Lower grades from a transition zone at the Boinas East pit in Spain hampered gold production for
The US$850,700 loss translates into 1.3 per share and compares with a year-ago profit of US$1 million (1.6 per share). Revenue between the two periods fell to US$7.6 million from US$8.3 million, while cash flow from operations increased to US$2 million from US$1.8 million.
For the first nine months of 2001, the loss amounted to US$898,300 (1.4 per share), compared with a year-earlier loss of US$2.3 million (3.5 per share). Revenue between the two 9-month periods climbed to US$23.7 million from US$19.7 million, while cash flow slipped US$1.5 million to US$5.1 million.
Gold production in the third quarter fell to 28,523 oz. at a total cash cost of US$229 per oz., compared with year-ago output of 29,060 oz. at US$233. Production suffered in the summer as complex ore with high levels of impurities was encountered in a transition zone at Boinas East, which is part of the El Valle mine. As a result, grades and recovery rates fell, and processing costs for copper concentrates climbed. Since mid-September, the quality of the concentrates and gold recoveries has returned to normal.
With a lack of lower-grade copper ore for blending, Rio Narcea stockpiled 100,000 tonnes of material running 7-8 grams gold per tonne and up to 3% copper. This will be processed in 2002.
During the third quarter, Rio Narcea averaged a gold price of US$277 per oz. for its production.
For the first nine months, the company produced 89,820 oz. priced at US$220 per oz., up from 67,680 oz. at US$264 in the comparable period of 2000.
Mining at the Boinas East pit is expected to wind down by year-end. Underground development there is on schedule, with the ramp progressing to 1,124 metres. A initial 9-hole program of infill drilling below the Boinas East pit confirmed the continuity of mineralization and returned expected grade thicknesses. Definition drilling will resume early next year.
The company also completed four underground holes to test the extension of the North Black Skarn on 100-metre centres. The Skarn’s southern limit has been defined and the zone remains open in the three other directions.
Meanwhile, waste removal continues at the El Valle pit and mining on the main portion of the high-grade Charnela zone is expected to begin in early 2002.
In late June, Rio completed a US$4-million debenture facility with Deutsche Bank. The funds are being used for infill drilling and a bankable feasibility study of the Aguablanca nickel/copper/platinum-group-metal project in southwestern Spain. The results of the study are expected in the second quarter of 2002.
Three drill rigs are carrying out infill work on a 25-metre grid to estimate the reserves for the first three years of production at Aguablanca. Also, crews are re-surveying 20,000 metres of existing drill holes.
Looking ahead, Rio expects to produce a total of 125,000 oz. priced at US$190 per oz. this year.
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