Cambior Reports its Third Quarter 1998 Results Part 1 of 3 - More Text, Highlights and Financial Tables Will Follow.

MONTREAL--(BUSINESS WIRE)--Oct. 28, 1998--Cambior Inc. (ME:CBJ.) (TSE:CBJ.) (AMEX:CBJ) is pleased to report financial and operating performance for the third quarter of 1998.

Revenues totalled $83 million; cash flow from operations was $17.6 million (25 cents per share) and net income was $0.4 million (1 cent per share). Gold production reached 157,000 ounces, a 29 percent increase as compared to the corresponding period of 1997 and direct mining costs were reduced to $222 per ounce, a 14 percent reduction from the previous year. The improvement in production was largely due to increase productivity and aggressive cost control at of the 100 percent owned Doyon operations. Cambior's successful gold hedging program generated an average gold price of $360 per ounce for the third quarter for a premium of $71 per ounce over the average market price.

FINANCIAL RESULTS

Revenues for the first nine months of 1998 totalled $267 million compared to $239 million for the first nine months of 1997. Cash flow from operations (before changes in working capital items) amounted to $69.9 million ($1.01 per share) compared to $51.6 million (86 cents per share) in the corresponding period of 1997. Net earnings were $12.1 million (17 cents per share), compared to $6.9 million (11 cents per share) in the previous year.

Revenues for the third quarter of 1998 amounted to $83 million, compared to $84 million for the third quarter of 1997. Cash flow from operations totalled $17.6 million (25 cents per share) compared to $18.3 million (31 cents per share) in the corresponding period of the previous year. Net earnings for the quarter amounted to $0.4 million (1 cents per share) compared to $3.6 million (6 cents per share) in the previous year.

MARKETS AND HEDGING

During the third quarter, the gold price weakened to a low of $273 per ounce in late August before improving to reach a high of $298 in late September. The average market price for the third quarter was $289 per ounce. Cambior's active hedging program continued to protect revenues by generating an average realized price of $360 per ounce of gold during the third quarter of 1998, yielding a premium of $71 per ounce over the average market price. For the first nine months of the year the average realized price was $405 per ounce, a premium of $111 per ounce over the average market price.

As of September 30, 1998, the gold hedging program had a net position ensuring an average price of $351 per ounce on 1,246,000 ounces of gold over the next four years, including full coverage of the anticipated gold production for the next two years 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. During the third quarter, Cambior took advantage of weak gold prices to buy back the gold loan outstanding, thereby generating a gain of $18 million and a corresponding reduction of its debt.

Zinc markets remained weak during the third quarter averaging 46 cents/lb. The negative impact of the Asian economic recession depressed zinc prices despite continued reductions of the inventory level.

OPERATIONS

During the third quarter of 1998, Cambior produced 157,000 ounces of gold, a 29 percent increase as compared to 121,500 ounces in the corresponding period of 1997, and the average direct mining cost was reduced by 14 percent, from $258 per ounce in the previous year to $222 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. Canadian operations also benefited from the weaker Canadian dollar at 66 cents/US dollar during the third quarter of 1998 compared to 72 cents/US dollar in the prior year. Cash flow from gold mining operations in the third quarter amounted to $21.2 million, a 78 percent increase over the prior year, representing 83 percent of Cambior's total cash flow from operations.

Total zinc production was 16,900 tonnes and total copper production was 1,400 tonnes. Cambior's share of production from the Niobec mine was 283 tonnes of niobium. Cash flow from metal mining operations in the third quarter amounted to $4.4 million. Expressed in gold equivalent, this represents a further metal credit contribution of $28 per ounce and thereby would effectively reduce our net direct mining costs to $195 per ounce produced during the third quarter of 1998.

DOYON DIVISION

The Doyon division continued to show improvements during the third quarter as 65,100 ounces were produced, a 41,500-ounce increase over the corresponding period in the previous year as Cambior now owns and operates 100 percent of the Doyon mine. Direct mining costs decreased to $196 per ounce for the third quarter of 1998, a 25 percent reduction as compared to $260 per ounce for the third quarter of 1997, and a 18 percent reduction when compared to $239 per ounce for the second quarter of 1998. Mill throughput was 341,000 tonnes (3,800 tpd) with an average head grade of 6.2 g Au/t.

The improved results at the Doyon division are due to operating changes implemented by Cambior since the beginning of the year, including: the integration of the Mouska mine with the Doyon mine; higher efficiencies; and, the positive impact of the accelerated development program, which totalled 3,900 metres during the third quarter, a major increase over the prior year. Continuing improvements are expected at Doyon for the remainder of the year and into 1999. The paste fill plant was commissioned in late September and will allow the reduction of dilution in the West Zone. Production on level 10 began in September and should improve the availability of higher grade stopes starting during the fourth quarter. Further improvements are expected as levels 12 and 14 become available for production during 1999 and the year 2000, and as more selective mining methods are introduced. Reserves under level 8, which are becoming available, show a higher average grade at 7.6 g Au/t as compared to the 6.1 g Au/t reserves available above level 8.

Production performance at Doyon is expected to continue to improve, reaching 65,000 ounces in the fourth quarter of 1998, and 260,000 ounces for the year 1999. Similarily, costs are also expected to continue to reduce to $190 per ounce for the fourth quarter.

The objective at the Doyon division is to increase production to a level of 300,000 ounces per year and to reduce direct mining costs to $180 per ounce in two years. Further potential is expected as the studies are completed for the expansion of the mill to 1.45 - 1.6 million tonnes per year at a low anticipated incremental investment. Furthermore, exploration and drilling efforts will be intensified starting in 1999. Infill drilling between levels 8 and 14 could improve mining reserves. Additional exploration and definition drilling will target, in future years, the area below level 14, the Far West sector and the sector between the Doyon and Mouska deposits.

OMAI OPERATION

The Omai mine performed well during the third quarter with the mill averaging a throughput of 20,850 tonnes per day and processing 75 percent hard rock, as compared to 20,440 tonnes per day and 62 percent hard rock in the third quarter of 1997. The direct mining costs were $9.65 per tonne for the third quarter of 1998, a 13 percent reduction from the $11.05 per tonne incurred in the third quarter of 1997 and an 8 percent reduction from the second quarter of 1998. The grade of the ore mined was 1.43 g Au/t but provided only 87 percent of the mill feed due to lower equipment availability and increased mill throughput. The remainder of the mill feed, 274,000 tonnes, was supplied from the stockpile at a grade of 0.70 g Au/t. Consequently the average grade milled was lower at 1.32 g Au/t, yielding production of 75,100 ounces of gold at a direct mining cost of $247 per ounce.

Exploration work continued on the Omai River and Quartz Hill concessions located adjacent to the Omai mine with a view to defining additional soft rock reserves. During the quarter Omai Gold Mines Limited (OGML) agreed to acquire the rights to 100 percent of the Eagle Mountain property located approximately 45 kilometres southwest of the Omai mine.

METAL OPERATIONS

The Bouchard-Hebert mine produced 9,600 tonnes of zinc and 1,200 tonnes of copper in the third quarter of 1998 compared to 8,400 tonnes of zinc and 1,700 tonnes of copper in the third quarter of 1997. The increase in zinc production is due to an improvement in the zinc grade from 4.0 percent in the third quarter of 1997 to 4.3 percent during the third quarter of this year. As a result of lower realized zinc prices, 50 cents/lb this year as compared to 72 cents/lb last year, the Net Smelter Return decreased to $30 per tonne in the third quarter of 1998. Operating costs were reduced to $22 per tonne resulting in a mining cash contribution of $8 per tonne.

The Langlois mine produced 7,400 tonnes of zinc and 260 tonnes of copper during the third quarter of 1998, compared to 7,300 tonnes of zinc and 340 tonnes of copper during the third quarter of 1997. The Net Smelter Return was $42 per tonne in the third quarter, benefiting from a higher zinc grade of 6.6 percent. Operating costs for the quarter were $31 per tonne resulting in a mining cash contribution of $11 per tonne. Production for the fourth quarter of 1998 will be reduced due to a one-month mill shut down as development work is activated to repair ore passes at lower levels. The mine plan calls for continuing improvements in grade in the near term.

The Niobec mine performed on target with a contribution to Cambior of 283,000 kg of niobium in ferroniobium. Prices remained stable for the quarter.

CERRO SAN PEDRO

Exploration and development activities continued at the Cerro San Pedro project in Mexico with expenditures of $2.5 million being incurred during the quarter, bringing the total spent by Cambior on the project to-date to $12.8 million. Work on the feasibility study continued during the quarter with the focus on permitting, metallurgical testing and detailed engineering. A core drilling program of 5,000 metres began in the third quarter and will be completed in October; the updated feasibility study is scheduled for the first quarter of 1999.

INVESTMENTS

Investments during the third quarter totalled $21.2 million, and were principally focused on ongoing improvements at Omai ($5.4 million), Doyon ($6.9 million) and Bouchard-Hebert/Langlois ($1.9 million), and the funding of advanced low-cost heap-leach gold development projects: Cerro San Pedro ($2.5 million) and La Arena ($0.5 million).