Claude Resources Inc. - Third Quarter Report For the Nine Months Ended September 30, 2001
Toronto Stock Exchange
Trading symbol - CRJ
SASKATOON, SK, Nov. 23 /CNW/ -
Overview
Gold prices improved during the third quarter, averaging US $8.00 per
ounce higher than the first six months of 2001. The events of September 11th
led to a modest increase in gold prices and while the impact was not as
dramatic as many expected, it does appear to be more sustainable than previous
rallies.
The lower gold grades experienced at Seabee during the first six months
of the year continued unexpectedly through most of the third quarter,
resulting in lower than planned gold production. The grade began to improve
significantly in late September, prompting optimism that the Company will
achieve its annual production target of approximately 50,000 ounces.
During the third quarter, the Company initiated deeper drilling at the
Seabee mine with excellent results. Five consecutive holes, between 450 and
650 metres below surface, yielded ore grades, cut to 75 grams across true
widths, as follows:
- 46.0 grams per tonne over 4.20 metres
- 14.6 grams per tonne over 3.44 metres
- 20.9 grams per tonne over 1.97 metres
- 35.0 grams per tonne over 2.25 metres
- 25.0 grams per tonne over 1.80 metres
These grades are superior to the historical milled grades at Seabee,
which average 8.5 grams per tonne. The ore, expected to be accessible for
milling by late 2002, supports continued confidence in the immense potential
for longevity of the Seabee mine.
Prudent restraints on expenditures and anticipated improvement in mine
operating results in the fourth quarter, has the Company optimistic that it
will enter the annual mine re-supply season during the first quarter of 2002
with a solid working capital base.
<<
Financial Highlights
Nine Months Ended Nine Months Ended
September 30, 2001 September 30, 2000
------------------------------------------------------------------------
Revenue ($ millions) 22.3 23.6
Net earnings (loss) ($ millions) (1.9) 1.1
Earnings (loss) per share ($) (.05) .03
Cash provided by operations ($ millions) 2.6 5.1
Cash from operations per share ($) .06 .13
Average realized gold price for the
period (US$/ounce) 270 285
Total cash operating costs (US$/ounce) 224 197
Working capital ($ millions) 8.7 8.1
>>
Financial
Three months
For the three months ended September 30, 2001, the Company recorded a net
loss of $0.7 million ($0.02 per share) compared to net earnings of $1.0
million ($0.03 per share) for the same period in 2000. This decrease was a
combination of higher depreciation and depletion charges and lower than
expected contribution from the Seabee mine operations. As well, third quarter
2001 gross oil and gas revenues fell 18% from the 2000 period due to third
quarter declines in petroleum prices realized. Cash flow provided from
operations for the third quarter was $0.6 million compared to $2.0 million
last period.
Year to date
Claude recorded a net loss of $1.9 million ($0.05 per share) for the
first three quarters of 2001, compared to net earnings of $1.1 million ($0.03
per share) for the same period last year.
Sales revenues decreased by 6% to $22.3 million for the nine months ended
September 30, 2001, from $23.6 million in 2000. A period to period drop in
gold revenues, due mainly to decreased production, was partially offset by an
increase in gross oil and gas revenues, largely a result of higher average
petroleum prices realized in 2001.
Gold revenues dropped 20% from $17.5 million for the first nine months of
2000 to $14.0 million in 2001. Gold production fell from 41,800 ounces poured
in 2000 to 33,600 ounces poured this period. These revenues were also affected
by a slightly lower average realized price (2001- CDN $416/US $270; 2000-CDN
$419/US $285).
Gross oil, natural gas liquids and gas revenues increased by 36% from
$6.1 million in 2000 to $8.3 million in 2001. This significant increase was
the result of higher average realized prices, particularly in the NGL and gas
sectors.
Total operating and administrative costs fell from $14.9 million for the
first three quarters of 2000 to $14.3 million for the same period in 2001.
This reduction is largely a function of decreased operating costs at the
Seabee mine, together with a reduction in interest charges.
Total mine cash costs for the nine month period were $11.6 million in
2001 compared to $12.1 million in 2000. Cash operating costs increased from
US $197 per ounce for the first three quarters of 2000 to US $224 per ounce
for the current period, a result of lower production.
Depreciation and depletion of the Company's gold assets was $4.1 million
for the first nine months of 2001, compared with $2.9 million for the
corresponding 2000 period. This is largely attributable to the smaller
calculated reserve base, a result of regulatory changes, at the Seabee mine.
Amortization and depreciation costs per ounce for the period were US $80
compared to US $48 in the 2000 period.
Cash flow provided from operations for the period was $2.6 million ($0.06
per share) compared to $5.1 million ($0.13 per share) in 2000. The lower cash
flow is due to a combination of lower gold production, partially offset by
reduced production costs at the Seabee mine, and a $0.4 million increase in
operating cash flow contributed by our oil and gas properties.
Currency & Commodity Hedging
To manage risks associated with gold prices and changes in foreign
currency, the Company may use commodity and foreign currency instruments. At
September 30, 2001, Claude had outstanding forward gold contracts related to
future production of 5,000 ounces at an average price of US $288 per ounce,
with a market value loss inherent in these contracts of US $18,000.
At September 30, 2001 the Company had outstanding foreign exchange
contracts to sell US $3.1 million at an average contract exchange rate of
1.5647 $CDN/$US, with a market value loss inherent of US $28,000.
Operations
Gold
During the nine month period, the Seabee mine processed 202,600 tonnes of
ore (averaging 5.99 grams per tonne) and produced 33,600 ounces of gold. This
compares to 177,900 tonnes (averaging 8.27 grams per tonne) and 41,800 ounces
produced during the same period in 2000.
The mill feed grade is 23% lower than the 7.8 grams per tonne average
grade of Seabee's proven and probable reserves. However, a 14% improvement in
throughput reduced the impact of the lower grade ore.
The last quarter will focus on accessing the Claude 2B zone on the 495
level and a ramp extension to the 650 level. Mining and development on the
Currie Rose 2A and 2D zones continues on the 60 and 400 levels.
As indicated earlier, drilling below the 500 level on the Claude 2B zone
has been very promising. This zone is open along strike and at depth, and
additional drilling is slated throughout the remainder of the year.
Oil & Gas
For the nine months ended September 30, 2001, oil and NGL production was
67,000 barrels, 12% lower than the 76,000 barrels produced in the 2000 period.
The average realized price was US $25.93 (CDN $39.89) per barrel versus
US $26.69 (CDN $39.29) last year. Gas production improved 1% from 740 MMCF in
2000 to 751 MMCF this period. The average realized price was US $4.10 (CDN
$6.31) per MCF compared to the US $2.58 (CDN $3.80) per MCF realized in last
period.
Exploration
Exploration efforts focused on the Seabee mine area. Targets included two
zones near Porky Lake to the north, a number of structures immediately north
of the Claude No. 5 zone and a zone on the Shane option east of Munro Lake.
In the Porky Lake area, two parallel structures were mapped and
prospected westward from the northern take-off point of the winter road
access. The southern target is interpreted to be a calc-silicate altered,
shear hosted system that produced low-grade intersections as reported in
historic drill records. The northern target occurs within a feldspathic
arenite near its contact with the underlying mafic volcanic suite. The
mineralization appears as free gold grains in association with coarse
arsenopyrite. Two intervals contained visible gold and constitute drill-ready
targets.
In the Munro Lake area three kilometres east of the Seabee mine, a
complex structure was uncovered by prospecting. Interpreted as a weakly
silicified braided shear or fracture system, this structure contained a
background gold population that returned assays between 0.5 and 1.5 grams per
tonne from a combination of grab samples and saw cuts over widths in excess of
20 metres. Within this envelope of elevated gold values, smaller intervals in
the 0.3 to 1.0-metre range returned assays in the 6 to 20 grams per tonne
range. This zone is open both along strike and to depth.
Closer to the Seabee mine, second generation targets within the Laonil
Lake intrusive complex have been identified and remapped. This work has
focused on untested windows within the mine trend with the objective of
identifying proximal drill targets. Additional compilation and
three-dimensional modelling is required prior to drilling.
On the Madsen property in the Red Lake area of northwestern Ontario,
results were received from the 4,432 metre drill program done on behalf of the
property's optionee, Placer Dome. Targeting the high-grade No. 8 zone halfway
between surface and the known workings, the two pilot holes and two
navigational cuts intersected four mineralized zones. Three of these zones
returned modest grades in the 4 to 5 grams per tonne range over widths of 1 to
3 metres. Structural and stratigraphic anomalies coupled with the reported
intersections provide Placer with a powerful vectoring tool for the next phase
of its exploration program on the Madsen property.
Transfer Agent and Registrar:
Computershare Investor Services Canada Phone (403) 267-6800
600, 530 - 8th Avenue SW Fax (403) 267-6529
Calgary, Alberta
T2P 3S8
<<
Consolidated Balance Sheets
(Dollars in Thousands)
September 30 December 31
2001 2000
-------------- -------------
Assets
Current assets:
Cash $ - $ 980
Receivables 1,899 2,375
Inventories 8,863 8,860
Prepaids and other 1,638 1,101
-------------- -------------
12,400 13,316
Oil and gas properties 2,750 2,649
Mineral properties 13,748 15,008
-------------- -------------
$ 28,898 $ 30,973
-------------- -------------
-------------- -------------
Liabilities and Shareholders' Equity
Current liabilities:
Bank indebtedness $ 974 $ -
Payables and accrued liabilities 2,379 4,201
Current portion of long-term debt 329 -
-------------- -------------
3,682 4,201
Long-term debt 192 -
Future site reclamation costs 2,560 2,515
Shareholders' equity:
Share capital (Note 2) 16,999 56,893
Retained earnings (deficit) 5,465 (32,636)
-------------- -------------
22,464 24,257
-------------- -------------
$ 28,898 $ 30,973
-------------- -------------
-------------- -------------
Consolidated Statements of Earnings (Loss)
(Dollars in Thousands)
Three Months Ended Nine Months Ended
September 30 September 30
2001 2000 2001 2000
--------- --------- --------- ---------
Revenues
Gold $ 4,614 $ 5,005 $ 13,990 $ 17,477
Oil and gas:
Gross revenue 1,908 2,326 8,263 6,111
Crown royalties (501) (773) (2,503) (1,568)
Alberta Royalty Tax Credit (12) 147 622 410
Overriding royalties (846) (891) (3,517) (2,475)
--------- --------- --------- ---------
Net oil and gas revenue 549 809 2,865 2,478
--------- --------- --------- ---------
5,163 5,814 16,855 19,955
Expenses
Gold 3,761 3,141 11,576 12,091
Oil and gas 440 442 1,353 1,339
General and administrative 312 349 1,149 1,196
Interest and other 16 (107) 28 156
Provision for income taxes - (28) 166 114
--------- --------- --------- ---------
4,529 3,797 14,272 14,896
--------- --------- --------- ---------
Earnings before the undernoted items 634 2,017 2,583 5,059
Depreciation, depletion and
reclamation:
Gold 1,211 924 4,120 2,948
Oil and gas 121 150 362 450
Provision for foreign currency
fluctuations - (69) - 529
--------- --------- --------- ---------
Net earnings (loss) $ (698) $ 1,012 $ (1,899) $ 1,132
--------- --------- --------- ---------
Net earnings (loss) per share $ (0.02) $ 0.03 $ (0.05) $ 0.03
--------- --------- --------- ---------
Weighted average number of shares
outstanding (000's) 40,554 39,225 40,554 38,828
--------- --------- --------- ---------
--------- --------- --------- ---------
Consolidated Statements of Cash Flows
(Dollars in Thousands)
Three Months Ended Nine Months Ended
September 30 September 30
2001 2000 2001 2000
--------- --------- --------- ---------
Cash provided from (used in):
Operations:
Net earnings (loss) $ (698) $ 1,012 $ (1,899) $ 1,132
Non cash items:
Depreciation, depletion
and reclamation 1,332 1,074 4,482 3,398
Provision for foreign
currency fluctuations - (69) - 529
--------- --------- --------- ---------
Cash from operations 634 2,017 2,583 5,059
Net change in other operating items:
Receivables (11) 201 476 1,393
Inventories 1,162 274 (3) (814)
Prepaids and other 30 (19) (537) -
Payables and accrued liabilities (866) (416) (1,822) 826
Obligations relating to foreign
currency fluctuations - (2,056) - (2,420)
--------- --------- --------- ---------
949 1 697 4,044
Investing:
Mineral properties (994) (1,858) (2,815) (6,481)
Oil and gas properties (242) (123) (463) (147)
--------- --------- --------- ---------
(1,236) (1,981) (3,278) (6,628)
Financing:
Issue of common shares (1) - 106 196
Long-term debt (82) - 521 -
Brokerage deposits - 428 - 198
--------- --------- --------- ---------
(83) 428 627 394
Decrease in cash position (370) (1,552) (1,954) (2,190)
Cash position, beginning of period (604) (963) 980 (325)
--------- --------- --------- ---------
Cash position, end of period $ (974) $ (2,515) $ (974) $ (2,515)
--------- --------- --------- ---------
--------- --------- --------- ---------
Cash from operations per share $ 0.02 $ 0.05 $ 0.06 $ 0.13
--------- --------- --------- ---------
--------- --------- --------- ---------
Consolidated Statements of Retained Earnings
(Dollars in Thousands)
Three Months Ended Nine Months Ended
September 30 September 30
2001 2000 2001 2000
--------- --------- --------- ---------
Retained earnings (deficit),
beginning of period $ 6,163 $ 16,207 $(32,636) $ 16,087
Reduction of stated capital
(Note 2) - - 40,000 -
Net earnings (loss) (698) 1,012 (1,899) 1,132
--------- --------- --------- ---------
Retained earnings, end of period $ 5,465 $ 17,219 $ 5,465 $ 17,219
--------- --------- --------- ---------
--------- --------- --------- ---------
>>
Notes to Consolidated Financial Statements
Note 1 - General
The accompanying unaudited consolidated financial statements should be
read in conjunction with the notes to the Company's audited consolidated
financial statements for the year ended December 31, 2000. The unaudited
consolidated financial statements include the 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 period's
presented.
Note 2 - Share Capital
At September 30, 2001 there were 40,553,853 common shares outstanding.
Options in respect of 1,500,000 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.
At the annual meeting of shareholders on May 23, 2001, a special
resolution was passed reducing the stated capital of the Company by
$40,000,000.
%SEDAR: 00000498E
-30-
For further information: Neil McMillan, President, Phone: (306)
668-7505;
newswire.ca |
