Unable to maintain its record-setting production rate of the first quarter, Rio Narcea Gold Mines (RNG-T) posted a net loss of US$474,500 (or 0.07 per share) for the three months ended June 30. The company enjoyed a small profit during the first quarter.
During the second quarter of 2000, Rio Narcea lost US$2.8 million (4.3 per share). Revenue between the two periods increased to US$7.1 million from US$4.6 million. Cash flow from operations (after changes to non-cash working capital items) during the recent quarter was US$2.1 million, well off the US$6 million generated in the corresponding period of 2000.
For the first half of 2001, the company’s loss amounted to US$47,600 (0.01 per share), compared with US$3.3 million (5.1 per share) the previous year. Revenue climbed to US$16.1 million from US$11.3 million. Cash flow slid about US$1.8 million to US$3 million.
Recent second-quarter gold production tallied 26,802 oz. at a total cash cost of US$192 per oz. This was nearly double the year-ago 14,161 oz. produced at US$286 per oz., but off the record 34,495 oz. produced at US$174 per oz. during the first quarter of 2001. The company realized an average of US$267 per oz. for its second-quarter production.
Mill throughput of 135,733 tonnes was off 21,166 tonnes from the first quarter and 46,989 tonnes lower than a year earlier. Head grade fell to 6.6 grams gold per tonne from 7.3 grams in the first quarter — year-ago head grades averaged 2.7 grams. Recovery rate in the mill was virtually unchanged from the first quarter at 93.5%. A year earlier, the figure was 89.7%.
Rio Narcea says the drop-off in second-quarter production was expected, due to the processing of lower grades during June. Additionally, 100,000 tonnes of ore running 7-8 grams gold and up to 3% copper were stockpiled, due to the unavailability of lower-grade copper ore for blending. This ore is slated for processing in early 2002.
So far this year, gold production totalled 61,297 oz. at a cash cost of US$182 per oz. The company still expects to meet its 2001 gold production target of 125,000 oz. at US$190 per oz.
In mid-July, Rio exercised an option to acquire the Aquablanca nickel-copper-platinum group metals project in southwestern Spain from Atlantic Copper and the Spanish government. This followed the completion of a due diligence review, which included metallurgical tests, drilling, geotechnical studies and the re-logging and re-assaying of considerable core.
Rio Narcea also examined a mine plan based on a 10-to-12-year, open-pit operation producing about 7,000 tonnes nickel per year with copper and platinum-group-metal byproducts.
The company plans a program of infill and deep drilling for a bankable feasibility study. This is slated for completion in early 2002. Pending positive results, commercial production could begin as early as 2003. The drilling and study will be funded by a $4-million debenture facility completed with Deutsche Bank.
The company remains tight on cash. In July, it drew down the remaining US$500,000 of its US$1.5-million working capital facility with Deutsche Bank.
At the end of June, Rio Narcea had US$1.7 million in cash and cash equivalents and a net working capital deficiency of US$6.7 million, thanks to an increase in the short-term debt. Long-term debt stands at US$20.3 million.
Be the first to comment on "Rio Narcea slips back into red (August 28, 2001)"