Cambior Reports Its 2002 Production And Targets for 2003 and Updates Its Revenue Protection Program.Business Editors LONGUEUIL, Quebec--(BUSINESS WIRE)--Jan. 13, 2003 All Amounts Are Expressed in Us Dollars (Unaudited) Cambior 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 )(TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :CBJ) reports gold production of 568,900 ounces for the year 2002 and a 32% reduction of its revenue protection program. Production Results For the year 2002, Cambior produced 568,900 ounces of gold, compared to 614,900 ounces of gold in 2001. For the fourth quarter of 2002, gold production totalled 133,000 ounces compared to 160,700 ounces for the corresponding quarter in 2001. The decrease in gold production is mainly due to lower production at the Omai mine, as scheduled in the mining plan. Production at the Omai mine for 2002 was 319,600 ounces of gold, surpassing the original 2002 mine plan by 34,100 ounces of gold. This excellent performance is mainly due to a higher grade milled, resulting from improvement over mineral reserves. For the fourth quarter of 2002, gold production totalled 74,000 ounces compared to 91,100 ounces for the corresponding quarter of 2001. The production target for 2003 is 273,000 ounces of gold at an estimated mine operating cost of $216 per ounce ounce, in zoology ounce, in zoology: see leopard. ounce, unit of measurement ounce: see English units of measurement. , including a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $17 per ounce for deferred stripping capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. in previous years. The lower gold production anticipated for 2003 is caused by a lower 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. milled of 5,907,000 tonnes of ore due to 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 of all sources of saprolite sap·ro·lite n. Soft, partially decomposed rock rich in clay and remaining in its original place. saprolite and alluvial al·lu·vi·al adj. Of, relating to, or found in alluvium: alluvial soil; alluvial gold. alluvial Adjective of or relating to alluvium Noun (soft rock) in the second quarter. Since the low-grade soft rock stockpiles will supply only 3% of the mill feed, the milled grade will improve to 1.56 g Au/t, reflecting the direct feed grade from the Fennell Pit. Mined tonnage will be reduced to 8.3 million tonnes compared to 17.3 million tonnes in 2002. Sustaining capital will be nil for the remainder of the mine life. For 2002, the Doyon Division produced 216,200 ounces of gold compared to 228,700 ounces produced in 2001. For the fourth quarter, production totalled 50,900 ounces compared to 62,000 ounces produced in the corresponding quarter of 2001. The decrease in production is due to a 10% lower mill throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. in the last four months of the year due to a relatively harder mix of ore; also, the grade from the underground mines was slightly lower. However, the Company has discovered higher-grade 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. zones between levels 12 and 14 in the extensions of lenses identified on higher levels, including Zone "J". The drilling program continues at depth in order to evaluate the economic potential of these new zones. Nearly 100,000 metres of exploration and development drilling is scheduled at the Doyon Division in 2003. The 2003 production target will be maintained at 218,000 ounces of gold at an estimated mine operating cost of $241 per ounce. The higher operating costs operating costs npl → gastos mpl operacionales are related to additional development for stope stope n. An excavation in the form of steps made by the mining of ore from steeply inclined or vertical veins. tr.v. stoped, stop·ing, stopes To remove (ore) from or mine by means of a stope. preparation. Capital expenditures for 2003 are estimated at $8.9 million, mainly for underground exploration and the development of the mineral reserves in the extensions of the mineralized zones of the Doyon and Mouska mines, as well as for the raising of the dikes at the Doyon tailings Tailings (also known as tailings pile, tails, leach residue, or slickens[1]) are the materials left over[2] after the process of separating the valuable fraction from the worthless fraction of an ore. pond. Cambior's share of production from the Sleeping Giant Sleeping Giant may refer to: In geology:
natural resource, natural resources - resources (actual and potential) supplied by nature at depth; it is expected that a feasibility study "A Feasibility Study" is an episode of the original The Outer Limits television show. It first aired on 13 April, 1964, during the first season. It was remade in 1997 as part of the revived The Outer Limits series with a minor title change. will be completed during the first quarter of 2003. Cambior's share of capital expenditures for 2003, excluding the mine deepening deep·en tr. & intr.v. deep·ened, deep·en·ing, deep·ens To make or become deep or deeper. Noun 1. deepening - a process of becoming deeper and more profound program, is estimated at $2 million. The Niobec division maintained a strong performance during 2002 with total sales reaching $23.5 million compared to $18.7 million in 2001. The Company anticipates a similar performance in 2003. Cambior's share of capital expenditures for 2003 is estimated at $1.9 million mainly for deferred development, improvement projects and for the construction of a new tailings pond. GOLD MARKET AND REVENUE PROTECTION PROGRAM Gold Market The fourth quarter of 2002 saw a major improvement in the price of gold with a closing price of $343 per ounce, an increase of $66 per ounce compared to the closing price on December 31, 2001 and $19 per ounce since the end of the third quarter. This improvement is due to several factors, including the weakness of the US dollar, the erosion of investor confidence following the financial and accounting problems, the 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. tensions in Venezuela and North Korea, and the potential conflict between Iraq and 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. . For 2002, the average price of gold was $310 per ounce, the highest average price since 1997. Revenue Protection Program 32% reduction in the gold hedging program Because of the decrease in the required hedges negotiated with the lenders in 2002 and the Company's positive outlook for the market of gold, Cambior reduced its hedging commitments by 32% or 600,000 ounces in 2002, by the delivery of gold production against the existing hedging positions, the 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). of certain obligations and the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of positions. In order to secure necessary net cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses to meet its financial obligations, the Company maintains a Revenue Protection Program for its gold operations. As at December 31, 2002, the Company had total commitments of 1.3 million ounces at an average price of $301 per ounce, including 114,000 ounces of call options sold at an average price of $301 per ounce. The Company expects to reduce these commitments to 0.8 million ounces by the end of 2003, corresponding to the minimum level of hedging required by the lenders under the proposed new credit facility. As at December 31, 2002, the price of gold per ounce was $19 higher than it was on September 30, 2002, resulting in an estimated negative adjustment of $1.8 million to the mark-to-market value for the non-hedge derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. , comprised of call options and swaps of the gold lease rate in the fourth quarter. This charge will have no impact on cash flow and these charges, positive or negative, will cease as these non-hedge derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. positions 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. . In order to avoid the non-cash adjustments in the future, the Company has decided to abandon the use of these optional instruments and the mark-to-market value of these positions will become nil and have no further impact on the Company's earnings subsequent to 2004. Rosebel Gold Project In December 2002, the Government of Suriname, through its Ministry of Natural Resources, approved the 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. and the Environmental Impact Assessment and issued the Right of Exploitation and all other land use permits required for the construction and operation of the Rosebel project to Rosebel Gold Mines N.V., a wholly-owned subsidiary of Cambior. Subsequently, the National Assembly of Suriname approved the amendment to the 1994 Mineral Agreement, which eliminated the participation options held by the Government in the project in exchange for a 5%-carried equity, and authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: the capital structure of the operating company operating company A business that engages in transactions with outsiders. . During the fourth quarter of 2002, the Company upgraded the access road for the heavy loads during construction, installed the management information and communication systems, expanded the exploration camp into a temporary construction camp, cleared the land for the permanent camp, built roads to the plant and mill sites, surveyed the final route for the transmission line, advanced detailed engineering and completed condemnation Condemnation bell, book, and candle symbols of Catholic excommunication rite. [Christianity: Brewer Note-Book, 85] Bridge of Sighs passage from Doge’s court to execution chamber in Renaissance Venice. [Ital. Hist. and geotechnical drilling for the tailings pond, initial waste dumps DUMPS a lethal inherited disorder of Holstein cattle that causes infertility. The name is an acronym of Deficiency of Uridine MonoPhosphate S and other plant facilities and tenders for all equipment. The Company expects to complete the financing documentation and obtain the political risk insurance over the next few weeks. The Company is looking forward to bringing the Rosebel Project into commercial production during the first quarter of 2004. It is estimated that Rosebel will produce 270,000 ounces of gold in its first year of operation at a mine operating cost of $157 per ounce, boosting Cambior's gold production to over 700,000 ounces of gold in 2004. OUTLOOK Louis P. Gignac, Cambior's President and Chief Executive Officer, stated: "We are satisfied with the good performance of our operations in 2002. The Omai mine surpassed its original 2002 production target by 12%. Our gold production target for 2003 is estimated at 522,000 ounces at a mine operating cost of $227 per ounce, including a non-cash charge of $9 per ounce for deferred stripping capitalized in prior years. The decrease in budgeted production is the result of a planned reduction at the Omai mine following depletion of soft ore feed to the mill and reduced mill throughput. This year, we will concentrate our efforts on the development of the Rosebel gold project, which should allow us to maintain a significant level of production in 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. for years to come. The construction and development of the Rosebel gold project, at a capital cost of $95 million, will officially begin shortly once documentation for financing and political risk insurance is finalized See finalization. . Including the capital cost for the construction of the Rosebel Project, the total capital expenditures for 2003 are estimated at $100 million. We remain focused on reducing our gold hedging commitments to benefit from the improving gold market and on developing our asset base to provide our shareholders with improving returns and increase net asset value per share." The fourth quarter results and year-end audited financial results are scheduled for release on or about February 11, 2003. 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" and "CBJ.WT.B", trade on the TSX. 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. ", including, but not limited to, the statements regarding future production targets, mine operating costs, capital expenditures (including those of the Rosebel Project), work programs, hedging commitments and the value of non-hedge derivative instruments, the obtaining of political risk insurance for the Rosebel Project and the completion of the documents for the new credit facility. Forward-looking statements involve a number of risks and uncertainties, and there can be no assurance that such statements will prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements and there can be no guarantee that forward-looking statements in this press-release, namely those regarding the obtaining of the political risk insurance for the Rosebel Project and the closing of the new credit facility, will materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. . Factors that could cause results or events to differ materially from current expectations expressed or implied by the forward-looking statements include, among other things, the risks referred in Cambior's 2001 Annual Information Form filed with the Securities Commission of all provinces in Canada, and with the United Stated Securities and Exchange Commission, as well as the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. and the American Stock Exchange American Stock Exchange (AMEX) Stock exchange in the U.S. Originally known as “the Curb,” it began as an outdoor marketplace in New York City c. 1850. It moved indoors to its present location in the Wall Street area in 1921. .
TABLE 1
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CAMBIOR PRODUCTION
(unaudited)
Fourth Quarter Full Year Target
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(Cambior's share) 2002 2001 2002 2001 2003
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GOLD
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Omai
Production
(ounces) 74,000 91,100 319,600 354,300 273,000
Tonnage
milled (t) 1,936,300 2,013,200 7,727,300 7,902,600 5,907,000
Grade milled
(g Au/t) 1.33 1.52 1.40 1.50 1.56
Recovery (%) 89.6 92.7 91.6 92.7 92.9
Doyon (1)
Production
(ounces) 50,900 62,000 216,200 228,700 218,000
Tonnage
milled (t) 306,800 334,700 1,286,600 1,338,700 1,312,700
Grade milled
(g Au/t) 5.4 6.0 5.5 5.6 5.4
Recovery (%) 96.1 96.0 95.5 95.6 95.6
Sleeping Giant (50%)
Production
(ounces) 8,100 7,600 33,100 31,900 31,000
Tonnage
milled (t) 24,100 27,200 101,400 107,000 80,700
Grade milled
(g Au/t) 10.8 9.0 10.5 9.6 12.1
Recovery (%) 97.0 96.2 97.0 96.7 97.2
Total production
(ounces of gold) 133,000 160,700 568,900 614,900 522,000
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NIOBIUM
Sales of Nb
(in millions of $)
(unaudited)
Niobec (50%) $6.4 $4.8 $23.5 $18.7 n/a
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(1) Includes the Doyon and Mouska mines.
TABLE 2
REVENUE PROTECTION PROGRAM AS OF DECEMBER 31, 2002 (unaudited)
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Gold sales and deliveries
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The Company's gold sales and delivery commitments, with the financial
counter-parties, as at December 31, 2002 are as follows:
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2003 2004 2005 2006 2007 Total
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FORWARDS(1)
Quantity (000 oz) 420 255 155 130 56 1,016
Average price ($/oz) 302 309 317 326 350 312
PREPAID GOLD FORWARDS
Quantity (000 oz) 52 52 52 - - 156
Price ($/oz) 235 235 235 - - 235
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MINIMUM DELIVERY OBLIGATIONS(2)
Quantity (000 oz) 472 307 207 130 56 1,172
Average price ($/oz) 295 296 296 326 350 302
CALL OPTIONS (3)
Quantity (000 oz) 10 104 - - - 114
Average price ($/oz) 300 301 - - - 301
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TOTAL DELIVERY COMMITMENTS(4)
Quantity (000 oz) 482 411 207 130 56 1,286
Average price ($/oz) 295 297 296 326 350 301
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(1) Certain fixed forward positions, totalling 0.58 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%.
(2) The minimum delivery obligations include all forward contracts and
the prepaid gold forward contracts.
(3) The strike prices range from $300.00 to $310.50 per ounce for an
average price of $301 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.
The Company's quarterly contingent delivery obligations under the
call options are as follows:
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First Second Third Fourth
(in 000 ounces) Quarter Quarter Quarter Quarter TOTAL
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2003 - - 10.5 - 10.5
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2004 19.5 27.5 23.0 33.5 103.5
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(4) The total delivery commitments include all the forward contracts,
prepaid gold forward sales and call option contracts.
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