Baker Lake (Mar 31/04) - Rising capital costs have resulted in a year-long delay in the development of the Meadowbank Gold project near Baker Lake.

Marcel Utatnaq of Baker Lake prepares an ore sample for shipping on the Meadowbank Gold project.

Cumberland Resource Ltd.'s Kerry Curtis said the company was in the process of completing a feasibility study on the project throughout most of 2003 and the early stages of 2004.

Cumberland's original plan called for the feasibility study to be completed before the end of 2004's first quarter.

Curtis said that would have given Cumberland the time for detailed engineering, as well as the procurement and shipping of supplies to initiate the project in 2005.

"We did need to consider the shipping of construction items to Baker Lake to initiate that construction in 2005," said Curtis.

"Towards the end of the first quarter, the initial capital cost items started to come in and they were much higher than we had anticipated."

Curtis said while the company is still reconciling a number of variances, it is apparent the prices of steel, concrete and fuel have risen quite dramatically, even during the past three months.

He said that rise in price is an obvious factor in the preliminary costs Cumberland now finds itself facing.

"In light of this, we needed more time to fully examine the costs and try to optimize the project into a position where the feasibility study has more flexibility.

"Obviously, we need to try and reduce capital costs and look at production opportunities, which could be increasing or decreasing the scale of production."

The company is proceeding with its $4.7 million exploration program this year and should be drilling within a week.

Despite the setback, Curtis said Cumberland still has great confidence in the Meadowbank project.

"The way we see it, this is a bump in the road to the project.

"And, while it's obviously a serious bump for the timing of the project, we think we have a project that's going to work.

"It's now a case of redesign, optimization and looking at a whole series of variables to sort out what the best way to achieve gold production at Meadowbank is.

"The project is still highly anticipated and, eventually, Meadowbank will be a working project."