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Attention Business/Financial Editors:
Claude Resources Announces Third Quarter Results
CALGARY, Nov. 4 /CNW/ -
OVERVIEW
The Company's Seabee mine produced 18,100 ounces of gold during the third
quarter. This brings total production to 42,900 ounces for the nine months
with every expectation that the 60,000 ounce record production target for the
year will be realized.
There have been a number of accomplishments since the acquisition of the
Madsen Gold Mine at Red Lake. These include the basics of establishing an
experienced and productive workforce, the construction of required
infrastructure and refurbishment; the preparation of the mill for start-up;
and the settlement of liabilities assumed with the acquisition. The Madsen
mill was commissioned in the last week of July, as scheduled.
The mine plan initiated for underground development at Madsen, which
focused on the former workings of the main Austin zone, is being redesigned as
results in some cases have not met expectations. Encouraging results from
surface drilling on the McVeigh zone, which is near and parallels the Austin
zone, indicate that the McVeigh may in fact be a replica of the Austin zone.
Given the high number of ore grade drill intercepts in this structure, it is
planned to collar a portal and construct a ramp to access the ore in the upper
levels of this zone to provide complimentary feedstock to the 500 tons per day
being accessed from the Austin zone.
FINANCIAL
For the nine months ended September 30, 1998, Claude recorded net
earnings from operations of $1.8 million ($.07 per share). Since the Canadian
dollar continued to weaken vis-a-vis the US dollar during the quarter, the
Company provided an additional $1.26 million as a ''provision for foreign
currency fluctuations'' resulting in a net loss of $.3 million ($.01 per
share) for the nine months. Net earnings for the same period last year were
$3.4 million ($.20 per share).
Cash flow of $7.2 million ($.28 per share) for the three quarters of 1998
are identical to those for the same period last year. The average gold price
received of CDN $422 per ounce is significantly lower than the CDN $494 per
ounce compared to last year and accounts for reduced revenues.
Decreased gold revenues, however, were substantially offset by lower mine
operating costs. Cash operating costs at the Seabee mine for the current year
of US $180 per ounce compare to US $230 per ounce experienced for the same
period in 1997. Oil and gas contribution to cash flow for the nine months
dropped 43% to $.7 million compared to last year reflecting the depressed
state of oil prices.
Working capital for the period was $9.3 million, relatively unchanged
from the $9.4 million for the comparative period last year.
OPERATIONS
Gold
Access to ore from the high grade 1405 2C west stope during the quarter
enabled the Seabee operation to process an average blended grade of 9.7 grams
per tonne for the period; a return to the approximate overall average grade of
the mines reserve base. Mill throughput for the quarter averaged 665 tonnes
per day.
For the first nine months of the year, the operation has produced 42,900
ounces of gold; the mill has processed an average of 620 tonnes per day at a
grade of 8.63 grams per tonne with a 92.9% recovery rate.
A number of significant projects have been completed during the summer
months which contribute to the overall cost effectiveness and long-term
viability of the operation. A road was constructed around the tailings pond
providing vehicular access to the tailings dam site; the tailings dam was
built higher to increase the capacity of the tailings pond and reduce the need
for water treatment; a drum filter was installed in the mill which will reduce
cyanide consumption; fire prevention and emergency equipment has been
upgraded; emergency power supply generation has been upgraded; and an
emergency spill containment dyke has been constructed.
A very proud occasion for the Company was the success of the Seabee Mine
Rescue Team which won the provincial hardrock rescue competition.
Oil & Gas
During the first nine months of 1998 the Company's oil and gas holdings
produced 15% less oil and 15% less gas than the comparable period of 1997.
This decreased production combined with a 40% decrease in oil prices resulted
in a 39% decrease in overall oil and gas revenue for the comparative period.
DEVELOPMENT PROJECTS
Madsen Gold Mine
Milling operations commenced on July 23, 1998. Mill throughput averaged
490 tons per day in August increasing to 625 tons per day in September. It is
expected that the planned mill throughput of 800 tons per day will be achieved
during November.
As is normal, low grade ore is being used to test and fine tune the
Madsen mill during the start-up phase. Pending a production decision, revenues
from the 2,600 ounces of gold produced during the period were netted against
pre-production expenditures which are capitalized and accordingly not
reflected in the Statement of Operations.
The mine has been dewatered to below the 13th level to facilitate mine
development and rehabbing of the numbers 1, 2, and 3 shaft and hoist
compartments. As well, a compressor building was constructed to house the mine
air compressors and provide a repair shop for underground and surface
equipment. Fire pumps and fire lines have been installed and connected.
Currie Rose
Development work remains on schedule as the property is prepared for
production next year. Haulage and draw points are near completion on the 140
metre level on the 2C west zone and an open raise on the 190 metre level
awaits timbering. Claude is committed to processing a minimum of 30,000
tonnes annually from the property commencing in 1999.
EXPLORATION
Mapping and prospecting efforts focussed on the area around and to the
east of the Seabee Mine. Working the Currie Rose and Santoy properties, crews
developed the geological famework of the known vein systems and successfully
uncovered a number of new gold-bearing veins. Further testing by a
combination of geophysical surveys and diamond drilling awaits winter road
access.
A number of targets on the Madsen property were explored and drilled
during the quarter. The most significant results of the program were
encountered in the McVeigh zone which lies parallel to the existing mine
workings. The structure has been traced on surface for over 2,000 metres.
Underground development on this structure will begin in October and is
expected to provide feedstock for the mill in the first quarter of 1999.
<<
CONSOLIDATED BALANCE SHEETS
as at September 30, 1998 1998 1997
Assets (thousands)
-------------------------------------------------------------------------
Current assets:
Cash $ (707) $ (2,287)
Receivables 4,804 3,188
Inventories 9,847 10,623
Prepaids and other 835 669
---------- ----------
14,779 12,193
Oil and gas properties 3,179 3,036
Mineral properties 47,573 17,425
---------- ----------
65,531 32,654
-------------------------------------------------------------------------
Liabilities and Shareholders' Equity
-------------------------------------------------------------------------
Current liabilities:
Payables 4,267 2,552
Current portion of estimated
participation liability 48 192
Current portion of other liabilities 1,131 -
---------- ----------
5,446 2,744
Estimated participation liability 308 2,668
Other liabilities 3,293 178
Future site reclamation costs 1,922 744
Shareholders' equity 54,562 26,320
---------- ----------
$ 65,531 $ 32,654
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
Nine months ended September 30 1998 1997
(thousands)
-------------------------------------------------------------------------
Revenues:
Gold $ 18,097 $ 20,781
Oil and gas:
Gross revenue 4,379 5,538
Crown royalties (758) (1,109)
Alberta Royalty Tax Credit 469 575
Overriding royalties (1,858) (2,308)
--------- ---------
Net oil and gas revenue 2,232 2,696
--------- ---------
20,329 23,477
Expenses:
Gold 11,938 13,916
Oil and gas 1,540 1,491
General and administrative 1,004 1,501
Interest and other income (1,343) (697)
--------- ---------
13,139 16,211
-------- ---------
Earnings before the undernoted items 7,190 7,266
Depreciation, depletion and reclamation:
Gold 4,710 3,283
Oil and gas 648 597
Provision for foreign currency
fluctuations (Note 1) 2,131 -
--------- ---------
Net earnings (loss) $ (299) $ 3,386
Net earnings (loss) per share $ (.01) $ 0.20
-------------------------------------------------------------------------
(Note 1) Provision for Foreign Currency Fluctuations
At September 30, 1998, the Company had outstanding foreign exchange
contracts to sell US $21.6 million at an average exchange rate of 1.3246. The
value of these contracts are marked to market with the resulting adjustment to
the provision for foreign currency fluctuations. Including the provision for
foreign currency fluctuations, these contracts now have an effective exchange
rate of 1.5291.
CONSOLIDATED STATEMENTS OF CHANGES
IN FINANCIAL POSITION
Nine months ended September 30 1998 1997
(thousands)
-------------------------------------------------------------------------
Cash provided from (used in):
Operations:
Net earnings (loss) $ (299) $ 3,386
Non cash items:
Depreciation, depletion and reclamation 5,358 3,880
Provision for foreign currency
fluctuations 2,131 -
--------- ---------
Cash from operations 7,190 7,266
Net change in operating working capital:
Receivables (2,545) 773
Inventories (1,331) (1,953)
Prepaids and others (50) 146
Payables 2,369 82
--------- ---------
5,633 6,314
Investing:
Oil and gas properties (684) (945)
Mineral properties (33,805) (12,469)
--------- ---------
(34,489) (13,414)
Financing:
Repayment of estimated participation
liability (144) (1,084)
Other liabilities 1,029 (85)
Issue of special warrants 908 -
Issue of common shares 24,104 616
--------- ---------
25,897 (553)
--------- ---------
Increase (decrease) in cash (2,959) (7,653)
Cash, beginning of year 2,252 5,366
--------- ---------
Cash, end of period $ (707) $ (2,287)
Cash from operations per share $ 0.28 $ 0.42
-------------------------------------------------------------------------
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%SEDAR: 00000498E
-30-
For further information: Neil McMillan, President, (306) 668-7505 |
