Richmont Mines' Newfoundland Operations Extended to at Least Seven Years With Acquisition of Hammerdown Deposit
MONTREAL--(BUSINESS WIRE)--March 30, 2000--(TSE:RIC. - news; AMEX:RIC - news) Richmont Mines Inc. has acquired from a private company, the Hammerdown property located near King's Point in the mining district of Springdale, Newfoundland. This property is 88 miles from the Nugget Pond Mine, which currently produces 45,000 ounces of gold per year at a cash cost of U.S.$143 per ounce.
This is a very important acquisition for Richmont Mines in that it will assure the continuation of the milling operations at the Nugget Pond Division for a minimum of seven years. When the Hammerdown Mine goes into production, the ore will be trucked to and treated at the Nugget Pond Mill.
According to a recent evaluation from Abiting Inc., the Hammerdown deposit contains proven and probable reserves of 297,000 tons of ore at a grade of 0.61 ounces of gold per ton, representing approximately 181,500 ounces of gold. Furthermore, resources are estimated to contain an additional 100,000 ounces of gold.
Including the evaluation expenses, the purchase price is $6 million of which $5.4 million was paid in cash. The remaining $600,000 will be paid out at $10 for every ounce of gold between the 70,000th ounce and the 130,000th ounce of gold produced from the Hammerdown deposit. After the deposit has produced 200,000 ounces of gold, a royalty of $20 per ounce will be payable to the previous owner, Major General Resources Ltd., if the gold price exceeds U.S.$290 per ounce.
Based on the proven and probable reserves, the purchase price is evaluated at CAN$33 (U.S.$23) per ounce of gold; by taking into account the resources, the cost is CAN$21 (U.S.$14) per ounce. The potential to increase reserves is excellent, and a systematic exploration program will take place to increase known reserves.
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