Buoyed by record gold production from its El Valle mine in Spain,
The earnings translate into US13 per share, and compare with a year-earlier loss of US$3.7 million, or 6 per share. Revenue between the two periods soared 63.5% to $55.5 million, while cash flow increased to US$14.1 million from $916,900.
During the year, El Valle churned out a record 177,225 oz. gold at a cash cost of US$143 each. A year earlier, the mine produced 124,363 oz. at US$219 per oz. The increase is due to higher-grade production from the Charnela zone combined with an improved mill performance.
In 2002, the mill processed 753,411 tonnes of ore with an average head grade of 7.75 grams gold per tonne. That included 97,000 tonnes of ore (running 4.65 grams gold and 0.77% copper) from the Carles open-pit mine. Between 2001 and 2002, recoveries climbed to 94.4% from 91.2%.
The company sold its 2002 production for an average of US$307 per oz., up from US$263 per oz. the previous year. The increase reflects a higher average spot price and a smaller loss on foreign-exchange hedging.
In the fourth quarter, Rio earned just short of US$2.7 million (or 3 per share), compared with a year-earlier loss of US$2.2 million (3 a share). Revenue between the two quarters climbed by US$5.3 million to US$15.2 million, and cash flow shot up to US$5 million from US$346,600.
Rio Narcea produced 42,405 oz. in the fourth quarter at US$143 per oz., up from 34,543 oz. at US$166 per oz. a year earlier.
The company expects to pour more than 155,000 oz. gold at US$135 apiece in 2003. About 150,000 tonnes of ore are expected to come from the Carles mine.
An exploration program aimed at replacing reserves and converting resources is expected to cost US$4.4 million. Meanwhile, a feasibility study at the Corcoesto heap-leach gold project, west of El Valle and Carles, is slated for completion by mid-2003. The study includes 10,000 metres of infill drilling aimed at converting resources to reserves.
Rio also intends to evaluate the Lugo gold properties in Galicia, where it has signed on to earn a 70% interest from Outokumpu.
Aguablanca
Construction on the Aguablanca nickel project in southwestern Spain is expected to begin by the first quarter of 2004. Final mining permits are expected shortly, and a long-term concentrate offtake agreement has been arranged with Swiss commodity trader Glencore International.
Over projected life of 10.5 years, Aguablanca would produce 9,080 tonnes nickel annually, along with 6,810 tonnes copper and 25,000 oz. platinum group metals — all in concentrate.
Capital costs are pegged at US$64.1 million; the net present value is US$106 million at a 5% discount rate and a nickel price of US$2.99 per lb.
Earlier this year, the company further reduced its hedge book by closing out 82,736 oz. covered under gold calls priced at US$437per oz. In the end, Rio was left with 111,418 oz. under calls at the same price through to mid-2005. A small forward sales contract covers 13,647 oz. at US$301 per oz. through to 2006.
At the end of 2002, Rio’s cash and equivalents had grown to US$7.7 million, while long-term debt had shrunk to US$13.6 million.
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