Richmont Mines enjoys a record year — Small producer succeeds in clearing debt from books

With higher production coming from all the operations in which it has an interest, Richmont Mines (RIC-T) has paid off its long-term debt in a bid to control its financial costs.

The company operates the Francoeur mine near Rouyn-Noranda, Que., where annual annual production rose 12% to 32,500 oz. in 1998. Head grades at Francoeur also rose, to 7.2 from 6.5 grams gold per tonne, and recovery was slightly higher, rising to 95.4% from 95.1%.

At the Nugget Pond mine, near Baie Verte, Nfld., the first full year of operation saw 44,000 oz. gold poured, up from 34,800 oz. between April 1 and Dec. 31 in 1997. Grade, at 11 grams per tonne, was lower, but recovery improved. Milled tonnage was up considerably, because of a full production year and mill throughput that averaged about 10% faster than in 1997.

At the Beaufor mine, near Val d’Or, Que., a joint venture of Aurizon Mines (ARZ-T) and Richmont’s 69%-owned subsidiary, Louvem Mines (LOV-M), saw production rise to 41,200 oz. in 1998 from 29,800 oz. in the previous year.

The company used its cash flow to pay down $10.4 million in long-term debt (about $4.6 million ahead of schedule). The debt was part of a US$9-million loan that financed part of the development cost of Nugget Pond. Payment of the debt has left Richmont with about $12.4 million in cash and short-term investments.

The decline in the Canadian-U.S. exchange rate since the loan was taken out in 1996 will force Richmont to take a $678,963 charge in the final quarter of 1998 — a charge that includes amortization of capitalized interest

payments from the period when the Nugget Pond mine was under construction.

Richmont’s Camflo mill, west of Val d’Or, which processes ore from the Beaufor and Francoeur mines, also had its highest annual throughput in 1998. The mill processed a record 362,000 tonnes, including 33,000 tonnes for custom-milling clients.