News article:
canoe.ca
Cambior looks for partners, to
sell assets
DENVER, Oct 19 (Reuters) - Cambior Inc., one of several
North American gold companies punished by market
concerns about hedging, said on Tuesday it would be willing
to enter into a "business combination" with a strategic partner
to enhance shareholder value.
Montreal-based Cambior, which saw its shares plummet
earlier this month after it disclosed a significant gold hedging
program, also said it would sell its base metals assets to
reduce debt and concentrate on gold mining.
"We will look into opportunities where either a strategic
investor or other companies would consider a business
combination with Cambior," Cambior Chief Executive Louis
Gignac told delegates at the Denver Gold Group's annual
conference.
Cambior, which owns the Doyon gold mine in Canada and
the Omai gold mine in Guyana, said disposing of its base
metals assets would give it the flexibility to further diversify its
gold and silver mining operations.
Shares of Cambior fell sharply earlier this month after the
company informed markets that it had hedged, or forward
sold, 2.7 million ounces of gold production through to the year
2007 at an average price of $318 an ounce.
Hedging, a common practice in the industry, allows a
company to guard against a fall in gold prices by selling future
production at a fixed price.
It can pay handsome dividends in an environment where
confidence in gold is declining, but it can backfire when bullion
prices rise.
The disclosure came in the middle of a stunning rally, which
pushed bullion prices up to around the $325-an-ounce level.
The precious metal was trading around $311 on Tuesday
midday.
Cambior said it was continuing to negotiate with its hedging
counterparties.
Cambior shares were trading at C$2.59 at midday on the
Toronto Stock Exchange, up 20 Canadian cents.
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