River Gold’s cash flow swells (August 22, 2002)

Despite lower gold production River Gold Mines (RIV-T) managed to post a small profit of $105,957 (or nil per share) for the three months ended June 30.

That compares with year-ago earnings of $739,150 (2 per share). Revenue was virtually unchanged at $10.6 million, while cash flow crept up to $3.3 million.

For the first half of 2002, River’s net profit was $376,259 (or a penny per share) a nice turnaround from the year-ago loss of $1.2 million (or 4 per share). Revenues between the two periods climbed to nearly $21 million from $18.4 million the previous year. River’s cash flow swelled to $6.4 million, nearly triple a year earlier.

During the three- and six-month periods, River produced 21,600 oz. and 43,700 oz. of gold respectively, both slightly lower than the corresponding periods of the previous year. Fewer tonnes were milled, but that was partially offset by slightly higher grades. Cash cost during the recent quarter climbed US$6 to US$201 per oz. and fell US$21 to US$194 per oz. for the half-year. The company realized US$315 and US$303 for each ounce produced during the quarter and six-month period, respectively. Both represent significant improvements over the previous year.

During the quarter, River completed a new production shaft at the River Gold mine, near Wawa, Ont. The shaft, which is scheduled to be operational in February, is expected to reduce hauling costs significantly.

At last report, reserves at the mine stood at 1.2 million tonnes grading 10.14 grams gold per tonne. The deposit extends to 400 metres below surface, except in the shaft area, where it deepens to 460 metres.

River has begun mining at the Mishi open pit mine. 2 km west of the River Gold mill> The company is currently evaluating the project’s resources. At last count, the deposit’s overall resource stood at about 1.4 million tonnes grading 4.2 grams gold per tonne, including an open-pit resource of 772,000 tonnes grading 3.3 grams to a depth of 56 metres. An in-house evaluation outlined an open-pit resource of 450,000 tonnes grading 3.1 grams gold to a depth of 35 metres, with a stripping ratio of 3-to-1.

River expects that Mishi’s ore will lower the overall grade treated in the second half of 2002.

At the end of June, River had nearly $7 million in cash and equivalents.