A stronger euro pushed operating expenses higher and ate into the earnings of
Still, the company ended on the plus side with net income of US$433,800 (or nil per share) on revenue of US$14.9 million, compared with year-earlier earnings of US$2.4 million (or 3 per share) on revenue of US$15.5 million. Operating cash flow climbed by US$1.5 million to US$6.6 million between the two periods.
For the first nine months of the year, earnings totalled US$1.1 million (1 per share), well off the US$$7 million earned in the corresponding period of 2002. Revenue climbed by US$5 million to US$45.3 million, and operating cash flow jumped 56% to US$14.3 million.
Third-quarter gold production slipped nearly 10% to 43,403 oz. The lower production pushed cash operating costs US$22 per oz. higher to US$152 per oz. The El Valle plant in Spain processed 3,750 more tonnes of ore at 199,928 tonnes, as average grades slipped 11% to 7.2 grams gold per tonne. Recoveries were higher than expected at 94.4%.
For the first nine months of the year, production was little changed at 134,664 oz. Cash costs fell US$10 to US$133 per oz. Mill throughput increased by 15,741 tonnes to 579,566 tonnes, grades slipped by 2.5% to 7.7 grams, and recoveries were virtually unchanged at 94%.
Rio realized an average of US$352 for each ounce produced during the quarter, up from US$322 per oz. a year earlier but below the quarter’s average spot price of US$363 per oz. The 9-month average realized price was US$347 per oz., up from US$307 per oz. a year earlier.
The quarter’s production included 24,305 tonnes of ore from the Carles mine, also in Spain, which was fed into the plant at a 15% blend with El Valle ore. A reduction in arsenic and bismuth levels in the processing circuit boosted concentrate production from the blend.
The company says the El Valle and Carles mines combined are expected to produce 170,000 oz. gold at US$135 per oz. for the year.
Mining of the higher-grade Charnela zone wrapped up in mid-August, whereas mining in the Caolinas satellite pit, in the north corner of the El Valle pit, is to begin before year-end.
Drilling continues to expand resources at Carles East. Mining began in July, and by October, 10,000 tonnes had been produced. Ore grades have been better than expected at close to 8 grams gold per tonne. Underground development to provide access to the Carles North orebody was completed during the quarter, and definition drilling began in August.
Elsewhere, construction of the Aguablanca nickel mine, in the same country, began in October. By the end of the third quarter, about US$13 million had been spent on development and construction. The project’s capital cost has been boosted by US$7.5 million to US$70 million, owing to the strengthening euro.
The open-pit mine is expected to produce 18 million lbs. nickel, 11 million lbs. copper, and 20,000 oz. platinum group elements over 10.5 years beginning in mid-2004.
Also slated for an early 2004 start-up is the Boinas East underground mine. The upper zones will be mined by mechanized cut-and-fill methods, the lower zones, by benching. Ore will be stockpiled until the end of 2004, then processed separately to take advantage of the significantly higher copper values and low impurity levels to produce a clean copper concentrate as well as dor.
At the quarter’s end, the company had US$48.4 million in cash and equivalents and US$50.2 million in working capital. An additional US$53 million was available under existing credit facilities.
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