Louvem, Richmont short on gold production in 2006

The Beaufor gold mine, near Val d’Or, Que., was a disappointment in 2006 for both of its 50-50 joint- venture owners, Louvem Mines (LOV-V) and Richmont Mines (RIC-T, RIC-X).

Louvem reported a net loss of $2.1 million in 2006 compared with a net income of $100,000 the year before.

Richmont earned $3.2 million for the year, after a net loss of $27.5 million in 2005, but the company’s production targets were lower than expected at both Beaufor and the East Amphi gold mine.

Beaufor, Louvem’s only producing gold mine, did not meet production expectations due to a lack of continuity in mineralized zones and a shortage of long-hole stopes.

In 2006, nearly 140,000 tonnes of ore were processed at Beaufor grading 5.54 grams gold per tonne for almost 25,000 oz. gold — much lower than the anticipated 40,000 oz. In 2005, 199,000 tonnes of ore were processed grading 5.72 grams gold per tonne yielding almost 37,000 oz. gold.

Beaufor’s cash costs were up to US$585 per oz. gold from US$372 per oz. in 2005.

For 2007, production is estimated at just 20,000 oz. gold, but both companies have hopes of increasing reserves by drilling 20,000 metres.

Aurizon Mines (ARZ-T, AZK-X) sold its 50% stake in Beaufor to Richmont in 2001. In 2003, Richmont’s first year of production, the mine produced nearly 57,000 oz. gold at a cash cost of US$245 per oz. Since then, costs have increased as production has dropped.

Louvem’s sales dropped 28% in the fourth quarter to 2,300 oz. gold, sold at an average price of US$605. That compared with about 3,200 oz. gold sold for US$475 apiece during the same period in 2005.

Beaufor’s latest reserve estimate put the mine at about 184,000 tonnes grading 8.33 grams gold per tonne for about 49,500 oz. gold. Measured and indicated resources were about 611,000 tonnes grading 7.55 grams gold, or 148,000 oz. gold.

Richmont’s gold sales for the year were nearly 45,000 oz. gold with an average cash cost of US$538 per oz. and selling price of US$600 per oz.

Richmont had a net income of $2.5 million in the fourth quarter of 2006 compared with a net loss of $25 million for the same period in 2005. This was due to a $26- million cash writedown of the East Amphi mine, located in the Malartic mining camp along the Cadillac Break.

Production began in February 2006 at East Amphi with 179,000 tonnes of ore grading 3.47 grams gold per tonne, yielding 20,000 oz. gold at a cash cost of US$485 per oz.

Over 2,000 metres of disappointing exploration drilling at East Amphi over the year triggered a decision to stop operations by the second quarter of 2007. Proven and probable reserves are about 100,000 tonnes grading 3.67 grams gold, or nearly 12,000 oz. gold.

Revenue was up 154% in the fourth quarter to $10.4 million compared with $4.1 million in 2005, due to higher gold prices and the sale of the Nugget Pond property and mill in Newfoundland for $3.1 million. Gold sales increased 43% in the quarter to 9,102 oz. at a cash cost of US$547 sold at US$613 per oz. The company also brought in $1 million from custom milling compared with only $100,000 during the fourth quarter of 2005.

What’s keeping Richmont positive is its 55% joint venture with Patricia Mining (PAT-V, PTMHF-O) at the Island Gold underground exploration project in northeastern Ontario. In November, the company poured its first gold dor bar from the property.

More than $23 million was spent on development and exploration work in 2006, bringing measured and indicated resources to nearly 520,000 tonnes grading 11.34 grams gold per tonne, or about 189,000 oz. gold. Inferred resources stand at 197,000 tonnes grading 10.16 grams gold, or 65,000 oz. gold. The reserve calculation will be completed before the end of this quarter.

Richmont plans to spend $1 million on exploration at Mountain Lake Resources’ (MOA-V, MLKRF-O) Valentine Lake project in Newfoundland in 2007, which will allow Richmont to acquire a 70% interest in the project. The property has an inferred resource of 920,000 tonnes grading 8.51 grams gold, or about 252,000 oz. gold.