordance with the recently adopted accounting principles in Canada, the Company records in the income statement the change in the valuation of its variable volume forward and call options commitments ("optionalities"). Due to a gold market price increase of $22 an ounce, the mark-to-market value of these optionalities has been reduced by $8.2 million. This charge has no impact on cash flow and will decrease as these instruments expire with the delivery of the ounces under these optionalities. At September 30, 2001, the Company had gold commitments of 969,000 ounces at an average price $328 per ounce with minimum delivery obligations of 306,000 ounces at $338 per ounce under these optional instruments, which is 19% higher than current market price. In order to avoid these non-cash adjustments in future, the Company has decided to minimize the use of these instruments and the mark-to-market value of these instruments will become nil and have no further impact on the Company's earnings subsequent to 2004. As at September 30, 2001, optionalities declined by 30% from the beginning of the year. At September 30, 2001, the Company had minimum delivery obligations of 1,413,000 ounces at a price of $297 per ounce and total commitments of 2,076,000 ounces at a price of $305 per ounce. The commitments include the optionalities described above.
The estimated mark-to-market position is summarized as follows:
---------------------------------------------------------------------
September June December September June December
30, 30, 31, 30, 30, 31,
2001 2001 2000 2000 2000 1999
---------------------------------------------------------------------
Closing gold
market price
($/oz) 293 271 273 274 288 290
---------------------------------------------------------------------
Mark-to-market value
of hedge derivatives
and Prepaid
Gold Forward
instruments (M$) (14.3) (2.1) 3.5 (0.6) (8.6) (19.7)
Mark-to-market
value of non-hedge
derivative
instruments
recognized
in the balance
sheet (M$) (7.2) 1.0 6.1 0.8 (23.2) (35.7)
---------------------------------------------------------------------
Estimated
mark-to-market value
- Revenue protection
program (M$) (21.5) (1.1) 9.6 0.2 (31.8) (55.4)
---------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
2001 2000 2001 2000
---------------------------------------------------------------------
Impact on earnings of non-hedge
derivative instruments (M$)
Mark-to-market value at the end
of period (7.2) 0.8 (7.2) 0.8
Mark-to-market value at the
beginning of period 1.0 (23.2) 6.1 (35.7)
---------------------------------------------------------------------
Unrealized gain (loss) on
derivative instruments (8.2) 24.0 (13.2) 36.5
---------------------------------------------------------------------
As at October 24, 2001, with a closing gold market price of $276 per ounce, the estimated mark-to-market value for the Cambior's Revenue Protection Program is $6.1 million. Based on these market conditions, the unrealized gain Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. on derivative instruments would be $2.5 million compared to a loss of $8.2 million accounted in the quarter. CASH FLOWS FROM OPERATING ACTIVITIES Cash flows from operating activities were $1.3 million (1 cents per share) in the third quarter of 2001 compared to $3.9 million (5 cents per share) for the corresponding quarter in 2000. The difference is mainly due to the non-cash revenue of $3.1 million from the delivery of 12,978 ounces of prepaid gold (deferred revenue). For the first nine months of 2001, cash flows from operating activities were $76.1 million (84 cents per share) compared to $22.0 million (30 cents per share) in the same period in 2000. The cash flows in 2001 include the receipt of $51.9 million net of the delivery of 12,978 ounces of prepaid gold (deferred revenue). INVESTMENTS Investments related to continuing mining operations for the third quarter of 2001 totalled $5.2 million compared to $6.4 million for the same period last year, representing an 18% decrease. Investments were principally for underground development at the Doyon Division ($1.9 million) and stripping costs at Omai ($2.1 million). Investments relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc continuing mining operations for the first nine months of 2001 totalled $15.9 million compared to $15.6 million for the same period last year. RESERVE DEVELOPMENT AND EXPLORATION The Company committed to an investment of $6.5 million in 2001 towards the search for new gold mineral reserves and resources. More than 80% of these funds are targeted on or near the Company's operating mines. The program is partially funded by a $1.3 million grant from the Quebec Government and a reduction in the gold royalty rate payable to the Government of Guyana on Omai production. More than 10 drills are currently active in the execution of these surface and underground programs. This initiative has yielded early results with the development of the new high-grade gold lenses at the Sleeping Giant Mine, which will add a minimum of two additional years to the mine life. SALE OF ASSETS During the third quarter of 2001, the Company sold its interest in the El Pachon Project, pursuant to the agreement with Noranda Noranda: see Rouyn-Noranda, Que., Canada. Inc. signed in June 2001, for a total consideration of $15.0 million, with $13.0 million paid in September and $2.0 million at the time Noranda makes a production decision but not later than September 2005. The proceeds from that sale were used mainly to reduce indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. . FINANCING ACTIVITIES During the third quarter of 2001, the Company reimbursed a total of $11.7 million under the Revised Credit Facility with proceeds received from the sale of the El Pachon Project. The Company also reimbursed the remaining mortgage loan on its interest in Niobec following the issuance of common shares totalling $3.7 million to its largest shareholder, Jipangu Inc. The Company further strengthened its capital base through the issuance of Cdn$800,000 ($520,000) in flow through shares in July to fund exploration projects. During the first nine months of 2001, the Company reimbursed $65.3 million under the Revised Credit Facility with proceeds received from the sale of assets and the proceeds from prepaid gold forward sale agreement. The mortgage loan of $13.0 million was also reimbursed. During that period, the Company issued 22.3 million common shares for a total of $10.5 million. HUMAN RESOURCES The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. The Company entered into 3-year labor agreements with its unionized employees at the Mouska and Niobec operations. RISKS By the very nature of its activities, the Company is subject to various financial, operational and political risks in the normal course of business. While the Company assesses and minimizes these risks by applying high operating standards, including the careful managing and planning of its facilities, hiring qualified personnel and developing their skills through training and development programs, establishing and maintaining internationally-recognized standards, independent audits and the purchase of insurance policies, these risks cannot be eliminated. Thus, readers are urged to read and consider the risk factors more particularly described in the Company's Annual Report on Form 20-F filed with the regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities of Canada (as its Annual Information Form) and of the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, .
CAMBIOR INC.
---------------------------------------------------------------------
CONSOLIDATED OPERATIONS Three months Nine months
(in thousands of US dollars) ended September 30, ended September 30,
2001 2000 2001 2000
(unaudited) $ $ $ $
---------------------------------------------------------------------
REVENUES
Sales 48,368 51,616 145,159 157,106
Investment and
other income 66 202 683 603
---------------------------------------------------------------------
48,434 51,818 145,842 157,709
---------------------------------------------------------------------
EXPENSES
Mining operations 36,948 37,303 115,329 112,403
Depreciation, depletion
and amortization 8,917 12,292 28,028 37,328
Exploration 607 327 1,557 1,748
General and administrative 722 637 2,542 2,305
Capital tax 277 358 637 928
Financial expenses 1,175 4,531 4,640 12,298
---------------------------------------------------------------------
48,646 55,448 152,733 167,010
---------------------------------------------------------------------
Loss before the
undernoted items (212) (3,630) (6,891) (9,301)
Unrealized gain (loss)
on derivative instruments
(Note 2) (8,182) 24,021 (13,219) 36,549
Income and mining taxes (101) (102) (195) 116
---------------------------------------------------------------------
Earnings (Loss) from
continuing operations (8,495) 20,289 (20,305) 27,364
Results of discontinued
operations - (9,746) - (7,275)
---------------------------------------------------------------------
Net earnings (loss) (8,495) 10,543 (20,305) 20,089
---------------------------------------------------------------------
Net earnings (loss)
per share (in dollars)
Continuing operations (0.09) 0.27 (0.22) 0.38
Discontinued operations - (0.13) - (0.10)
---------------------------------------------------------------------
(0.09) 0.14 (0.22) 0.28
---------------------------------------------------------------------
Weighted average number of
common shares outstanding
(in thousands) 91,586 75,563 90,303 72,278
---------------------------------------------------------------------
CAMBIOR INC.
---------------------------------------------------------------------
CONSOLIDATED CONTRIBUTED SURPLUS AND DEFICIT
(in thousands of US dollars)
(unaudited) Three months Nine months
ended September 30, ended September 30,
2001 2000 2001 2000
$ $ $ $
---------------------------------------------------------------------
CONTRIBUTED SURPLUS
Balance, beginning 23,047 22,922 23,047 361,542
Transfer to deficit - - - (338,620)
---------------------------------------------------------------------
Balance, ending 23,047 22,922 23,047 22,922
---------------------------------------------------------------------
DEFICIT
Balance, beginning as
previously reported (121,274) (1,508) (109,374) (338,620)
Cumulative adjustment to
the opening balance
(Note 2) - (16,679) - (27,674)
---------------------------------------------------------------------
Restated balance,
beginning (121,274) (18,187) (109,374) (366,294)
Net earnings (loss) (8,495) 10,543 (20,305) 20,089
Transfer from
contributed surplus - - - 338,620
Share issue expenses,
net of income taxes (56) (10) (146) (69)
---------------------------------------------------------------------
Balance, ending (129,825) (7,654) (129,825) (7,654)
---------------------------------------------------------------------
CAMBIOR INC.
---------------------------------------------------------------------
CONSOLIDATED CASH FLOWS
(in thousands of US dollars) Three months Nine months
ended September 30, ended September 30,
(unaudited) 2001 2000 2001 2000
$ $ $ $
---------------------------------------------------------------------
OPERATING ACTIVITIES
Net earnings (loss) (8,495) 10,543 (20,305) 20,089
Deferred revenue (3,055) - 51,945 -
Non-cash items:
Depreciation, depletion
and amortization 8,917 12,292 28,028 38,904
Discontinued operations - 8,581 - 8,581
Unrealized loss (gain) on
derivative instruments
(Note 2) 8,182 (24,021) 13,219 (36,549)
Deferred gains (2,491) (2,412) (1,162) (10,358)
Future income and
mining taxes 27 (30) - 261
Provision for
environmental obligations 421 291 1,235 1,507
Other 108 187 375 461
---------------------------------------------------------------------
3,614 5,431 73,335 22,896
Changes in non-cash working
capital items (2,286) (1,469) 2,741 (864)
---------------------------------------------------------------------
Cash flows from
operating activities 1,328 3,962 76,076 22,032
---------------------------------------------------------------------
INVESTING ACTIVITIES
Investments - - 841 (249)
Property, plant
and equipment (5,242) (6,365) (15,860) (15,560)
Assets disposal - - - 11,221
Discontinued operations 12,652 (748) 12,138 29,729
---------------------------------------------------------------------
Cash flows from (used in)
investing activities 7,410 (7,113) (2,881) 25,141
---------------------------------------------------------------------
FINANCING ACTIVITIES
Long-term debt - Borrowings - - - 13,000
Long-term debt - Repayments (11,737) (36) (68,432) (62,781)
Deferred financing charges - - (2,521) -
Shares and warrants issues 464 (10) 810 5,056
---------------------------------------------------------------------
Cash flows used in
financing activities (11,273) (46) (70,143) (44,725)
---------------------------------------------------------------------
Foreign exchange gain on cash
held in foreign currency 143 67 564 1,046
---------------------------------------------------------------------
Net increase (decrease) in
cash and cash equivalents (2,392) (3,130) 3,616 3,494
Cash and cash equivalents,
beginning of period 9,556 12,555 3,548 5,931
---------------------------------------------------------------------
Cash and cash equivalents,
end of period 7,164 9,425 7,164 9,425
---------------------------------------------------------------------
Cash flows from operating
activities per share
(in dollars) 0.01 0.05 0.84 0.30
---------------------------------------------------------------------
Weighted average number of
common shares outstanding
(in thousands) 91,586 75,563 90,303 72,278
---------------------------------------------------------------------
CAMBIOR INC.
---------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS September 30, December 31,
(in thousands of US dollars) 2001 2000
$ $
(unaudited) (audited)
---------------------------------------------------------------------
ASSETS
Current assets
Cash and cash equivalents 7,164 3,548
Settlements receivable 2,397 1,542
Other accounts receivable 2,986 4,032
Production inventories 6,137 10,874
Supplies inventory and
prepaid expenses 19,803 19,008
---------------------------------------------------------------------
38,487 39,004
Investments 1,910 1,213
Property, plant and equipment 204,328 235,872
Deferred financing charges 2,601 550
Fair-value of non-hedge derivatives - 6,061
---------------------------------------------------------------------
247,326 282,700
---------------------------------------------------------------------
LIABILITIES
Current liabilities
Accounts payable and
accrued liabilities 23,285 24,652
Current portion of long-term debt 3,897 118,457
Current portion of deferred revenue 12,222 -
Deferred gains 6,946 8,108
---------------------------------------------------------------------
46,350 151,217
Long-term debt (Note 7) 47,217 11,089
Deferred revenue (Note 7) 39,723 -
Fair-value of non-hedge derivatives 7,158 -
Provision for environmental
obligations and other 13,228 12,181
---------------------------------------------------------------------
153,676 174,487
---------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Capital stock 220,917 209,961
Contributed surplus 23,047 23,047
Deficit (129,825) (109,374)
Cumulative translation adjustment (20,489) (15,421)
---------------------------------------------------------------------
93,650 108,213
---------------------------------------------------------------------
247,326 282,700
---------------------------------------------------------------------
NOTES AND COMMENTS TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES The accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. unaudited financial statements are prepared in accordance with Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting for interim financial statements and do not include all the information required for complete financial statements. They are consistent with the policies outlined in the Company's audited financial statements for the year ended December 31, 2000. The interim financial statements and related notes should be read in conjunction with the Company's audited financial statements for the year ended December 31, 2000. When necessary, the financial statements include amounts based on informed estimates and best judgements of management. The results of operations for the interim periods reported are not necessarily indicative indicative: see mood. of results to be expected for the year. 2. UNREALIZED LOSS/GAIN ON DERIVATIVE INSTRUMENTS On October 24, 2000, the Emerging Issues Committee ("EIC EIC Editor-In-Chief EIC Euro Info Centre (DIN) EIC Earned Income Credit EIC Excellence in Cities (UK) EIC Enterprise Interaction Center (Interactive Intelligence) ") of the Canadian Institute of Chartered Accountants The Canadian Institute of Chartered Accountants (CICA) is the umbrella body for the Chartered Accountant profession in Canada and Bermuda. Membership of the CICA totals 70,000 Chartered Accountants and 8,500 students. issued EIC-113 "Accounting by Commodity Producers for Written Call Options". Under EIC-113, unmatched written call options are required to be marked-to-market Marked-to-market An arrangement whereby the profits or losses on a futures contract are settled each day. with any resulting change in value recognized in the current operating period. The Company has applied retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin EIC-113 for its accounting treatment of written call options and variable volume forward contracts with restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of prior years and prior periods. 3. EBITDA Earnings before interest, taxes, depreciation and amortization and unrealized loss/gain on derivative instruments are summarized as follows:
---------------------------------------------------------------------
Three months Nine months
ended September 30, ended September 30,
2001 2000 2001 2000
$000 $000 $000 $000
---------------------------------------------------------------------
Net earnings (loss) (8,495) 10,543 (20,305) 20,089
Add (Deduct):
Unrealized loss (gain) on
derivative instruments 8,182 (24,021) 13,219 (36,549)
---------------------------------------------------------------------
Net loss before unrealized
loss (gain) on derivative
instruments (313) (13,478) (7,086) (16,460)
Results of
discontinued operations - 9,746 - 7,275
Depreciation, depletion
and amortization 8,917 12,292 28,028 37,328
Financial expenses 1,175 4,531 4,640 12,298
Income and mining taxes 101 102 195 (116)
---------------------------------------------------------------------
EBITDA 9,880 13,193 25,777 40,325
---------------------------------------------------------------------
4. DISCONTINUED OPERATIONS As part of its restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). program, the Company decided in the first quarter of 2000 to actively pursue the process of reducing the level of indebtedness by concentrating its efforts in the disposal of its base metal assets. Consequently and in accordance with generally accepted accounting principles in Canada, the Company presents its base metal assets as discontinued operations. On September 28, 2001, the Company sold its interest in the El Pachon Project, pursuant to the agreement with Noranda Inc., signed on June 28, 2001, for a total consideration of $15,000,000, with $13,000,000 paid in September and $2,000,000 at the time Noranda makes a production decision but not later than September 2005. The proceed from the sale was used mainly to reduce indebtedness for $11,700,000 and to pay fees related to the credit facility. The El Pachon sale concludes the financial restructuring program. The Company decided not to consider its Carlota Car·lo·ta 1840-1927. Belgian-born empress of Mexico (1864-1867) as the wife of Archduke Maximilian of Austria. Project as part of the discontinued operations anymore. As per generally accepted accounting principles in Canada, the results of the Carlota project has been reclassified as continuing operations. This reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. has no impact on net earnings (loss). 5. REVENUE PROTECTION PROGRAM a) Selling price
---------------------------------------------------------------------
Three months Nine months
ended September 30, ended September 30,
2001 2000 2001 2000
($ per ounce) $ $ $ $
---------------------------------------------------------------------
Market price 274 277 269 282
Cambior's premium 19 41 18 42
---------------------------------------------------------------------
Accounting realized price 293 318 287 324
---------------------------------------------------------------------
The average market price during the third quarter of 2001 was $274
per once. The gold hedging program generated net additional revenues
of $2,832,000 ($19 per ounce) giving an accounting realized price of
$293 per ounce.
b) Gold sales
The Company's gold sales commitments as at September 30, 2001 are
presented in the following table.
---------------------------------------------------------------------
As at September 30, 2001
---------------------------------------------------------------------
2001 2002 2003
(3 months)
---------------------------------------------------------------------
FORWARDS
Quantity (000 ozs) 91 180 269
Average price ($/oz) 288 288 287
PREPAID GOLD FORWARDS
Quantity (000 ozs) 13 52 52
Average price ($/oz) 235 235 235
VARIABLE VOLUME
FORWARDS(1)
Minimum quantity (000 ozs) - 68 69
Average price ($/oz) - 332 336
---------------------------------------------------------------------
MINIMUM DELIVERY
OBLIGATIONS(2)
Quantity (000 ozs) 104 300 390
Average price ($/oz) 281 289 289
---------------------------------------------------------------------
CALL OPTIONS(3)(4)
Quantity (000 ozs) 49 216 53
Average price ($/oz) 290 322 300
VARIABLE VOLUME
FORWARDS(1) (4)
Variable quantity (000 ozs) 24 60 60
Average price ($/oz) 339 332 336
---------------------------------------------------------------------
TOTAL DELIVERY
COMMITMENTS(5)
Quantity (000 ozs) 177 576 503
Average price ($/oz) 292 306 296
---------------------------------------------------------------------
DEFFERRED GAINS (6) ($M) 4.5 2.4 -
---------------------------------------------------------------------
---------------------------------------------------------------------
As at September 30, 2001
---------------------------------------------------------------------
2004 2005 2006 2007 Total
---------------------------------------------------------------------
FORWARDS
Quantity (000 ozs) 105 86 102 53 886
Average price ($/oz) 300 302 323 350 298
PREPAID GOLD FORWARDS
Quantity (000 ozs) 52 52 - - 221
Average price ($/oz) 235 235 - - 235
VARIABLE VOLUME
FORWARDS(1)
Minimum quantity (000 ozs) 68 69 28 4 306
Average price ($/oz) 338 342 346 350 338
---------------------------------------------------------------------
MINIMUM DELIVERY
OBLIGATIONS(2)
Quantity (000 ozs) 225 207 130 57 1,413
Average price ($/oz) 296 299 328 350 297
---------------------------------------------------------------------
CALL OPTIONS(3)(4)
Quantity (000 ozs) 53 - - - 371
Average price ($/oz) 300 - - - 312
VARIABLE VOLUME
FORWARDS(1) (4)
Variable quantity (000 ozs) 60 60 25 3 292
Average price ($/oz) 338 342 346 350 338
---------------------------------------------------------------------
TOTAL DELIVERY
COMMITMENTS(5)
Quantity (000 ozs) 338 267 155 60 2,076
Average price ($/oz) 304 308 331 350 305
---------------------------------------------------------------------
DEFFERRED GAINS (6) ($M) - - - - 6.9
---------------------------------------------------------------------
(1) The Variable Volume Forward (VVF) position is for a nominal
quantity of 380,000 ounces maturing at fixed delivery dates from
October 2001 to October 2007. The delivery dates and strike prices
are fixed, but the quantity to be delivered during any specific
month may vary from a minimum of 80% up to a maximum of 150% of
the nominal quantity based on a spot gold price ranging from $276
per ounce to $350 per ounce. Monthly test dates are set between
October 2001 and May 2004.
(2) The minimum delivery obligations include all forward contracts,
the prepaid gold forward contracts and the minimum ounces
deliverable under the VVF contracts.
(3) Some 71% of the call options expire over the next 15-month period,
from October 2001 to December 2002. They have a strike price
ranging from $290 to $340 per ounce for an average price of $312
per ounce. The Company's contingent delivery obligations under
such contracts will only take effect if the gold price is above
the strike price of the relevant contract at its maturity date.
(4) Certain call options sold, fixed forward and VVF positions,
totalling 1.0 million ounces, include a swap of the gold lease
rate for the duration of the contracts. Pursuant to the swap
agreements, the Company pays the floating rate and the
counter-parties pay a fixed rate of 1.25% to 1.75% per annum.
(5) The total delivery commitments include all forward contracts,
prepaid gold forward sales, the maximum ounces deliverable under
the VVF contracts and the call option contracts.
(6) Deferred gains include gains realized by the conversion of the
gold loans into dollar loans during 1997 and 1998. Additional
gains were deferred resulting from the anticipated delivery of
gold against contracts with original expiry dates in 2001 and
2002. These amounts will be included in revenues in the fourth
quarter of 2001 and in 2002.
(7) The estimated mark-to-market value of Cambior's gold sales
commitments as at September 30, 2001 is negative $21,492,000 of
which a loss of $7,158,000 was accounted for in the balance sheet
as Fair value on non-hedge derivative instruments.
6. SEGMENTED INFORMATION
The Company operates four gold mines: Omai, located in Guyana;
Doyon, which includes the Mouska mine, and Sleeping Giant (50%
ownership through a joint venture), located in Quebec, Canada. The
Company is also a 50% owner, through a joint venture, of the Niobec
Mine, a niobium operation located in Quebec, Canada.
---------------------------------------------------------------------
Omai Doyon Sleeping Niobec
Giant
$000 $000 $000 $000
---------------------------------------------------------------------
Three months ended
September 30, 2001
Revenues - Sales 27,231 14,642 2,198 4,297
Investment income
and other revenues 8 - - -
Financial expenses 1,118 - - -
Depreciation,
depletion and
amortization 4,567 3,645 205 353
Divisional earnings
(loss) 791 (416) 233 1,260
Capital expenditures 2,111 1,908 167 298
---------------------------------------------------------------------
Three months ended
September 30, 2000
Revenues - Sales 28,227 16,634 2,943 3,812
Investment income
and other revenues 16 - - -
Financial expenses 4,310 - - -
Depreciation,
depletion and
amortization 6,893 4,519 538 313
Divisional earnings
(loss) (3,353) 239 760 467
Capital expenditures
(dispositions) 2,587 2,191 379 647
---------------------------------------------------------------------
Nine months ended
September 30, 2001
Revenues - Sales 78,766 45,754 6,705 13,934
Investment income
and other revenues 28 - - -
Financial expenses 4,057 (86) - -
Depreciation,
depletion and
amortization 14,046 11,372 1,063 1,087
Divisional earnings
(loss) (1,699) (2,141) 455 2,631
Capital expenditures
(dispositions) 7,267 5,747 798 755
Property, plant and
equipment 64,891 92,776 4,381 11,888
Divisional assets 82,273 96,875 5,053 18,299
---------------------------------------------------------------------
Nine months ended
September 30, 2000
Revenues - Sales 83,388 52,956 9,121 11,641
Investment income
and other revenues 43 - - -
Financial expenses 11,372 - - -
Depreciation,
depletion and
amortization 20,875 13,985 1,554 813
Divisional earnings
(loss) (8,132) 1,153 2,351 1,835
Capital expenditures
(dispositions) 6,243 8,147 634 2,456
Property, plant and
equipment 117,968 156,255 4,943 12,504
Divisional assets 135,977 159,188 5,252 18,148
---------------------------------------------------------------------
---------------------------------------------------------------------
Corporate
Discontinued and
Operations others Total
$000 $000 $000
---------------------------------------------------------------------
Three months ended
September 30, 2001
Revenues - Sales - - 48,368
Investment income
and other revenues - 58 66
Financial expenses - 57 1,175
Depreciation,
depletion and
amortization - 147 8,917
Divisional earnings
(loss) - (2,080) (212)
Capital expenditures (12,652) 758 (7,410)
---------------------------------------------------------------------
Three months ended
September 30, 2000
Revenues - Sales - - 51,616
Investment income
and other revenues - 186 202
Financial expenses - 221 4,531
Depreciation,
depletion and
amortization - 29 12,292
Divisional earnings
(loss) (9,746) (1,743) (13,376)
Capital expenditures
(dispositions) 748 561 7,113
---------------------------------------------------------------------
Nine months ended
September 30, 2001
Revenues - Sales - - 145,159
Investment income
and other revenues - 655 683
Financial expenses - 669 4,640
Depreciation,
depletion and
amortization - 460 28,028
Divisional earnings
(loss) - (6,137) (6,891)
Capital expenditures
(dispositions) (12,138) 452 2,881
Property, plant and
equipment - 30,392 204,328
Divisional assets - 44,826 247,326
---------------------------------------------------------------------
Nine months ended
September 30, 2000
Revenues - Sales - - 157,106
Investment income
and other revenues - 560 603
Financial expenses - 926 12,298
Depreciation,
depletion and
amortization - 101 37,328
Divisional earnings
(loss) (7,275) (6,508) (16,576)
Capital expenditures
(dispositions) (29,729) (12,892) (25,141)
Property, plant and
equipment 47,031 33,796 372,497
Divisional assets 47,031 53,038 418,634
---------------------------------------------------------------------
Reconciliation of reportable operating divisional earnings
(losses) to net earnings (loss) is as follows:
---------------------------------------------------------------------
Three months Nine months
ended September 30, ended September 30,
2001 2000 2001 2000
$000 $000 $000 $000
---------------------------------------------------------------------
Divisional earnings
(losses) of mines 1,868 (1,887) (754) (2,793)
Results of
discontinued operations - (9,746) - (7,275)
Corporate and others (2,080) (1,743) (6,137) (6,508)
---------------------------------------------------------------------
(212) (13,376) (6,891) (16,576)
Unrealized gain (loss) on
derivative instruments (8,182) 24,021 (13,219) 36,549
Income and mining taxes (101) (102) (195) 116
---------------------------------------------------------------------
Net earnings (loss) (8,495) 10,543 (20,305) 20,089
---------------------------------------------------------------------
7. RESTRUCTURING PROGRAM The Company completed its financial restructuring with the simultaneous closing Simultaneous Closing is a real estate seller financing technique, whereby the private mortgage note created by the seller is simultaneously sold to a note buyer on closing. of a $65,000,000 revised Credit Facility, a $55,000,000 Prepaid Gold Forward Sale Agreement and the conversion of the remaining mortgage loan in respect of the Company's 50% interest in the Niobec Mine into equity and subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". . Proceeds of the new facilities were used to reimburse re·im·burse tr.v. re·im·bursed, re·im·burs·ing, re·im·burs·es 1. To repay (money spent); refund. 2. To pay back or compensate (another party) for money spent or losses incurred. the amount outstanding of $115,575,000 due under the December 22, 1999 Amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. Restated Credit Facility and other borrowings. Revised Credit Facility The revised Credit Facility consists of: (a) $55,000,000 non revolving term loan with a maturity date of December 31, 2005; and (b) $10,000,000 revolving loan due on December 31, 2005. Minimum repayments under the facility as at September 30, 2001 are:
---------------------------------------------------------------------
Term loan Revolving loan Total
$000 $000 $000
---------------------------------------------------------------------
2002 5,000 - 5,000
2003 20,000 - 20,000
2004 17,994 - 17,994
2005 - 7,275 7,275
---------------------------------------------------------------------
42,994 7,275 50,269
---------------------------------------------------------------------
The interest rate will vary from to 2% to 3% above LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). based on a quarterly calculation of the ratio of the net present value of projected cash flows to the Net Senior Debt outstanding. The Company is required to maintain various covenants and financial ratios including a revised Mandatory Peremptory; obligatory; required; that which must be subscribed to or obeyed. Mandatory statutes are those that require, as opposed to permit, a particular course of action. Hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. Program ("Program.") The Company must ensure that under the Program: (i) total gold delivery commitments do not exceed 90% of proven and probable reserves; (ii) total gold delivery commitments do not exceed 100% of its estimated production (net of royalties Not to be confused with Royal family. Royalties (sometimes, running royalties) are usage-based payments made by one party (the "licensee") to another (the "licensor") for ongoing use of an asset, most typically an intellectual property (IP) right. ) during the loan period; and (iii) sufficient hedges are in place to cover a minimum of 70% of its estimated gold production during the loan period at a minimum hedged hedge n. 1. A row of closely planted shrubs or low-growing trees forming a fence or boundary. 2. A line of people or objects forming a barrier: a hedge of spectators along the sidewalk. price of at least $290 per ounce. Under the terms of the Agreement, Cambior can roll forward its contracts up to the final maturity date of the Revised Credit Facility. Furthermore, it is not subject to margin calls against these contracts. Cambior has also issued to the lenders 1,300,000 warrants to purchase common shares of the Company at Cdn$0.56 (US$0.37 per share) which are exercisable at any time on or before December 31, 2005. Mortgage Loan As part of the restructuring plan, Cambior entered into an agreement with Jipangu Inc. for the conversion of Jipangu's $10,000,000 first-ranking mortgage on Cambior's 50% interest in the Niobec mine into equity and subordinated debt. On January 18, 2001, Jipangu concluded a $6,300,000 private placement whereby Jipangu Inc. subscribed Subscribed Newly issued securities that an investor has agree to, or stated his intent to, buy in a public offering prior to the issue date. When an investor uses rights, he expects to own the designated number of shares they have subscribed to once the offering is completed. to 15,000,000 common shares of the Company at a price of US$0.42 per share. Then, on September 25, 2001, a $3,700,000 private placement was concluded whereby Jipangu subscribed to 6,491,228 common shares at a price of US$0.57 per share. Proceeds from these private placements were used to repay Jipangu's mortgage loan of $10,000,000. Jipangu now holds approximately 27.1% of the outstanding common shares of Cambior. Long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. The long-term debt position is summarized as follows:
---------------------------------------------------------------------
September 30, 2001 June 30, 2001 December 31, 2000
$000 $000 $000
---------------------------------------------------------------------
Credit Facility 50,269 61,969 115,575
Mortgage - 3,700 13,000
Obligations under
capital lease 845 882 971
---------------------------------------------------------------------
51,114 66,551 129,546
Current portion 3,897 6,041 118,457
---------------------------------------------------------------------
Long term portion 47,217 60,510 11,089
---------------------------------------------------------------------
Prepaid Gold Forward Sale Agreement Under the terms of the $55,000,000 Prepaid Gold Forward Sale Agreement, Cambior is committed to deliver 234,000 ounces of gold in equal monthly deliveries commencing July 2001 to December 2005. The cash proceeds from the Agreement have been accounted for as deferred revenue. During the third quarter of 2001, Cambior delivered 12,978 ounces valued at $235.40 per ounce for a total of $3,055,000. 8. FLOW-THROUGH SHARES ISSUE The Company completed private placements of 800,000 flow-through common shares at Cdn$1.00 per share equivalent to $520,000. Proceeds of the transaction will be used for Canadian exploration expenses ("CEE cee n. The letter c. ") on some of the Company's on-going Adj. 1. on-going - currently happening; "an ongoing economic crisis" ongoing current - occurring in or belonging to the present time; "current events"; "the current topic"; "current negotiations"; "current psychoanalytic theories"; "the ship's current position" exploration programs. The Company has agreed to renounce TO RENOUNCE. To give up a right; for example, an executor may renounce the right of administering the estate of the testator; a widow the right to administer to her intestate husband's estate. 2. the full amount of the CEE in favour Favor or favour (see spelling differences) may be
9. EARNINGS PER SHARE Approximately 8,096,000 weighted average common shares representing the weighted average effect of assumed conversion of warrants and exercise of options were excluded from the denominator denominator the bottom line of a fraction; the base population on which population rates such as birth and death rates are calculated. denominator in the diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. loss per share calculation for the third quarter of 2001 (9,087,000 for the third quarter of 2000). 10. ADDITIONAL INFORMATION Foreign exchange rates during the period were as follows: --------------------------------------------------------------------- Cdn$ / US$ 2001 2000 --------------------------------------------------------------------- September 30 (Closing) 1.5785 1.5035 June 30 (Closing) 1.5140 1.4806 December 31 (Closing) - 1.4995 Third Quarter (Average) 1.5453 1.4822 Year-to-date (Average) 1.5380 1.4720 --------------------------------------------------------------------- Cambior has the following common shares outstanding: --------------------------------------------------------------------- October 25, 2001 97,854,000 shares September 30, 2001 97,854,000 shares June 30, 2001 90,563,000 shares December 31, 2000 75,563,000 shares --------------------------------------------------------------------- All amounts are expressed in US dollars |
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