Omai main owner Cambior posts big losses
TORONTO (Reuters) - Shares of troubled Canadian gold miner Cambior Inc., the majority shareholder in the Omai gold mine in Guyana, slipped to a record low yesterday after the company posted big yearend losses, continuing to feel the effects of an aggressive gold hedging programme gone awry. In early afternoon trade, Montreal-based Cambior's stock was down 10 Canadian cents at 75 Canadian cents, on volume of 113,000 shares on the Toronto Stock Exchange. Previously the stock traded in a 52-week range of 80 Canadian cents and C$7.30. During the Easter weekend the company announced it had logged big losses and writedowns for 1999. For the fourth quarter, ended December 31, Cambior reported a net loss of $331.8 million, or $4.70 a share, on revenue of $80.9 million. That compares with a loss of $23.6 million, or 33 cents a share, on revenue of $76.9 million for the same period a year earlier. For the year, the gold miner reported a loss of $358 million, or $5.07 a share, on revenue of $331.8, compared with a loss of $11.5 million, or 16 cents a share, on revenue of $343.6 million for the same period a year earlier. The company said it had a 1999 writedown of mining assets totalling $294 million following re-evaluation of all of its mining assets. Of that total, $118 million was attributable to its zinc assets, $70 million to the devaluation of its base metals mining projects and $38 million to its gold mining projects. Cambior was also forced to take a restructuring charge of $57.3 million, largely the result of a reduction and rescheduling of its hedging programme. The company ran into financial trouble in October after it said it had hedged a significant portion of its future production at a price of $318 an ounce. The announcement came during a sharp rally that pushed the precious metal to above $330 an ounce. Hedging, a practice common in the gold industry, allows a company to guard against a fall in gold prices by selling future production at a fixed price. This forced Cambior in late October to reduce its hedge position and retain an advisor to look at all options, including selling part or all of the company. Cambior also began jettisoning its non-gold assets, including striking a deal with Breakwater Resources Ltd. to sell two zinc mines in northwestern Quebec. The $48-million sale involved its Bouchard-Hebert and Langlois mines, as well as related net working capital and metal hedging obligations. The company said proceeds from the sale "should allow for the repayment of accrued restructuring fees and the reduction of the debt from $212 million to $182 million." Aur Resources Inc. had offered to buy Cambior but withdrew its C$170-million bid last month. Cambior said it expects to continue its sale of non-gold assets and said more transactions were expected over the next several weeks as it races towards a June deadline for restructuring its debt. Analysts were not surprised by the company's stock performance. "The investing people have taken (Cambior) off their radar screens, however, I don't think the corporate people have done so," said Montreal-based metals analyst Terence Ortslan, at TSO & Associates. Ortslan said Cambior still holds a number of valuable mines that could prove attractive to potential suitors. "It's still a vehicle for corporate acquisitors," he said. (US$1 = $1.48 Canadian. All in $US except where stated otherwise.) 
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