Richmont in the red

Richmont Mines (RIC-T) felt the pinch from lower gold prices and decreased production during the first quarter of 2001.

The company lost $1.75 million (or 12 per share) on revenue of $2.3 million, compared with year-ago earnings of US$849,631 (6 per share) on $11 million. Cash flow from operations was $38,331, down from $4.4 million a year earlier.

First-quarter production tallied 4,900 oz. gold at a cash cost of US$296 per oz., compared with 24,100 oz. produced at US$196 per oz. in the same period of 2000. Richmont expects cash costs to improve significantly (to less than US$200 per oz.) over the next few quarters.

At the Nugget Pond mine in Newfoundland, lower ore grades doubled costs per ounce. The mine produced 4,900 oz. at US$296 per oz. The average ore grade encountered was 0.17 oz. per ton. Production suffered from a lack of continuity and above-average dilution in Zone 1. Mining in this zone will cease at the end of March and a new mining plan will be developed.

During the recent quarter, Richmont spent $1.9 million at the nearby Hammerdown gold project, where the decline now reaches to the second level. Hammerdown’s proven and probable reserves stand at 443,000 tons grading at 0.47 oz. per ton. The installation of surface infrastructures continues. A production rate of 250 tons per day is expected by July.

During the recent quarter, the Francoeur mine in Quebec produced 34,500 tons of ore. To minimize costs, the material will be processed along with the second quarter’s production.

In early April, Richmont agreed to buy Aurizon Mines‘ (ARZ-T) half-interest in the suspended Beaufor gold mine in northwestern Quebec. Richmont will pay Aurizon $1.65 million in cash upon closing. Thereafter, it will pay a sliding-scale royalty on future production.

Richmont already had a stake in the underground mine through its 69.3% ownership of Louvem Mines (LOV-M), which owns the remaining half of Beaufor.

Louvem reported a net loss of $687,804 (3 per share) on revenue of $3,133 for the first quarter, compared with a year-ago loss of $2,246 on revenue of $0.7 million. Cash was consumed by operations to the tune of $790,053 during the latest quarter, compared with the $490,540 provided by operations a year earlier.

During the latest quarter, there was no production at the Beaufor mine. For the same period of 2000, Louvem’s half-share of the Beaufor production was 6,400 oz. gold. Cash costs were US$242 per oz.