Despite record production and lower cash costs at its El Valle gold mine in northern Spain,
The company lost US$674,500 on revenue of US$8.4 million during the 3-month period, continuing a string of losses. Cash costs fell to US$172 per oz. gold, compared with US$194 in the second quarter of 1998.
Production at El Valle reached a record 28,200 oz. gold, a 43% increase over this year’s first quarter.
Rio Narcea’s hedging program includes 48,000 oz. gold mainly at US$315 per oz., representing nearly all of the remaining year’s production. The company also has 160,000 oz. hedged through 2000 to 2002 at US$315 per oz. An additional 30,000 oz. are sold forward at US$300 per oz., with calls on 111,000 oz. at US$395 per oz.
In a drill program aimed at increasing reserves at El Valle, Rio Narcea has been testing the downdip limits of mineralization near the centre of the open pit. Results include 34.9 metres averaging 4.5 grams gold per tonne and 18.2 metres averaging 3.9 grams at depths of 211 metres and 252 metres, respectively.
Drilling also targeted the Black Skarn deposit, situated under the Boinas East pit at El Valle. Results include 18.7 metres averaging 5.8 grams gold and 29 grams silver, plus 3.8% copper.
The El Valle mine is in Asturias province.
In the neigbouring province of Galicia, Rio Narcea has completed a first phase of infill drilling at another gold target. Results have yet to be announced.
Meanwhile, at the Penedono project in northern Portugal, crews carried out underground mapping and sampling of granite-hosted quartz veins. Assays range from 4.6 to 30 grams gold. Trenching and geochemical surveys are now under way.
On June 30, Rio Narcea had US$2.3 million in cash.
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