Claude Resources

News

Claude Reports
2003 Financial Results

Year End

As a result of improved gold sales volume and average prices realized in both gold and natural gas, Claude reported net earnings of $1.9 million, or $0.04 per share, for the year ended December 31, 2003. This compared to a net loss of $1.6 million, or $0.03 per share, in 2002. Cash flow from operations, before net change in non-cash working capital items of $7.8 million, or $0.14 per share, compares to $3.8 million, or $0.08 per share, for the same period in 2002.

Gold sales of 50,800 ounces in 2003 represents a 22% increase over the 41,500 ounces sold in 2002. This was largely a result of successful development between the 510 metre and 650 metre levels. The average realized gold price per ounce in 2003 of CDN $508 (US $362) versus CDN $490 (US $312) in 2002 also contributed to revenue growth.

The $2.0 million increase in Seabee mine operating costs was largely a function of the mine operating below the 510 metre level prior to the extension of the shaft to 600 metres. Despite increased volumes, total cash operating costs per ounce increased slightly from US $246 in 2002 to US $253 this year as the Canadian dollar significantly strengthened against the US dollar.

The Company's oil, natural gas liquids and gas properties continue to positively affect cash flow with sales volumes of 224,000 barrels of oil equivalent (boe) in 2003 relatively unchanged from last year. However, average prices realized increased 37% from CDN $28.25 (US $17.99) per boe in 2002 to CDN $38.73 (US $27.60) per boe this year.

During the year, the Company commissioned the shaft extension from the 395 metre level to 600 metre level and increased its underground diamond drilling concurrent with underground mine development. As a result it is expected that both gold sales volume and mining costs will continue to track historic averages.

Fourth Quarter

Claude reported net earnings of $.3 million, or $0.01 per share, in the fourth quarter of 2003 compared to net earnings of $1.7 million, or $0.03 per share, in the comparable quarter of 2002. Cash flow from operations before net change in non-cash working capital items of $2.1 million, or $0.04 per share compares to $3.3 million, or $0.07 per share, for the same period in 2002.

Gold sales volume dropped in the fourth quarter to 13,500 ounces this quarter from 15,000 ounces in 2002. This was partially offset by an increase in the average gold price realized from CDN $506 (US $322) in the fourth quarter of 2002 to CDN $517 (US $393) for the fourth quarter of 2003. Total mine operating costs were relatively unchanged period over period at $4.4 million however total cash operating costs per ounce rose by 32% from US $187 in 2002 to US $248 in the fourth quarter of this year. This increase was partially a result of lower sales however the strengthening Canadian vs. US dollar was primarily responsible for the unit cost increase.

Oil, natural gas liquids and gas production fell slightly in the fourth quarter from 59,576 boe in 2002 to 55,867 boe this quarter.

Claude’s balance sheet is free of long-term debt obligations and the Company continues to have limited exposure to gold derivative contracts.

 

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Consolidated Statements of Earnings (Loss)
(Canadian Dollars in Thousands)
				Three Months Ended					Years Ended
				December 31					December 31
				2003		2002			2003		2002
Revenues
	Gold		$	6,970	$	7,576		$	25,807	$	20,363
	Oil and gas:
		Gross revenue		1,407		2,219			9,368		7,043
		Crown royalties		(261)		(516)			(2,346)		(1,748)
		Alberta Royalty Tax Credit		125		126			539		440
		Overriding royalties		(724)		(1,058)			(4,077)		(2,929)
	Net oil and gas revenue			547		771			3,484		2,806
				7,517		8,347			29,291		23,169
Expenses
	Gold			4,389		4,394			18,041		16,070
	Oil and gas			375		(17)			1,260		1,138
	General and administrative			678		640			2,057		2,218
	Interest and other			9		138			101		(84)
	Provision for income taxes			5		(70)			63		31
				5,456		5,085			21,522		19,373
Earnings before the undernoted items				2,061		3,262			7,769		3,796
	Depreciation, depletion and reclamation:
		Gold		1,593		1,406			5,369		4,934
		Oil and gas		149		176			507		469
Net earnings (loss)			$	319	$	1,680		$	1,893	$	(1,607)
Net earnings (loss) per share
		Basic and diluted	$	0.01 =====	$	0.03 =====		$	0.04 =====	$	(0.03) =====
Weighted average number of shares outstanding (000's)				55,299 =====		48,742 =====			53,851 =====		46,919 =====

 

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Consolidated Statements of Cash Flows
(Canadian Dollars in Thousands)
				Three Months Ended					Years Ended
				December 31					December 31
				2003		2002			2003		2002
Cash provided from (used in):
Operations:
	Net earnings (loss)		$	319	$	1,680		$	1,893	$	(1,607)
	Non cash items:
		Depreciation, depletion and accretion		1,742		1,582			5,876		5,403
	Net change in non-cash working capital:
		Receivables		(1,499)		(160)			(338)		(1,475)
		Inventories		1,546		1,641			(435)		1,280
		Shrinkage stope platform costs		(497)		(954)			(826)		(3,021)
		Prepaids		(5)		2			69		(78)
		Payables and accrued liabilities		918		(1,379)			2,595		(174)
	Cash from operations			2,524		2,412			8,834		328
Investing:
	Short-term investments			300		(300)			300		(300)
	Investments			(962)		116			(1,041)		115
	Mineral properties			(3,701)		(2,351)			(14,830)		(8,180)
	Oil and gas properties			(1,009)		(287)			(1,862)		(730)
	Deposit for reclamation costs			(283)		(230)			(525)		(768)
				(5,655)		(3,052)			(17,958)		(9,863)
Financing:
	Issue of common shares, net of issue costs			7,397		1,409			14,181		6,163
	Demand loan repayment			-		(81)			(110)		(328)
	Obligations under capital lease
		Proceeds		-		-			-		214
		Repayment		(15)		4			(60)		(41)
				7,382		1,332			14,011		6,008
Increase (decrease) in cash position				4,251		692			4,887		(3,527)
Cash position, beginning of period				(992)		(2,320)			(1,628)		1,899
Cash position, end of period				3,259 ====	$	(1,628) ====		$	3,259 ====	$	(1,628) ====

Notes to Consolidated Financial Statements

Note 1 - General

The accompanying unaudited consolidated financial statements should be read in conjunction with the notes to the Company's audited consolidated financial statements for the year ended December 31, 2003. The unaudited consolidated financial statements include the financial statements of the Company and its subsidiary.

The unaudited consolidated financial statements reflect all normal and recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the respective interim periods presented.

Stock-based Compensation

Effective January 1, 2004, Claude will adopt the revised CICA Handbook Section 3870, "Accounting for Stock-Based Compensation and Other Stock-Based Payments". Revised Section 3870 requires all transactions whereby goods and services are received in exchange for stock-based compensation and other stock-based payments to be recognized in the financial statements at fair value. This change effectively requires companies to expense the cost of stock options provided to employees. This requirement is effective for financial periods beginning on or after January 1, 2004. Adoption of this standard in 2003 would have reduced net earnings by $10,600.

Note 2 - Change in Accounting Policy

Effective January 1, 2003, the Company adopted the recommendations of CICA Handbook Section 3110, "Asset Retirement Obligations". This standard addresses the accounting for the Company's legal obligations associated with the retirement of tangible long-lived assets resulting from the normal operation of those assets. The Company is required to record the fair value of the liability for the obligation when it is incurred and capitalize an equivalent amount as an asset to be depreciated over its useful life. An accretion component is charged each period and represents the interest on the fair value liability. The adoption of this policy has been applied retroactively. The effect on the 2003 and 2002 financial statements was as follows:

	2003	2002
Increase in mineral properties	$ 95	$ 130
Decrease in asset retirement obligations	834	865
Increase in retained earnings	995	1,093
Decrease in net earnings	66	98

The effect on the fourth quarter 2003 & 2002 financial statements was to decrease net earnings by $18,000 and $29,000, respectively.

Note 3 - Shrinkage Stope Platform Costs

Shrinkage stope platform costs represent ore that is being used as a working stage, within the stope, to gain access to further ore. This ore is expected to be processed in the following 12 months. The processing of this broken ore occurs in accordance with a mine plan based on the known mineral reserves and current mill capacity. The timing of processing of ore has not been significantly affected by historic prices of gold.

Note 4 - Share Capital

At December 31, 2003 there were 58,341,627 common shares outstanding.

Options in respect of 2,425,000 common shares are outstanding under the stock option plan. These options have exercise prices ranging from $.53 to $3.05 with expiration dates between April, 2006 and November, 2013.

On January 31, 2003, the Company completed a private placement offering of 2,500,000 units, each unit consisting of one common share and one half of one common share purchase warrant, at a price of $1.50 per unit, for gross proceeds of $3,750,000. Each whole purchase warrant will entitle the holder, upon exercise at any time up to and including January 31, 2004, and upon payment of $1.85, to subscribe for one common share. In partial consideration for the services provided to Claude in connection with the private placement, the Underwriters were issued 250,000 common share purchase warrants each of which entitles the holder, upon exercise at any time up to and including January 31, 2004, and upon payment of $1.85, to subscribe for one common share. At December 31, 2003, there were 1,362,750 warrants outstanding.

On December 12, 2003, the Company entered into a flow-through share agreement for the issue of 1,000,000 common shares at a price of $2.50 per share for gross proceeds of $2,500,000. The Company must expend $2,500,000 in qualifying Canadian Exploration Expenses as defined in the Income Tax Act (Canada) prior to December 31, 2004.

On December 23, 2003, the Company completed a private placement of 2,500,000 units, each unit consisting of one common share and one half of one common share purchase warrant, at a price of $2.00, for gross proceeds of $5,000,000. Each whole purchase warrant will entitle the holder, upon exercise at any time up to and including June 23, 2005, and upon payment of $2.50, to subscribe for one common share. In partial consideration for the services provided to Claude in connection with the private placement, the Underwriters were issued 150,000 common share purchase warrants each of which will entitle the holder, upon exercise at any time up to and including December 23, 2004 and upon payment of $2.10, to subsribe for one common share. At December 31, 2003, there were 1,400,000 warrants outstanding.

In 2004, 1,138,450 warrants outstanding pursuant to the January 31, 2003 private placement were exercised.

Note 5 - Guarantees

Effective January 1, 2003, the Company adopted the new CICA Accounting Guideline AcG-14 which requires certain disclosures of obligations under guarantees. There have been no material changes to the guarantees reported in the annual consolidated financial statements.

Note 6 - Comparative Figures

Certain prior year balances have been reclassified to conform to the current year financial statement presentation.

Note 7 - Differences from United States Accounting Principles

These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada. See Note 19 of the Company's audited financial statements for the year ended December 31, 2002, for a narrative explanation of the differences in Canadian and US generally accepted accounting principles.

 

For further information please contact:

Neil McMillan
President & Chief Executive Officer
Claude Resources Inc.
Saskatoon, Saskatchewan
306.668.7505

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