Richmont Mines earns $1.63-million in 2008
2009-02-26 11:29 EST - News Release
Mr. Martin Rivard reports
RICHMONT MINES REPORTS RECORD SALES FOR THE FOURTH QUARTER AND FULL YEAR 2008
Richmont Mines Inc. has released financial and operational results for its fourth quarter and year ended Dec. 31, 2008. Financial results are based on Canadian GAAP (generally accepted accounting principles) and dollars in Canadian currency, unless otherwise noted.
Highlights:
- Fourth-quarter revenue more than doubled to $22.9-million;
- Full-year revenue increased 85 per cent to $70.6-million;
- Gold sales at 70,945 ounces were 54 per cent above 2007;
- Acquisition of Patricia Mining Corp. completed in the fourth quarter.
Revenue for the fourth quarter of 2008 was $22.9-million, a 122-per-cent increase compared with $10.3-million in the fourth quarter of 2007. Net income for the fourth quarter of 2008 was $2.1-million, or nine cents per share, compared with a net loss of $1-million, or three cents per share, in the fourth quarter of 2007, as the significant revenue increase in the 2008 fourth quarter more than offset increased operating and exploration costs. Total precious metals revenue was up $12.6-million, or 148 per cent, to $21.1-million in the fourth quarter of 2008, compared with $8.5-million in the fourth quarter of 2007, as a result of a 102-per-cent increase in ounces of gold sold, combined with 23-per-cent higher selling prices per ounce in Canadian dollars. In the 2008 fourth quarter, 22,116 ounces of gold were sold at an average price of $897 (U.S.) ($956 (Canadian)) per ounce, compared with 10,949 ounces of gold sold in the same period last year at an average price of $724 (U.S.) ($778 (Canadian)) per ounce.
Solid fourth-quarter results
Operating costs, including royalties, for the fourth quarter of 2008 were $13.0-million, compared with $6.5-million in the same period the prior year. However, the average cash cost of production was lower at $550 (U.S.) ($586 (Canadian)) per ounce of gold sold in the fourth quarter of 2008, compared with $556 (U.S.) ($598 (Canadian)) in last year's fourth quarter. The average cash cost per ounce during the reported quarter benefited from improved grades when compared with the prior year's period.
Exploration and project evaluation costs were $2.4-million in the fourth quarter of 2008, $1.1-million above exploration and project evaluation costs of $1.3-million in the 2007 fourth quarter, reflecting the company's continued efforts to grow its reserves and resources. Approximately $700,000 in exploration costs were incurred at the Beaufor mine, $900,000 at the Island gold mine and $500,000 at the Golden Wonder project in the 2008 fourth quarter. During the 2007 fourth quarter, approximately $500,000 in exploration costs were incurred at the Beaufor mine, $200,000 at Island gold mine, and $500,000 at Golden Wonder. Richmont announced in October the termination of the joint venture option at the Golden Wonder project.
Strong cash position and no debt
At Dec. 31, 2008, cash and cash equivalents were $26.0-million, compared with $27.3-million at Dec. 31, 2007, and $29.6-million at Sept. 30, 2008. During the quarter, Richmont acquired all the outstanding shares of Patricia Mining Corp., using a combination of cash and common shares, resulting in the lower cash balance compared with the end of the 2008 third quarter. Richmont Mines has no long-term debt obligations and has working capital of $26.8-million. The cash equivalents included $18.3-million of Canadian bankers acceptance and bank discount notes with high-level credit ratings, and $7.7-million in cash deposited in a major Canadian chartered bank.
POSITIVE PRODUCTION TREND AT THE ISLAND GOLD MINE (1)
Three Three Fiscal Fiscal
months months year year
ended ended ended ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2008 2007 2008 2007
Tonnes 47,898 35,202 161,320 35,202
Head grade (g/t) 9.34 6.84 7.65 6.84
Gold recovery (%) 96.71 94.36 95.83 94.36
Recovered grade (g/t) 9.04 6.45 7.33 6.45
Ounces sold 13,915 7,302 38,037 7,302
Cash cost per
ounce (U.S.) $546 $621 $659 $621
Investment in property,
plant and equipment
(thousands of dollars) 1,591 1,653 3,079 4,495
Exploration expenses
(thousands of dollars) 868 239 2,293 505
Diamond drilling
(metres)
Exploration and
definition 5,888 2,722 16,665 12,940
During the 2008 fourth quarter, 47,898 tonnes of ore from the Island gold mine were processed at an average recovered grade of 9.04 grams per tonne, and 13,915 ounces of gold were sold at an average price of $890 (U.S.) ($949 (Canadian)) per ounce. For the same period last year, 35,202 tonnes of ore were processed at an average recovered grade of 6.45 g/t, and 7,302 ounces of gold were sold at an average price of $726 (U.S.) ($780 (Canadian)) per ounce. Cash costs at Island gold decreased to $546 (U.S.) ($582 (Canadian)) from $621 (U.S.) ($668 (Canadian)) in last year's fourth quarter. The fourth quarter of 2007 was the Island gold mine's initial quarter of production.
For the year ended Dec. 31, 2008, 161,320 tonnes of ore were processed at an average recovered grade of 7.33 g/t, and 38,037 ounces of gold were sold at an average price of $867 (U.S.) ($924 (Canadian)) per ounce. During the first nine months of 2008, the mine produced at approximately 65 per cent of its design capacity. In the fourth quarter of 2008, production was at around 80 per cent of design capacity, resulting in a notable improvement in the cash cost of production.
(1) Prior to its acquisition of Patricia Mining, which held a 45-per-cent interest in the Island gold project, Richmont Mines reported 100 per cent of the consolidated results of the Island gold mine, in compliance with AcG-15, which stipulates that a holder of variable interests must consolidate the accounts if it intends to assume the majority of the expected losses and/or receive the majority of the residual returns of the variable-interest entity (VIE). Richmont held a 55-per-cent stake in the unincorporated joint venture, and, as its share of the earnings and/or losses differed from the percentage that it owned, the company was therefore considered the primary beneficiary of the VIE.
Martin Rivard, president and chief executive officer of Richmont Mines, commented: "Production at Island gold continued to improve in the fourth quarter and reached more than 500 tonnes per day, well ahead of production from the previous quarter. Better availability of experienced miners, an improved management team, and access to higher-grade mining areas contributed to the improved results. We will maintain our efforts to improve production and increase exploration and development work."
CONTINUED STEADY PERFORMANCE AT THE BEAUFOR MINE
Three Three Fiscal Fiscal
months months year year
ended ended ended ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2008 2007 2008 2007
Tonnes 30,343 13,921 115,674 97,429
Head grade (g/t) 8.64 8.21 9.00 8.47
Gold recovery (%) 97.27 98.28 98.31 98.72
Recovered grade (g/t) 8.41 8.07 8.85 8.36
Ounces sold 8,201 3,613 32,908 26,182
Cash cost of
production per
ounce (U.S. dollars) $555 $430 $509 $468
Investment in property,
plant and equipment
(thousands of
Canadian dollars) $15 $217 $127 $1,060
Exploration expenses
(thousands of
Canadian dollars) $706 $524 $2,921 $1,874
Diamond drilling
(metres)
Definition 4,699 436 11,439 3,095
Exploration 9,298 6,309 33,765 25,157
During the fourth quarter of 2008, 30,343 tonnes of ore from the Beaufor mine were processed at an average recovered grade of 8.41 grams per tonne, and 8,201 ounces of gold were sold at an average price of $908 (U.S.) ($968 (Canadian)) per ounce. In the same quarter of 2007, 13,921 tonnes of ore were processed at an average recovered grade of 8.07 g/t, and 3,613 ounces of gold were sold at an average price of $719 (U.S.) ($773 (Canadian)) per ounce. Cash costs at the Beaufor mine increased to $555 (U.S.) ($592 (Canadian)) from $430 (U.S.) ($462 (Canadian)) in last year's fourth quarter, largely due to higher mining costs. During the current quarter, Richmont processed 32,643 tonnes of custom milling ore at the Camflo mill, compared with 46,317 tonnes during the 2007 fourth quarter.
During the year ended Dec. 31, 2008, 115,674 tonnes of ore were processed at an average recovered grade of 8.85 g/t, and 32,908 ounces of gold were sold at an average price of $886 (U.S.) ($944 (Canadian)) per ounce. In 2007, 97,429 tonnes of ore were processed at an average recovered grade of 8.36 g/t, and 26,182 ounces of gold were sold at an average price of $693 (U.S.) ($745 (Canadian)) per ounce. The cash cost per ounce was $509 (U.S.) ($543 (Canadian)) during the current period compared with $468 (U.S.) ($503 (Canadian)) last year.
2008 review of operations
For the year ended Dec. 31, 2008, revenue was $70.6-million, or 85 per cent above revenue of $38.1-million in 2007, reflecting increased gold sales at higher prices. In 2008, 70,945 ounces of gold were sold at an average price of $876 (U.S.) ($934 (Canadian)) per ounce, compared with 46,193 ounces of gold sold in 2007 at an average price of $699 (U.S.) ($751 (Canadian)) per ounce.
Operating costs, including royalties, for the year ended Dec. 31, 2008, were $44.6-million, compared with $24.8-million last year, primarily due to the costs associated with advancing the Island gold mine to current production levels, as well as higher operating costs at the Beaufor mine. Island gold began production during last year's fourth quarter.
Exploration and project evaluation costs were $10.5-million for 2008, compared with $3.3-million in 2007, as the company focused its exploration efforts on the Island gold and Beaufor mines, which had 2008 exploration costs of $2.3-million and $2.9-million, respectively. In addition, Richmont spent $4.2-million at the Golden Wonder exploration project prior to its October, 2008, decision to terminate this project.
Net income in 2008 was $1.6-million, or seven cents per share, compared with net earnings of $6.7-million, or 28 cents per share, in 2007, which included an $8.1-million gain on the sale of mining assets.
GOLD PRODUCTION UP 62% IN 2008
Gold production
2008
Mine Tonnes Mill Recovered Ounces
(metric) recovery grade
(%) (g/t)
Island gold (1) 165,941 95.83 7.35 39,224
Beaufor 123,958 98.31 8.62 34,353
East Amphi (2) - - - -
======
Total 73,577
======
Gold production
2007
Mine Tonnes Mill Recovered Ounces
(metric) recovery grade
(%) (g/t)
Island gold 35,403 94.36 6.46 7,348
Beaufor 96,943 98.72 8.41 26,204
East Amphi 118,179 96.95 3.09 11,752
======
Total 45,304
======
(1) Commercial production started on Oct. 1, 2007. Prior to the
acquisition of Patricia Mining, which held a 45-per-cent interest
in the Island gold project, Richmont Mines reported 100 per cent
of the consolidated results of the Island gold mine, in compliance
with AcG-15, which stipulates that a holder of variable interests
must consolidate the accounts if it intends to assume the majority
of the expected losses and/or receive the majority of the residual
returns of the variable interest entity (VIE). Richmont held a
55-per-cent stake in the unincorporated joint venture, and, as its
share of the earnings and/or losses differed from the percentage
that it owned, the company was therefore considered the primary
beneficiary of the VIE.
(2) Closed at the end of the second quarter of 2007.
Island Gold produced 165,941 tonnes of ore at an average recovered grade of 7.35 g/t, for 39,224 ounces in 2008, compared with 35,403 tonnes at 6.46 g/t and 7,348 ounces in 2007. The Island gold mine commenced production on Oct. 1, 2007. The Beaufor mine produced 123,958 tonnes of ore at 8.62 g/t for production of 34,353 ounces in 2008, compared with production of 96,943 tonnes at 8.41 g/t for 26,204 ounces in 2007. In 2007, the East Amphi mine produced 118,179 tonnes of ore at 3.09 g/t for 11,752 ounces, prior to its sale in June of 2007. Richmont's total gold production in 2008 was 73,577 ounces, 62 per cent above 2007 production of 45,304 ounces.
BEAUFOR MINE RESERVES AND RESOURCES
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2008, 2008, 2008, 2007, 2007, 2007,
Reserves tonnes grade ounces tonnes grade ounces
(metric) (g/t Au) (metric) (g/t Au)
Proven 96,678 7.17 22,287 90,822 7.56 22,085
Probable 147,385 10.03 47,505 164,879 10.10 53,547
Total proven and
probable 244,063 8.89 69,792 255,701 9.20 75,632
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2008, 2008, 2008, 2007, 2007, 2007,
Reserves tonnes grade ounces tonnes grade ounces
(metric) (g/t Au) (metric) (g/t Au)
Measured 101,767 5.46 17,861 101,160 5.73 18,639
Indicated 635,839 6.37 130,139 591,534 6.45 122,628
Total measured and
indicated 737,606 6.24 148,000 692,694 6.34 141,267
Inferred 655,804 7.35 154,927 133,962 7.03 30,278
Proven and probable reserves at the Beaufor mine were stable at 69,792 ounces at the end of 2008, compared with 75,632 ounces at the end of 2007, as reserves identified in the company's exploration program nearly offset production for the year. Measured and indicated resources were estimated at 148,000 ounces, compared with 141,267 ounces at the end of 2007. The 2008 exploration program resulted in a significant increase in inferred resources, which grew from 30,278 ounces in 2007 to 154,927 ounces at the end of 2008.
In 2009, Richmont plans to complete more than 45,000 metres of drilling to increase the company's level of confidence of the potential for further development at depth.
ISLAND GOLD RESERVES AND RESOURCES
Dec. 31, Dec. 31,
2008, 2007,
Reserves tonnes grade ounces tonnes grade ounces
(metric) (g/t Au) (metric) (g/t Au)
Island and
Lochalsh zones
Proven 308,205 9.08 89,925 369,325 8.91 105,773
Probable 722,982 8.57 199,144 689,555 8.11 179,763
Total proven and
probable 1,031,187 8.72 289,069 1,058,880 8.39 285,536
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2008 2008 2008 2007 2007 2007
Reserves (1) tonnes grade ounces tonnes grade ounces
(metric) (g/t Au) (metric) (g/t Au)
Island, Lochalsh
and Goudreau zones
Measured 18,948 8.70 5,300 8,135 6.45 1,687
Indicated 403,249 10.87 140,954 582,032 10.19 190,735
Total measured
and indicated 422,197 10.77 146,254 590,167 10.14 192,422
Inferred 676,608 9.65 209,985 613,635 9.80 193,350
(1) Resources presented in the above table are exclusive of reserves and do not have
demonstrated economic viability at this time.
At the Island gold mine, proven and probable reserves were estimated at 289,069 ounces of gold at the end of 2008, compared with 285,536 ounces last year, as the company's exploration program identified new reserves sufficient to replace 2008 production. Over all, more than 26,000 metres of definition and exploration drilling are planned for 2009 at Island gold.
Outlook
Mr. Rivard concluded: "The improvements we made at Island gold, combined with continued strong production at Beaufor, have established a solid operating foundation for the company. We enter 2009 with a strong balance sheet with no long-term debt, and we are positioned to take immediate advantage of rising gold prices. Also, we will be actively looking for acquisitions or partnerships to expand our pipeline of projects, further increase our reserve base, and increase future production rates."
FINANCIAL DATA
Three Three Fiscal Fiscal
months months year year
ended ended ended ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2008 2007 2008 2007
Results (in thousands
of Canadian dollars)
Revenue $22,908 $10,321 $70,591 $38,071
====== ==== ====== ======
Net earnings (loss) $2,086 ($986) $1,635 $6,671
====== ==== ====== ======
Cash flow from
(used in) operations 7,428 (744) 12,117 5,999
Results per share ($)
Net earnings (loss)
basic and diluted $0.09 ($0.03) $0.07 $0.28
Average selling price
of gold per ounce 956 778 934 751
Average selling price
of gold per ounce
(U.S. dollars) 897 724 876 699
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