Rio Narcea post Q3 earnings

Rio Narcea Gold Mines (RNG-T) has posted higher third-quarter earnings thanks to increased gold production and improved realized gold prices.

During the three months ended Sept. 30, the company made US$2.4 million (or 3 per share) on US$15.5 million in revenue, compared with year-ago net earnings of US$521,300 (a penny a share) on US$7.5 million. Cash flow from operations was US$5.2 million, well ahead of the year-ago US$900,000.

For the first nine months of 2002, Rio’s net income tallied to US$7 million (a dime a share), a nice turnaround from the year-ago net loss of US$1.5 million (2 per share). Revenue between the two periods climbed US$16.2 million to US$40.3 million. Operations generated US$11.4 million in cash flow, more than doubling the year-ago pace.

Quarterly gold production shot up nearly 70% to 48,029 oz. Operating cash costs slipped to US$130 per oz. from US$221 per oz. The improved production is attributed to higher grades (8.1 grams gold compared with 6 grams gold per tonne a year earlier) and recovery rates, which climbed to 94% from 91%.

For the nine-month period, the company churned out 134,820 oz. at US$134 each, up from 89,820 oz. at US$193 apiece during the corresponding period of 2001.

The third quarter’s average realized gold price came in at US$317 per oz., up from US$243 per oz. the previous year. For the first three quarters, the company averaged US$295 per oz., up US$33 per oz.

With third-quarter production beating expectations, Rio Narcea has boosted its 2002 output target by 20,000 oz. to 170,000 oz. at less than US$150 apiece.

Required under a loan deal with Deutsche Bank, the company’s hedge book includes 14,2555 oz. of gold under forward sales contracts priced at US$300.98 per oz. The book also contains put options on 410,280 oz. at prices of US$280 and E300 apiece. Another 231,938 ounces are covered by call options at US$365 and E405 per oz.

At the end of September, the company had US$6.7 million in cash and working capital of US$2.3 million. The company’s long-term debt was down more than US$3 million to US$16 million; the current portion was US$576,800.