Cambior Reports Record Gold Production and Improved Financial Performance for the Second Quarter of 1998.MONTREAL--(BUSINESS WIRE)--July 28, 1998--CAMBIOR INC inc - /ink/ increment, i.e. increase by one. Especially used by assembly programmers, as many assembly languages have an "inc" mnemonic. Antonym: dec. .(ME: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.) (AMEX AMEX See: American Stock Exchange :CBJ) (Part 1 of 2) All amounts in US dollars Cambior Inc. reports record gold production and improved financial and operating performance for the second quarter of 1998, despite weak gold markets. Gold production for the quarter increased to a record of 163,000 ounces as compared to 122,000 ounces produced in the corresponding period of 1997 and direct mining costs were reduced to $237 per ounce ounce, in zoology ounce, in zoology: see leopard. ounce, unit of measurement ounce: see English units of measurement. , a 14 percent reduction from the previous year. Cambior's successful gold hedging program generated an average gold price of $391 per ounce for the second quarter for a premium of $91 over the average market price. Revenues totalled $92 million, a 23 percent increase over the previous year; 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 showed a major improvement to $21.8 million (31 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. ) a 59 percent increase over the previous year. Net income was $2.1 million (3 cents per share) for the quarter. FINANCIAL RESULTS Revenues for the second quarter of 1998 amounted to $92 million, an increase of $17 million (23 percent), compared to $75 million for the second quarter of 1997. Cash flow from operations (before changes in working capital items) totalled $22 million (31 cents per share) compared to $14 million (23 cents per share) in the corresponding period of the previous year. Net earnings for the quarter amounted to $2.1 million (3 cents per share) compared to $0.2 million in the previous year. Revenues for the first half of 1998 totalled $184 million compared to $156 million for the first half of 1997. Cash flow from operations amounted to $52 million (76 cents per share) compared to $33 million (55 cents per share) in the corresponding period of 1997. Net earnings were $12 million, compared to $3 million in the previous year. Results for the second quarter were positively affected by the increased production and improved performance of the Doyon mine and the continued strong performance of the Omai mine. As well, Cambior's successful gold hedging program generated an average price of $391 per ounce, a premium of $91 over the average market price. Zinc production significantly increased as the zinc grades at both the Bouchard-Hebert and Langlois mines improved. MARKETS AND HEDGING At the beginning of the second quarter the gold market was showing signs of improvement, reaching a high of over $313 per ounce in late April. However, markets weakened weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. during the second quarter to a low of
$286 per ounce in mid-June before restabilizing at the $290 to $295 per
ounce range. This weakness was attributed to the uncertainty surrounding
the creation of the European Central Bank European Central Bank (ECB)Bank created to monitor the monetary policy of the countries that have converted to the Euro from their local currencies. The original 11 countries are: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and the weakness of the Asian economy. The average market price for the second quarter was $300 per ounce, an improvement of $6 per ounce over the first quarter. Cambior's active hedging program continued to protect revenues by generating an average realized price of $391 per ounce of gold during the second quarter of 1998, yielding a premium of $91 per ounce over the average market price. For the first half of the year the average realized price was $428 per ounce, a premium of $131 per ounce. As of June 30, 1998, the gold hedging program had a net position ensuring an average price of $348 per ounce on 1,253,000 ounces of gold over the next four years, including full coverage of the anticipated gold production for the remainder of 1998 at $350 per ounce. This hedging program is achieved with the benefits of the hedge positions on the forward sale of gold production and the amortization of deferred earnings generated by the prior conversions of gold loans to dollar loans. Zinc markets remained weak during the second quarter averaging 48 cents/lb. The uncertainty in the Asian economy continued to negatively affect zinc prices despite continued reduction in the inventory level. More recently, zinc prices have begun to firm up to the 50 cents/lb level. OPERATIONS During the second quarter of 1998, Cambior produced 163,000 ounces of gold, a 34 percent increase, as compared to 122,000 ounces in the corresponding period of 1997, and the average direct mining cost was reduced by 14 percent, from $277 per ounce in the previous year to $237 per ounce. The increase in gold production was largely due to the impact of the acquisition of the remaining 50 percent interest in Doyon and the production improvements achieved at the mine. Gold production for the second quarter showed a 10 percent increase over the first quarter, while direct mining costs were reduced by 5 percent from $250 per ounce to $237 per ounce. Total zinc production was 18,400 tonnes and total copper production was 2,000 tonnes. The improvement over the prior year is due to contribution from the Langlois mine which was shutdown shut·down n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down in the first half of 1997. Cambior's share of production from the Niobec mine was 270 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. . The Omai mine continued to perform well during the second quarter with mill throughput averaging 20,800 tonnes per day processing 72 percent of hard rock, as compared to 19,900 tonnes per day at 62 percent hard rock in the second quarter of 1997. The direct mining costs were $10.54 per tonne tonne measure of weight or mass; 1 tonne=1000 kg. See also ton. for the second quarter of 1998, a 10 percent reduction from the $11.71 per tonne incurred in the second quarter of 1997. The average grade milled was 1.46 g Au/t yielding gold production of 82,700 ounces of gold at a direct mining cost of $242 per ounce. Exploration work continued on the Omai River and Quartz quartz, one of the commonest of all rock-forming minerals and one of the most important constituents of the earth's crust. Chemically, it is silicon dioxide, SiO2. Hill concessions located adjacent to the Omai mine as well as the Hicks Hicks , Edward 1780-1849. American painter of primitive works, notably The Peaceable Kingdom, of which nearly 100 versions exist. property in order to increase soft rock reserves. The Doyon operations continued to show improvements during the second quarter as 63,600 ounces were produced, a 29 percent increase over the first quarter of 1998 and a 38,500 ounce increase over the previous year as Cambior now owns and operates 100 percent of Doyon. Direct mining costs decreased to $239 per ounce for the second quarter of 1998, a 31 percent reduction as compared to $348 per ounce for the second quarter of 1997 and a 5 percent reduction when compared to $252 per ounce for the first quarter of 1998. Mill throughput was 328,000 tonnes with an average head grade of 6.3 g Au/t. Development work is focusing on 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. availability and preparation for production below the 8th level. The foundation and steel erection erection /erec·tion/ (e-rek´shun) the condition of being rigid and elevated, as erectile tissue when filled with blood. e·rec·tion n. 1. for the paste fill plant has been completed and the distribution system is being extended. The program to reduce the width of the 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. in the West Zone continued to progress. With the accessibility of the new production area below the 8th level, gold production is expected to increase in the second half of the year. The Bouchard-Hebert mine produced 10,100 tonnes of zinc and 1,600 tonnes of copper in the second quarter of 1998 compared to 7,400 tonnes of zinc and 2,000 tonnes of copper in the second quarter of 1997. The increase in zinc production is due to an improvement in the zinc grade from 3.6 percent in the second quarter of 1997 to 4.6 percent during the second quarter of this year. As a result of lower zinc prices the Net Smelter Return decreased to $33 per tonne in the second quarter of 1998. As compared to the first quarter of 1998, operating costs operating costs npl → gastos mpl operacionales were maintained at $24 per tonne. The Langlois mine produced 8,300 tonnes of zinc and 340 tonnes of copper during the second quarter of 1998 compared to 6,900 tonnes of zinc and 290 tonnes of copper during the first quarter of 1998. The mine did not operate during the first half of 1997 and resumed operations on July 1, 1997. The Net Smelter Return increased to $38 per tonne in the second quarter from $27 per tonne in the first quarter, principally due to the increase in the zinc grade to 6.9 percent. Operating costs for the quarter were $27 per tonne, an improvement of $3 per tonne over the first quarter and the mine plan calls for continuing improvements in the grade for the remainder of 1998 and into 1999. PROJECTS Exploration and development activities continued at the Cerro San Pedro project in Mexico with expenditures of $5.4 million being incurred during the quarter, bringing the total spent by Cambior on the project to-date to $10.2 million. Work on 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. continued during the quarter with the focus on permitting, metallurgical met·al·lur·gy n. 1. The science that deals with procedures used in extracting metals from their ores, purifying and alloying metals, and creating useful objects from metals. 2. testing and detailed engineering. A core drilling program of 5,000 metres is planned for the third quarter and the updated feasibility study is scheduled for year-end 1998. During the second quarter at the La Arena project in Peru, 23 holes totalling 3,140 metres were completed to finalize fi·nal·ize tr.v. fi·nal·ized, fi·nal·iz·ing, fi·nal·iz·es To put into final form; complete or conclude: "They have jointly agreed ... the 1998 drill program. In total 112 holes, totalling 20,700 metres, have been drilled on the property to-date. Completion of the drilling program and calculation of resources are expected during the second half of the year. Metallurgical testing started with bottle roll and column testing and the pre-feasibility study is in progress and should be completed by the end of the year. INVESTMENTS Investments during the second quarter totalled $25.5 million, and were principally focused on ongoing improvements at Omai ($6.6 million), Doyon ($7.2 million) and Bouchard-Hebert/Langlois ($2.6 million), and the funding of advanced low-cost heap-leach gold development projects: Cerro San Pedro ($5.4 million) and La Arena ($1.1 million). FINANCING Cambior continues to maintain a sound financial position with cash resources of $33 million and an unused debt capacity of up to $44 million for total liquidity of more than $77 million at June 30, 1998. The acquisition of the remaining 50 percent interest in Doyon consisted of a cash consideration of $95 million of which $50 million was paid at closing through an equity issue, $25 million was paid on June 30, 1998 and $20 million is due on December 31, 1998. Cambior plans to draw upon its unused debt capacity to fund the final payment at the end of 1998. REVOLVING TERM CREDIT FACILITY Cambior has entered into a new five year Extendible Revolving Term Credit Facility with a banking syndicate Syndicate organized crime unit throughout major cities of the United States. [Am. Hist.: NCE, 2018] See : Gangsterism co-arranged by The Chase Manhattan Bank The Chase Manhattan Bank, now part of JPMorgan Chase, was formed by the merger of the Chase National Bank and the Bank of the Manhattan Company in 1955. The bank is headquartered in New York City. and The Bank of Nova Scotia Nova Scotia (nō`və skō`shə) [Lat.,=new Scotland], province (2001 pop. 908,007), 21,425 sq mi (55,491 sq km), E Canada. Geography for up to $250 million or 750,000 ounces of gold, an increase of $25 million and 150,000 ounces from the previous facility. The facility amount will reduce by $30 million or 90,000 ounces of gold semi-annually starting on June 30, 2000 with a final reduction of $70 million or 210,000 ounces on June 30, 2003. The reduction schedule of the credit facility may be extended annually by one year by agreement between Cambior and the Banks. This new facility provides for a general streamlining of administrative requirements from the lenders and less restrictive covenants Restrictive covenants Provisions that place constraints on the operations of borrowers, such as restrictions on working capital, fixed assets, future borrowing, and payment of dividends. . The benefit of this facility will be to greatly improve the financial position of Cambior and defer de·fer 1 v. de·ferred, de·fer·ring, de·fers v.tr. 1. To put off; postpone. 2. To postpone the induction of (one eligible for the military draft). v.intr. the start of the repayment schedule until mid-2000. On a pro-forma basis for June 1998, the total liquidity available to Cambior would have increased from $77 million to $126 million. CORPORATE OVERVIEW Cambior President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , Louis P. Gignac, stated: "We are pleased with the results of the second quarter and the progress that has been made at the Doyon mine. We are continuing to focus on lowering operating costs, principally at the Omai and Doyon mines. Cambior enjoys a strong financial position and has put in place a hedging position to weather the current weak metal prices and protect our revenues over the near term. We are prudently advancing our low-cost heap-leach gold projects, Cerro San Pedro and La Arena, and reviewing investment opportunities". 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 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. 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 under the heading "Risk Factors" in Cambior's Annual Information Form (AIF AIF Annual Information Form AIF Apoptosis-Inducing Factor AIF Agence Intergouvernementale de la Francophonie (French: Intergovernmental Agency for Francophony) AIF Australian Imperial Force ) filed with the Ontario Securities Commission The Ontario Securities Commission (OSC) is a regulatory agency which administers and enforces securities legislation in the Canadian province of Ontario. The OSC is an Ontario Crown corporation which reports to the Ontario legislature through the Minister of Finance. , the Quebec Securities Commission, the United States Securities and Exchange Commission (Form 40-F) and other 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 . Cambior Inc. is an international diversified diversified (di·verˑ·s gold producer with operations, development projects and exploration activities throughout the Americas. Cambior shares trade on the Toronto, Montreal and American (AMEX) stock exchanges under the symbol "CBJ".
CAMBIOR INC.
HIGHLIGHTS
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Second Quarter First Half
ended June 30, ended June 30,
All amounts are in US dollar 1998 1997 1998 1997
$ $ $ $
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RESULTS (in millions)
Total revenues 91.6 74.6 184.1 155.5
Net earnings 2.1 0.2 11.7 3.3
Cash flow from operations(1) 21.8 13.7 52.3 33.3
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PER COMMON SHARE ($)
Earnings 0.03 0.00 0.17 0.06
Cash flow from operations(1) 0.31 0.23 0.76 0.55
Weighted average number
of shares (in millions)(2) 70.6 60.1 68.7 60.1
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GOLD PRODUCTION
Number of ounces (000) 163 122 311 255
Direct mining costs
($ per ounce) 237 277 243 268
Cambior's selling price
($ per ounce) 391 428 428 441
Market price ($ per ounce) 300 343 297 347
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ZINC - PRODUCTION
Number of pounds (in millions) 40 16 74 32
Realized market price
(cents/lb) 47 66 47 62
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FINANCIAL POSITION June March December
30, 1998 31, 1998 31, 1997
(in millions)
Cash 33 45 51
Total assets 854 876 765
Total debt 162 141 141
Net debt 129 96 90
Shareholders' equity 591 603 536
Liquidities 77 117 124
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(1) Before changes in working capital items.
(2) As at June 30, 1998, Cambior had a total of 70.6 million common
shares outstanding.
CONTACT: Cambior Inc.
Investor Relations
Robert LaValliere, 514/878-1282
Fax: 514/878-3324
http://www.cambior.com
info@cambior.com
Victoria Putnam, 514/878-3166
Fax: 514/878-0635
info@cambior.com
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