Rio Narcea posts wider loss

Rio Narcea Gold Mines (RNG-T) met its gold production budget for the first three months of 2002, pumping out 25,117 oz. of the yellow metal.

That is, as expected, well off the 34,495 oz. produced during the year-ago period. Cash cost between the two periods climbed US$20 per oz. to US$194 per oz. Production during the latest quarter was derived largely from stockpiled Boinas East ore whereas year-ago production came from the first mining phase of the Charnela zone of the El Valle pit in Spain.

With the lower production, the company suffered a net loss of US$1.3 million (or 2 per share), compared with a net loss of US$841,000 (1.3 per share) during the corresponding period of 2002. Revenues slipped to US$6.7 million from US$9 million. Cash flow from operations nearly doubled to US$1.8 million.

On the exploration front, by the end of March, Rio had completed 746 metres of drilling in 10 holes aimed below the Boinas East pit at El Valle. Four of the first seven holes returned potentially mineable grades and thicknesses. One hole cut both oxidized breccia and black skarn with 16.3 metres averaging 6.4 grams gold per tonne. Pending the remaining results, Rio plans a 10,000-metre drill program in the El Valle area. The holes will aim to upgrade resources into reserves and identify new resources along the Rio Narcea gold belt.

Drills were also active at Aguablanca nickel-copper-platinum-group-metals project in southwestern Spain, where infill drilling for the feasibility study wrapped up. Fourteen holes totalling 3,637 metres closed the drill spacing to 25 metres in both the South and North zones down to a vertical depth of about 200 metres. Drilling also began below the planned open pit.

A surface electromagnetic survey designed to condemn areas for planned waste dumps turned up three anomalies, one of which may represent an eastern extension to known mineralization.

Ore reserve and updated resource estimates are being prepared for the feasibility study, which is slated for completion in early June. A production decision would follow shortly thereafter.

At last report, Aguablanca’s resources stood at 30 million tonnes grading 0.7% nickel, 0.5% copper, 0.3 gram platinum, 0.3 gram palladium and 0.3 gram gold.

Looking ahead, the company expects to eclipse its original 2002 production target of 150,000 oz. gold at US$150 apiece as it mines the high-grade Charnela zone of the El Valle pit.

At the end of the quarter, Rio had about US$3.25 million in cash plus another US$2 million in escrow pending receipt of the final prospectus for a special warrants placement completed in late March.