Richmont Mines nearly doubles revenues

Low gold prices may have hurt its earnings, but Richmont Mines (RIC-T) still enjoyed its sixth consecutive year of profitability in 1997.

Revenue during the 12-month period nearly doubled, to $38.7 million from $20.1 million in 1996. Earnings dropped, however, to $2.4 million (or 16cents per share) from $2.9 million (20cents per share).

The company’s operating cash flow increased to $10.1 million (67cents per share), compared with $6.6 million (46cents per share) in 1996, an increase of 53%.

For the 3-month period ended Dec. 31, 1997, revenue totalled $12.5 million, compared with $5.5 million in the corresponding quarter of 1996, while earnings rose to $904,481 (6cents per share) from $533,367 (4cents per share) last year. Cash flow from operating activities rose to $4.7 million (30cents per share), compared with $517,648 (4cents per share) in the fourth quarter of 1996.

In 1997, Richmont produced 72,800 oz. gold at a cash cost of US$215 per oz., compared with 30,100 oz. at a cash cost of US$275 a year earlier. This increase is mainly attributed to the start of commercial production at the Nugget Pond mine in Newfoundland on April 1, 1997. Nugget Pond’s output was 34,800 oz. gold at a cash cost of US$143 per oz., while the Francoeur mine in Quebec produced 29,000 oz. gold at a cash cost of US$273 per oz. in 1997, compared with 30,100 oz. at US$275 in the previous year.

The increase of Richmont’s interest in Louvem Mines (LOV-M) during the year, to 69.3% from 36%, provided the former with an additional 9,000 oz. gold at a cash cost of US$307 — its share of production at Louvem’s 50%-owned Beaufor mine in Quebec. Richmont has consolidated Louvem’s results since last July. Richmont’s Camflo mill, 25 miles from Beaufor, treated a record 343,000 tons of ore in 1997, compared with 323,000 tons the previous year.

Richmont’s hedging program protects 48,000 oz. gold in 1998 at an average price of US$377 per oz.

During its normal course issuer bid program, Richmont bought back 45,000 shares on the stock markets in 1997, at an average price of $3.13 per share.