Smaller top line throws Rio Narcea for a loss

The combination of a lower gold price and a production shortfall at the El Valle mine in northwestern Spain resulted in a US$4.8-million loss for Rio Narcea Gold Mines (RNG-T) in 2000.

The loss included a US$1.6-million writedown of exploration assets, taken against properties in the Navelgas and Oscos gold belts in Asturias province. The total loss per share was US7.

Revenues declined to US$27.5 million in 2000, from US$31.7 million in 1999 when Rio Narcea lost US$2.2 million.

The company realized an average price of US$290 per oz. on gold sales, against an average US$279 spot price, slightly lower than in 1999, but the real impact on revenues was lower output at El Valle, which produced 97,016 oz. gold in 2000, down from 103,785 oz. in the previous year.

Higher mill throughput (724,000 tonnes, against 670,000 tonnes in 1999) was more than offset by a decline in grade. The head grade decreased to 4.6 grams gold per tonne from 5.3 grams in 1999, and recovery in the mill fell to 89.7% from 90.1% in 1999. Cash costs rose to US$202 per oz. from US$185, largely on the back of increased smelter and transportation costs.

Rio Narcea is expecting the coming year to be substantially better, as two higher-grade zones on the El Valle property (Sienna and Charnela) enter production.