Claude Resources Inc. - First Quarter Results
Toronto Stock Exchange Trading Symbol - CRJ
SASKATOON, SK, May 18 /CNW/ -
Overview
Continued weakness in the spot price of bullion is generating growing
pressure on the gold mining industry. Notwithstanding that gold consumption
has exceeded gold mine production by a wide margin for more than eight years,
the commodity price has refused to move up in a material fashion.
While Claude is not immune to the pressures created by the narrow margins
currently being realized in the gold mining business, the Company is well
positioned to survive continued weakness in gold prices.
Claude's diversification into oil and gas in the early 1980's continues
to serve Company shareholders well. Further, the Company is free of long term
debt and has a substantial working capital position.
The Seabee mine is among the most productive and lowest cost of all
narrow vein underground operations. Claude believes it can sustain cash
operating costs under US $200 per ounce for the foreseeable future. Seabee's
mineral reserves total 579,000 tonnes and the operation has an additional
inferred mineral resource that exceeds 1,600,000 tonnes as extensions to depth
of the current mine workings.
Claude's Madsen Red Lake project is progressing as planned with the
project operator, Placer Dome, carrying all costs associated with an
aggressive exploration program. Phase I, involving four stratigraphic
exploration holes, is complete and Placer has commenced Phase II with a plan
to drill the area hosting the high-grade No. 8 zone. Phase II drilling should
be complete by mid-year 2001.
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Financial Highlights
Three Months Three Months
Ended March 31/01 Ended March 31/00
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Revenue ($ millions) 7.90 7.90
Net earnings (loss) ($ millions) (.40) -
Earnings (loss) per share ($) (.01) -
Cash from operations per share .02 .04
Cash provided by operations ($ millions) .80 1.40
Average realized gold price for the
period (US $/ounce) 259 281
Total cash operating cost (US $/ounce) 217 208
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>>
Financial Results
-----------------
For the three months ended March 31, 2001, Claude recorded a net loss of
$.4 million ($.01 per share) compared to break-even net earnings for the first
quarter of 2000.
Total revenue generated for the three months was $7.9 million, unchanged
from that reported for the first quarter of 2000. Gold revenues decreased 26%
over the comparative quarter last year as a result of lower production and a
decrease in the average realized price per ounce of gold. Gross oil and gas
revenues increased substantially from 2000 due to increases in petroleum
prices realized.
The Seabee mine contributed $4.4 million to revenue, a decrease of $1.5
million from the $5.9 million recorded a year ago. Production at the Seabee
mine decreased 23% from 14,500 ounces in 2000 to 11,100 ounces this year. This
reflects a delay in completion of the high grade 2d2901 stope, due to its
larger than expected size, with the result that blending with lower grade ore
could not be achieved. The Company believes this stope will be available for
free-pull during the latter half of the second quarter and expects to achieve
budget of 54,800 ounces for full year 2001. As well, there was a decrease in
the average realized gold price for the period (2001 - CDN $396/US $259; 2000 -
CDN $409/US $281).
Total mine cash costs were $3.7 million for this quarter versus $4.4
million last period. This decrease in costs is a direct result of the cost-
cutting measures associated with the mine plan undertaken at Seabee for the
year. Cash operating costs per ounce increased slightly from US $208 in 2000
to US $217 for the current quarter.
Gross oil, natural gas liquids and gas revenues totaled $3.5 million for
the current period compared to $2.0 million last year. However, the
comparative net contribution to overall corporate results was affected by an
adjustment processed to the oil and gas operations in the first quarter of
2000.
Cash flow provided from operations for the period was $.8 million ($.02
per share) compared to $1.4 million ($.04 per share) last year. This reduction
in cash flow was a combination of lower gold production and gold prices
realized, offset by decreases in Company operating costs.
Write-down of Mineral Properties
--------------------------------
During the fourth quarter of 2000, the Company reviewed the carrying
values of certain of its mineral properties and determined that, as a result
of current gold prices and the absence of economically recoverable mineral
reserves at the time, the values should be reduced. The December 31, 2000
retained earnings deficit reflects the $51.1 million write-down of mineral
properties recorded in 2000.
Currency and Commodity Hedging
------------------------------
To manage risks associated with prices for gold and changes in foreign
currency, the Company may use commodity and foreign currency instruments. At
March 31, 2001, Claude had no outstanding gold derivative contracts. At March
31, 2001, the Company had outstanding foreign exchange contracts to sell US
$4.0 million at an average exchange rate of 1.5626 CDN $/US $.
Operations
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Gold
Year to date the mine has processed 63,500 tonnes of ore grading 6.43
grams per tonne yielding 11,100 net ounces of gold. During the quarter ore
from the lower grade 2c1900 stope was expected to be blended with higher-grade
ore from the 2d2901 stope. The 2d2901 stope proved to be much larger than
originally contemplated resulting in a longer completion period. While this
has caused a production shortfall in the near term, the scheduled move to this
higher production area during the second quarter is expected to enable the
Company to achieve its production target for the year. Production forecast for
the Seabee mine is 54,800 ounces this year at a total cash operating cost of
under US $200 per ounce and total production costs of approximately US $240
per ounce.
Definition drilling and development has further outlined the 2c & 2d
structures between the 340 and 400 levels. Both structures remain open along
strike and depth. Exploration and development will concentrate on both of
these zones throughout the remainder of the year. A deep drilling program is
slated for the second half of the year.
An independent audit of the Seabee mine's reserves by ACA Howe
International Limited in March of this year confirmed the following reserves:
<<
Proven Mineral Probable Mineral Proven and Probable
Reserve Reserve Mineral Reserves
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Tonnes 299,018 280,331 579,349
Grade (grams/tonne) 7.64 7.43 7.54
Ounces 73,456 66,984 140,440
>>
In addition, this audit documented 19,250 tonnes grading 8.30 grams per
tonne and 1,680,000 tonnes grading 8.0 grams per tonne in the Indicated
Mineral Resource and Inferred Mineral Resource categories, respectively.
Oil & Gas
Oil and gas operations continue to positively impact cash flows as strong
petroleum prices continued in 2001. During the period, the Company's oil and
gas holdings provided $.5 million ($.01 per share) in net cash flow,
relatively unchanged from last year.
Exploration
-----------
First quarter exploration activities were directed at the claims within a
four kilometre envelope of the Seabee mine's two mineral leases. Winter
diamond drilling targeted four quartz-filled shear structures to the west,
north-northwest and east-northeast of the mine and totaled 5,037 metres in 42
holes. This drilling was successful in extending a number of moderate to
strong shear structures, generally cutting narrow widths with anomalous, but
low, gold values. Results support the Company's confidence in the existence of
additional economic reserves within trucking distance of the Seabee mill.
<<
CONSOLIDATED BALANCE SHEETS
March 31 December 31 March 31
2001 2000 2000
Assets (thousands)
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Current assets:
Cash $ - $ 980 $ -
Brokerage deposit - - 469
Receivables 2,412 2,375 4,193
Inventories 11,488 8,860 12,022
Prepaids and other 1,012 1,101 877
--------- --------- ---------
14,912 13,316 17,561
Oil and gas properties 2,674 2,649 2,443
Mineral properties 14,994 15,008 63,246
--------- --------- ---------
32,580 30,973 83,250
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Liabilities and Shareholders' Equity
Current liabilities:
Bank indebtedness 458 - 756
Payables and accrued
liabilities 5,646 4,201 5,745
Current portion of other
liabilities - - 1,000
--------- --------- ---------
6,104 4,201 7,501
Other liabilities - - 1,093
Future site reclamation
costs 2,530 2,515 2,359
Shareholders' equity:
Share capital (Note 2) 57,005 56,893 56,194
Retained earnings
(deficit) (33,059) (32,636) 16,103
---------- --------- ---------
23,946 24,257 72,297
---------- --------- ---------
$32,580 $30,973 $83,250
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CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) &
RETAINED EARNINGS (DEFICIT)
Three months ended March 31 2001 2000
(thousands)
------------------------------------------------------------------------
Revenues:
Gold $ 4,373 $ 5,928
Oil and gas:
Gross revenue 3,515 1,954
Crown royalties (1,101) (393)
Alberta Royalty Tax Credit 108 163
Overriding royalties (1,524) (733)
---------- ----------
Net oil and gas revenue 998 991
---------- ----------
5,371 6,919
Expenses:
Gold 3,670 4,389
Oil and gas 382 444
General and administrative 435 433
Interest and other income (19) 142
Provision for income taxes 72 72
---------- ----------
4,540 5,480
Earnings before the undernoted items 831 1,439
Depreciation, depletion and reclamation:
Gold 1,135 1,071
Oil and gas 119 150
Provision for foreign currency fluctuations - 202
---------- ----------
Net earnings (loss) (423) 16
Retained earnings (deficit), beginning of year (32,636) 16,087
---------- ----------
Retained earnings (deficit), end of period $ (33,059) $ 16,103
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Net earnings per share $ (0.01) $ -
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CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31 2001 2000
(thousands)
------------------------------------------------------------------------
Cash provided from (used in):
Operations:
Net earnings (loss) $ (423) $ 16
Non cash items:
Depreciation, depletion and reclamation 1,254 1,221
Provision for foreign currency fluctuations - 202
---------- ----------
Cash from operations 831 1,439
Net change in other operating items:
Receivables (37) (547)
Inventories (2,628) (2,428)
Prepaids and other 89 92
Payables and accrued liabilities 1,445 3,571
---------- ----------
(300) 2,127
Investing:
Mineral properties (1,107) (2,484)
Oil and gas properties (143) -
---------- ----------
(1,250) (2,484)
Financing:
Issue of common shares 112 197
Brokerage deposits - (271)
---------- ----------
112 (74)
---------- ----------
Decrease in cash position (1,438) (431)
Cash position, beginning of year 980 (325)
---------- ----------
Cash position, end of period $ (458) $ (756)
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Cash from operations per share $ 0.02 $ 0.04
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Notes to Consolidated Financial Statements
Note 1 - General
The accompanying unaudited consolidated financial statements should be
read in conjunction with the Company's audited consolidated financial
statements for the year ended December 31, 2000. The unaudited consolidated
financial statements include financial statements of the Company and its
subsidiary.
The unaudited interim consolidated financial statements reflect all
normal and recurring adjustments which are, in the opinion of management,
necessary for a fair presentation of the respective interim periods presented.
Note 2 - Share Capital
a) At March 31, 2001, there were 40,553,853 common shares outstanding.
b) Options in respect of 1,550,000 shares are outstanding under the stock
option plan. These options have exercise prices ranging from $.53 to
$3.05 with expiration dates between April, 2006 and August, 2010.
%SEDAR: 00000498E
-30-
For further information: Neil McMillan, President, Phone: (306)
668-7505;
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