Richmont nabs Hammerdown

By purchasing the nearby Hammerdown deposit, Richmont Mines (RIC-T) has added an estimated four years to the life of its Nugget Pond gold mine, near Baie Verte, Nfld.

The Montreal-based company paid privately held Abiting $5.4 million for the deposit, plus the cancellation of existing royalties. Another $10 per oz. is to be paid when between 70,000 and 130,000 oz. are produced. Also, if production exceeds 200,000 oz. and the price of gold rises above US$290 per oz., $20 per oz. is payable to Major General Resources (mgr-t), which sold the deposit to Abiting in early March for $3.4 million.

The Hammerdown deposit hosts 600,000 tonnes grading 15 grams gold per tonne. Of that amount, according to a recent evaluation by Abiting, 269,432 tonnes grading 20.91 grams are proven and probable reserves.

Richmont plans to truck mined ore 142 km to the Nugget Pond mill, which should keep the 385-ton-per-day plant operating for at least the next seven years.

In 1999, Nugget Pond cranked out 43,500 oz. at a cash cost of US$138 per oz., making it the strongest performer of Richmont’s three gold mines. The other two — Francouer and half-owned Beaufor, both in Quebec — contributed a combined 40,500 oz., at US$247 per oz., to the company’s account. (Operations at Francouer were suspended in late September, only to resume in February.) Aggregate production is projected at 92,000 oz. this year, at a combined average cash cost of US$192 per oz.

Richmont began the year with $12.5 million in working capital, plus $7 million in unused credit. It has roughly 15.5 million shares outstanding.