Finance

Claude Resources reports ‘fabulous’ production, earnings in 2015

Record gold production, increased sales, higher prices and lower operating costs helped boost Claude Resources Inc.’s revenue by 23 per cent last year, and the company is “very confident” 2016 will be another “strong year,” according to its president and CEO. “We had a fabulous year in production and costs went in the right direction, in terms of going down, and the balance …

Record gold production, increased sales, higher prices and lower operating costs helped boost Claude Resources Inc.’s revenue by 23 per cent last year, and the company is “very confident” 2016 will be another “strong year,” according to its president and CEO.

“We had a fabulous year in production and costs went in the right direction, in terms of going down, and the balance sheet looks good … It’s a lot of really good news,” Brian Skanderbeg said Thursday after the Saskatoon-based mining company’s year-end earnings call.

Claude Resources produced 75,748 ounces of gold last year, a 20 per cent increase from the 62,984 ounces it churned out in 2014. The company reported yearly revenue of $107.7 million in 2015, up from the $87.4 million it brought in the year before. A $4.4 million non-cash deferred income tax recovery pushed its yearly profit to $32.3 million.

Skanderbeg attributed the company’s gains to a combination of factors, including a 16 per cent increase in gold sales and a six per cent increase in Canadian dollar gold prices due to a weakened loonie. He said a “significant improvement” in ore grades and reduced input costs — due to low oil prices — were responsible for a 20 per cent reduction in cash cost per ounce produced. 

“We’re mining higher grades, we’re mining with more efficient mining methods, we’re putting lower capital in, and we’re actually mining with lower operating costs … all those are contributing,” Skanderbeg said. “You may see some erosion of what we have been benefiting from in terms of the lower oil price (through 2016, but I still think there’s going to be a very good benefit (for the company).”

Established in 1980, Claude Resources owns and operates the Seabee Gold Operation about 125 kilometres northeast of La Ronge. The operation consists of two producing mines: the Seabee Gold Mine and the slightly larger Santoy Gap Complex. In 2015, the mines reported “head grades” of 8.10 and 9.94 ounces per tonne of ore respectively. 

On March 7, 2016, Claude Resources and the Vancouver-based precious metals mining firm Silver Standard Resources Inc. entered into an agreement whereby Silver Standard Resources would acquire Claude Resources for the equivalent of $1.65 per share, or about $337 million. The offer represented a 30 per cent premium on Claude Resources’ share price at the time. 

“We’re not going to pick the ore body up and take it somewhere else. It’s there whether we like it or not, and we certainly like it. We have no issues with it,” John DeCooman, Silver Standard’s vice president of business development and strategy, told the Saskatoon StarPhoenix after the deal was announced. 

The deal has been ratified by both companies’ boards of directors but still needs to be approved by a two-thirds majority of Claude Resources shareholders at a meeting in mid-May. Skanderbeg said while some shareholders have concerns, he expects the transaction to go through.

“Yes, we’re a high-margin producer and, yes, we’re confident we can sustain that, but we want growth for our shareholders … and when we looked at the strategic path of combining with Silver Standard, that path offered us a very good growth platform,” Skanderbeg said. 

amacpherson@postmedia.com
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