Correcting...RETRANSMISSION:RETRANSMISSION: Cambior Reports Operating and Financial Results; Record Gold Production With Reduced Costs Part 1 of 3, More Text and Financial Tables Will Follow.

MONTREAL--(BUSINESS WIRE)--Jan. 27, 1999--CAMBIOR INC.(ME:CBJ.) (TSE:CBJ.) (AMEX:CBJ)

Cambior Inc. reports improved operating and financial performance for the year ended December 31, 1998, despite the weakness in the gold markets.

Revenue totaled $344 million, an improvement of $20 million over the previous year. Cash flow from operations was $84 million ($1.21 per share) for the year and net earnings before writedowns was $11 million (16 cents per share). The net loss after a $22.5 million year-end writedown was $11.5 million (a loss of 16 cents per share).

Gold production increased to a record of 638,000 ounces in 1998, a 23 percent increase over the 520,000 ounces produced in 1997. The average direct mining cost for gold production continued to decline, averaging $223 per ounce for the fourth quarter and $233 per ounce for the year, a 9 percent reduction over the previous year.

The production target for 1999 has been set at 650,000 ounces of gold at an estimated direct mining cost of $215 per ounce on the basis of continued improvements expected at Doyon.

Gold reserves have been estimated at year-end 1998 on the basis of a gold price of $325. Gold operations report proven and probable reserves of 5.2 million ounces and mineral resources of 1.4 million ounces. In addition, advanced gold development projects represent 2.7 million ounces of mineral resources.

FINANCIAL RESULTS

Revenues for 1998 amounted to $344 million, an increase of $20 million or 6 percent as compared to $324 million for the previous year. Cash flow from operations (before changes in working capital items) totaled $84 million ($1.21 per share) compared to $68 million ($1.14 per share) for the previous year. Net earnings for 1998 amounted to $11 million (16 cents per share) before year-end writedowns, compared to $7.1 million (12 cents per share) in the previous year. A net writedown of $22.5 was recorded at year-end for the devaluation of certain assets. This writedown has no impact on Cambior's cash flow and the resultant net loss was $11.5 million (16 cents per share).

In the fourth quarter of 1998, revenues totaled $77 million compared to $85 million in the previous year. The successful gold hedging program yielded an average price of $345 per ounce in the fourth quarter of 1998 as compared to $408 in the corresponding period of 1997. Cash flow from operations amounted to $14 million (20 cents per share) and the net loss was $1.1 million before the writedown and $23.6 million after the writedown.

In light of the continuing weakness of the gold price, Cambior has recorded a non-cash charge of $24 million, $22.5 million net of taxes, in the fourth quarter of 1998, principally due to the writedown of the Metates gold-silver property ($14M) situated in Mexico, and the devaluation of certain assets and investments.

The financial results were affected by the weak gold markets despite the successful hedging program, as realized prices decreased in the fourth quarter to $345 per ounce as compared to $408 per ounce in the previous year. Similarly, realized zinc prices were also weak, averaging 43 cents/lb in the fourth quarter and 47 cents/lb for the year. The impact of these weak market conditions was offset by an increase in gold production of 23 percent as compared to the prior year. More importantly, gold production costs were reduced by 9 percent to $233 per ounce for the year and to $223 per ounce in the fourth quarter.

MARKETS AND HEDGING PROGRAM

During the fourth quarter of 1998, gold markets traded mostly within the range of $285 to $300 per ounce, with prices averaging $294 per ounce for the quarter. Cambior's active hedging program continued to protect revenues by generating an average realized price, for the fourth quarter, of $345 per ounce of gold for a premium of $51 per ounce over the average market price. For full- year 1998, the realized price of gold averaged $389 per ounce for a premium of $95 per ounce over the average market price of $294 per ounce.

As of December 31, 1998, the gold hedging program had a net position ensuring an average price of $353 per ounce on 802,000 ounces of gold over the next two years, including full coverage of the gold production for 1999 at $358 per ounce. This realized price will be achieved with the benefit of the hedge positions on the forward sale of gold production and the amortization of deferred earnings generated by the conversion of gold loan hedge positions.

Zinc markets weakened during the fourth quarter averaging 43 cents/lb as compared to 46 cents/lb during the previous quarter, and 46 cents/lb for full-year 1998 as compared to 60 cents/lb in 1997. Copper markets were similarly affected while niobium markets remained stable.

OPERATIONS

Gold production for full-year 1998 increased to a record of 638,000 ounces compared to 520,000 ounces in 1997. The increase in gold production was primarily due to the impact of the acquisition of the remaining 50 percent interest in the Doyon mine in January 1998 and continuing improvements at Doyon. Direct mining costs decreased to $233 per ounce, a 9 percent reduction as compared to $255 for the previous year.

Zinc production was 62,200 tonnes in 1998, as compared to 47,500 tonnes in the previous year due to the full year of operations at Langlois. Copper production was 6,900 tonnes and Cambior's share of production from the Niobec mine was 1,100 tonnes of niobium.

During the fourth quarter of 1998, Cambior produced a record 170,000 ounces of gold, an 18 percent increase as compared to 144,000 ounces in the corresponding period of 1997 and an 8 percent increase over the third quarter of 1998. 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. Direct mining costs averaged $223 per ounce in the fourth quarter of 1998 compared to $231 per ounce in the corresponding quarter in 1997. Canadian operations also benefited from the weaker Canadian dollar at 0.648 US $ during the fourth quarter of 1998 as compared to 0.710 US $ during the fourth quarter of 1997.

Gold production for 1999 is expected to reach a total of 650,000 ounces as compared to the 638,000 attained in 1998. More importantly, average direct mining costs are estimated at $215 per ounce for 1999, an 8 percent reduction when compared to the $233 per ounce achieved in 1998. These improvements are largely attributable to the expected performance at the Doyon operations.

Zinc production was 11,600 tonnes for the quarter as compared to 17,300 tonnes in the corresponding quarter in 1997 due to the shut down of the Langlois mine in November. Copper production was 1,500 tonnes and Cambior's share of production from the Niobec mine was 266 tonnes of niobium. The metal production targets for 1999 have been set at 71,200 tonnes of zinc, 8,100 tonnes of copper and 1,100 tonnes of niobium.

DOYON

The Doyon division continued to show improvements during the fourth quarter as 61,500 ounces were produced, a 22,000-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, at $40 per tonne of ore and $223 per ounce of gold for the fourth quarter of 1998, were much improved over the previous year but less favourable than the previous quarter. Production costs were negatively affected by increased development and services costs, and higher dilution than anticipated which yielded an average head grade of 5.8 g Au/t. Mill throughput for the quarter was 341,000 tonnes (3,700 tpd) with an average recovery of 96 percent.

For 1998, tonnage milled totaled 1,327,000 tonnes at an average grade of 5.8 g Au/t yielding a production of 240,000 ounces at a direct mining cost of $226 per ounce, representing a 22 percent decrease in costs when compared to 1997.

The Doyon division is expected to generate 1,330,000 tonnes at 6.4 g Au/t in 1999, yielding gold production of 260,000 ounces at an expected average direct mining cost of $200 per ounce.

Improvements in underground mining operations are expected in 1999 at the Doyon mine. More selective mining methods will be introduced specifically in the West Zone. Some 200,000 tonnes of ore will be extracted in the West Zone below level 8. This is expected to have an impact on improving grade and consequently reducing operating costs. Furthermore, exploration and drilling efforts to define additional reserves will be intensified in 1999 with a drilling program (41,000 metres) between levels 8 and 14. Exploration (8,000 metres) will target the Far West sector, the north and south corridors and the Mooshla B prospect.

Important investments are planned at the Mouska mine with a 330 metre internal shaft program to allow production on three levels below level 8 in the year 2000, and an exploration drift towards the Authier Zone to confirm mineralization identified from surface drilling.

OMAI 

The Omai mine performed well during the fourth quarter with the mill averaging a throughput of 21,900 tonnes per day and processing 77 percent hard rock, as compared to 20,200 tonnes per day and 65 percent hard rock in the fourth quarter of 1997. The direct mining cost was $10.09 per tonne for the fourth quarter of 1998, representing a 5 percent reduction from the corresponding quarter in 1997. The grade of the ore mined in the fourth quarter was 1.51 g Au/t, yielding production of 89,000 ounces of gold at a direct mining cost of $228 per ounce. The cost performance represents a major improvement over recent quarters and last year and is largely due to improved grades and mining costs.

For 1998, tonnage milled totaled 7,706,000 tonnes at an average grade of 1.44 g Au/t yielding production of 328,000 ounces at a direct mining cost of $10.18 per tonne of ore and $239 per ounce of gold.

The Omai mine is expected to produce 306,000 ounces of gold in 1999 at an estimated direct mining cost of $240 per ounce. The throughput at the mill is targeted to average approximately 20,400 tonnes per day (13,600 tonnes of hard rock and 6,800 tonnes of soft rock), or 7,443,000 tonnes for the year. The Fennell pit is expected to supply 45 percent of the mill feed while the Wenot Pit should supply 38 percent of the feed. Some 1,232,000 tonnes of soft rock will be reclaimed from the low grade stockpiles to complement the soft rock feed. Head grade is expected to be 1.4 g Au/t and the gold recovery rate 93 percent. Waste and ore extraction from the pits is planned at 28,620,000 tonnes, for a waste to ore ratio of 3.6. The waste to ore ratio is 1.9 for the mine life. As a result, the cost related to additional stripping in excess of the average stripping ratio for the life of the mine will continue to be deferred and amortized in later years.

Efforts will continue to further reduce costs and the focus will be on improving the efficiency of the mining operations and securing lower supply costs. Exploration work will be intensified on the Quartz Hill and Eagle Mountain properties with a view to defining additional soft rock reserves.

SLEEPING GIANT 

Cambior's share of production from the Sleeping Giant mine in 1998 was 35,700 ounces compared to 24,800 ounces in 1997. The direct mining cost was reduced by 26 percent, from $254 to $187 per ounce, due to higher annual throughput of 192,000 tonnes, improved head grade of 12.8 g Au/t and the impact of the weak Canadian dollar.

Cambior's share of production from the Sleeping Giant mine in 1999 is targeted at 39,000 ounces of gold at an estimated direct mining cost of $160 per ounce. Total annual throughput is estimated at 209,000 tonnes at an average grade of 12.4 g Au/t.

BOUCHARD-HEBERT

The Bouchard-Hebert mine experienced continued improvements in its operating performance during 1998 with increased annual throughput of 1,022,000 tonnes and a higher head grade of 4.2 percent zinc as compared to 3.9 percent zinc in 1997. For 1998, zinc and copper metals in concentrates totaled 36,900 tonnes and 5,800 tonnes, respectively. Gold equivalent contained in the copper concentrate totaled 32,000 ounces. For the fourth quarter of 1998, zinc and copper metals in concentrates totaled 8,900 tonnes and 1,400 tonnes respectively. Operating costs were $22 per tonne for the full year and $20 per tonne for the fourth quarter of 1998.

In 1999, the Bouchard-Hebert mine is expected to maintain its throughput of 1,100,000 tonnes per year (2,900 tonnes per day) to produce 39,100 tonnes of zinc and 6,900 tonnes of copper in concentrates. Gold equivalent contained in the copper concentrate is anticipated at 39,400 ounces. Zinc head grade is expected to improve to 4.3 percent and the direct mining cost will be maintained at $22 per tonne.

LANGLOIS

Zinc and copper production in concentrates for the year at the Langlois mine were 25,300 tonnes and 1,000 tonnes respectively. Zinc head grade was 6.5 percent and copper was 0.33 percent. For the fourth quarter, zinc and copper metals in concentrates totaled 2,700 tonnes and 100 tonnes respectively. The decrease in production during the fourth quarter was due to a one-month mill shutdown to repair the main ore pass at lower levels. Operating costs were $31 per tonne for the full year and $38 per tonne for the fourth quarter as a result of lower efficiencies due to the one-month shutdown.

The annual rate of production in 1999 at the Langlois mine is expected to be 425,000 tonnes. Zinc head grades are expected to improve to 8 percent as mining moves into the higher grade zone. On the basis of a zinc price of 48 cents/lb which has been 34 percent hedged, an NSR of $44 per tonne is expected. Production is expected to reach 32,000 tonnes of zinc and 1,200 tonnes of copper in concentrates and operating costs are anticipated at $33 per tonne.