---

40



RESPONSIBILITY FOR FINANCIAL STATEMENTS

The Management of the Company is responsible for the preparation of the
consolidated financial statements and information contained in the annual
report. The accompanying consolidated financial statements of Cambior Inc. have
been prepared by management and approved by the Board of Directors of the
Company. Financial information contained elsewhere in this report is consistent
with the consolidated financial statements.

The consolidated financial statements have been prepared in accordance with
Canadian generally accepted accounting principles and where appropriate reflect
management's best judgments and estimates based on currently available
information.

Cambior maintains adequate accounting systems and administrative controls to
produce reliable financial statements and provide reasonable assurance that
assets are properly safeguarded.

Raymond Chabot Grant Thornton LLP, Chartered Accountants, have been appointed
by the shareholders to conduct an independent audit of the Company's financial
statements. Their report outlines the nature of their audit and expresses their
opinion of the financial statements of the Company.

The Board of Directors of the Company is responsible for ensuring that
management fulfills its responsibilities for financial reporting. The Board of
Directors carries out this responsibility through its Audit Committee, which is
composed solely of independent directors. The Board of Directors has also
designated the Chairman of the Audit Committee as the Company's financial
expert. The Audit Committee is also responsible for making recommendations with
respect to the appointment, remuneration and terms of engagement of the
Company's auditors. The Committee meets at least on a quarterly basis with the
external auditors, with and without management being present, to review the
financial statements, discuss audit and internal control related matters and
ensure full disclosure. The Audit Committee reports its findings to the Board of
Directors for its consideration when approving the financial statements for
issuance to shareholders.



|/s/ Louis P. Gignac         | /s/ Bryan A. Coates            
|--------------------------- | -------------------------------
|                            |                                
|Louis P. Gignac             | Bryan A. Coates, CA            
|President and               | Vice President,
    Finance    
|Chief Executive
    Officer | and Chief Financial
    Officer
|                            |                                
|Longueuil, Canada           |                                
|February 17, 2005           |                                

---

Cambior 2004 Annual Report        
41AUDITORS' REPORT
TO THE SHAREHOLDERS OF CAMBIOR INC.We have audited the consolidated balance sheets of Cambior Inc. as at
December 31, 2004 and 2003 and the consolidated statements of operations,
contributed surplus and deficit and cash flows for each of the years in the
three-year period ended December 31, 2004. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with Canadian generally accepted
auditing standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Company as at December 31,
2004 and 2003 and the results of its operations and cash flows for each of the
years in the three-year period ended December 31, 2004 in accordance with
Canadian generally accepted accounting principles.
/s/ Raymond Chabot Grant Thornton LLP
Chartered Accountants
Montréal, Canada 
February 17, 2005COMMENTS BY AUDITORS
FOR AMERICAN READERS ON CANADA-US REPORTING DIFFERENCESIn the United States of America, reporting standards for auditors require the
addition of an explanatory paragraph (following the opinion paragraph) when
there is a change in accounting principles that has a material effect on the
comparability of the Company's financial statements, such as the changes
described in Notes 3 and 25A to the consolidated financial statements. Our
report to the shareholders dated February 17, 2005 is expressed in accordance
with Canadian reporting standards which does not require a reference to such
change in accounting principles in the auditors' report when the change is
properly accounted for and adequately disclosed in the consolidated financial
statements.
/s/ Raymond Chabot Grant Thornton LLP
Chartered Accountants
Montréal, Canada 
February 17, 2005

---

42 Cambior 2004 Annual Report



CONSOLIDATED OPERATIONS

|Years ended December
    31 (In thousands of United States dollars,                           |      |          |         |         
|--------------------------------------------------------------------------------------------- | ---- | -------- | ------- | --------
|except for amounts per share)                                                                 | Note | 2004     | 2003    | 2002    
|                                                                                              |      | $        | $       | $       
|Revenues                                                                                      |      |          |         |         
|Mining operations                                                                             |      | 299,981  | 190,869 | 202,258 
|Investment
    and other income                                                               |      | 937      | 2,997   | 1,945   
|                                                                                              |      | 300,918  | 193,866 | 204,203 
|Expenses                                                                                      |      |          |         |         
|Mining operations                                                                             |      | 224,511  | 151,804 | 153,361 
|Depreciation, depletion and amortization                                                      |      | 46,937   | 28,734  | 29,589  
|Exploration and business development                                                          |      | 10,201   | 7,572   | 4,190   
|General and administrative                                                                    |      | 8,917    | 6,083   | 4,849   
|Financial expenses                                                                            |      | 4,117    | 1,923   | 2,399   
|Stock-based compensation costs                                                                | 17   | 1,580    |        |        
|Loss (Gain)
    on foreign exchange                                                           |      | 1,103    | (1,862) |        
|                                                                                              |      | 297,366  | 194,254 | 194,388 
|Earnings (Loss) before the undernoted
    items                                               |      | 3,552    | (388)   | 9,815   
|Non-hedge derivative
    gain (loss)                                                          | 22   | 2,551    | 635     | (16,765)
|Loss on foreign
    exchange from reduction in net investment                                 | 20   |         |        | (541)   
|Impairment loss and
    restructuring costs                                                   | 4    | (73,152) |        |        
|Income and mining
    taxes                                                                   | 21   | (6,160)  | 554     | (353)   
|Non-controlling interest                                                                      |      | (565)    |        |        
|Net earnings (loss)                                                                           |      | (73,774) | 801     | (7,844) 
|                                                                                              |      |          |         |         
|Basic net earnings (loss) per share                                                           |      | (0.30)   | 0.00    | (0.06)  
|Diluted net earnings (loss) per share                                                         |      | (0.30)   | 0.00    | (0.06)  
|                                                                                              |      |          |         |         
|Basic weighted average number of
    common shares outstanding (in thousands)                 | 16   | 249,321  | 187,953 | 140,055 
|Diluted weighted average number of
    common shares outstanding (in thousands)               | 16   | 249,321  | 190,577 | 140,055 
|The
    accompanying notes are an integral part of the consolidated financial
    statements.



---

Cambior 2004 Annual Report        
43CONSOLIDATED CONTRIBUTED SURPLUS AND DEFICIT

|Years ended December 31 (In thousands
    of United States dollars)                           | Note | 2004      | 2003      | 2002     
|--------------------------------------------------------------------------------------------- | ---- | --------- | --------- | ---------
|                                                                                              |      | $         | $         | $        
|CONTRIBUTED SURPLUS                                                                           |      |           |           |          
|Balance, beginning of
    year, as previously reported                                        |      |          |          | 23,047   
|Restatement for the fair value of
    options granted in prior years                          | 3    | 15,661    |          |         
|Restated balance, beginning of year                                                           |      | 15,661    |          | 23,047   
|Stock-based
    compensation costs                                                            | 17   | 1,580     |          |         
|Fair value of options
    exercised                                                           | 17   | (202)     |          |         
|Transfer to deficit                                                                           | 19   |          |          | (23,047) 
|Balance, end of year                                                                          |      | 17,039    |          |         
|                                                                                              |      |           |           |          
|DEFICIT                                                                                       |      |           |           |          
|Balance, beginning of
    year, as previously reported                                        |      | (111,006) | (107,448) | (117,876)
|Prior years' adjustment to reflect
    change in accounting for asset retirement obligations  | 3    | 2,082     | 1,930     | 1,722    
|                                                                                              |      | (108,924) | (105,518) | (116,154)
|Restatement for stock-based
    compensation costs                                            | 3    | (15,873)  |          |         
|Restated balance, beginning of year                                                           |      | (124,797) | (105,518) | (116,154)
|Net earnings (loss)                                                                           |      | (73,774)  | 801       | (7,844)  
|Share and warrant
    issue expenses, net of income taxes                                     |      | (5,906)   | (4,207)   | (4,567)  
|Transfer from contributed surplus                                                             | 19   |          |          | 23,047   
|Balance, end of year                                                                          |      | (204,477) | (108,924) | (105,518)
|The
    accompanying notes are an integral part of the consolidated financial
    statements.



---

44         Cambior 2004 Annual ReportCONSOLIDATED CASH FLOWS

|Years ended December 31 (In thousands
    of United States dollars)                           | Note | 2004      | 2003      | 2002    
|--------------------------------------------------------------------------------------------- | ---- | --------- | --------- | --------
|                                                                                              |      | $         | $         | $       
|OPERATING
    ACTIVITIES                                                                      |      |           |           |         
|Net earnings (loss)                                                                           |      | (73,774)  | 801       | (7,844) 
|Deferred gains                                                                                |      |          | (680)     | (122)   
|Non-cash items                                                                                |      |           |           |         
|Deferred revenue - delivery of gold on the prepaid forward                                    | 12   | (12,222)  | (12,222)  | (12,222)
|Depreciation, depletion and amortization                                                      |      | 46,937    | 28,734    | 29,589  
|Amortization of deferred stripping costs                                                      |      | 4,754     | 5,741     | 2,290   
|Accretion expense - asset retirement obligations                                              |      | 1,787     | 995       | 716     
|Impairment loss                                                                               | 4    | 71,211    |          |        
|Amortization of deferred gains                                                                |      | (3,953)   | (865)     | (2,856) 
|Unrealized non-hedge derivative loss (gain)                                                   | 22   | (9,339)   | 1,428     | 16,765  
|Stock-based compensation costs                                                                |      | 1,580     |          |        
|Future income taxes                                                                           | 21   | 5,704     |          |        
|Non-controlling interest                                                                      |      | 565       |          |        
|Others                                                                                        |      | 961       | 915       | 792     
|                                                                                              |      | 34,211    | 24,847    | 27,108  
|Changes in non-cash working capital
    items                                                 | 5(a) | 3,794     | (646)     | 3,716   
|Cash flow from operating activities                                                           |      | 38,005    | 24,201    | 30,824  
|                                                                                              |      |           |           |         
|INVESTING
    ACTIVITIES                                                                      |      |           |           |         
|Short-term investments                                                                        | 6    | 32,924    | (41,562)  | (25,208)
|Investments                                                                                   |      | (14,180)  | (1,057)   | (2,251) 
|Acquisition of assets
    and businesses                                                      | 9    | (56,730)  | 3,230     |        
|Property, plant and equipment                                                                 |      | (76,238)  | (110,404) | (30,182)
|Cash flow used in investing activities                                                        |      | (114,224) | (149,793) | (57,641)
|                                                                                              |      |           |           |         
|FINANCING
    ACTIVITIES                                                                      |      |           |           |         
|Long-term debt -
    Borrowings                                                               |      | 2,097     | 55,000    |        
|Long-term debt -
    Repayments                                                               |      | (20,753)  | (28,735)  | (27,976)
|Deferred charges                                                                              |      | (36)      | (1,790)   |        
|Common shares issued net of issue
    expenses                                                |      | 87,150    | 113,183   | 57,616  
|Cash flow from financing activities                                                           |      | 68,458    | 137,658   | 29,640  
|                                                                                              |      |           |           |         
|Effect of changes in the exchange rate
    on cash held in foreign currency                   |      | 331       | (1,211)   | 186     
|Net increase (decrease) in cash and
    cash equivalents                                      |      | (7,430)   | 10,855    | 3,009   
|Cash and cash equivalents, beginning
    of year                                              |      | 28,450    | 17,595    | 14,586  
|Cash and cash equivalents, end of year                                                        | 6    | 21,020    | 28,450    | 17,595  
|The
    accompanying notes are an integral part of the consolidated financial
    statements.



---

Cambior 2004 Annual Report        
45CONSOLIDATED BALANCE SHEETS

|As at December 31 (In thousands of
    United States dollars)                                 | Note | 2004      | 2003     
|--------------------------------------------------------------------------------------------- | ---- | --------- | ---------
|                                                                                              |      | $         | $        
|ASSETS                                                                                        |      |           |          
|Current assets                                                                                |      |           |          
|Cash and short-term investments                                                               | 6    | 54,866    | 95,220   
|Receivables                                                                                   |      | 22,227    | 9,415    
|Production inventories                                                                        |      | 13,691    | 7,081    
|Supplies inventory and prepaid expenses                                                       |      | 37,903    | 24,615   
|Current portion of deferred losses                                                            | 13   | 4,646     |         
|Fair value of non-hedge derivatives                                                           |      | 1,549     |         
|Future income
    tax assets                                                                  | 21   | 12,985    |         
|                                                                                              |      | 147,867   | 136,331  
|Investments and
    deferred charges                                                          | 7    | 20,185    | 7,065    
|Property, plant and equipment                                                                 | 8    | 421,799   | 354,968  
|                                                                                              |      | 589,851   | 498,364  
|                                                                                              |      |           |          
|LIABILITIES                                                                                   |      |           |          
|Current liabilities                                                                           |      |           |          
|Accounts payable and accrued liabilities                                                      |      | 61,238    | 36,203   
|Current portion of long-term liabilities                                                      | 10   | 36,763    | 33,008   
|Fair value of
    non-hedge derivatives                                                       |      |          | 7,790    
|                                                                                              |      | 98,001    | 77,001   
|Long-term debt                                                                                | 11   | 44,442    | 47,260   
|Deferred revenue                                                                              | 12   |          | 12,223   
|Deferred gains                                                                                | 13   | 204       | 755      
|Liability for asset
    retirement obligations and others                                     | 14   | 25,959    | 19,926   
|Accrued benefit
    liabilities                                                               | 15   | 5,075     | 2,907    
|Fair value of hedge
    derivatives                                                           | 4    | 14,273    |         
|Future income and
    mining tax liabilities                                                  | 21   | 21,117    |         
|Non-controlling interest                                                                      |      | 5,788     |         
|                                                                                              |      | 214,859   | 160,072  
|                                                                                              |      |           |          
|SHAREHOLDERS'
    EQUITY                                                                      |      |           |          
|Common shares,
    warrants and options                                                       | 16   | 545,498   | 446,948  
|Equity component of
    convertible debenture                                                 | 11   | 262       |         
|Contributed surplus                                                                           |      | 17,039    |         
|Deficit                                                                                       |      | (204,477) | (108,924)
|Cumulative translation adjustment                                                             | 20   | 16,670    | 268      
|                                                                                              |      | 374,992   | 338,292  
|                                                                                              |      | 589,851   | 498,364  
|Commitments and
    contingencies                                                             | 22   |           |          
|The
    accompanying notes are an integral part of the consolidated financial
    statements.

|                            |                    
|--------------------------- | -------------------
|On behalf of the
    Board, |                    
|                            |                    
|                            |                    
|/s/ Robert Normand          | /s/ Louis P. Gignac
|                            |                    
|Robert Normand              | Louis P. Gignac    
|Director                    | Director           
|                            |                    

---

46 Cambior 2004 Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. INCORPORATION AND OPERATIONS

Cambior Inc. ("Cambior" or the "Company"), continued and existing under Part
1A of the Companies Act (Québec), is engaged in the exploration, development and
operation of mining properties, principally gold, but also niobium and
refractory grade bauxite, located in North America and South America. The
Company's main operating units are located in Canada, Guyana and Suriname.

2. ACCOUNTING POLICIES

The consolidated financial statements are prepared in accordance with
Canadian generally accepted accounting principles ("GAAP"). As described in Note
25, these principles differ in certain material respects from principles and
practices that the Company would have followed had its consolidated financial
statements been prepared in accordance with accounting principles generally
accepted in the United States of America ("United States" or "US") ("US GAAP").
The principal accounting policies followed by the Company are as follows:

Principles of consolidation

The consolidated financial statements include the accounts of Cambior and of
its subsidiaries. The Company's share in joint ventures is accounted for using
the proportionate consolidation method.

Use of estimates

The preparation of consolidated financial statements in conformity with GAAP
requires management to make estimates and assumptions. These estimates and
assumptions affect the amounts reported in the consolidated financial statements
and related notes. The Company regularly reviews the estimates and assumptions
that affect the consolidated financial statements, and actual results could
differ from these estimates. Significant areas where management judgment is
applied are asset valuations, contingent liabilities, asset retirement
obligations, employee future benefit costs, fair value of derivative
instruments, mineral reserves and future income and mining taxes. In the opinion
of management, all adjustments considered necessary for fair presentation of the
results for the periods presented are reflected in the consolidated financial
statements.

Foreign currency translation

The US dollar is the reporting currency of the Company.

The functional currency of Canadian mining activities is the Canadian dollar.
Assets and liabilities of Canadian mining activities are translated into US
dollars at the exchange rate in effect at the balance sheet date and revenues
and expenses are translated at the average rate in effect during the year.
Translation adjustments arising from changes in exchange rates are deferred and
shown as a separate component of shareholders' equity.

The US dollar is the functional currency for the Company's activities in
Guyana, Suriname and French Guiana, in as much as all proceeds from the sale of
production are in US dollars and substantially all of the disbursements made for
the OMAI Gold mine, OMAI Bauxite mine, Rosebel mine and Camp Caiman project are
in US dollars.

Other monetary assets and liabilities in currencies other than the respective
functional currencies are translated at the exchange rate in effect at the
balance sheet date, whereas other non-monetary assets and liabilities in such
currencies are translated at the exchange rate in effect at the transaction
date. Revenues and expenses in such currencies are translated at the average
rate in effect during the year, with the exception of depreciation, depletion
and amortization which are translated at the historical rate. Gains and losses
are recorded in operations for the year.

---

Cambior 2004 Annual Report        
47Cash and cash equivalentsCash and cash equivalents include cash funds, bank balances and short-term
investments in money market instruments with an original term of less than three
months that are carried at the lower of cost and fair market value.
Short-term investments

Short-term investments consist of investments in money market instruments
with an original term of more than three months, but no longer than one year,
that are carried at the lower of cost and fair market value.
Production inventories

Production inventories are valued at the lower of average production cost and
net realizable value. Depreciation, depletion and amortization are treated as a
product cost, and are expensed when the product is sold.
Supplies inventory

Supplies inventory is valued at the lower of average cost and replacement
cost.Property, plant and equipment
(i)         Property, plant and
equipmentProperty, plant and equipment are accounted for at cost. The depreciation,
  depletion and amortization of mining properties, development expenses and
  buildings and equipment related to mines are based on the units of production
  method over the estimated economic life of the related deposit. However, if
  the anticipated useful life of the assets is less than the life of the
  deposit, depreciation is based on their anticipated useful life.
  Other property, plant and equipment are depreciated under the straight-line
  method according to their anticipated useful lives, which is ten years for
  office furniture, five years for vehicles and office equipment and the
  duration of the lease for leasehold improvements.(ii)        Capitalization of financial
costsFinancial costs are capitalized when relating to indebtedness incurred to
  finance construction and development activities, prior to the commencement of
  commercial production.(iii)       Deferred stripping costsMining costs associated with stripping activities are deferred in the case
  of an open pit mine if the actual ratio of total tonnes of material mined
  relative to gold production, in a given year, is higher than the estimated
  average ratio for the life of the mine. These mining costs are subsequently
  charged to operations and included in mining operations expenses in the
  periods during which said ratio is lower than the estimated average ratio for
  the life of the mine.(iv)        Exploration propertiesExploration expenses incurred to the date of establishing that a property
  has mineral resources which have the potential of being economically
  recoverable are charged to operations; exploration and development expenses
  incurred subsequent to this date are allocated to property, plant and
  equipment under mining projects. Significant payments related to the
  acquisition of land and mineral rights are capitalized.

---

48Cambior 2004 Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(v)       Impairment of long-lived
assets

> The Company periodically reviews the carrying amount of its property, plant
>   and equipment. An impairment loss must be recognized if the carrying amount of
>   a long-lived asset exceeds the sum of the undiscounted cash flows expected to
>   result from its use and eventual disposition. Net estimated future cash flows,
>   on an undiscounted basis, from each mine and mining project are calculated
>   based on future metal production (proven and probable reserves as well as
>   mineral resources having the potential of being economically recoverable),
>   estimated future realized metal prices, operating, capital and site
>   restoration expenses and estimated future foreign exchange rates. In that
>   event, the asset must be written down to its fair value and an impairment loss
>   recorded in the results of operations. The fair value is based on the present
>   value of the estimated cash flows. Management's estimate of future cash flows
>   is subject to risks and uncertainties. Therefore, it is reasonably possible
>   that changes could occur which may affect the recoverability of the Company's
>   property, plant and equipment.

Deferred charges

Financing charges and charges related to the prepaid gold forward sales
agreement are amortized following the scheduled payments of the credit facility
and the sales agreement.

Commodity contracts and financial instruments

The Company enters from time to time into commodity contracts, prepaid
forward sales agreements and foreign exchange contracts to manage the price
volatility of the commodities produced at its operating mines and the foreign
currency exposure for its Canadian operations. The Company also enters into
foreign exchange contracts to minimize the exposure to changes in fair value of
short-term investments as a result of fluctuations in foreign exchange rates.

i)         
Hedge derivative instruments

> The Company has always identified the quantity and the period of future
>   gold production to be hedged based on the mining plans for all its operating
>   mines and identified the amounts of foreign currencies to be hedged. Since
>   January 1, 2001 for commodities contracts and since July 1, 2002 for foreign
>   currency contracts, the Company has formally documented all relationships
>   between hedging instruments and hedged items, as well as its risk management
>   objectives and strategies for undertaking various hedge transactions as
>   required by Accounting Guideline ("AcG") 13 and SFAS Statement No. 133. This
>   process includes linking all hedging derivatives to specific forecasted
>   transactions. The Company also formally assesses, both at the hedge's
>   inception and on an ongoing basis, whether the derivatives that are used in
>   hedging transactions are highly effective in offsetting cash flows of hedged
>   items.
>   Gold fixed forward sales and spot deferred sales
>   
>   The objective of these instruments is to reduce the variability of the cash
>   flows from forecasted sales of gold production. Changes in the cash flows from
>   gold fixed forward sales and spot deferred sales (forward transactions) are
>   expected to be highly effective at offsetting changes in the expected cash
>   flows from forecasted sales of gold production due to changes in sales prices.
>   The forward transactions, for which the quantity, price and timing of delivery
>   are fixed, are accounted for under the hedge accounting method. Where there is
>   certainty of delivery of gold production, the Company designates a timing of
>   production delivery. Hedge effectiveness is measured by comparing the changes
>   in the present value of the sales of gold production with the change in the
>   fair value of the forward contracts. Expected cash flows from forecasted sales
>   are based on forward prices. The fair value of gold hedge derivative
>   instruments is not included on the balance sheet unless the instrument does
>   not meet the hedge accounting method requirements. Proceeds from these
>   contracts are recognized in revenues in the same period as the corresponding
>   hedged item. When the Company delivers gold production against such contracts
>   at a date earlier than anticipated or liquidates the contract before that
>   date, any gain or loss is recognized as a deferred gain or loss on the balance
>   sheet. Subsequently, this deferred gain or loss is accounted for in the
>   statement of operations as an increase/decrease in revenues for the period of
>   the corresponding hedged item's original designation date. If the Company
>   delivers gold production against such contracts at a date later than
>   anticipated, the Company accounts for the related gain or loss in revenues on
>   the original designation date.

---

Cambior 2004 Annual Report        
49
Foreign exchange fixed forwards and spot deferred contracts to
  hedge changes in cash flows
  The Company also enters into foreign exchange fixed forwards
  and spot deferred contracts (foreign exchange contracts) whereby it commits to
  deliver US currency in exchange for Canadian dollars. Because all of the
  Company's revenues are derived in US funds and expenditures incurred by the
  Company for its Canadian operations are denominated in Canadian dollars, the
  Company enters into such contracts to meet the Canadian operations' needs in
  Canadian dollars. The objective of these instruments is to reduce the
  variability of the cash flows from forecasted sales of gold denominated in US
  dollars. Hedge effectiveness is measured by comparing the changes in the
  present value of gold sales denominated in US dollars with the change in the
  fair value of the foreign exchange contracts. Expected cash flows from
  forecast sales are based on forward prices.
  The fair value of foreign exchange hedge derivative
  instruments is not included on the balance sheet unless the instrument does
  not meet the hedge accounting method requirements. The forward transactions,
  for which the amount, price and timing of delivery are fixed, are accounted
  for under the hedge accounting method where proceeds from these contracts are
  recognized in revenues in the same period as the corresponding hedged item. If
  foreign exchange contracts are repurchased before the original designation
  date, any gain or loss is recognized as a deferred gain or loss on the balance
  sheet. Subsequently, this deferred gain or loss is accounted for in the
  statement of operations as an increase/decrease in revenues for the period of
  the corresponding hedged item's original designation date. If foreign exchange
  contracts are repurchased after the original designation date, the Company
  accounts for the related gain or loss in revenues on the original designation
  dates.

ii)         Non-hedge
derivative instruments

In some cases, the Company utilizes instruments with
  optionalities (call options, variable volume forwards ("VVF") and lease rate
  swaps) as part of its revenue protection program. Transactions in which there
  is no certainty for one or more of its key components (price, delivery date,
  quantity) do not meet the conditions of hedge accounting, and are treated as
  "non-hedge derivatives" and marked to market. Gold purchase commitments,
  including those used to offset optionalities, are also marked to market. The
  Company obtains a valuation from a counterparty of its portfolio of gold
  commitments for each reporting period. This market valuation is based on
  forward rates and considers the market price, rate of interest, gold lease
  rate and volatility. The fair value of the non-hedge instruments is included
  on the balance sheet and the change in market value from the previous
  reporting period is included in the operations statement as a non-hedge
  derivative gain or loss. The variation in these valuations can be significant
  and can have a material impact on earnings.
  If non-hedge derivative instruments (call options and VVF) are
  converted into hedge derivative instruments (fixed forwards) and included in a
  hedging relationship, any change in the fair value of the instrument after the
  conversion date is recognized in revenues as explained previously in section i).iii)       
Prepaid gold forward sales contract

> Since the delivery of the gold production related to the
>   prepaid gold forward sales contract is probable, the Company considers this
>   contract as a normal sales contract. Initial proceeds from prepaid gold
>   forward sales contracts are accounted for as deferred revenue and are
>   recognized in revenues from mining operations when the related ounces of gold
>   are delivered.

---

50 Cambior 2004 Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Asset retirement obligations

Environmental and on-going site reclamation costs at operating mines are
charged to operations in the period during which they occur. The Company
recognizes, when the legal obligation is incurred, the fair value of an
estimated liability for the future cost of restoring a mine site upon
termination of the operation with a corresponding increase in the carrying value
of the related long-lived asset. The Company amortizes the amount added to the
asset using the depreciation method established for the related asset. The
depreciation expense is included in the operations statement and accounted for
in accumulated depreciation, depletion and amortization. An accretion expense in
relation with the discounted liability over the remaining life of the mining
properties is accounted for in mining operations and added to the asset
retirement obligation. The liability is adjusted at the end of each period to
reflect the passage of time and changes in the estimated future cash flows
underlying the obligation.

Employee future benefit plans

The Company accrues its obligations under employee future benefit plans and
the related costs, net of plan assets.

The cost of pensions and other retirement benefits earned by employees is
actuarially determined using the projected benefit method prorated on service
and management's best estimate of expected plan investment performance, salary
escalation, retirement ages of employees and health care costs.

For the purpose of calculating the expected return on plan assets, those
assets are valued at fair value.

Actuarial gains (losses) arise from the difference between actual long-term
rate of return on plan assets for that period and the expected long-term rate of
return of plan assets for that period or from changes in actuarial assumptions
used to determine the accrued benefit obligation. The excess of the net
actuarial gain (loss) over 10% of the greater of the benefit obligation and the
fair value of plan assets is amortized over the average remaining service period
of active employees. The average remaining service periods are summarized in
Note 15. Transitional obligations are amortized on a straight-line basis.

Income and mining taxes

The Company uses the tax asset and liability method to recognize and measure
future income taxes. Under this method, future income tax assets and liabilities
are recognized for the tax consequences of temporary differences by applying
statutory tax rates applicable to future years to the difference between the
financial statement carrying amounts and the tax bases. Cambior records a
valuation allowance against any portion of these future income tax assets that
it believes will, more likely than not, fail to be realized. Mining taxes
represent Canadian provincial taxes levied on mining operations and are
classified as income taxes since such taxes are based on a percentage of mining
profits.

Stock-based compensation costs

Under its stock option plan, the Company grants common share purchase options
to directors and key employees of the Company. Stock-based compensation plans
are accounted for using the fair value-based method of accounting. Compensation
costs, measured at the grant date based on the fair value of the options and
recognized over the related service period, are accounted for as an expense in
the statement of operations and credited to contributed surplus. Consideration
paid by employees when the options are exercised, as well as the fair value of
options exercised, are added to capital stock.

---

Cambior 2004 Annual Report        
51Revenue recognitionRevenues from gold, niobium and bauxite sales that represent more than 98.5%
(98.7% in 2003) of revenues from mining operations are recognized when the
following conditions are met:
Persuasive evidence of an arrangement exists;
  Delivery has occurred under the terms of the arrangement;
  The price is fixed or determinable; and
  Collection is reasonably assured.For gold sold under forward sales contracts or in the spot market, it is
considered that delivery has occurred on transfer of title to the gold to
counterparties.
For niobium and bauxite sold under specific contracts, it is considered that
delivery has occurred on transfer of the rights and obligations to buyers.
Revenues from contracting services are recognized as services are rendered.
Earnings (Loss) per share

The calculation of earnings (loss) per share is based upon the weighted
average number of shares outstanding each year. The treasury stock method is
used to determine the dilutive effect of stock options and warrants.
Reclassification

Certain comparative figures have been reclassified to conform with the
presentation adopted in 2004.3. CHANGES IN ACCOUNTING POLICIES
Stock-based compensation costsOn January 1, 2004, the Company adopted, retroactively, without restating
prior periods, the amended recommendations of the Canadian Institute of
Chartered Accountants ("CICA") Section 3870, "Stock-based Compensation and Other
Stock-based Payments". These standards define a fair value-based method of
accounting and establish that compensation costs be measured at the grant date
based on the fair value of the options and recognized over the related service
period. These amendments require that the fair value-based method be applied to
options granted to employees, which previously had not been accounted for at
fair value. Before 2004, the Company did not use the fair value method of
accounting for its options granted to employees and provided in its financial
statements pro forma disclosures of net earnings and earnings per share as if
the fair value method of accounting had been applied.

|The following table
    presents the impact of the previously-described changes as at January 1,
    2004: |       
|---------------------------------------------------------------------------------------------------------- | ------
|                                                                                                           | $     
|Fair value of options
    granted from 1995 to 2003 applied to deficit                                     | 15,873
|Fair value of options exercised from
    1995 to 2003 transferred to common shares                         | (212) 
|Residual amount applied to contributed
    surplus                                                         | 15,661
|                                                                                                           |       
|The effect of this
    change on the 2004 financial statements is as follows:                              |       
|                                                                                                           | $     
|Results                                                                                                    |       
|Increase in stock-based compensation costs                                                                 | 1,580 
|Balance sheet                                                                                              |       
|Increase in
    contributed surplus                                                                        | 1,580 



---

52 Cambior 2004 Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Asset retirement obligations

On January 1, 2004, the Company adopted the recommendations of CICA Section
3110, "Accounting for Asset Retirement Obligations" which establish standards
for recognition and measurement of a liability for an asset retirement
obligation and the associated asset retirement cost. This section generally
applies to legal obligations associated with the retirement of long-lived assets
that result from the acquisition, construction, development and/or normal
operation of a long-lived asset. The Company recognizes, when the obligation is
incurred, the fair value of an estimated liability for the future cost of
restoring a mine site upon termination of the operation with a corresponding
increase to the carrying value of the related long-lived asset. The Company
amortizes the amount added to the asset using the depreciation method
established for the related asset and recognizes an accretion expense in
relation with the discounted liability over the remaining life of the mining
property. The liability is adjusted at the end of each period to reflect the
passage of time and changes in the estimated future cash flows underlying the
obligation. This differs from the prior practice which involved accruing for the
estimated reclamation and restoration obligations through annual charges using
the estimated economic life of the related deposits.

This change in accounting policy was applied retroactively and reflected in
the consolidated financial statements as follows:

|                                                                                                                        |       | 2004   | 2003  
|----------------------------------------------------------------------------------------------------------------------- | ----- | ------ | ------
|                                                                                                                        |       | $      | $     
|Consolidated Balance
    Sheet:                                                                                         |       |        |       
|Increase in property,
    plant and equipment                                                                           |       | 10,953 | 5,440 
|Increase in asset
    retirement obligations                                                                            |       | 10,731 | 3,358 
|Increase in shareholders' equity                                                                                        |       | 222    | 2,082 
|                                                                                                                        | 2004  | 2003   | 2002  
|                                                                                                                        | $     | $      | $     
|Consolidated Operations:                                                                                                |       |        |       
|Decrease in mining
    operations expenses                                                                              | 387   | 863    | 963   
|Increase in depreciation, depletion
    and amortization                                                                | 991   | 711    | 755   
|Increase (Decrease) in net earnings                                                                                     | (604) | 152    | 208   
|                                                                                                                        |       |        |       
|The
    following is a reconciliation of the total liability for asset retirement
    obligations at December 31, 2003:
|                                                                                                                        |       |        | $     
|Balance at December
    31, 2003 as previously reported                                                                 |       |        | 16,400
|Impact of adoption of CICA Section
    3110                                                                             |       |        | 3,358 
|Restated balance at December 31, 2003                                                                                   |       |        | 19,758

Flow-through shares

In March 2004, the CICA Emerging Issues Committee ("EIC") issued EIC Abstract
146, "Flow-through shares", identifying two issues as a result of varying
practices related to the date of recognition of the future tax liability and the
recognition of previously unrecorded future income tax assets caused by the
renouncement of expenditures relating to flow-through shares. The future income
tax liability must be recognized, and the shareholder's equity reduced, on the
date that the Company renounces the tax credits associated with the
expenditures, provided there is reasonable assurance that the expenditures will
be made. The previously unrecorded future income tax assets must be recognized
as a reduction of income tax expense included in the determination of net income
or loss in the period incurred, except when the "more likely than not" test
cannot be satisfied. Cambior adopted this pronouncement in 2004 which resulted
in the recognition of a future income tax liability of $1,219,000 offset by the
recognition of a corresponding amount of unrecognized tax losses incurred
previously.

---

Cambior 2004 Annual Report        
53Other changes in accounting policiesIn January 2003, the CICA issued AcG-15 "Consolidation of Variables Interest
Entities" which harmonizes Canadian GAAP with FASB Interpretation No.46, and
provides guidance for applying the principles of Section 1590, "Subsidiaries",
to certain special purpose entities. This pronouncement did not have any impact
on the Company's consolidated financial statements.
In December 2003, the EIC issued EIC Abstract 141, "Revenue Recognition",
which provides general interpretive guidance on the application of CICA Handbook
Section 3400, "Revenue". The Company currently follows such guidelines.
In November 2002, the CICA issued Section 3063, "Impairment of Long-Lived
Assets", which addresses the recognition, measurement and disclosure of the
impairment of long-lived assets. Section 3063 requires that an impairment loss
be recognized if the carrying amount of a long-lived asset is not recoverable.
The carrying amount of a long-lived asset is not recoverable if the carrying
amount exceeds the sum of the undiscounted cash flows expected to result from
its use and eventual disposition. The impairment loss to be recognized is
measured as the amount by which the carrying amount of the long-lived asset
exceeds its fair value.
In February 2003, the CICA issued AcG-14 "Guarantor's Accounting and
Disclosure Requirements for Guarantees". AcG-14 requires guarantors to disclose
certain information for guarantees outstanding at the end of the reporting
period. At adoption, AcG-14 did not have any impact on the Company's
consolidated financial statements.
4. REORGANIZATION OF THE DOYON MINE

In September 2004, Cambior implemented a reorganization at the Doyon gold
mine, that resulted in a reduction in manpower and a decrease in the annual
mining rate. This became necessary due to rock mechanic constraints, which
caused a reduction in available production areas. In addition, the lower mining
rate led to increased unit operating costs and a reduction of mineral reserves.
The estimated restructuring costs consisted of termination benefits that
amounted to $1,941,000 during the third quarter of 2004 for which a balance of
$1,007,000 is still payable at the end of 2004.
In accordance with its accounting policies, the Company reviewed the carrying
value of the Doyon mine at year-end 2004 based on its long-term plan and updated
mineral reserves and determined that an impairment loss of $71,211,000 was
necessary. This loss was charged to operations and includes a reduction of the
carrying value of the Doyon mine of $52,645,000 which was included in
accumulated depreciation, depletion and amortization on the balance sheet. The
impairment loss also reflects the write-off of previously deferred losses
totaling $4,293,000 related to the closure of hedge positions related to Doyon
future gold production. It also includes a hedge derivative loss of $14,273,000
in relation with the fair value of forward sales commitments linked to Doyon
future gold production. This hedge derivative loss resulted in the recognition
on the balance sheet of a long-term liability for the fair value of hedge
derivatives.
Net estimated future cash flows from the Doyon mine, were calculated, on an
undiscounted basis, based on best estimates of future gold production, which
were established using long-term gold price and foreign exchange rate
assumptions. Future expected operating costs, capital expenditures and asset
retirement obligations were based on the life of the mine. The fair value was
calculated by discounting the estimated future net cash flows using a single
interest rate, commensurate with the risk.
The above is summarized as follows:

|                                 | $     
|-------------------------------- | ------
|Impairment loss                  | 52,645
|Write-off of deferred
    losses | 4,293 
|Hedge derivative loss            | 14,273
|                                 | 71,211
|Restructuring costs              | 1,941 
|                                 | 73,152



---

54 Cambior 2004 Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. FINANCIAL INFORMATION INCLUDED IN THE CONSOLIDATED STATEMENT OF CASH FLOWS

(a) Changes in non-cash working capital items

|                                             | 2004    | 2003    | 2002   
|-------------------------------------------- | ------- | ------- | -------
|                                             | $       | $       | $      
|Receivables                                  | (3,841) | (711)   | (2,117)
|Production inventories                       | (293)   | (2,667) | 3,587  
|Supplies inventory and
    prepaid expenses  | (8,199) | (1,312) | 891    
|Accounts payable and accrued
    liabilities | 16,127  | 4,044   | 1,355  
|                                             | 3,794   | (646)   | 3,716  

Some changes in non-cash working capital items for the Rosebel project,
representing an utilization of cash flow of $8,288,000 (source of cash flow of
$419,000 in 2003), are included in investing activities. These are considered as
investing activities because they relate to the construction of the Rosebel mine
or the constitution of working capital prior to commercial production. Since
commercial production began, changes in non-cash working capital items for
Rosebel are presented under operating activities except for the variation of
accounts payable related to construction of major projects. Other changes in
non-cash working capital items are related to acquisition of assets and
businesses and are included in investing activities.

(b) Cash flows relating to interest and income and mining taxes

|                                            | 2004  | 2003  | 2002 
|------------------------------------------- | ----- | ----- | -----
|                                            | $     | $     | $    
|Interest paid                               | 2,500 | 1,343 | 1,440
|Income and mining
    taxes paid (received) | 451   | (361) | 274  

6. CASH AND SHORT-TERM INVESTMENTS

|                                                                                                   |                                                                                                                                                        | 2004   | 2003  
|-------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------ | ------ | ------
|                                                                                                   |                                                                                                                                                        | $      | $     
|Cash                                                                                               | 7,438                                                                                                                                                  | 5,036 
|Short-term
    investments with maturities of less than three months,                              |                                                                                                                                                        |       
|                                                                                                   | bearing interest at rates varying from
    2.10% to 2.45% (0.87% to 2.75% in 2003) (a)                                                                 | 13,582 | 23,414
|Cash and
    cash equivalents                                                                      | 21,020                                                                                                                                                 | 28,450
|Restricted
    cash bearing interest at rates varying from 0.90% to 1.01% in 2003 (b)              |                                                                                                                                                       | 10,000
|Short-term
    investments with maturities of more than three months but less than six
    months, |                                                                                                                                                        |       
|                                                                                                   | bearing interest at rates varying from
    2.02% to 2.48% (0.89% to 2.85% in 2003) (c)                                                                 | 33,846 | 56,770
|Cash and short-term investments                                                                    | 54,866                                                                                                                                                 | 95,220
|(a)                                                                                                | Some of
    these short-term investments are denominated in Canadian dollars totaling
    $1,082,000 (Cdn $1,300,000).                                
|(b)                                                                                                | An
    amount of $10,000,000 was being held until the achievement of commercial
    production at the Rosebel project which occurred in February 2004.
|(c)                                                                                                | Some of
    these short-term investments are denominated in Canadian dollars totaling
    $9,033,000 (Cdn $10,857,000).                               



---

Cambior 2004 Annual Report        
557. INVESTMENTS AND DEFERRED CHARGES

|                                                                                                                | 2004   | 2003 
|--------------------------------------------------------------------------------------------------------------- | ------ | -----
|                                                                                                                | $      | $    
|Shares of publicly
    traded companies, at cost (a)                                                            | 15,820 | 3,023
|Residual proceeds
    receivable of $2,000,000 from the sale of the El Pachon project, discounted
    at 6.125% | 1,912  | 1,803
|Promissory note
    receivable from a supplier and others                                                       | 2,454  |     
|                                                                                                                | 20,186 | 4,826
|Deferred charges                                                                                                | 1,911  | 2,239
|                                                                                                                | 22,097 | 7,065
|Current portion
    included in receivables                                                                     | 1,912  |     
|                                                                                                                | 20,185 | 7,065
|(a) Some of these shares are denominated in Canadian dollars totaling
    $15,772,000 (Cdn $20,608,000).       

8. PROPERTY, PLANT AND EQUIPMENT

|                                                    |           | 2004             |        
|--------------------------------------------------- | --------- | ---------------- | -------
|                                                    |           | Accumulated      |        
|                                                    |           | depreciation,    |        
|                                                    |           | depletion and    |        
|                                                    | Cost      | amortization (1) | Net    
|                                                    | $         | $                | $      
|Mining properties                                   | 144,402   | 56,682           | 87,720 
|Development expenses
    (2)                        | 467,463   | 381,219          | 86,244 
|Land, buildings and
    equipment relating to mines | 451,971   | 297,759          | 154,212
|Other                                               | 14,666    | 13,048           | 1,618  
|                                                    | 1,078,502 | 748,708          | 329,794
|Mining projects (3)                                 | 106,640   | 14,635           | 92,005 
|                                                    | 1,185,142 | 763,343          | 421,799
|                                                    |           |                  |        
|                                                    |           | 2003             |        
|                                                    |           | Accumulated      |        
|                                                    |           | depreciation,    |        
|                                                    |           | depletion and    |        
|                                                    | Cost      | amortization (1) | Net    
|                                                    | $         | $                | $      
|Mining properties (4)                               | 52,598    | 45,508           | 7,090  
|Development expenses                                | 367,703   | 304,366          | 63,337 
|Land, buildings and
    equipment relating to mines | 337,991   | 247,788          | 90,203 
|Other                                               | 14,345    | 12,384           | 1,961  
|                                                    | 772,637   | 610,046          | 162,591
|Rosebel project (3)                                 | 146,029   | 23,543           | 122,486
|Mining projects                                     | 69,891    |                 | 69,891 
|                                                    | 988,557   | 633,589          | 354,968

|(1) | Includes impairment loss.                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | In 2004, an amount of $1,553,000 of
    government assistance was accounted for as a reduction of development
    expenses.                        
|(3) | The costs of mining and Rosebel projects
    include accumulated depreciation related to the transfer of equipment
    between subsidiaries.       
|(4) | The consolidated costs and accumulated
    depreciation, depletion and amortization at December 31, 2003 were restated
    to reflect the change in
|    | accounting policy for asset retirement
    obligations.                                                                                            

---

56 Cambior 2004 Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

9. ACQUISITION OF ASSETS AND BUSINESSES

Rosebel mine

Cambior acquired the residual 50% interest in the Rosebel project from Golden
Star Resources Ltd. on May 16, 2002 for a consideration of $8,000,000 and a
price participation right based on proceeds from the sale of gold extracted from
the property. The scheduled payments of the cash consideration are as follows:

(a) $5,000,000 at closing; and 
(b) Three successive $1,000,000 annual payments commencing in 2003.

In accordance with a Mineral Agreement relating to the Rosebel project, the
Government of Suriname granted a 25-year renewable Right of Exploitation to
Cambior's subsidiary, Rosebel Gold Mines N.V. ("RGM") in December 2002.

Camp Caiman project

On November 29, 2003, the Company acquired the Camp Caiman advanced gold
exploration project located in French Guiana, South America, and other assets
and liabilities through a merger agreement with Ariane Gold Corp. ("Ariane").

Under the terms of the agreement, Cambior issued 14,834,621 common shares to
Ariane shareholders valued at $2.64 (Cdn $3.58) each, based on the closing
prices of the companies' respective shares on the Toronto Stock Exchange on the
date the transaction was announced. The Company also allowed the holders of
1,265,989 options issued under the Ariane employee option plan to obtain
corresponding options of Cambior (based on the relevant exchange ratio) and to
hold them until their original scheduled expiry.

In accordance with the guidelines of EIC-124, the transaction with Ariane was
accounted as an acquisition of assets. Ariane's activities have been accounted
for in Cambior's results since the closing date of the transaction.

The value of the net assets acquired has been established as follows:

|                                                                                          | $     
|----------------------------------------------------------------------------------------- | ------
|Cash and cash
    equivalents                                                             | 3,230 
|Current assets                                                                            | 186   
|Investment (1)                                                                            | (396) 
|Property, plant and equipment - mining
    projects                                       | 49,615
|Total assets acquired                                                                     | 52,635
|                                                                                          |       
|Current liabilities                                                                       | 2,276 
|Assumption of long-term debt                                                              | 9,711 
|Total liabilities assumed                                                                 | 11,987
|Net assets acquired                                                                       | 40,648
|                                                                                          |       
|Consideration                                                                             |       
|Issuance of Cambior shares                                                                | 39,203
|Fair value of
    Ariane common share purchase options converted into Cambior options (2) | 1,445 
|                                                                                          | 40,648

Investing activities in the cash flows statement only include the cash impact
of this transaction.

|(1) | Prior to the transaction, the Company held a minority
    investment in shares of Ariane.                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The options granted upon the merger agreement with Ariane
    were valued at their fair value using the Black-Scholes option-pricing model
    takinginto account an expected life of six months, a
    semi-annual risk-free interest rate of 3.11%, a volatility of 54% and a nil
    dividend.

---

Cambior 2004 Annual Report        
57Acquisition of Sequoia Minerals Inc.On July 2, 2004, Cambior acquired Sequoia Minerals Inc. ("Sequoia") through a
merger transaction, thereby consolidating the ownership of the Niobec mine.
Sequoia held a 50% interest in the Niobec mine and was the mine operator.
Cambior purchased the remaining interest for $42,019,000 in cash and issued
2,241,000 of its shares valued at $6,292,000. This value was determined based on
an exchange ratio of one Cambior share for each 6.3 Sequoia shares. This ratio
implied a price of Cdn $0.60 for each share of Sequoia and was based on the
closing prices of both companies' shares on the Toronto Stock Exchange on April
19, 2004.
The transaction with Sequoia was accounted as a business combination using
the purchase method of accounting. Cambior estimated a liability for asset
retirement obligations relating to the closure of a non-strategic division.
Cambior also accounted for a provision of $422,000 for involuntary termination
benefit expenses.
Given that the acquired company was liquidated into Cambior as of January 1,
2005, the future income tax assets previously considered in Sequoia's financial
statements were re-evaluated based on its estimated profit for the period
preceding the liquidation. No future tax liability was recorded with respect to
the excess of purchase price paid over book value as it is assumed that, as a
result of the acquisition, such future liability will be settled against some of Cambior's not-yet recorded future tax assets. However, a future mining duties
liability of $1,101,000 was recorded to reflect the higher values for accounting
than for mining duties existing in Sequoia at the time of acquisition. The
allocation of the purchase price is subject to future adjustments. Sequoia's
activities were accounted for in Cambior's results as of July 2, 2004.
The following table summarizes the preliminary value of the assets acquired
and the liabilities assumed at the date of acquisition:

|                                                                                       | $     
|-------------------------------------------------------------------------------------- | ------
|Current assets                                                                         | 12,963
|Investments                                                                            | 153   
|Property, plant and
    equipment (1)                                                  | 58,430
|Future income tax assets                                                               | 41    
|Total assets acquired                                                                  | 71,587
|                                                                                       |       
|Current liabilities                                                                    | 4,559 
|Assumption of
    long-term debt (2)                                                   | 14,061
|Assumption of
    debenture                                                            | 1,015 
|Asset retirement
    obligations                                                       | 822   
|Accrued benefit
    liability (3)                                                      | 1,446 
|Future mining tax liabilities                                                          | 1,101 
|Total liabilities assumed                                                              | 23,004
|Net assets acquired                                                                    | 48,583
|                                                                                       |       
|Consideration                                                                          |       
|Disbursement (4)                                                                       | 42,019
|Issuance of Cambior shares                                                             | 6,292 
|Conversion option on convertible debenture                                             | 262   
|Fair value of
    Sequoia common share purchase options converted into Cambior options | 10    
|                                                                                       | 48,583

|(1) | Property, plant and equipment consist of
    mining properties, land, buildings and equipment relating to mines.                                    
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Cambior reimbursed the bank by year end.                                                                                                            
|(3) | In 2005, a portion of this accrued benefit
    liability will be transferred to a company previously associated with
    Sequoia (Note 15).         
|(4) | The Company entered into foreign exchange
    fixed forward contracts to hedge the foreign exchange risk related to the
    disbursement in Canadian
|    | Dollars at a foreign exchange rate of
    1.3619.                                                                                                   

---

58 Cambior 2004 Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Privatization of Linden Bauxite Operations in Guyana

In December 2004, Cambior completed a transaction with the Government of
Guyana for the privatization of certain assets of Linden Mining Enterprise
Limited (Linmine), a bauxite mining and processing operation wholly-owned by the
Government of Guyana.

A new company, OMAI Bauxite Mining Inc. (OBMI), has been incorporated and is
owned 70% by Cambior and 30% by the Government of Guyana. The Government of
Guyana contributed the processing plant along with service facilities and the
Montgomery mine totaling $5,223,000. Cambior contributed an amount of
$12,187,000 to acquire its 70% participation including $5,000,000 and the
balance in mine equipment transfers from OMAI Gold Mines Ltd. (OGML).

OBMI has also received a commitment for a $10,000,000 credit facility from a
Caribbean financial institution on a non-recourse basis, but subject to a
$5,000,000 construction cost-overrun guaranty from Cambior. This facility has a
10-year term and an interest rate of 10.5% per year and will be used to
refurbish the processing plant and infrastructure.

Furthermore, Cambior, through its wholly-owned subsidiary OMAI Services Inc.
(OSI), also received a financing commitment from the same Caribbean financial
institution for $8,000,000 over 10 years at a rate of 10.5% per year on a
non-recourse basis to install a power plant, near OBMI facilities.

10. CURRENT PORTION OF LONG-TERM LIABILITIES

|                                 | Note | 2004   | 2003  
|-------------------------------- | ---- | ------ | ------
|                                 |      | $      | $     
|Current portion of:              |      |        |       
|Long-term debt                   | 11   | 20,787 | 16,934
|Deferred revenue                 | 12   | 12,222 | 12,222
|Deferred gains                   | 13   |       | 3,852 
|Asset
    retirement obligations | 14   | 3,754  |      
|                                 |      | 36,763 | 33,008

11. LONG-TERM DEBT

|                                                  | Total  | Scheduled payments | Total 
|------------------------------------------------- | ------ | ------------------ | ------
|                                                  | 2004   | 2005               | 2006  
|                                                  | $      | $                  | $     
|2003 Credit facility
    (a)                      | 50,000 | 18,000             | 14,000
|Balance of purchase
    price - Camp Caiman (b)   | 7,800  |                   | 3,958 
|Balance of purchase
    price - Rosebel (c)       | 1,000  | 1,000              |      
|Debt-Rosebel-Grassalco
    (d)                    | 2,276  | 696                | 795   
|Accounts payable on
    hedging-long-term portion | 213    |                   | 213   
|Obligations under
    capital leases (e)          | 887    | 611                | 183   
|Non-participating
    shares (f)                  | 1,880  | 480                | 480   
|Convertible debenture (g)                         | 1,173  |                   | 1,173 
|Total                                             | 65,229 | 20,787             | 20,802
|Current portion                                   | 20,787 |                    |       
|Long-term portion                                 | 44,442 |                    |       



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Cambior 2004 Annual Report        
59

(a) 2003 Credit facility

On February 7, 2003, Cambior entered into a new Credit facility agreement
("2003 Credit facility") with a banking syndicate for an amount of $65,000,000.
The 2003 Credit facility initially consisted of a non-revolving term loan for an
amount of $55,000,000 and a $10,000,000 revolving Credit facility, both maturing
on December 31, 2007.
In 2004, Cambior successfully negotiated an amendment to its 2003 Credit
facility with its lenders to delay the reimbursement schedule of its $50,000,000
Credit facility by nine months and extend the maturity date of the revolving
credit line by nine months. The new repayment schedule, which begins on March
31, 2005 instead of June 30, 2004, will be as follow:
2005 - 4 quarterly payments of $4,500,000
  2006 - 4 quarterly payments of $3,500,000
  2007 - 4 quarterly payments of $3,500,000
  2008 - 3 quarterly payments of $1,333,000At December 31, 2004, the $10,000,000 revolving Credit facility, maturing on
September 30, 2008, is unutilized except for a letter of credit for $500,000
that has been issued under this facility to guarantee a portion of the Omai mine
closure costs.
The 2003 Credit facility bore interest at the LIBOR rate plus 2.50%, until
achievement of completion at the Rosebel project as defined in the 2003 Credit
agreement which occurred in late 2004. Effective January 1, 2005, the interest
margin above LIBOR varies from 1.50% to 2.25% based on the Loan Life Protection
Ratio ("LLPR"). The LLPR is defined as the ratio of the present value
(discounted at a rate of 8% per annum) of projected cash flow available for debt
service to the total net senior debt. Committed facilities carry a weighted
average standby fee of 0.75% (0.35% post-completion rate) per annum on the
unutilized portion. As at December 31, 2004, the effective interest rate was
4.81% (3.68% as at December 31, 2003).
The 2003 Credit facility is subject to various covenants, financial ratios
and prepayments in the event of future financings. On August 12, 2003, the
lenders agreed to eliminate the requirement for minimum hedging covenants under
the loan agreement.
The Company has granted security over its interests in the Doyon, Mouska,
Sleeping Giant, Niobec, Omai and Rosebel mines.
(b) Balance of purchase price payable for Camp Caiman project

Pursuant to the merger agreement with Ariane in November 2003, the Company
assumed the balance of the purchase price relating to Ariane's acquisition from
Asarco Incorporated, in August 2002, of Asarco Guyane Française S.A.R.L. ("AGF"),
a subsidiary holding the rights to the Camp Caiman project. The balance of
purchase price is accounted for at its discounted value calculated using an
interest rate of 3%, without interest and payable as follows:
i) $4,136,800 on August 19, 2006; and 
ii) $4,136,800 within 120 days of the commencement of commercial production.
An amount of $2,171,000 was paid in 2004. The balance of purchase price
payable is subject to prepayments in the case of a subsequent issuance of
equity. The AGF shares are subject to an escrow agreement and any transfer of
the AGF shares would be subject to that agreement. The AGF shares will be
released from escrow to Cambior once the acquisition price has been paid in
full.
(c) Balance of purchase price - Rosebel

The balance of the purchase price represents the discounted
amount, calculated using an interest rate of 5.0%, of one installment of
$1,000,000 due in 2005. An amount of $1,000,000 was paid both in both 2003 and
2004. This balance is guaranteed by a pledge on half of Cambior's shares of RGM.

---

60 Cambior 2004 Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(d) Debt - Rosebel - Grassalco

Upon receiving the Right of Exploitation for the Rosebel project in December
2002, an amount became payable to Grasshopper Aluminum Company N.V. ("Grassalco"),
a mining company owned by the Government of Suriname, in compensation for
exploration expenses incurred by Grassalco. This amount is payable in three
equal annual installments of $696,000, the first of which is due in February
2005. The discounted value was calculated using an interest rate of 3.19%.

(e) Obligations under capital leases

Obligations under capital leases bear interest at rates ranging from 4.5% to
7.4%, payable in quarterly installments until 2008.

(f) Non-participating shares

The Rosebel mine started commercial production on February 11, 2004. In
accordance with the Mineral Agreement between the Company and the Republic of
Suriname, the Company issued to the Government of Suriname following the date of
the commercial production, as defined, 5% of the participating capital stock of
RGM, and 2,000,000 non-participating shares redeemable for $2,000,000. The
Company accounted for a non-participating interest of $2,000,000, and a
redemption of non-participating interest totaling $120,000 was done during the
year. A non-controlling interest expense of $543,000 was accounted for in 2004.

(g) Convertible debenture

Upon the acquisition of Sequoia in July 2004, the Company assumed a
convertible debenture. The liability component of this debenture is convertible
anytime into 340,166 common shares of the Company and partially convertible at
the Company's option under certain conditions. The debenture has a par value of Cdn $1,500,000, bears interest at 10% per annum payable on a quarterly basis,
and matures in December 2006. The effective interest rate was 13% at December
31, 2004. The fair value of the conversion option associated with the
convertible debenture is recorded as "Equity component of convertible debenture"
under shareholders' equity. The accretion on the debenture is charged to
earnings ratably to maturity.

Interest:

Interest on long-term debt was as follows:

|                           | 2004  | 2003  | 2002 
|-------------------------- | ----- | ----- | -----
|                           | $     | $     | $    
|Interest on long-term debt |       |       |      
|- Expensed                 | 2,291 | 91    | 1,323
|- Capitalized              | 529   | 1,411 |     
|                           | 2,820 | 1,502 | 1,323



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Cambior 2004 Annual Report        
61

12. DEFERRED REVENUE

On January 12, 2001, Cambior entered into a $55,000,000 prepaid gold forward
sales agreement (the "agreement") with a financial institution, whereby Cambior
was committed to deliver an aggregate of 233,637 ounces of gold in equal monthly
deliveries from July 2001 to December 2005. The cash proceeds from this prepaid
sale were accounted for as deferred revenue. Under the prepaid gold forward
sales agreement, the Company must comply with the same covenants and financial
ratios as under the terms of the 2003 Credit facility (Note 11). At December 31,
2004, gold deliveries remaining under the prepaid gold forward sales agreement
represented 51,920 ounces totaling $12,222,000, and the estimated fair value was
$21,617,000 ($41,336,000 at December 31, 2003).
13. DEFERRED GAINS (LOSSES)

Deferred gains (losses) on gold and US dollars are related to hedging
transactions described in Note 2. This account also includes non-hedge
derivative losses related to call options and VVF converted into hedge forward
instruments.

|                                                                                                                             | 2004    | 2003 
|---------------------------------------------------------------------------------------------------------------------------- | ------- | -----
|                                                                                                                             | $       | $    
|Deferred gains
    (losses) - gold                                                                                           | (5,134) | 1,330
|Deferred gains - US dollars                                                                                                  |        | 1,436
|                                                                                                                             | (5,134) | 2,766
|Fair value at the date of conversion
    of non-hedge derivative instruments converted into hedge derivative
    instruments | 692     | 1,841
|                                                                                                                             | (4,442) | 4,607
|Current portion                                                                                                              | (4,646) | 3,852
|Long-term portion                                                                                                            | 204     | 755  

14. LIABILITY FOR ASSET RETIREMENT OBLIGATIONS

Cambior's activities are subject to various laws and regulations regarding
the environment for which the Company estimates future costs. These provisions
may be revised on the basis of amendments to such laws and regulations and the
availability of new information and technology. The liability for asset
retirement obligations has been considered in the year-end impairment test
process. According to management's estimate, the cash flows provided by Cambior's operations and expected from the sale of residual equipment will be
sufficient to meet its payment obligations. The Company also makes arrangements
with the Government of Québec regarding the security pledge (government bond or
guaranty letters) under provincial government regulations. These security
pledges may be rescheduled over time as a result of the discovery of additional
mineral reserves on a property that would extend the mine life. Rehabilitation
disbursements for OGML started at the end of 2004 and will continue in 2005 and
2006.

At December 31, 2004, estimated undiscounted amounts of cash flow required to
settle the obligations, expected timing of payments and the average
credit-adjusted risk-free rate assumed in measuring the asset retirement
obligations were as follows:

|             | Undiscounted | Expected      | Average         |            
|------------ | ------------ | ------------- | --------------- | -----------
|             | amounts      | timing
    of | credit-adjusted | Inflation  
|             | required     | payments      | risk-free rate  | factors    
|             | $            |               |                 |            
|Doyon mine   | 26,114       | 2012-2019     | 5.39%           | 1.37%      
|Omai mine    | 4,532        | 2005-2006     | 4.26%           | 1.02%      
|Rosebel mine | 2,875        | 2006-2020     | 4.29%           | 1.33%      
|Niobec mine  | 2,449        | 2005-2025     | 5.24%           | 2.33%      
|Other mines  | 2,828        | 2005-2012     | 3.15%-4.87%     | 1.04%-1.43%
|             | 38,798       |               |                 |            

The fair value of OBMI's asset retirement obligations (Note 9) could not be
reasonably estimated as at December 31, 2004 since the acquisition of OBMI was
completed on December 8, 2004. The impact is not expected to be material.

---

62 Cambior 2004 Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The actual schedule of estimated future disbursements including
rehabilitation and government bonds, is as follows:

|             | $     
|------------ | ------
|2005         | 4,185 
|2006         | 1,782 
|2007         | 2,252 
|2008         | 740   
|2009         | 6,824 
|2010 onwards | 23,015
|             | 38,798

There were no material assets that were legally restricted for the purposes
of settling asset retirement obligations at December 31, 2004, except for a
letter of credit in the amount of $500,000 issued to the Government of Guyana as
a closure cost guarantee for the Omai mine.

The following table presents the reconciliation of the liability for asset
retirement obligations:

|                                                                                                          | 2004   | 2003  
|--------------------------------------------------------------------------------------------------------- | ------ | ------
|                                                                                                          | $      | $     
|Balance, beginning of
    year as previously reported                                                     | 16,400 | 12,410
|Prior years' adjustment to reflect the
    change in accounting for asset retirement obligations (Note 3) | 3,358  | 2,559 
|Restated balance, beginning of year                                                                       | 19,758 | 14,969
|New obligation
    relating to the acquisition of Sequoia                                                 | 822    |      
|New obligation
    relating to Rosebel                                                                    |       | 1,328 
|Changes in the
    estimated cash flows                                                                   | 2,814  |      
|Changes in the
    estimated timing of payments                                                           | 2,859  |      
|Accretion expense                                                                                         | 1,787  | 995   
|Foreign exchange variation                                                                                | 1,394  | 2,466 
|Balance, end of year                                                                                      | 29,434 | 19,758

15. EMPLOYEE FUTURE BENEFIT PLANS

The Company contributes to various defined contribution and
defined benefit pension plans for its employees that are funded on the basis of
actuarial valuations. The defined benefit pension plans cover certain employees
in Canada, the United States, Guyana and Suriname and are subject to funding
based on actuarial valuation which is performed at least every three years. The
Company measures its accrued benefit obligations and the fair value of plan
assets for accounting purposes as at December 31st of each year. The
most recent actuarial valuation was prepared as at January 1, 2003 and the next
required valuation will be as of January 1, 2006.

As well, senior management of the Company specifically
designated by the Board of Directors participate in a supplementary executive
retirement plan ("SERP"). The purpose of the SERP is to provide these employees
with a pension equal to that which would otherwise be received if the Company's
defined benefit pension plan reflected the full amount of the base salary of
such employees. The Company made a contribution of $392,000 in 2003. Annual
contributions are assessed by the Board of Directors based on the Company's
financial position and other factors.

The Company also has two defined post-retirement benefit plans
that provide health care plans to some employees of the Niobec mine. These plans
are unfunded and require no contribution from employees.

Upon the acquisition of Sequoia in July 2004, the Company
assumed accrued benefit liabilities relating to defined benefit pension plans
and other post-retirement benefit plans (health care plans). The Company also
recognized a new accrued benefit liability related to a health care plan offered
to unionized employees of Niobec. One of the Niobec defined benefit pension
plans acquired will be transferred to a company previously associated with
Sequoia in 2005.

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Cambior 2004 Annual Report        
63

Total cash payments

Total cash payments for employee future benefits, consisting of cash
contributed by the Company to its funded pension plans, cash payments directly
to beneficiaries for its unfunded other benefit plans, and cash contributed to
defined contribution plans was $3,077,000 in 2004 ($2,799,000 in 2003).
Defined contribution plans

The total expenses for the Company's defined contribution plans amounted to
$2,306,000 in 2004 ($1,908,000 in 2003 and $1,563,000 in 2002).
Defined benefit plans

|                                  | Pension benefit plan | Post-retirement benefit plan
|--------------------------------- | -------------------- | ----------------------------
|                                  | 2004                 | 2003                        
|                                  | $                    | $                           
|Accrued benefit
    obligation    |                      |                             
|Balance, beginning of
    year    | 7,776                | 5,716                       
|                                  |                      |                             
|Current service
    expense       | 534                  | 436                         
|Interest expense                  | 589                  | 439                         
|Actuarial loss (gain)             | 684                  | 105                         
|Actuarial loss - past
    year    |                     |                            
|Benefits paid                     | (166)                | (221)                       
|Acquisition of Sequoia            | 1,838                |                            
|Foreign exchange variation        | 992                  | 1,301                       
|                                  | 4,471                | 2,060                       
|Balance, end of year              | 12,247               | 7,776                       
|                                  |                      |                             
|Plan assets                       |                      |                             
|Fair value, beginning
    of year | 5,377                | 3,438                       
|                                  |                      |                             
|Actual return on plan
    assets  | 554                  | 392                         
|Employer contributions            | 716                  | 882                         
|Benefits paid                     | (166)                | (170)                       
|Acquisition of Sequoia            | 1,488                |                            
|Foreign exchange variation        | 712                  | 835                         
|                                  | 3,304                | 1,939                       
|Fair value, end of year           | 8,681                | 5,377                       
|                                  |                      |                             
|Pension plans assets consist of:  | 2004                 | 2003                        
|                                  | %                    | %                           
|Asset category:                   |                      |                             
|Equity securities                 | 52                   | 52                          
|Debt securities                   | 36                   | 32                          
|Other                             | 12                   | 16                          
|Total                             | 100                  | 100                         



---

64 Cambior 2004 Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

|Reconciliation of the funded status of the benefit plans to the amounts
    recorded in the financial statements is as follows:
|-------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                               
|                                                                                                                               
|                                                                                                                               
|Fair value of plan
    assets                                                                                                  
|Accrued benefit obligations                                                                                                    
|Funded status-deficit (1)                                                                                                      
|Unamortized
    transitional asset                                                                                             
|Unamortized net actuarial loss                                                                                                 
|Accrued benefit liability                                                                                                      
|                                                                                                                               
|(1) For 2004, two of the three defined pension benefit plans show a
    deficit totaling $3,743,000 ($2,567,000 in 2003).      

|                                                                                             |                      |                             
|-------------------------------------------------------------------------------------------- | -------------------- | ----------------------------
|The
    accrued benefit liability is included in the Company's balance sheet as
    follows:
|                                                                                             | Pension benefit plan | Post-retirement benefit plan
|                                                                                             | 2004                 | 2003                        
|                                                                                             | $                    | $                           
|Accounts payable and
    accrued liabilities                                                 | 105                  | 56                          
|Accrued benefit liabilities                                                                  | 2,917                | 2,462                       
|                                                                                             | 3,022                | 2,518                       
|                                                                                             |                      |                             
|There is
    no minimum liability as defined under US GAAP.                                 

The total expense for the Company's defined benefit plans is as follows:

|                                                      | Pension benefit plan | Post-retirement benefit plan
|----------------------------------------------------- | -------------------- | ----------------------------
|                                                      | 2004                 | 2003                        
|                                                      | $                    | $                           
|Current service cost                                  | 534                  | 436                         
|Interest expense                                      | 589                  | 439                         
|Actual return on plan
    assets                      | (554)                | (392)                       
|Actuarial losses
    (gains)                          | 684                  | 105                         
|Element of employee
    future benefit costs before   |                      |                             
|adjustments to recognize the long-term nature         |                      |                             
|of employee future benefit costs                      | 1,253                | 588                         
|Adjustments to
    recognize the long-term nature     |                      |                             
|of employee future benefit costs:                     |                      |                             
|Difference between
    expected return and            |                      |                             
|actual return on plan assets for the year             | 126                  | 108                         
|Difference between
    actuarial loss/gain recognized |                      |                             
|for the year and actuarial loss/gain on accrued       |                      |                             
|benefit obligation for the year                       | (627)                | (55)                        
|Amortization of the transitional
    obligation       | (120)                | (111)                       
|Defined benefit costs recognized                      | 632                  | 530                         



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Cambior 2004 Annual Report        
65



The significant assumptions used to evaluate the Company's accrued benefit
obligation and benefit costs are as follows (weighted-average):

|                                                                         | Pension benefit plan | Post-retirement benefit plan
|------------------------------------------------------------------------ | -------------------- | ----------------------------
|                                                                         | 2004                 | 2003                        
|                                                                         | %                    | %                           
|Accrued benefit
    obligation as of December 31:                        |                      |                             
|Discount rate                                                            | 6.0                  | 6.5                         
|Rate of compensation increase                                            | 3.0-4.0              | 3.0                         
|Benefit costs for
    years ended December 31:                           |                      |                             
|Discount rate                                                            | 6.0-6.5              | 6.0                         
|Expected long-term rate of return on plan assets                         | 2.0-7.5              | 7.0                         
|Rate of compensation increase                                            | 3.0-4.0              | 3.0                         
|Assumed health care trend rate for the next year used                    |                      |                             
|to measure the expected cost covered by the plans                        |                     |                            
|                                                                         |                      |                             
|                                                                         | 2004                 | 2003                        
|Average remaining service period of
    active employees covered by the: | Years                | Years                       
|-
    defined pension benefit plan                                       | 16                   | 16                          
|- SERP                                                                   | 11                   | 11                          
|- defined pension benefit plan - Sequoia                                 | 16                   |                            
|- defined post-retirement benefit plan -                                 |                      |                             
|manager and clerical employees at Niobec                                 | 10                   | 10                          
|- defined post-retirement benefit plan -                                 |                      |                             
|unionized employees at Niobec                                            | 16                   |                            

The estimated employer contributions for 2005 are $1,216,000. Estimated
future cash flows are as follows:

|            | $    
|----------- | -----
|2005        | 304  
|2006        | 316  
|2007        | 337  
|2008        | 372  
|2009        | 463  
|2010 onward | 3,999
|            | 5,791

Sensitivity analysis:

Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plans. A one percentage point change in assumed
health care cost trend rates would have the following effects for 2004:

|                                     | Increase | Decrease
|------------------------------------ | -------- | --------
|                                     | $        | $       
|Total service and
    interest costs | 32       | (28)    
|Accrued benefit
    liabilities      | 282      | (233)   

16. COMMON SHARES, WARRANTS AND OPTIONS

Authorized

- Unlimited number of voting common shares without par value.
- Unlimited number of Class I preferred shares without par value, issuable
  in one or several series with rights, privileges, restrictions and conditions
  to be determined by the Board of Directors.
- 10,000,000 Class II preferred shares.

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66 Cambior 2004 Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |            | 2004    |            | 2003    |            | 2002   
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------- | ------- | ---------- | ------- | ---------- | -------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Number of  |         | Number of  |         | Number of  |        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | securities | Amount  | securities | Amount  | securities | Amount 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | (000)      | $       | (000)      | $       | (000)      | $      
|Common shares
    issued and fully paid:                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |            |         |            |         |            |        
|Balance, beginning of year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 240,842    | 445,743 | 160,167    | 288,040 | 104,904    | 226,291
|Stock-based compensation value of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |            |         |            |         |            |        
|options exercised from 1995 to 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |            | 212     |            |        |            |       
|Stock-based
    compensation value of                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |            |         |            |         |            |        
|options exercised in 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |            | 202     |            |        |            |       
|Issued:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |            |         |            |         |            |        
|Public offerings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 29,333     | 87,823  | 40,000     | 72,192  | 27,273     | 38,595 
|Private placement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |           |        |           |        | 21,346     | 17,293 
|Merger agreement (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |           |        | 14,835     | 39,203  |           |       
|Acquisition of Sequoia (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 2,241      | 6,292   |           |        |           |       
|Exercise and expiry of warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 150        | 119     | 24,754     | 44,018  | 6,515      | 5,626  
|Exercise of options (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 635        | 855     | 515        | 849     |           |       
|Flow-through
    common shares (4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 987        | 3,299   | 571        | 1,441   | 129        | 235    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 33,346     | 98,802  | 80,675     | 157,703 | 55,263     | 61,749 
|Balance, end of year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 274,188    | 544,545 | 240,842    | 445,743 | 160,167    | 288,040
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |            |         |            |         |            |        
|Common share
    purchase warrants: (5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |            |         |            |         |            |        
|Balance, beginning of year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 150        | 50      | 2,216      | 870     | 1,300      | 436    
|Issued:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |            |         |            |         |            |        
|Public offerings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |           |        |           |        | 1,067      | 319    
|Private placement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |           |        |           |        | 1,364      | 588    
|Exercised                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | (150)      | (50)    | (702)      | (232)   | (1,515)    | (473)  
|Expired                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |           |        | (1,364)    | (588)   |           |       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | (150)      | (50)    | (2,066)    | (820)   | 916        | 434    
|Balance, end of year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |           |        | 150        | 50      | 2,216      | 870    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |            |         |            |         |            |        
|Common share
    purchase options granted following                                                                                                                                                                                                                                                                                                                                                                                                                                                                |            |         |            |         |            |        
|the Ariane merger and Sequoia acquisition: (1) (2) (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                             |            |         |            |         |           
|Balance, beginning of year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 1,012      | 1,155   |           |        |           |       
|Granted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 47         | 10      | 1,266      | 1,445   |           |       
|Exercised                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | (186)      | (212)   | (254)      | (290)   |           |       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | (139)      | (202)   | 1,012      | 1,155   |           |       
|Balance, end of year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 873        | 953     | 1,012      | 1,155   |           |       
|Total common shares, warrants and
    options                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |            | 545,498 |            | 446,948 |            | 288,910
|(1) Upon the merger agreement with Ariane (Note 9)(2) Upon the acquisition of Sequoia (Note 9)(3) The options were exercised by employees of the Company under
    the stock option plan for directors and key employees and pursuant to the
    merger agreement with Ariane.(4) In 2002, 129,455 common shares were subscribed by Cambior
    officers and employees.(5) Excluding warrants to purchase common shares that were issued
    as part of the August 12, 2003 and October 14, 2004 public offerings.



---

Cambior 2004 Annual Report        
67Issuance of securities
2004:On October 14, 2004, Cambior issued 29,333,333 units at a price of Cdn $3.75
per unit to a syndicate of underwriters for gross proceeds of $87,823,000 (Cdn
$110,000,000). Each unit consisted of one common share and one-half of one
Series D common share purchase warrant. Each whole Series D warrant is
exercisable at a price of Cdn $4.35 before October 16, 2006. The net proceeds of
the offering were used by the Company for general corporate purposes.
During 2004, 150,000 common shares at a price of Cdn $0.56 per share were
issued pursuant to the exercise of warrants for total proceeds of $119,000.
In conjunction with the acquisition of Sequoia, the Company issued 2,241,000
common shares on July 2, 2004 (Note 9).
In addition, pursuant to a flow-through financing to incur Canadian
Exploration Expenses, common shares were issued as follows during 2004:
Number of
    
    Totalcommon shares
    Issuance price
    proceeds(000)
    ($ per share)
    $March 18, 2004
    111
    $3.31 (Cdn $4.40)
    367April 16, 2004
    571
    $3.27 (Cdn $4.40)
    1,868July 12, 2004
    305
    $3.49 (Cdn $4.60)
    1,064987
    
    3,2992003:

During 2003, 24,754,000 common shares were issued pursuant to the exercise of
warrants as follows:

|                                                                                                                                                                                                                                                         | Number
    of |                       | Total     
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------- | --------------------- | ----------
|                                                                                                                                                                                                                                                         | common shares | Issuance price        | proceeds  
|                                                                                                                                                                                                                                                         | (000)         | ($ per share)         | $         
|                                                                                                                                                                                                                                                         | 10,417        | $1.14 (Cdn
    $1.70) | 11,834    
|                                                                                                                                                                                                                                                         | 107           | $0.85 (Cdn
    $1.30) | 123       
|                                                                                                                                                                                                                                                         | 596           | $0.41 (Cdn
    $0.56) | 444       
|                                                                                                                                                                                                                                                         | 13,634        | $2.28 (Cdn $3.00)     | 31,617 (1)
|                                                                                                                                                                                                                                                         | 24,754        |                       | 44,018    
|(1) During 2003, 1,364,000 warrants exercisable at a price of Cdn
    $2.20 each and 682,000 warrants exercisable at Cdn $3.00 each expired
    without being exercised. The value of warrants totaling $588,000 was
    transferred into common shares.



---

68         Cambior 2004 Annual ReportNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)On August 12, 2003, Cambior issued to a syndicate of underwriters, 40,000,000
units at a price of $1.80 (Cdn $2.50) per unit for gross proceeds of $72,192,000
(Cdn $100,000,000). Each unit consisted of one common share and one-half of one
Series C common share purchase warrant. Each whole Series C warrant is
exercisable at a price of Cdn $3.75 prior to August 12, 2008.
On September 2, 2003, 571,428 common shares were issued at a price of $2.52 (Cdn
$3.50) pursuant to a flow-through financing for total proceeds of $1,441,000 (Cdn
$2,000,000) to incur Canadian Exploration Expenses.
2002:

On February 28, 2002, Cambior completed a private placement of 21,346,154
special warrants at $0.81 (Cdn $1.30) per special warrant for gross proceeds of
$17,293,000 (Cdn $27,750,000). The proceeds were added to working capital. Each
special warrant was exercised into one common share and one-half warrant, with
each whole warrant entitling its holder to acquire one common share of Cambior
at a price of Cdn $1.70 until February 27, 2003. In connection with the
financing, the Company granted compensation warrants valued at $319,000 to the
underwriters to purchase 1,067,308 units (each consisting of one share and
one-half warrant) at Cdn $1.30 each.
On May 16, 2002, Cambior completed a public offering of 27,272,728 units at
$1.42 (Cdn $2.20) per unit for gross proceeds of $38,595,000 (Cdn $60,000,000).
Half of the proceeds was used to reduce the 2001 Credit facility and half was
added to working capital. Each unit consisted of one common share and one-half
Series B common share purchase warrant. Each whole Series B warrant entitled its
holder to acquire one common share of Cambior at a price of Cdn $3.00 at any
time prior to November 24, 2003. In connection with the offering, the Company
granted compensation options valued at $588,000 to the underwriters without
payment of additional consideration, exercisable to purchase up to an aggregate
of 1,363,636 units at a price of Cdn $2.20 per unit.
During 2002, some 6,514,577 additional common shares were issued to various
third parties pursuant to the exercise of warrants issued previously, for total
proceeds of $5,153,000.
On July 19, 2002, Cambior concluded a private placement of 129,455
flow-through shares at $1.81 (Cdn $2.79) per share, for proceeds of $235,000 (Cdn
$361,000) used to incur Canadian Exploration Expenses.
Flow-through common shares

Flow-through common shares require the Company to pay an amount equivalent to
the proceeds of the issue on prescribed resource expenditures in accordance with
the applicable tax legislation. If the Company does not incur the committed
resource expenditures, it will be required to indemnify the holders of the
shares for any tax and other costs payable by them as a result of the Company
not making the required resource expenditures.
As at December 31, 2004, the Company's remaining commitment with respect to
unspent resource expenditures under flow-through common share agreements was
$2,586,000.

---

Cambior 2004 Annual Report        
69

Warrants

As at December 31, 2004, the outstanding number of warrants exercisable into
common shares was as follows:

|Date of issue    | Expiry date      | Exercise price | Number issued | Number exercisable
|---------------- | ---------------- | -------------- | ------------- | ------------------
|                 |                  | $ per share    | (000)         | (000)             
|August 12, 2003  | August 12, 2008  | Cdn
    $3.75  | 20,000        | 20,000            
|October 14, 2004 | October 16, 2006 | Cdn $4.35      | 14,667        | 14,667            
|                 |                  |                |               | 34,667            

Earnings per share

The following number of equity instruments were not included in the
computation of diluted earnings per share because to do so would have been
anti-dilutive for the periods presented.

|                      | 2004   | 2003  | 2002  
|--------------------- | ------ | ----- | ------
|Number of instruments | (000)  | (000) | (000) 
|                      |        |       |       
|Options               | 7,964  | 1,625 | 5,668 
|Warrants              | 34,667 |      | 27,721
|Convertible debenture | 340    |      |      
|                      | 42,971 | 1,625 | 33,389

Reconciliation of the diluted weighted average number of common shares
outstanding for the following years is as follows:

|                                                                 | Number
    of | Number
    of | Number
    of
|---------------------------------------------------------------- | ------------- | ------------- | -------------
|                                                                 | instruments   | instruments   | instruments  
|                                                                 | 2004          | 2003          | 2002         
|                                                                 | (000)         | (000)         | (000)        
|                                                                 |               |               |              
|Basic weighted average
    number of common shares outstanding   | 249,321       | 187,953       | 140,055      
|Effect of dilutive
    stock options                             |              | 2,054         |             
|Effect of dilutive warrants                                      |              | 570           |             
|Diluted weighted average number of
    common shares outstanding | 249,321       | 190,577       | 140,055      



---

70 Cambior 2004 Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

17. COMMON SHARE PURCHASE OPTIONS AND STOCK-BASED COMPENSATION

Under the stock option plan for directors and key employees of the Company,
options may be granted to select eligible employees. Options expire seven years
after the date of granting. Once granted, one half of the options may be
exercised from the second anniversary date of the granting and the balance after
the third anniversary thereof. Options are granted at an exercise price equal to
the average quoted market price of the common shares of the Company on the
Toronto Stock Exchange for the five trading days immediately preceding the grant
date.

The following table sets out the activity in options:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                   |        | 2004          |        | 2003          |        | 2002         
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------ | ------------- | ------ | ------------- | ------ | -------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                   |        | Weighted      |        | Weighted      |        | Weighted     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                   |        | average       |        | average       |        | average      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                   |        | price
    per |        | price
    per |        | price
    per
|                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Number | option        | Number | option        | Number | option       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                   | (000)  | $/option      | (000)  | $/option      | (000)  | $/option     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                   |        |               |        |               |        |              
|Common shares reserved (1)                                                                                                                                                                                                                                                                                                                                                                                                                         | 9,000  |               | 9,000  |               | 9,000  |              
|Options outstanding,
    beginning of year                                                                                                                                                                                                                                                                                                                                                                                                         | 7,254  | 2.54          | 5,668  | 3.13          | 4,855  | 4.24         
|Granted                                                                                                                                                                                                                                                                                                                                                                                                                                            | 1,730  | 2.37          | 1,400  | 1.40          | 1,425  | 1.39         
|Granted following
    acquisition/merger (2) (3)                                                                                                                                                                                                                                                                                                                                                                                                   | 47     | 5.45          | 1,266  | 1.69          |       |             
|Exercised                                                                                                                                                                                                                                                                                                                                                                                                                                          | (635)  | 1.01          | (515)  | 1.08          | (30)   | 0.33         
|Forfeited or expired                                                                                                                                                                                                                                                                                                                                                                                                                               | (432)  | 8.99          | (565)  | 11.25         | (582)  | 8.64         
|Options outstanding, end of year                                                                                                                                                                                                                                                                                                                                                                                                                   | 7,964  | 2.50          | 7,254  | 2.54          | 5,668  | 3.13         
|Options exercisable, end of year                                                                                                                                                                                                                                                                                                                                                                                                                   | 4,554  |               | 3,540  |               | 2,354  |              
|(1) As at December 31, 2004, 792,000 common shares were available for
    future options grants.(2) Upon the acquisition of Sequoia (Note 9) in 2004, the then
    outstanding Sequoia options were converted into Cambior options using an
    exchange rate of 6.3.(3) Pursuant to the merger agreement with Ariane (Note 9) in
    2003, the outstanding Ariane options were converted into Cambior options
    using an exchange rate of 2.91.

The following stock options were outstanding at December 31, 2004, including
the options resulting from the acquisition of Sequoia and the merger agreement
with Ariane:

|Exercise price |        | Options outstanding | Exercisable options
|-------------- | ------ | ------------------- | -------------------
|               |        | Weighted            | Weighted           
|               |        | average             | average            
|               |        | remaining           | exercisable        
|               | Number | life                | price per option   
|($ per option) | (000)  | (years)             | ($ per option)     
|               |        |                     |                    
|0.42 to 0.49   | 1,095  | 3.2                 | 0.43               
|0.68 to 0.68   | 26     | 3.5                 | 0.68               
|1.04 to 1.48   | 523    | 2.5                 | 1.24               
|1.62 to 2.28   | 3,292  | 4.2                 | 1.72               
|2.70 to 2.96   | 1,642  | 6.5                 | 2.72               
|3.49 to 4.72   | 764    | 1.7                 | 4.63               
|6.03 to 6.56   | 254    | 0.5                 | 6.46               
|9.48 to 9.48   | 368    | 0.5                 | 9.48               
|               | 7,964  |                     | 2.50               



---

Cambior 2004 Annual Report        
71

Accounting for compensation plans

As mentioned in Note 3, Cambior adopted, retroactively, the amended
recommendations of the CICA Section 3870, as of January 1, 2004.
The fair value of options granted was estimated using the Black-Scholes
option-pricing model taking into account an expected life of five years and the
following assumptions:

|                                                   | 2004   | 2003   | 2002  
|-------------------------------------------------- | ------ | ------ | ------
|Semi-annual risk-free interest rate                | 3.95%  | 4.08%  | 5.07% 
|Volatility                                         | 75%    | 78%    | 85%   
|Dividend                                           |       |       |      
|Weighted average fair
    value of options granted | $ 1.44 | $ 0.93 | $ 1.00

In 2004, the total stock-based compensation expense determined under the fair
value-based method was $1,580,000. The fair value of options exercised during
2004 totaling $202,000 was transferred from contributed surplus to common
shares.

Before 2004, the Company measured compensation costs relating to awards of
stock options using the intrinsic value-based method of accounting, and was
required to make pro forma disclosures of net earnings (loss), basic earnings
(loss) per share and diluted earnings (loss) per share as if the fair
value-based method of accounting had been applied, which would have been
reported as follows:

|                                                                       | 2003    | 2002   
|---------------------------------------------------------------------- | ------- | -------
|                                                                       | $       | $      
|Net earnings (loss)                                                    | 801     | (7,844)
|Deduct: Total
    stock-based employee compensation expense determined |         |        
|under
    fair value-based method for all awards                       | (1,065) | (814)  
|Pro forma net loss                                                     | (264)   | (8,658)
|Basic net earnings
    (loss) per share                                | 0.00    | (0.06) 
|Diluted net earnings
    (loss) per share                              | 0.00    | (0.06) 
|Basic net loss per
    share, pro forma                                | (0.00)  | (0.06) 
|Diluted net loss per
    share, pro forma                              | (0.00)  | (0.06) 

Share purchase plan

The Company has an employee share purchase plan under which eligible
employees have the opportunity to acquire common shares of Cambior through
payroll deductions. The Company matches up to 50% of the employee contribution
up to the lesser of 3% of basic annual salary or Cdn $5,000. The shares are
acquired on the open market by a trustee. Cambior's contribution is charged to
earnings in the year of contribution, and amounted to $489,000 in 2004, $313,000
in 2003 and $157,000 in 2002.

---

72 Cambior 2004 Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents the carrying amounts and estimated fair values
of Cambior's financial instruments and commodities:

|                                                      |          | 2004   |          | 2003  
|----------------------------------------------------- | -------- | ------ | -------- | ------
|                                                      | Carrying | Fair   | Carrying | Fair  
|                                                      | value    | value  | value    | value 
|                                                      | $        | $      | $        | $     
|Financial Assets                                      |          |        |          |       
|Cash and cash
    equivalents (1)                     | 21,020   | 21,020 | 28,450   | 28,450
|Short-term investments
    (1)                        | 33,846   | 33,846 | 66,770   | 66,770
|Receivables (1)                                       | 22,227   | 22,227 | 9,415    | 9,415 
|Investments - Publicly
    traded companies (2)       | 15,820   | 18,922 | 3,023    | 7,091 
|Investments - Residual
    proceeds receivable (3)    | 1,912    | 1,912  | 1,803    | 1,803 
|Promissory note and
    others (4)                    | 2,454    | 2,454  |         |      
|Fair value of
    non-hedge derivatives               | 1,549    | 1,549  |         |      
|Foreign exchange
    contracts (Note 22) (7)          |         | 317    |         | 280   
|                                                      |          |        |          |       
|Financial
    liabilities                             |          |        |          |       
|Accounts payable and
    accrued liabilities (1)      | 61,238   | 61,238 | 36,203   | 36,203
|Long-term debt (5)                                    | 65,229   | 65,229 | 64,194   | 64,194
|Fair value of
    non-hedge derivatives (Note 22) (6) |         |       | 7,790    | 7,790 
|Fair value of gold
    forwards (Note 22) (6)         | 14,273   | 23,006 |         | 59,676

|    |                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The fair value of cash and cash
    equivalents, short-term investments, receivables and accounts payable and
    accrued liabilities is equivalent to thecarrying amount given the short maturity period.                   
|(2) | The fair value of the shares of publicly-traded companies
    was based on the last quoted market price.                                                                                                                     
|(3) | The fair value of the residual proceeds receivable from
    the sale of the El Pachon project is equivalent to the carrying amount given
    the short-termmaturity period.                                                  
|(4) | The fair value of the promissory note and others is
    equivalent to the carrying amount given the short-term maturity period.                                                                                              
|(5) | Since most of the long-term debt is variable rate debt,
    the fair value of the Company's long-term debt approximates the carrying
    amount as atDecember 31, 2004 and 2003.                                             
|(6) | The Company obtains a valuation from a counterparty of
    its portfolio of gold commitments. This valuation is based on forward rates
    considering themarket price, rate of interest, gold lease rate and
    volatility.
|(7) | The Company obtains a valuation from a counterparty of
    its portfolio of foreign exchange contracts. This valuation is based on
    forward premiumconsidering market foreign exchange rates.                             

19. DECREASE OF DEFICIT FROM CONTRIBUTED SURPLUS

At their annual general and special meeting held on May 7, 2002, the
Company's shareholders adopted a resolution to apply $23,047,000 available from
the contributed surplus account to reduce the Company's accumulated deficit.

---

Cambior 2004 Annual Report        
7320. CUMULATIVE TRANSLATION ADJUSTMENTThis account reflects the difference in the net value of the assets of the
Canadian mining operations relative to the US exchange rate in effect at the end
of each reporting period.
The changes in this account are as follows:

|                                                                  | 2004   | 2003     | 2002    
|----------------------------------------------------------------- | ------ | -------- | --------
|                                                                  |        |          |         
|                                                                  | $      | $        | $       
|Cumulative unrealized
    gain (loss), beginning of year          | 268    | (18,855) | (20,365)
|Unrealized net gain
    for the year on translation of net assets | 16,402 | 19,123   | 969     
|Exchange loss charged
    to operations following reduction       |        |          |         
|in net
    investment in Canadian mining operations               |       |         | 541     
|Cumulative unrealized gain (loss), end
    of year                | 16,670 | 268      | (18,855)
|Exchange rate, end of year                                        | 1.2020 | 1.2965   | 1.5776  

21. INCOME AND MINING TAXES

The provision for income and mining taxes is different from the amount that
would have resulted from applying the combined Canadian statutory income tax
rate (federal and provincial: 36.0% in 2004, 37.2% in 2003 and 38.2% in 2002) as
a result of the following:

|                                                                                                        | 2004     | 2003    | 2002   
|------------------------------------------------------------------------------------------------------- | -------- | ------- | -------
|                                                                                                        |          |         |        
|                                                                                                        | $        | $       | $      
|Income taxes (Income
    tax benefit) at combined                                                       |          |         |        
|Canadian statutory rate (federal and provincial)                                                        | (24,138) | 92      | (2,862)
|Increase (Decrease)
    resulting from:                                                                 |          |         |        
|Resource allowance and earned depletion                                                                 | 671      | (742)   | (1,084)
|Unrecognized deductible temporary differences for the year                                              | 32,400   | 3,606   | 2,810  
|Unrecognized tax benefit on losses in Canada                                                            | 2,021    |        |       
|Unrecognized tax benefit on losses of foreign subsidiaries                                              | 1,393    | 1,495   | 1,954  
|Non-taxable portion of gain                                                                             |         | (425)   | (139)  
|Income tax rate differential of foreign subsidiaries                                                    | 727      | 302     | 243    
|Use of tax benefits not previously recognized                                                           | (5,066)  | (1,892) | (720)  
|Future income tax recovery resulting from recognition of Rosebel prior
    years' tax assets            | (4,008)  |        |       
|Impact of non-deductible (non-taxable) portion of foreign exchange loss
    (gain) on Canadian currency | 741      | (2,560) |       
|Non-deductible items and other elements                                                                 | 963      | 124     | (202)  
|                                                                                                        | 5,704    |        |       
|Tax on large
    corporations                                                                           | 242      | 293     | 353    
|Provincial mining
    taxes (recovery)                                                                  | 214      | (712)   |       
|Other countries' current taxes
    (recovery)                                                           |         | (135)   |       
|                                                                                                        | 6,160    | (554)   | 353    

In 2004, the Company recognized a recovery of future income and mining taxes
of $1,219,000 for losses incurred previously as a result of the issuance of
flow-through shares as per the new guidelines issued by the CICA Emerging Issues
Committee.

---



74         Cambior 2004 Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The provision for income taxes is made up of the following components:

|                                                               | 2004    | 2003  | 2002
|-------------------------------------------------------------- | ------- | ----- | ----
|                                                               |         |       |     
|Current:                                                       | $       | $     | $   
|Federal income taxes - tax on large
    corporations in Canada | 242     | 293   | 353 
|Provincial mining taxes (recovery)                             | 214     | (712) |    
|Other countries' current taxes (recovery)                      |        | (135) |    
|                                                               | 456     | (554) | 353 
|Future:                                                        |         |       |     
|Federal and provincial income tax                              | (1,180) |      |    
|Foreign income tax                                             | 6,884   |      |    
|                                                               | 5,704   |      |    
|Total                                                          | 6,160   | (554) | 353 

The provision for future income and mining taxes has been provided on
temporary timing differences which consist of the following:

|                                                                                            | 2004     | 2003    | 2002   
|------------------------------------------------------------------------------------------- | -------- | ------- | -------
|                                                                                            | $        | $       | $      
|                                                                                            |          |         |        
|Depreciation, depletion and amortization                                                    | 5,278    | (1,717) | 1,109  
|Impairment loss                                                                             | (18,963) |        |       
|Mine closures, reclamation and other
    provisions                                         | (659)    | (59)    | (474)  
|Taxable deferred revenues                                                                   | 1,235    | (217)   | (341)  
|Unrecognized non-hedged derivative gain
    (loss)                                          | (9,384)  | 947     | (3,013)
|Foreign exchange loss on Canadian currency                                                  | 741      | (2,560) |       
|Unrecognized deductible temporary differences
    for the year                              | 32,400   | 3,606   | 2,810  
|Future income tax recovery resulting from
    recognition of Rosebel prior years' tax asset | (4,008)  |        |       
|Realization of future income tax accounted
    for in the acquisition of Sequoia            | 41       |        |       
|Recovery income and mining taxes related to
    issuance of flow-through shares             | (1,219)  |        |       
|Other                                                                                       | 242      |        | (91)   
|                                                                                            | 5,704    |        |       

Other than in Suriname, the Company does not anticipate having to pay income
tax in the foreseeable future, except for the tax on large corporations and
capital taxes in Canada. In addition, as a result of higher asset values for tax
purposes than accounting values and accumulated losses in Canada, Guyana and the
United States, the Company has significant future tax assets available. Some of
these assets were utilized as part of the Sequoia acquisition (Note 9). The
Company records a valuation allowance against any portion of its remaining
future income tax assets that it believes will, more likely than not, fail to be
realized.

---



Cambior 2004 Annual Report        
75



As at December 31, 2004 and 2003, future tax assets and liabilities were
detailed as follows:

|                                                      |           |           | 2004      |          |           | 2003     
|----------------------------------------------------- | --------- | --------- | --------- | -------- | --------- | ---------
|                                                      |           | US        |           |          | US        |          
|                                                      | Canada    | and other | Total     | Canada   | and other | Total    
|Tax assets:                                           | $         | $         | $         | $        | $         | $        
|Net operating loss carry-forwards                     | 2,891     | 60,515    | 63,406    | 933      | 64,790    | 65,723   
|Difference between book and                           |           |           |           |          |           |          
|tax depreciation and
    depletion                    | 95,624    | 15,656    | 111,280   | 80,977   | 10,254    | 91,231   
|Accrued liabilities                                   | 12,908    | 2,279     | 15,187    | 6,328    | 1,255     | 7,583    
|Others                                                | 4,708     |          | 4,708     | 4,821    |          | 4,821    
|Total of future tax assets before valuation allowance | 116,131   | 78,450    | 194,581   | 93,059   | 76,299    | 169,358  
|Valuation allowance                                   | (116,131) | (65,465)  | (181,596) | (93,059) | (76,299)  | (169,358)
|Total of future tax assets                            |          | 12,985    | 12,985    |          |           |         
|                                                      |           |           |           |          |           |          
|Tax liabilities:                                      |           |           |           |          |           |          
|Difference between book and tax depreciation          |           |           |           |          |           |          
|and total of future tax liabilities                   | 1,248     | 19,869    | 21,117    |         |          |         

Cambior has approximately $118,158,000 ($104,910,000 in 2003) in cumulative
Canadian exploration and cumulative Canadian development expenses and
approximately $325,308,000 ($286,450,000 in 2003) in property, plant and
equipment depreciation for tax purposes available indefinitely to reduce taxable
income in future years. The Company also benefits from unclaimed investment tax
credits totaling $1,000,000, which can be converted into other deductions
anytime.

In 2004, governmental assistance in the form of the Québec resources tax
credit reduced exploration expenses by an amount of $2,049,000 ($1,202,000 in
2003).

---



76         Cambior 2004 Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Losses carried forward as at December 31, 2004 will expire as follows:

|                  |              | United     |         
|----------------- | ------------ | ---------- | --------
|                  | Canada       | States (1) | Peru (4)
|                  | $            | $          | $       
|2005              |             |           |        
|2006              |             | 13,720     |        
|2007              |             | 6,804      |        
|2008              | 1,164        | 19,971     |        
|2009              | 1,309        | 15,164     |        
|2010              | 78           | 8,099      |        
|2011              |             | 6,111      |        
|2012              |             | 347        |        
|2014              | 6,203        |           |        
|2018              |             | 4,291      |        
|2019              |             | 2,631      |        
|2020              |             | 926        |        
|2021              |             | 175        |        
|2022              |             | 1,070      |        
|2023              |             | 1          |        
|Undetermined (4)  |             |           | 8,149   
|                  | 8,754        | 79,310     | 8,149   
|                  |              | Guyana     | Guyana  
|                  | Suriname (2) | OGML (2)   | OBMI (3)
|                  | $            | $          | $       
|Unlimited (2) (3) | 35,124       | 49,557     | 567     

|    |                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Cambior has no active subsidiary in the
    United States of America.                                                                                            
|(2) | In accordance with the Mineral Agreement
    concluded with the government of the country.                                                                       
|(3) | In accordance with the Mineral Agreement
    concluded with the government of the country. In a given year, losses can
    only eliminate 50%                    
|    | of the income before losses.                                                                                                                                     
|(4) | According to fiscal legislation in Peru,
    losses can be carried forward until the end of the fourth year following the
    first year in which a fiscal profit
|    | is realized (no fiscal profit has been
    realized to date).                                                                                                    

The Company's French subsidiaries, CBJ-France and AGF,
benefit from an income tax exemption plan for a term of ten years. Under those
tax holiday plans, certain commitments made to the French Tax Administration
must be met. The tax holidays are subject to re-assessment by the authorities.

---



Cambior 2004 Annual Report        
77



22. COMMITMENTS AND CONTINGENCIES

Gold sales, deliveries and purchase commitments

The Company's gold sales, deliveries and purchase commitments as at December
31, 2004, were as follows(1):

|                                                                                    |          | 2005 | 2006 | 2007 | Total
|----------------------------------------------------------------------------------- | -------- | ---- | ---- | ---- | -----
|FORWARDS                                                                            |          |      |      |      |      
|Quantity                                                                            | (000 oz) |     | 129  | 56   | 185  
|Average price                                                                       | ($/oz)   |     | 326  | 350  | 333  
|PREPAID GOLD FORWARDS (Note 12)                                                     |          |      |      |      |      
|Quantity                                                                            | (000 oz) | 52   |     |     | 52   
|Average price                                                                       | ($/oz)   | 235  |     |     | 235  
|TOTAL DELIVERY OBLIGATIONS                                                          |          |      |      |      |      
|Quantity                                                                            | (000 oz) | 52   | 129  | 56   | 237  
|Average price                                                                       | ($/oz)   | 235  | 326  | 350  | 312  
|GOLD PURCHASE                                                                       |          |      |      |      |      
|Quantity                                                                            | (000 oz) | (32) |     |     | (32) 
|Average price                                                                       | ($/oz)   | 391  |     |     | 391  
|Net delivery obligations                                                            | (000 oz) | 20   | 129  | 56   | 205  
|                                                                                    |          |      |      |      |      
|(1) The
    designation dates for accounting purposes differ from commitment dates.

The estimated fair value of Cambior's gold forward sales, deliveries and
purchase commitments, excluding the prepaid gold forward sales, calculated using
forward rates considering market prices, interest rate, gold lease rate and
volatilities, is as follows:

|                                                                                                                         | 2004     | 2003    
|------------------------------------------------------------------------------------------------------------------------ | -------- | --------
|                                                                                                                         | $        | $       
|Forwards                                                                                                                 | (8,733)  | (59,676)
|Forwards - Doyon future gold production included in the
    impairment loss and recognized on the balance sheet (Note 4) | (14,273) |        
|                                                                                                                         | (23,006) | (59,676)
|Non-hedge derivatives, recognized on the balance sheet                                                                   | 1,549    | (7,790) 
|                                                                                                                         | (21,457) | (67,466)

As the prepaid gold forward sales agreement is not a financial instrument
included in the scope of SFAS-133, the fair value of this instrument is
disclosed in Note 12 - Deferred revenue.

The non-hedge derivative gain (loss) is summarized as follows:

|                                                                                                 | 2004    | 2003    | 2002    
|------------------------------------------------------------------------------------------------ | ------- | ------- | --------
|                                                                                                 | $       | $       | $       
|Variation of the fair value of the non-hedge
    derivative instruments during the year          | 9,339   | (1,428) | (11,692)
|Gain resulting from lease rate swap contracts                                                    | 1,497   | 3,105   |        
|Loss arising from the exercise of call
    options sold and gold purchase commitments            | (8,285) | (1,042) |        
|Non-hedge derivative loss related to call options and VVF
    converted into forward instruments |        |        | (5,073) 
|Non-hedge derivative gain (loss)                                                                 | 2,551   | 635     | (16,765)



---

78Cambior 2004 Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Foreign exchange contracts

As at December 31, 2004, the Company had commitments, through foreign
exchange forward contracts, to deliver US $10,000,000 and obtain in exchange
Canadian dollars at an average rate of Cdn $1.2405 in 2005. As at December 31,
2004, the fair value of these foreign exchange contracts was $317,000. This
amount was not accounted for in the consolidated statement of operations as the
Company's commitments to deliver US dollars in exchange for Canadian dollars are
treated as hedge instruments. The Company is exposed to currency risks as a
result of revenues derived from its Canadian operations.

The Company also had a commitment through a foreign exchange forward contract
to deliver Cdn $10,000,000 and obtain in exchange US $8,062,000 in 2005. This
contract, which hedges a short-term investment maturing in 2005, was done to
counteract the possibility of incurring an exchange loss at the settlement date.

Risk of counterparties

Realization of the Company's hedging program is dependent upon the ability of
the counterparties to respect the terms of the contracts and the maintenance of
a liquid market. Cambior's counterparties in its hedging transactions are the
Company's lenders.

Credit Risk

In the normal course of business of non-gold operations, the
Company performs ongoing credit reviews of its customers and evaluates the
creditworthiness of all new customers. There is no existing single account
receivable that represents a substantial risk for the Company. An allowance for
doubtful accounts receivable is established while taking into account the
specific credit risk related to customers, historical trends and the economic
situation.

Royalties

Production from some mining properties is subject to royalties based on
various methods of calculation summarized as follows:

|Mine    | Calculation                                                                          | 2004   | 2003  | 2002 
|------- | ------------------------------------------------------------------------------------ | ------ | ----- | -----
|        |                                                                                      | $      | $     | $    
|Rosebel | 2% in-kind royalty per
    ounce of gold production and price participation          |        |       |      
|        | of 6.5% on the amount
    exceeding a market price of $425 per ounce when            |        |       |      
|        | applicable, using for
    each calendar quarter the arithmetic average of the market |        |       |      
|        | prices determined by
    the London Bullion Market, P.M. Fix.                        | 2,010  |      |     
|        |                                                                                      |        |       |      
|        | 0.25% of all mineral
    produced at Rosebel payable to a charitable foundation for  |        |       |      
|        | the purpose of
    promoting local development of natural resources within Suriname  | 489    |      |     
|        |                                                                                      |        |       |      
|        | 10% of the excess, if
    any, of the average quarterly market price above $300 per  |        |       |      
|        | ounce for gold
    production from the soft and transitional rock portions and above |        |       |      
|        | $350 per ounce from
    the hard rock portion of the Rosebel property, after         |        |       |      
|        | commencement of
    commercial production and up to a maximum of                     |        |       |      
|        | 7,000,000 ounces
    produced                                                        | 2,882  |      |     
|        |                                                                                      |        |       |      
|Omai    | 5% in-kind royalty on
    mineral production payable to the Government of Guyana.    |        |       |      
|        | Reduction of 1% if the
    gold price is lower than $280 per ounce                   | 4,890  | 4,945 | 4,934
|        |                                                                                      |        |       |      
|Doyon   | 24.75% of any excess
    of the annual market price over $375 per ounce of gold      |        |       |      
|        | produced (1,377,000
    remaining ounces of production at December 31, 2004)         | 1,154  |      |     
|        |                                                                                      |        |       |      
|Mouska  | Two royalties of 0.2% and 2.0%
    respectively of gold production                   | 118    | 460   | 435  
|Total   |                                                                                      | 11,543 | 5,405 | 5,369

---

Cambior 2004 Annual Report        
79

The Company is also subject to other royalties for which no amount was paid
during 2004, 2003 and 2002:

|Sleeping Giant:  | Two royalties
    representing 2% of gross operating profit for one and 15% of net operating
    profit for the other.                  
|---------------- | ----------------------------------------------------------------------------------------------------------------------------------------
|                 |                                                                                                                                         
|Carlota project: | 5% net smelter royalty
    upon commencement of commercial production; an advance in the amount of
    $350,000 was capitalized in 2004.

Sequoia Minerals

As part of the acquisition of Sequoia (Note 9), Cambior assumed a commitment
to extend a credit facility of an amount not to exceed $600,000 per annum over a
36-month period beginning on December 30, 2003. Any advances resulting from this
commitment bear interest at the prime rate plus 3% per annum, are reimbursable
by consecutive quarterly payments starting on December 30, 2006 until December
30, 2008, and are secured by a moveable hypothec on the universality of the
borrower's assets in the amount of Cdn $2,160,000. An amount of $364,000 (Cdn
$439,000) was advanced in 2004.

As part of the acquisition of Sequoia (Note 9), the Company has assumed the
indemnity and guarantees issued to the purchaser of a business sold in 2003, for
a two-year term (ten years for environmental purposes), up to a maximum amount
of Cdn $1,750,000.

Other commitments

As at December 31, 2004, the Company had commitments to complete facilities,
summarized as follows:

|        | $     
|------- | ------
|Rosebel | 4,943 
|Niobec  | 1,857 
|OBMI    | 3,690 
|OSI     | 1,618 
|        | 12,108

Claims

OMAI

On May 29, 2003, a writ of summons was served on OMAI Gold Mines Limited ("OGML")
in connection with a class action in Guyana claiming total compensation of
approximately US $2 billion for damages allegedly caused by the Omai gold mine
in Guyana since 1995. The action was filed on behalf of the same group of people
that had previously filed actions without success in both Québec and Guyana.

OGML has a rigorous and extensive water monitoring program that demonstrates
full compliance with environmental regulations in Guyana based on Guyanese,
Canadian, American and World Bank standards. Furthermore, Guyana's Environmental
Protection Agency and the Guyana Geology and Mines Commission also ensure
independent monitoring of OGML's compliance regarding the Essequibo River. Their
findings confirm OGML's results.

Cambior and OGML consider this action as unfounded and frivolous and OGML is
contesting it vigorously.

Others

The Company is also subject to various claims, legal proceedings, potential
claims and complaints arising in the normal course of business. The Company is
also subject to the possibility of new income and mining tax assessments for
some years. The Company does not believe that unfavourable decisions in any
pending procedures or threat of procedures related to any future assessment or
any amount it might be required to pay will entail a material adverse effect on
the Company's financial condition.

---

80 Cambior 2004 Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

23. JOINT VENTURES

The following accounts represent the Company's proportionate interest in the
joint ventures of the Sleeping Giant mine (50%) and the Niobec mine (50%) joint
ventures up to July 2, 2004 (Note 9).

|                                  | 2004     | 2003     | 2002    
|--------------------------------- | -------- | -------- | --------
|                                  | $        | $        | $       
|Current assets                    | 1,694    | 9,462    | 8,281   
|Property, plant and
    equipment | 10,504   | 25,014   | 17,454  
|Current liabilities               | (1,572)  | (3,678)  | (3,026) 
|Other liabilities                 | (1,686)  | (2,095)  | (422)   
|                                  | 8,940    | 28,703   | 22,287  
|Revenues                          | 24,687   | 33,704   | 33,658  
|Expenses                          | (22,616) | (26,305) | (24,904)
|Net earnings                      | 2,071    | 7,399    | 8,754   
|Cash flow from (used
    in):     |          |          |         
|Operating activities              | 3,723    | 10,447   | 10,830  
|Investing activities              | (3,499)  | (6,156)  | (3,035) 
|Financing activities              | (11)     |         |        

24. SEGMENTED INFORMATION

The Company operates four gold mines: Omai, located in Guyana; the Doyon
Division, which includes both the Doyon and Mouska mines, located in Québec,
Canada; Sleeping Giant (50% ownership through a joint venture), located in
Québec, Canada; and Rosebel, located in Suriname (since February 2004). The
Company is the sole owner of the Niobec mine, a niobium operation located in
Québec, Canada. Prior to July 2, 2004, Cambior owned 50% of the Niobec mine
through a joint venture. Contracting services are grouped with Niobec. The
bauxite property was acquired on December 8, 2004. A property in French Guiana
was acquired in November 2003 and is an advanced exploration project.

---

Cambior 2004 Annual Report        
81



|                                             |         |         |          |          | Niobec, |         |           |         
|-------------------------------------------- | ------- | ------- | -------- | -------- | ------- | ------- | --------- | --------
|                                             |         |         |          |          | Bauxite |         | Corporate |         
|                                             |         |         |          | Sleeping | and     | French  | and       |         
|                                             | Rosebel | Omai    | Doyon    | Giant    | others  | Guiana  | projects  | Total   
|2004                                         | $       | $       | $        | $        | $       | $       | $         | $       
|Revenues - Mining
    operations             | 109,448 | 80,870  | 53,138   | 11,749   | 44,739  |        | 37        | 299,981 
|Financial expenses                           | 9,466   | 378     | 10       | 34       | 436     | 2       | (6,209)   | 4,117   
|Depreciation,
    depletion and amortization | 18,745  | 8,903   | 14,191   | 2,126    | 2,733   |        | 239       | 46,937  
|Impairment loss and
    restructuring costs  |        |        | 73,152   |         |        |        |          | 73,152  
|Earnings (Loss)                              | 28,816  | 3,382   | (92,871) | (427)    | 4,158   | (1,307) | (9,605)   | (67,854)
|Capital expenditures
    (disposals)         | 41,869  | (3,020) | 17,227   | 3,051    | 61,175  | 7,711   | 19,135    | 147,148 
|Property, plant and
    equipment            | 140,880 | 14,160  | 66,035   | 10,504   | 105,396 | 58,257  | 26,567    | 421,799 
|Assets                                       | 184,166 | 36,004  | 73,251   | 12,198   | 136,460 | 58,747  | 89,025    | 589,851 
|                                             |         |         |          |          |         |         |           |         
|2003                                         |         |         |          |          |         |         |           |         
|Revenues - Mining
    operations             |        | 83,062  | 71,392   | 11,235   | 24,935  |        | 245       | 190,869 
|Financial expenses                           |        | 1,529   | 9        | (4)      |        |        | 389       | 1,923   
|Depreciation,
    depletion and amortization |        | 9,936   | 15,825   | 1,785    | 861     |        | 327       | 28,734  
|Earnings (Loss)                              | (137)   | 3,377   | (2,850)  | 956      | 6,635   | (8)     | (13,220)  | (5,247) 
|Capital expenditures
    (disposals)         | 91,083  | (1,535) | 10,617   | 4,438    | 2,820   | (2,043) | 2,851     | 108,231 
|Property, plant and
    equipment            | 123,813 | 31,526  | 101,957  | 8,574    | 19,175  | 50,802  | 19,121    | 354,968 
|Assets                                       | 139,598 | 51,259  | 107,024  | 9,657    | 29,055  | 55,840  | 105,931   | 498,364 
|                                             |         |         |          |          |         |         |           |         
|2002                                         |         |         |          |          |         |         |           |         
|Revenues - Mining
    operations             |        | 100,650 | 66,988   | 10,149   | 23,662  |        | 809       | 202,258 
|Financial expenses                           | 989     | 2,629   | 44       | 3        |        |        | (1,266)   | 2,399   
|Depreciation,
    depletion and amortization |        | 12,588  | 14,096   | 1,517    | 800     |        | 588       | 29,589  
|Earnings (Loss)                              | (989)   | 5,773   | 1,962    | 1,084    | 8,025   |        | (7,985)   | 7,870   
|Capital expenditures                         | 12,743  | 4,497   | 8,071    | 1,817    | 1,924   |        | 3,381     | 32,433  
|Property, plant and
    equipment            | 30,816  | 48,626  | 88,467   | 4,701    | 13,460  |        | 18,191    | 204,261 
|Assets                                       | 31,347  | 75,337  | 92,370   | 5,041    | 21,404  |        | 57,993    | 283,492 

Reconciliation of reportable operating divisional earnings to net earnings
(loss) for the year is as follows:

|                                                              | 2004     | 2003     | 2002    
|------------------------------------------------------------- | -------- | -------- | --------
|                                                              | $        | $        | $       
|Earnings (Loss)                                               | (58,249) | 7,973    | 15,855  
|Corporate and projects loss                                   | (9,605)  | (13,220) | (7,985) 
|                                                              | (67,854) | (5,247)  | 7,870   
|Investment and other
    income                               | 937      | 2,997    | 1,945   
|Stock-based
    compensation costs                            | (1,580)  |         |        
|Gain (Loss) on foreign
    exchange                           | (1,103)  | 1,862    |        
|Non-hedge derivative
    gain (loss)                          | 2,551    | 635      | (16,765)
|Loss on foreign
    exchange from reduction in net investment |         |         | (541)   
|Income and mining
    taxes                                   | (6,160)  | 554      | (353)   
|Non-controlling interest                                      | (565)    |         |        
|Net earnings (loss)                                           | (73,774) | 801      | (7,844) 



---

82 Cambior 2004 Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Geographic information

|                             |         | Revenues         | Property, plant
|---------------------------- | ------- | ----------------- | ---------------
|                             |         | mining operations | and equipment  
|                             | 2004    | 2003              | 2002           
|                             | $       | $                 | $              
|Canada                       | 104,091 | 105,341           | 101,456        
|Guyana                       | 86,442  | 85,528            | 100,802        
|French Guiana                |        |                  |               
|Suriname                     | 109,448 |                  |               
|United States and
    others |        |                  |               
|                             | 299,981 | 190,869           | 202,258        

25. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES

The consolidated financial statements have been prepared in accordance with
Canadian GAAP, which differ in certain material respects from those principles
and practices that the Company would have followed had its consolidated
financial statements been prepared in accordance with US GAAP.

A. CONSOLIDATED FINANCIAL STATEMENTS

The adjustments to comply with US GAAP would be as follows:

|Consolidated statement of
    operations                                                  | 2004     | 2003         | 2002        
|----------------------------------------------------------------------------------------- | -------- | ------------ | ------------
|                                                                                          |          | Restated (j) | Restated (j)
|                                                                                          | $        | $            | $           
|Net earnings (loss) as
    per Canadian GAAP                                              | (73,774) | 801          | (7,844)     
|Impairment loss (a)                                                                       | 13,604   |             |            
|Depreciation,
    depletion and amortization (b)                                          | 4,345    | 4,529        | 4,430       
|Exploration and
    development costs for mining properties (c)                           | (14,732) | (3,641)      | (3,516)     
|Unrealized gain (loss)
    on forward exchange contracts (d)                              | (565)    | (893)        | 6,367       
|Loss on foreign
    exchange from reduction in net investment (e)                         |         |             | 541         
|Adjustment of asset
    retirement obligations under Canadian GAAP (f)                    |         |             | (208)       
|Cumulative effect of
    change in accounting policy for asset retirement obligations (f) |         | 1,930        |            
|Gain on foreign
    exchange contracts  acquisition of businesses (g)                    | 1,137    |             |            
|Interest on accretion
    of the convertible debenture (h)                                | 22       |             |            
|Income and mining
    taxes (i)                                                           | (317)    |             |            
|Stock-based compensation costs (j)                                                        |         | (1,065)      | (814)       
|Net earnings (loss) as per US GAAP                                                        | (70,280) | 1,661        | (1,044)     
|Basic and diluted net earnings (loss)
    per share as per US GAAP                        | (0.28)   | 0.01         | (0.01)      



---

Cambior 2004 Annual Report        
83

The consolidated balance sheet items, adjusted to comply with US GAAP, would
be as follows:

|                                             |           |             | December 31, 2004 |           |  |           | December 31, 2003
|-------------------------------------------- | --------- | ----------- | ----------------- | --------- |  | --------- | -----------------
|                                             |           |             |                   |           |  |           |                  
|                                             | As per    |             |                   | As per    |  | As per    |                  
|                                             | Canadian  |             |                   | US        |  | Canadian  |                  
|                                             | GAAP      | Adjustments |                   | GAAP      |  | GAAP      | Adjustments      
|                                             | $         | $           |                   | $         |  | $         | $                
|Assets                                       |           |             |                   |           |  |           |                  
|Current
    portion of deferred losses       | 4,646     | (4,646)     | (m)               |          |  |          |                 
|Investment
    and deferred charges          | 20,185    | 3,102       | (l)               | 23,287    |  | 4,826     | 4,068            
|Property,
    plant and equipment            | 421,799   | (28,279)    | (a)               | 387,803   |  | 354,968   | (41,883)         
|                                             |           | 28,385      | (b)               |           |  |           | 24,040           
|                                             |           | (35,064)    | (c)               |           |  |           | (20,332)         
|                                             |           | 1,137       | (g)               |           |  |           | (4,754)          
|                                             |           | (175)       | (h)               |           |  |           |                  
|Deferred
    stripping costs                 |          |            |                   |          |  |          | 4,754            
|                                             |           |             |                   |           |  |           |                  
|Liabilities                                  |           |             |                   |           |  |           |                  
|Current
    portion of deferred gains        |          |            |                   |          |  | 3,852     | (3,852)          
|Deferred
    gains                           | 204       | (204)       | (m)               |          |  | 755       | (755)            
|Fair value
    of hedge derivatives          | 14,273    | 8,416       | (m)               | 22,689    |  |          | 59,396           
|Convertible debenture                        | 1,173     | 75          | (h)               | 1,248     |  |          |                 
|Future
    income and mining tax liabilities | 21,117    | (453)       | (i)               | 20,664    |  |          |                 
|                                             |           |             |                   |           |  |           |                  
|Shareholders' equity                         |           |             |                   |           |  |           |                  
|Common
    shares, warrants and options      | 545,498   | (34,956)    | (n)               | 518,065   |  | 446,948   | (29,050)         
|                                             |           | 6,753       | (o)               |           |  |           | 6,753            
|                                             |           | 770         | (i)               |           |  |           | 212              
|Equity
    component of                      |           |             |                   |           |  |           |                  
|convertible debenture                        | 262       | (262)       | (h)               |          |  |          |                 
|Contributed surplus                          | 17,039    | 11,626      | (o)               | 390,332   |  |          | 11,626           
|                                             |           | 361,667     | (p)               |           |  |           | 361,667          
|                                             |           |             |                   |           |  |           | 15,661           
|                                             |           |             |                   |           |  |           |                  
|Deficit                                      | (204,477) | (369,075)   |                   | (573,552) |  | (108,924) | (394,348)        
|                                             |           |             |                   |           |  |           |                  
|Changes in
    market value of               |           |             |                   |           |  |           |                  
|Investments                                  |          | 3,102       | (l)               | 3,102     |  |          | 4,068            
|Loss on
    hedge derivatives                |          | (12,956)    | (m)               | (12,956)  |  |          | (55,452)         
|Cumulative
    translation adjustment        | 16,670    | 9,480       | (e)               | 6,627     |  | 268       | 9,480            
|                                             |           | (19,513)    | (n)               |           |  |           | (19,513)         
|                                             |           | (10)        | (h)               |           |  |           |                  

(a) Impairment loss

Periodic reviews of the carrying amount of the Company's property, plant and
equipment are performed in accordance with Canadian GAAP requirements which,
beginning in 2004, are similar to US GAAP requirements with respect to the
writedown of assets. The impact on net earnings (loss) in 2004 results from the
fact that the impaired assets had a lower net book value under US GAAP than
under Canadian GAAP.

In addition, under US GAAP, the impairment loss and restructuring costs for
the year 2004 would be included in the calculation of "earnings before the
undernoted items".

---

84Cambior 2004 Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(b) Depreciation, depletion and amortization

The depreciation, depletion and amortization of mining assets for the years
2004, 2003 and 2002 was lower under US GAAP than under Canadian GAAP as a result
of writedowns accounted for in prior years for the related assets.

Under Canadian GAAP, certain components of tailing dam projects are amortized
over a period that reflects the anticipated project total construction costs and
total expected lifetime. Under US GAAP, such method is prohibited as only
historical costs and actual lifetime are to be considered in the computation of
amortization.

(c) Exploration and development costs for mining properties

Under Canadian GAAP, exploration and development costs incurred subsequent to
the date of establishing that a property has mineral resources which have the
potential of being economically recoverable are allocated to property, plant and
equipment under mining projects. Under the United States Securities and Exchange
Commission ("SEC") guidelines, all costs incurred before a commercially mineable
deposit is established, generally by completing a bankable feasibility study,
must be expensed as incurred and such property should be classified as an
exploration property.

(d) Unrealized gain (loss) on forward exchange contracts

Gains and losses on forward exchange contracts are charged to income in the
same period as the corresponding hedged item. Under US GAAP, for the year ended
December 31, 2001 and for the six-month period ended June 30, 2002, unrealized
gains (losses) were charged to income as they occurred. Since July 1, 2002, the
Company has designated foreign currency fixed forwards as cash flow hedges for
US GAAP purposes. Consequently, those contracts are marked to market and related
unrealized gains or losses are charged to other comprehensive income. Unrealized
gains and losses are included in revenues in the same period as the
corresponding hedged item.

(e) Loss on foreign exchange from reduction in net investment

The Company has recognized an exchange loss as a result of the reduction in
the net investment in Canadian mining operations. Under US GAAP, adjustments to
the equity translation account are made only when there is a reduction in
ownership as a result of a sale of a portion of the ownership to a third party.

(f) Asset retirement obligations

On January 1, 2004, for Canadian GAAP purposes, the Company adopted the
recommendations of CICA Section 3110. This change in accounting policy was
applied retroactively with restatement of the prior years' consolidated
financial statements.

For US GAAP purposes on January 1, 2003, the Company adopted the provisions
of SFAS 143, "Accounting for Asset Retirement Obligations". Under such
provisions, the cumulative effect of the change in accounting principle must be
included in the statement of operations during the year of adoption of the
accounting policy.

(g) Gain on foreign exchange contracts  acquisition of businesses

Under Canadian GAAP, the disbursement for the acquisition of Sequoia,
denominated in Canadian dollars, was accounted for using the exchange rate fixed
by foreign exchange fixed forward contracts purchased by the Company to hedge
the foreign exchange risk related to the disbursement.

Under US GAAP, such hedging is not permitted. The disbursement must be
accounted for using the exchange rate at the date of the acquisition and a
foreign exchange gain must be recognized.

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Cambior 2004 Annual Report        
85

(h) Convertible debenture

Under Canadian GAAP, the convertible debenture was divided into a liability
component and an equity component. The interest expense is calculated based on
the liability component using the effective interest rate.
Under US GAAP, the convertible debenture must be accounted for at its par
value and the interest expense must be calculated using the contract interest
rate.
(i) Income and mining taxes

For US GAAP purposes, income and mining taxes would be reduced by $453,000 to
reflect the impact, on future income taxes, of the increased amortization of
costs of the tailing dam projects.
Furthermore, the US GAAP treatment for the issuance of flow-through shares
differs from Canadian GAAP which resulted in an increase in the future income
tax expense of $770,000.
(j) Stock-based compensation costs

On January 1, 2004, for Canadian GAAP purposes, the Company adopted the
recommendations of CICA Section 3870. This change in accounting policy was
applied retroactively without restating prior periods.
As described in "Changes in accounting policies under US GAAP", the Company
adopted the provisions of SFAS 123 "Share-Based Payment" using a modified
retrospective application.
Under US GAAP, this retrospective application requires the restatement of
prior years.
(k) Deferred stripping costs

As mentioned in Note 2 "Accounting policies", the Company defers mining costs
associated with stripping activities in the case of an open-pit mine if the
actual ratio of total tonnes of material mined relative to gold production in a
given year is higher than the estimated average ratio for the life of the mine.
The Company charges to operations the amortization of deferred stripping costs
in the periods during which the actual ratio of total tonnes of material mined
is lower than the estimated average ratio for the life of the mine. This
accounting method results in the smoothing of these costs over the remaining
life of the mine. Instead of capitalizing these costs, some mining companies
expense them as incurred, which may result in a greater volatility in
period-to-period results of operations. Had the Company followed a policy of
expensing these costs as incurred, the reported mining operation expenses would
have been $4,754,000 lower in 2004, $5,740,000 lower in 2003 and $1,339,000
higher in 2002.
The carrying amount of deferred stripping costs is grouped with related
mining property, plant and equipment for impairment testing purposes. This
carrying amount, related to the open-pit Omai mine operation, the only mine for
which the Company capitalizes these costs, was completely amortized as at
December 31, 2004.
Under Canadian GAAP, deferred stripping costs are included in property, plant
and equipment on the balance sheet. US GAAP call for these costs to be presented
as a separate line item of the balance sheet. Furthermore, for US GAAP purposes,
cash flows from operating activities in the consolidated statements of cash
flows would have been reduced by deferred stripping costs of $3,629,000 in 2002,
and accordingly, the acquisition of property, plant and equipment and the cash
flows used in investing activities would have been reduced by the same amount.
(l) Long-term investments

Investments in shares of public companies and debt securities are recorded at
cost, less any provision for decrease in value other than a temporary decline.
Under US GAAP, the Company is required to record investments available-for-sale
at fair value and to present the unrealized gains or losses as a component of
other comprehensive income under shareholders' equity.

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86 Cambior 2004 Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(m) Gain (Loss) on hedge derivatives

As explained in the accounting policies section, the Company designated gold
forward contracts as cash flow hedges for US GAAP purposes. Furthermore, since
July 1, 2002, the Company has designated foreign exchange contracts as cash flow
hedges of Canadian sales denominated in US dollars. For US GAAP purposes, those
contracts are marked to market and related unrealized gains or losses are
charged to other comprehensive income until the hedged production is delivered.
Upon delivery, the gain or loss on the hedging contract that has been deferred
in other comprehensive income is transferred to revenues in the consolidated
statement of operations. When the Company delivers gold production against such
contracts at a date earlier than anticipated or liquidates the contract before
such anticipated date, the gain or loss continues to be deferred in other
comprehensive income and is transferred to revenues in the period of the
corresponding hedged item's original designation date. If the Company delivers
gold production against such contracts at a date later than anticipated, the
Company transfers the related gain or loss to revenues on the original
designation date.

(n) Share issue expenses

Share issue expenses are shown as an increase to the deficit as provided for
under Canadian GAAP. Under US GAAP, these expenses must be shown as a reduction
of capital stock.

(o) Change in reporting currency

The Company adopted the US dollar as its reporting currency
effective January 1, 1996. Under US GAAP, prior years' financial statements must
be translated using the current rate method, using the year-end rate or the rate
in effect at the transaction dates, as appropriate. This translation approach
was applied retroactively.

(p) Elimination of the deficit

On May 7, 2002, the Company's shareholders adopted a resolution to apply
amounts available from the contributed surplus account of $23,047,000 to reduce
the Company's accumulated deficit, and on June 22, 2000, shareholders adopted a
resolution to eliminate the Company's accumulated deficit of $338,620,000 as at
December 31, 1999 by applying amounts available from the contributed surplus
account. Under US GAAP, such transfers are not permitted.

Changes in accounting policies under US GAAP

1) FASB Statement 143

For US GAAP purposes, effective January 1, 2003, the Company adopted the
provisions of FASB Statement 143, "Accounting for Asset Retirement Obligations".
SFAS 143 generally applies to legal obligations associated with the retirement
of long-lived assets that result from the acquisition, construction, development
and/or normal operation of a long-lived asset. The Company recognizes, when the
obligation is incurred, the fair value of an estimated liability for the future
cost for restoring a mine site upon termination of an operation, with a
corresponding increase in the carrying value of the related long-lived asset.
The Company amortizes the amount added to the asset using the depreciation
method established for the related asset and recognizes an accretion expense in
relation with the discounted liability over the remaining life of the mining
property. The liability is adjusted at the end of each period to reflect the
passage of time and changes in the estimated future cash flows underlying the
obligation. For Canadian GAAP purposes, the Company began accounting for asset
retirement obligations retroactively for the year beginning on January 1, 2004.

As a result of the initial application of SFAS 143, a $1,930,000 gain was
recorded as a cumulative effect of a change in accounting policy.

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Cambior 2004 Annual Report        
87



The following is a reconciliation of the total liability for asset retirement
obligations:

|                               | $     
|------------------------------ | ------
|Balance, December 31, 2002     | 12,410
|Impact of adoption of SFAS 143 | 2,559 
|Additions to liabilities       | 1,328 
|Accretion expense              | 995   
|Foreign exchange variation     | 2,466 
|Balance, December 31, 2003     | 19,758

2) FASB statement 123 (revised 2004)

For US GAAP purposes, the Company adopted on January 1, 2004, the provisions
of SFAS 123 (revised 2004), "Share-based payment".

SFAS 123 focuses primarily on accounting for transactions in which an entity
obtains employee services in exchange of share-based payment transactions.
Statement 123 requires that such transactions be accounted for using the fair
value-based method and that compensation expense be recorded in the statement of
operations.

The Company elected to apply the modified version of retrospective
application, indicated in SFAS 123(R), under which financial statements for
prior periods are adjusted on a basis consistent with the pro forma disclosures
previously required for those periods. Therefore, the financial statements of
prior years have been restated to record the change of this accounting policy.

The following table presents the impact of SFAS 123(R) on the current and
comparative years' financial statements:

|                                                                  | 2004   | 2003  
|----------------------------------------------------------------- | ------ | ------
|                                                                  | $      | $     
|Consolidated Balance Sheet                                        |        |       
|Fair value of options granted from 1995 to
    the current year   | 15,873 | 14,808
|Stock-based compensation costs for the current year               | 1,580  | 1,065 
|Increase in deficit                                               | 17,453 | 15,873
|                                                                  |        |       
|Fair value of options exercised from 1995 to
    the current year | 212    | 133   
|Fair value of options exercised during the current year           | 202    | 79    
|Increase in common shares                                         | 414    | 212   
|Increase in contributed surplus - residual amount                 | 17,039 | 15,661

|                                           |       |       |     
|------------------------------------------ | ----- | ----- | ----
|                                           |       |       |     
|                                           | 2004  | 2003  | 2002
|                                           | $     | $     | $   
|Consolidated Statement of Operations       |       |       |     
|Increase in stock-based compensation costs | 1,580 | 1,065 | 814 

3) Employer's Disclosures about Pensions and Other Post-Retirement Benefits

In December 2003, the Financial Accounting Standards Board (FASB) issued FASB
Statement No. 132 (Revised 2003), Employer's Disclosures about Pensions and
Other Postretirement Benefits. This standard increases the existing
disclosure requirements by requiring more details about pension plan assets,
benefit obligations, cash flows, benefit costs and related information. Plan
assets need to be segregated by category, such as equity, debt and real estate,
and provide certain expected rates of return and other disclosures. This
standard applies to financial statements for fiscal years ending after December
15, 2003. The required information is presented in Note 15.

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88         Cambior 2004 Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4) Consolidation of Variable Interest Entities

In December 2003, the FASB revised Interpretation No. 46, Consolidation of
Variable Interest Entities (FIN 46R). This interpretation replaces FASB
Interpretation No. 46, Consolidation of Variable Interest Entities, which
was issued in January 2003. This standard requires an enterprise to consolidate
a variable interest entity if that enterprise is subject to a majority of the
risk of loss from the variable interest entity's activities or entitled to
receive a majority of the entity's residual return or both. FIN 46R also
requires certain disclosures about variable interest entities that the
enterprise is not required to consolidate but in which it has a significant
variable interest. This pronouncement did not have any significant impact on the
Company's consolidated financial statements.

5) Mining Assets: Impairment and Business Combinations

In March 2004, the Emerging Issues Task Force (EITF) of the FASB issued
abstract No. 04-3 providing a consensus that an entity should include value
beyond proven and probable reserves (VBPP) and the effects of anticipated
fluctuations in the future market price of minerals in determining the value
allocated to mining assets in a purchase price allocation. In addition, an
entity should include the cash flows associated with VBPP in estimates of
futures cash flows (both undiscounted and discounted) used for determining
whether a mining asset is impaired. The estimated cash flows should also include
the estimated cash outflows required to develop and extract the VBPP. An entity
should also consider the effects of anticipated fluctuations in the market price
of minerals when estimating future cash flows for impairment testing. This
pronouncement was considered in establishing the impairment loss accounted for
in 2004.

6) Mineral Rights are Tangible Assets

In March 2004, the EITF issued abstract No. 04-2 providing a consensus that
mineral rights should be considered tangible assets but also acknowledging that
this consensus is inconsistent with certain guidance in Statements 141 and 142.
To address this inconsistency, the FASB issued FASB Staff Position (FSP) FAS
141-1 and FAS 142-1. The Task Force also concluded that an entity should report
the aggregate carrying amount of mineral rights as a separate component of
property, plant and equipment either on the face of the financial statements or
in the notes to the financial statements. If the guidance results in the
recharacterization of an asset, prior period amounts on the statements of
financial position must be reclassified. Any effects on amortization or
depreciation of the asset must be accounted for prospectively. This
pronouncement did not have any significant impact on the Company's financial
statements.

B. CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

The statement of consolidated comprehensive income (loss) is as follows:

|                                          | 2004     | 2003     | 2002    
|----------------------------------------- | -------- | -------- | --------
|                                          | $        | $        | $       
|Net earnings (loss) as per US GAAP        | (70,280) | 1,661    | (1,044) 
|Other comprehensive income (loss)         |          |          |         
|Translation
    adjustment                | 16,392   | 19,123   | 969     
|Unrealized gain
    (loss) on investments | (966)    | 2,306    | 1,047   
|Gain (Loss) on hedge derivatives          | 42,496   | (19,583) | (43,538)
|Consolidated comprehensive income (loss)  | (12,358) | 3,507    | (42,566)



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Cambior 2004 Annual Report        
89



Changes in items of the other comprehensive income (loss) are as follows:

|                                      |            |            |           
|------------------------------------- | ---------- | ---------- | ----------
|                                      |            | Changes    |           
|                                      | Balance at | during the | Balance at
|                                      | beginning  | year       | end       
|                                      | $          | $          | $         
|2004                                  |            |            |           
|Cumulative
    translation adjustment | (9,765)    | 16,392     | 6,627     
|Loss on hedge
    derivatives         | (55,452)   | 42,496     | (12,956)  
|Unrealized gain on investments        | 4,068      | (966)      | 3,102     
|Other cumulative comprehensive loss   | (61,149)   | 57,922     | (3,227)   
|2003                                  |            |            |           
|Cumulative
    translation adjustment | (28,888)   | 19,123     | (9,765)   
|Loss on hedge
    derivatives         | (35,869)   | (19,583)   | (55,452)  
|Unrealized gain on investments        | 1,762      | 2,306      | 4,068     
|Other cumulative comprehensive loss   | (62,995)   | 1,846      | (61,149)  
|2002                                  |            |            |           
|Cumulative
    translation adjustment | (29,857)   | 969        | (28,888)  
|Gain (Loss) on hedge
    derivatives  | 7,669      | (43,538)   | (35,869)  
|Unrealized gain on investments        | 715        | 1,047      | 1,762     
|Other cumulative comprehensive loss   | (21,473)   | (41,522)   | (62,995)  

C. ACCOUNTING PRONOUNCEMENTS NOT YET IMPLEMENTED

US GAAP

1) Inventory costs

In November 2004, the FASB issued SFAS 151, "Inventory Costs 
an amendment of ARB No. 43, Chapter 4". SFAS 151 amends the guidance in ARB No.
43, Chapter 4 "Inventory Pricing", to clarify the accounting for certain
abnormal amounts in establishing inventory valuation. The proposed statement
would:

- Recognize as current-period charges, idle facility expense,
  excessive spoilage, double freight, and rehandling costs regardless of whether
  they meet the criterion of "so abnormal" as stated in ARB No. 43.
- Require that the allocation of fixed production overheads to
  the costs of conversion be based on the normal capacity of the production
  facilities.

SFAS 151 is effective for fiscal years beginning after June 15,
2005. The Company is currently evaluating the effect that the adoption of SFAS
151 will have on its consolidated results of operations and financial condition.

2) Exchange of nonmonetary assets

In December 2004, the FASB issued SFAS 153, "Exchanges of
Nonmonetary Assets  an amendment of APB Opinion No. 29". SFAS 153 eliminates
the exception from fair value measurement for nonmonetary exchanges of similar
productive assets in paragraph 21(b) of APB Opinion 29, "Accounting for
Nonmonetary Transactions," and replaces it with an exception for exchanges that
do not have commercial substance. SFAS 153 is effective for the fiscal periods
beginning after June 15, 2005. The Company is currently evaluating the effect
that the adoption of SFAS 153 will have on its consolidated results of
operations and financial condition.

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90         Cambior 2004
Annual Report



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Canadian GAAP

1) Financial instruments  assets and liabilities

On January 27, 2005, the CICA Accounting Standards Board ("AcSB")
issued final standards on accounting for financial instruments: "Comprehensive
income", "Hedges" and "Financial Instruments  Recognition and Measurement". The
rules will be applicable for fiscal years starting on or after October 1, 2006.

Financial assets, which include trade and loans receivable and
investments in debt and equity securities, must be classified into one of four
categories:

- Held to maturity investments (measured at cost)
- Loans and receivables (measured at amortized cost)
- Held for trading assets (measured at fair value with changes
  in fair value recognized in earnings immediately)
- Available-for-sale-assets, including investments in equity
  securities, held-to-maturity investments that an entity elects to designate as
  being available for sale, and any financial asset that does not fit into any
  other category (measured at fair value with changes in fair value accumulated
  in a separate component of shareholders' equity called "Other Comprehensive
  Income" (OCI) until the asset is sold). Impairment of investments in
  securities would be recognized earlier than under existing GAAP.

Financial liabilities, which include long-term debt and other
similar instruments, must be accounted for at amortized cost, except for those
classified as held for trading, which must be measured at fair value.

2) Financial instruments  accounting for derivatives

The standards for financial instruments also include changes to
the rules on accounting for derivatives, which are comprised of interest rate
swaps, forward exchange contracts, forward rate agreements, put and call options
on financial instruments and certain contracts for the delivery of commodities.
The basic rules applicable for derivatives are as follows:

- All derivatives must be measured at fair value.
- Changes in the fair value of a derivative must be recognized
  immediately in earnings unless the derivative qualifies as a hedge.
- If a derivative is a fair value hedge, changes in its fair
  value must still be recognized in earnings immediately. However, the earnings
  impact is offset by adjusting the carrying value of the hedged item by the
  change in its fair value attributable to the risk being hedged.
- If a derivative is a cash flow hedge, changes in its fair
  value are accumulated in a separate account in OCI until the hedged item
  affects earnings.

3) Consolidation of variable interest entities

In September 2003, the AcSB amended Accounting Guideline No. 15,
Consolidation of Variable Interest Entities in order to harmonize the guideline
with the corresponding US guidance, the revised version of FASB Interpretation
No. 46, Consolidation of Variable Interest Entities (FIN 46R), which was issued
in December 2003. This guideline applies to annual and interim periods beginning
on or after November 1, 2004. The Company does not expect this pronouncement to
have a material impact on its results of operations or financial condition.

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