Richmont has banner year (March 03, 2003)

Record gold sales, better prices, and lower production costs came together for Richmont Mines (RIC-T) in 2002, giving the company earnings of $9.1 million (or 59 per share) on revenue of $52 million.

The year was a good one for the Montreal-based gold producer, which had earned only $518,090 on revenue of $35 million in 2001. Improved gold prices meant that Richmont, a non-hedger, received an average of US$309 for its gold in 2002, up from US$271 in 2001.

The Beaufor mine’s return to production contributed greatly to Richmont’s production profile. Over the year, the mine, 25 km northeast of Val d’Or, Que., produced 56,065 oz., of which 54,374 oz. were sold. Cash costs at Beaufor were US$163 per oz.

Richmont’s subsidiary, Louvem Mines (LOV-V), whose only producing asset is a half-stake in Beaufor, generated revenue of $13.9 million and earnings of $4.7 million (18 per share) for the year.

At Beaufor, Richmont completed a drilling program that, more or less, replaced the reserves mined in 2002. New reserves were blocked out in the mine’s B and C zones along lateral extensions of known ore.

Reserves at Beaufor at year-end were calculated at 1 million tonnes grading 7.5 grams gold per tonne, plus resources of 732,000 tonnes at an average of 7.2 grams per tonne. Plans call for Richmont to drill three exploration drifts that will allow Zone B to be drilled east-to-west along strike and Zone C westward and downdip.

At the Hammerdown mine, near King’s Point, Nfld., production rose to 47,470 oz. in 2002 from 34,210 the year before, though costs increased to US$159 per oz. from US$115 in 2001. Lower mined grades were the main reason for the increase in costs.

In addition to 2002 production, Richmont sold 846 oz. of 2001 Hammerdown production in 2002.

Reserves at Hammerdown declined 36% in 2002, as resources were found not to be continuous at depth and in the periphery of the main mineralized zone. Hammerdown finished the year with reserves of 145,000 tonnes grading 15.1 grams gold per tonne and resources (in addition to reserves) of 95,000 tonnes at an average grade of 13.4 grams.

Richmont has budgeted $800,000 for exploration in the area of its Newfoundland mines, Hammerdown and the formerly producing Nugget Pond.

At the Francoeur mine, west of Rouyn-Noranda, Que., where production ceased in late 2001, Richmont spent $2.4 million on work that brought resources on the property up to 823,000 tonnes at a grade of 8.9 grams gold per tonne. Richmont is now doing definition drilling to convert those resources to reserves, and a feasibility study is under way to determine whether it would be economic to return to production at Francoeur.