The Omai gold mine is set to close in the 4th quarter of 2005 and rehabilitation of the site is now underway, a press release from parent company Cambior said yesterday.
The Business Wire statement said Omai "performed better than expected during the quarter to produce 58,400 ounces of gold at a mine operating cost of $263 per ounce, compared to 62,200 ounces of gold at $213 per ounce for the same period last year. The higher unit cost is due to lower grade, which reflects the partial feed from the low-grade stockpiles, and higher fuel costs.
An increase in mineral reserves in the Fennell pit and production delays during the rainy season extended production from the Fennell pit into the fourth quarter of 2004, well beyond the planned August closure. Gold production for 2004 is now estimated at 240,000 ounces compared to the original forecast of 234,000 ounces. The production costs were severely affected by higher fuel costs for both power generation and mining costs; the year-over-year impact is $1.3 million for the third quarter and $2.3 million for the first nine months.
"The last blast in the Fennell pit took place in early October and therefore the mill will now process exclusively low-grade hard rock ore from the stockpile. It is estimated that 3.7 million tonnes at grade of 0.9 g Au/t will remain to be processed in the first nine months of 2005 for production of 100,000 ounces of gold. The Company has already begun the rehabilitation of the mine site, which is expected to close in the fourth quarter of 2005.
Due to the wind-down of the operations at Omai, some equipment has been transferred to the bauxite operations located 100 km north of the mine and to the Rosebel mine in neighbouring Suriname."
Cambior issued third quarter results that show revenues totalling $80.7 million, compared to $46.5 million for the same period last year, representing an increase of 74%.
Cambior reports cash flow from operating activities of $16.9 million for the third quarter, a major increase compared to cash flow from operating activities of $4.6 million for the corresponding quarter in 2003. Unfortunately, a net loss of $6.1 million ($0.02 per share) was incurred in the third quarter 2004, compared to net earnings of $0.7 million in 2003, due to a production upset at the Doyon mine as a result of ground stability problems.
Among the highlights of the report are a successful completion of a Cdn $110 million equity financing deal which led to the issuance of 29,333,333 units at a price of Cdn $3.75 per unit. Each unit issued on October 14, 2004, consisted of one common share and one half of one Series D common share purchase warrant.
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The company also referred to the conclusion of an agreement with the Government of Guyana to privatize the Linden Bauxite operations in Guyana.
A new company, OMAI Bauxite Mining Inc. was incorporated to give effect to the privatization and will be owned 70% by the Company and 30% by the Government of Guyana. The Company will invest an amount of $10 million to acquire its 70% participation, of which $5 million will be cash and the balance will be in mine equipment transfers from the Omai mine. OMAI Bauxite has also received a commitment for a $10 million credit facility from a Caribbean financial institution on a non-recourse basis, but subject to a $5 million construction cost-overrun facility from the Company. This facility is for 10 years at an interest rate of 10.5% per year.