Owner
Post by Franko10 ™ on Oct 7, 2004 18:28:09 GMT -5
SECOND QUARTER REPORT
For the Six Months Ended June 30, 2004
Overview
Gold bullion prices remained stagnant trading in the US $380-$410 per ounce range throughout the second quarter of 2004. As a result, gold equity prices experienced weakness, particularly in the junior producer sector, which endured lower prices throughout the quarter.
The Company’s gold production strengthened during the quarter, although gold production was still below budget at 10,900 ounces. The Company expects gold production will continue to improve in the second half of 2004.
Increased oil and natural gas liquids (NGLs) production, a result of infill drilling, was offset by normal natural gas production declines. Petroleum revenue during the half was further affected by the stronger Canadian versus American dollar.
Claude Resources was very active on the exploration front during the quarter, with three drills operating in the Seabee area and work beginning on an exploration program at Claude’s Tartan Lake property near Flin Flon, Manitoba. Continued exploration success in the Seabee area may lead to a material increase in production at the Seabee mill over the next 12-24 months.
The Company continues to wait for the balance of first half exploration results from Placer Dome’s work on Claude’s Madsen, Red Lake project in Ontario, Canada.
Financial Highlights
Three
Months
Ended
June 30,
2004 Three
Months
Ended
June 30,
2003 Six
Months
Ended
June 30,
2004 Six
Months
Ended
June 30,
2003
Revenue ($ millions) 8.1 8.8 15.7 17.7
Net earnings (loss) ($ millions) (.1) .1 (.5) .6
Earnings (loss) per share ($) 0.00 0.00 (0.01) 0.01
Cash from operations
($ millions)* 1.1 1.4 2.1 3.0
Cash from operations per share ($)* .02 .03 .04 .06
Average realized gold price for the period (US$/ounce) 389 344 400 339
Total cash operating costs (US$/ounce) 295 266 309 269
Working capital ($ millions) 7.5 10.1 7.5 10.1
* before net change in non-cash working capital.
Operations
Gold
For the first half of 2004, the mine processed 94,125 tonnes of ore grading 7.26 grams per tonne yielding 20,800 ounces of gold. This compares to 96,618 tonnes of ore processed grading 8.24 grams per tonne yielding 24,100 ounces of gold for the similar period in 2003. As expected, the reduced production was a result of lower grade mill throughput originating from development ore on the 162/550 level sill and 2B6514 sill, offset by higher grade ore from the 2B6309 stope.
Operating Statistics
Quarter Ended Three Months Ended June 30 Six Months Ended June 30
2004 2003 2004 2003
Tonnes milled 47,453 49,118 94,125 96,618
Grade processed (g/t) 7.41 7.89 7.26 8.24
Recovery (%) 95.17% 95.26% 95.01% 94.66%
Operating efficiency 98.06% 99.47% 98.98% 99.29%
Sales volume 10,910 12,463 20,781 24,141
During the third quarter, the mine plan will focus on completing the 162/550 and 2B6514 stopes while developing stoping blocks on the 570 and 680 metre levels. The increased number of work areas and corresponding increase in availability of tonnage is expected to result in improved operating results for the fourth quarter.
Oil and Gas
Oil, NGLs and gas operations continue to positively impact Company earnings and cash from operations before net change in non-cash working capital. Solid production and prices resulted in contributed cash flows for the first six months of 2004 of $.7 million ($0.01 per share), compared to $1.5 million ($0.03 per share) for the same period in 2003. Extensive drilling at the Nipisi Unit is expected to increase oil and NGLs reserves while maintaining current production.
Exploration
During the second quarter of 2004, the Company remained active on the exploration front. Three drills were working in the Seabee mine area: at Porky Lake, 2 kilometres northeast of the mine and in the Santoy Lake area 15 kilometres southeast.
Work at Porky Lake consisted of infill drilling of the Porky Main Zone to upgrade confidence levels and to determine the continuity of the zone in preparation for an underground bulk sampling program.
Drilling also took place on a new discovery called the Porky West Zone (GAS Zone), which is 1.2 kilometres on strike to the west of the Porky Main Zone. Drilling returned excellent results that defined a 350 metre long, 1.5 to 5 metre wide gold bearing zone in the silicified feldspathic arenite, similar to the Porky Main Zone in mineralization style. The downward and strike extension of the GAS zone will be further tested during the next drill program.
Two drills were working on the Santoy Lake 7 and 8 zones east of the Seabee mine. This was a follow-up to the 2003 prospecting program in which sampling along a 4 kilometre corridor returned encouraging gold values. This program is currently underway and results will be released when completed.
Elsewhere in Saskatchewan, an all-weather access trail is being constructed to Claude’s Jojay gold property north of Otter Lake. This trail will be a continuation of the all-weather road that accesses the Jolu mine from Highway #102.
The Jojay gold property hosts a resource of approximately 300,000 tonnes at a grade of 9 grams of gold per tonne. Geophysical and ground sampling in the deposit area indicate great potential to expand its dimensions by further exploration. The new access trail enhances accessibility and will enable the Company to expeditiously carry out its future programs.
At the Tartan Lake mine near Flin Flon, Manitoba, permits have been received and dewatering of the mine workings and site restoration is underway. This will facilitate a 4,500 metre underground drill program to test a largely untested structure to the west of existing mine workings.
At Claude’s Madsen property in Red Lake, Ontario, final results are pending from Placer Dome’s drill program on the Treasure Box zone completed in the second quarter of 2004. Over 1,650 assays remain to be processed and Claude will report these results as soon as they are received. Placer has identified numerous exploration targets in addition to the Treasure Box and is currently prioritizing these targets for further exploration.
Financial
Three Months
For the three months ended June 30, 2004, the Company recorded a net loss of $96,000 ($0.00 per share) compared to restated net earnings due to changes in accounting policies of $79,000 ($0.00 per share) for the same period in 2003. Cash flow from operations before net changes in non-cash working capital items was $1.1 million ($0.02 per share) in the second quarter, compared to $1.4 million ($0.03 per share) in the similar period of 2003.
Total revenue generated for the quarter was $8.1 million, 8% lower than revenue generated in the second quarter of 2003. The Seabee mine contributed $5.8 million to revenue for the second quarter of 2004 compared to $6.0 million for the same period last year. Gold sales volume for the period declined 13% from 12,500 ounces in 2003 to 10,900 ounces in 2004. The reduction in sales volume was largely offset by the improvement in average gold prices per ounce realized for the period: Q204 – US $389 (CDN $529); Q203 – US $344 (CDN $481). The 18% decrease in oil, NGLs and gas revenue was due to the normal production decline of our gas wells, combined with lower average realized petroleum prices due to Canadian dollar strengthening.
Due largely to the commissioning of the shaft extension, total mine operating costs fell 4% from $4.6 million in the second quarter of 2003 to $4.4 million this period. The improved operating costs were offset by lower sales volume and an appreciating Canadian dollar for the period, which resulted in an 11% increase in cash operating costs per ounce1: Q204 – US $295; Q203 – US $266.
The 64% increase in operating costs at the Company’s oil and gas properties, period over period, was a result of a repairs and maintenance charges incurred at the Nipisi Unit and Edson Gas Plant.
(1) The Company reports its operating, depreciation and depletion costs on a per ounce basis, based on uniform standards developed by the Gold Institute. Management uses this measure to analyze the profitability, compared to average realized gold prices, of the Seabee mine. Investors are cautioned that the above measures may not be comparable to similarly titled measures of other companies, should these companies not follow Gold Institute standards.
For the Six Months Ended June 30, 2004
Overview
Gold bullion prices remained stagnant trading in the US $380-$410 per ounce range throughout the second quarter of 2004. As a result, gold equity prices experienced weakness, particularly in the junior producer sector, which endured lower prices throughout the quarter.
The Company’s gold production strengthened during the quarter, although gold production was still below budget at 10,900 ounces. The Company expects gold production will continue to improve in the second half of 2004.
Increased oil and natural gas liquids (NGLs) production, a result of infill drilling, was offset by normal natural gas production declines. Petroleum revenue during the half was further affected by the stronger Canadian versus American dollar.
Claude Resources was very active on the exploration front during the quarter, with three drills operating in the Seabee area and work beginning on an exploration program at Claude’s Tartan Lake property near Flin Flon, Manitoba. Continued exploration success in the Seabee area may lead to a material increase in production at the Seabee mill over the next 12-24 months.
The Company continues to wait for the balance of first half exploration results from Placer Dome’s work on Claude’s Madsen, Red Lake project in Ontario, Canada.
Financial Highlights
Three
Months
Ended
June 30,
2004 Three
Months
Ended
June 30,
2003 Six
Months
Ended
June 30,
2004 Six
Months
Ended
June 30,
2003
Revenue ($ millions) 8.1 8.8 15.7 17.7
Net earnings (loss) ($ millions) (.1) .1 (.5) .6
Earnings (loss) per share ($) 0.00 0.00 (0.01) 0.01
Cash from operations
($ millions)* 1.1 1.4 2.1 3.0
Cash from operations per share ($)* .02 .03 .04 .06
Average realized gold price for the period (US$/ounce) 389 344 400 339
Total cash operating costs (US$/ounce) 295 266 309 269
Working capital ($ millions) 7.5 10.1 7.5 10.1
* before net change in non-cash working capital.
Operations
Gold
For the first half of 2004, the mine processed 94,125 tonnes of ore grading 7.26 grams per tonne yielding 20,800 ounces of gold. This compares to 96,618 tonnes of ore processed grading 8.24 grams per tonne yielding 24,100 ounces of gold for the similar period in 2003. As expected, the reduced production was a result of lower grade mill throughput originating from development ore on the 162/550 level sill and 2B6514 sill, offset by higher grade ore from the 2B6309 stope.
Operating Statistics
Quarter Ended Three Months Ended June 30 Six Months Ended June 30
2004 2003 2004 2003
Tonnes milled 47,453 49,118 94,125 96,618
Grade processed (g/t) 7.41 7.89 7.26 8.24
Recovery (%) 95.17% 95.26% 95.01% 94.66%
Operating efficiency 98.06% 99.47% 98.98% 99.29%
Sales volume 10,910 12,463 20,781 24,141
During the third quarter, the mine plan will focus on completing the 162/550 and 2B6514 stopes while developing stoping blocks on the 570 and 680 metre levels. The increased number of work areas and corresponding increase in availability of tonnage is expected to result in improved operating results for the fourth quarter.
Oil and Gas
Oil, NGLs and gas operations continue to positively impact Company earnings and cash from operations before net change in non-cash working capital. Solid production and prices resulted in contributed cash flows for the first six months of 2004 of $.7 million ($0.01 per share), compared to $1.5 million ($0.03 per share) for the same period in 2003. Extensive drilling at the Nipisi Unit is expected to increase oil and NGLs reserves while maintaining current production.
Exploration
During the second quarter of 2004, the Company remained active on the exploration front. Three drills were working in the Seabee mine area: at Porky Lake, 2 kilometres northeast of the mine and in the Santoy Lake area 15 kilometres southeast.
Work at Porky Lake consisted of infill drilling of the Porky Main Zone to upgrade confidence levels and to determine the continuity of the zone in preparation for an underground bulk sampling program.
Drilling also took place on a new discovery called the Porky West Zone (GAS Zone), which is 1.2 kilometres on strike to the west of the Porky Main Zone. Drilling returned excellent results that defined a 350 metre long, 1.5 to 5 metre wide gold bearing zone in the silicified feldspathic arenite, similar to the Porky Main Zone in mineralization style. The downward and strike extension of the GAS zone will be further tested during the next drill program.
Two drills were working on the Santoy Lake 7 and 8 zones east of the Seabee mine. This was a follow-up to the 2003 prospecting program in which sampling along a 4 kilometre corridor returned encouraging gold values. This program is currently underway and results will be released when completed.
Elsewhere in Saskatchewan, an all-weather access trail is being constructed to Claude’s Jojay gold property north of Otter Lake. This trail will be a continuation of the all-weather road that accesses the Jolu mine from Highway #102.
The Jojay gold property hosts a resource of approximately 300,000 tonnes at a grade of 9 grams of gold per tonne. Geophysical and ground sampling in the deposit area indicate great potential to expand its dimensions by further exploration. The new access trail enhances accessibility and will enable the Company to expeditiously carry out its future programs.
At the Tartan Lake mine near Flin Flon, Manitoba, permits have been received and dewatering of the mine workings and site restoration is underway. This will facilitate a 4,500 metre underground drill program to test a largely untested structure to the west of existing mine workings.
At Claude’s Madsen property in Red Lake, Ontario, final results are pending from Placer Dome’s drill program on the Treasure Box zone completed in the second quarter of 2004. Over 1,650 assays remain to be processed and Claude will report these results as soon as they are received. Placer has identified numerous exploration targets in addition to the Treasure Box and is currently prioritizing these targets for further exploration.
Financial
Three Months
For the three months ended June 30, 2004, the Company recorded a net loss of $96,000 ($0.00 per share) compared to restated net earnings due to changes in accounting policies of $79,000 ($0.00 per share) for the same period in 2003. Cash flow from operations before net changes in non-cash working capital items was $1.1 million ($0.02 per share) in the second quarter, compared to $1.4 million ($0.03 per share) in the similar period of 2003.
Total revenue generated for the quarter was $8.1 million, 8% lower than revenue generated in the second quarter of 2003. The Seabee mine contributed $5.8 million to revenue for the second quarter of 2004 compared to $6.0 million for the same period last year. Gold sales volume for the period declined 13% from 12,500 ounces in 2003 to 10,900 ounces in 2004. The reduction in sales volume was largely offset by the improvement in average gold prices per ounce realized for the period: Q204 – US $389 (CDN $529); Q203 – US $344 (CDN $481). The 18% decrease in oil, NGLs and gas revenue was due to the normal production decline of our gas wells, combined with lower average realized petroleum prices due to Canadian dollar strengthening.
Due largely to the commissioning of the shaft extension, total mine operating costs fell 4% from $4.6 million in the second quarter of 2003 to $4.4 million this period. The improved operating costs were offset by lower sales volume and an appreciating Canadian dollar for the period, which resulted in an 11% increase in cash operating costs per ounce1: Q204 – US $295; Q203 – US $266.
The 64% increase in operating costs at the Company’s oil and gas properties, period over period, was a result of a repairs and maintenance charges incurred at the Nipisi Unit and Edson Gas Plant.
(1) The Company reports its operating, depreciation and depletion costs on a per ounce basis, based on uniform standards developed by the Gold Institute. Management uses this measure to analyze the profitability, compared to average realized gold prices, of the Seabee mine. Investors are cautioned that the above measures may not be comparable to similarly titled measures of other companies, should these companies not follow Gold Institute standards.
