Message from the President and CEO
Dear Shareholders
2006 has been an exciting and demanding year for Crew. We
have continued our quest, through acquisitions and explorations, to
become a world-class mid-tier gold producer by acquiring the Lefa
Corridor Gold Project in Guinea and 72.9% of the Masara Mine
in the Philippines.
The year started out with the discovery of a greater potential at the
Masara Mine than we originally thought. This led us to rethink our
original plans to simply commence mining using the former
methodology in place at Masara. Instead, we spent more time and
resources on the acquisition of modern mining equipment and
updating the mining plan using modern techniques. In addition, the
refurbishment of the 500tpd plant was accelerated and the
construction of the 1500tpd plant expanded to 2400tpd, bringing
the total ultimate capacity of the mine to 2900tpd. The net result of
the revised plan has been to slow down the development of a
smaller project and increase the potential production to 200,000
ounces of gold per annum. The production from the 500tpd plant
will commence before the end of 2006 and the 2400tpd plant is
expected to commence production in Q2 of calendar year 2007.
Our ultimate goal of 180,000 to 200,000 or more ounces from this
project is expected to be realised in 2008 and thereafter.
In October 2005 we completed our assessment of the Lefa Corridor
Gold Project in Guinea. This led to negotiations with the board of
Guinor and the ultimate offer, acceptance and financing of one of the
largest acquisitions of the year in our sector of the industry. We
acquired 85% of the project for $331 million and financed that
purchase and the funds for the $169 million expansion of the project
through a combination of debt and equity. In March 2006 we
acquired the remaining 15% of the project from the Government of
Guinea. This acquisition of Guinor for cash became a reality through
phenomenal support from our existing shareholders.
The Lefa Project will lift Crew from a junior/small mid-tier to a major
mid-tier producer. We believe we paid fair value for the project at
the time of acquisition, but the subsequent substantial increase in
the gold price, increased resource and reserve base, new
exploration discoveries and the consolidation we see in our sector
make the value to Crew even greater. We view this acquisition as
particularly important because it was successful in lifting Crew to a
new industrial level. It has helped us attract some of our industry’s
most experienced individuals, reduced the completion risk for our
present and future projects and ultimately gives you an even better
potential for reward on your investment in Crew.
The Lefa plant is nearing completion and we expect commissioning
to commence in December, as was expected at the time of the
acquisition. The project is expected to produce 320,000 to
350,000 ounces of gold per annum, based on the present reserve
grade. We believe, however, that the future potential upside is
considerable, as we have identified several prospective areas
within the mine permit area where initial drilling has returned
considerable intersects with grades significantly higher than our
present reserve grades.
Commissioning is expected to begin during the final calendar
quarter of 2006 and after a ramp-up period we expect to achieve
commercial production rates by the end of calendar Q1 2007.
Our first producing mine, Nalunaq, has been the platform upon
which we have been able to build Crew from a pure exploration
company, via a junior producer to shortly becoming a large mid-tier
producer. Last year saw significant improvements in grades from
around 16 g/t to nearly 19 g/t as a result of new mining
methodology and techniques. Further efficiency improvements in
both overall production and reduced cash costs are expected to be
achieved from the introduction of new underground equipment in
calendar Q4 2006. Nalunaq is expected to achieve a regular annual production of of 80,000 to 100,000 ounces from calendar
year 2007. We have recently announced the acquisition of the
Nugget Pond plant on Newfoundland for future processing of the
Nalunaq ore. This will further reduce our cash costs and regularize
production, reducing the working capital needs of the mine.
| To our shareholders, our partners and suppliers,
I want to express my sincere thanks and
appreciation for your support over the past year
and for your continued support as we attain our
ultimate goals. |
 |
Overall for the year we have made huge strides towards reaching
our goal of becoming a mid-tier gold producer. Our targets for
calendar year 2007 are to produce at an annualized rate of
550,000 ounces and to expand on this from our existing three
mines in calendar year 2008. We believe we are extremely well
positioned to participate in the wave of consolidation in our sector.
The exploration side of our business has continued to move forward
both for gold and other minerals. One of our objectives has been
to create a separate company to move the minerals part of the
business forward and towards production. The spin off of Crew
Minerals ASA is in progress, and with that will come a more
defined program for the development of the Mindoro Nickel
Project.
2006 has also been a year for creating depth and experience at
all staff levels. With the acquisition of the Lefa Project we acquired
tremendous depth of experience but we have also increased our
staff complement with very experienced people at all operating
sites and in Weybridge as we ramp up for the five-fold increase in
production that will occur in calendar year 2007.
Fiscal year 2006 and the remainder of calendar year 2006 will
continue to be building periods as we grow. The rewards will begin
to be realized in calendar 2007 as production commences and we
start to see the benefit of the last two years of acquisition
and expansion.
To our shareholders, in particular, but also to our partners and
suppliers, I want to express my sincere thanks and appreciation for
your support over the past year and for your continued support as
we attain our ultimate goals.
To our staff, who again have gone well beyond the call of duty to
create the new Crew, I give my sincere thanks for all your hard work
and diligence during this past year. As we grow over the balance
of 2006 and 2007, all of us at Crew should be proud of our
accomplishments to date and the status we will have attained.
However, I strongly believe the best is yet to come.
Yours faithfully
Jan A Vestrum
President & CEO
