SASKATOON – A Saskatchewan gold exploration and mining company is on the rebound. Claude Resources Inc. announced Monday it had a net profit of $4.6 million in 2014 compared to a net loss of $73.4 million in 2013.
“Very much a rebound year and established a record performance on production and safety, environment, budget, unit costs, a lot of different factors within the company were record performances in 2014,” said Claude President and CEO Brian Skanderbeg.
The Saskatoon-based company produced a record 62,984 ounces of gold in 2014, 44 per cent more than in 2013. Its previous record was set in 1998 with 60,300 ounces.
Skanderbeg says 2013 was a struggle both on a production and financial basis. Claude’s net loss in 2013 was driven by $63.8 million in impairment charges.
“When an impairment charge comes it essentially means you have written down the asset, you have taken the book value say at $100 million for the asset and you’ve reduced it to $80 million that’s a $20 million impairment charge, it doesn’t affect any cash but it does reflect your balance sheet and it reflects your earnings,” said Skanderbeg.
“The majority of the impairment charges were driven by the sale of the Madsen asset in Ontario.”
Claude says record-breaking production and proceeds generated from strategic initiatives allowed it to reduce its debt by $10.6 million, repay the company’s line of credit of $8.6 million and increase its cash position to $11.2 million as of Dec. 31, 2014.
“We set about 2014 with a strategy to both sell a royalty at Seabee and to sell the Madsen asset, we executed on both those transactions and we actually had a record production year and financial results that were well ahead of expectations,” said Skanderbeg.
“There was a necessity to close those two transactions and to start performing on an operational and financial basis much more strongly, we certainly had to perform well and we have.”
The company’s only producing asset is the Seabee gold operation located around 120 kilometres northeast of La Ronge, Sask. The asset has two functioning mines, the Seabee mine and the Santoy mine complex, which began production in 2011 and now mines two ore bodies.
“We evolved our mining method at Seabee to reflect a lower capital intensity and to reduce our overall cost structure and improve margins,” said Skanderbeg.
The change in mining method at the Seabee mine and the increase in production from mining higher grades, deceased Claude’s all-in sustaining cost-per-ounce of gold by 29 per cent for the year.
“This metric which most producers use means that for each ounce of gold, on average, costs us about $1,310 and the average price achieved for the year was around $1,390,” said Skanderbeg.
Claude’s annual gold revenue last year was $87.3 million, 37 per cent higher than in 2013.
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While gold production in the 2014 fourth quarter was down, the company is expecting another promising year underground.
“We’ve guided publically 60,000 to 65,000 ounces of production and a cost structure that is between $1,175 and $1,275 per ounce Canadian and we certainly believe we are going to have another strong year.”
For nearly a quarter century, its Seabee gold operation has mined over one million ounces of gold and with well over a million ounces remaining in reserves and resources, Skanderbeg says there’s still a long bright future for the asset.
“The company’s been in Saskatchewan, been Saskatoon-based and been largely the province’s only gold producer for our entire history,” said Skanderbeg.
Claude has about 280 employees and all assets are located in the province.
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