Richmont Mines Reports Strong Revenue and Net Income in the First Quarter of 2009
2009-05-07 08:30 ET - News Release
Also News Release (U-NYSE)
MONTREAL, QUEBEC, CANADA -- (MARKET WIRE) -- 05/07/09
- Precious metals revenue up 32% and ounces sold increase 11%
- First quarter earnings of $1.4 million, or $0.05 per share, $1 million above prior year
- Exploration expenses of $1.2 million
- $27.4 million in cash and cash equivalents at March 31, 2009
Richmont Mines Inc. (TSX: RIC)(NYSE AMEX: RIC), a gold exploration, development and production company with operations in Canada, today announced financial and operational results for its first quarter ended March 31, 2009. Financial results are based on Canadian GAAP and dollars are reported in Canadian currency, unless otherwise noted.
Revenue for the first quarter of 2009 was $19.9 million, a 33% increase compared with $15.0 million in the first quarter of 2008. In the 2009 quarter, 16,614 ounces of gold were sold at an average price of US$908 (CAN$1,131) per ounce, compared with 14,995 ounces of gold sold in the same period the prior year at an average price of US$888 (CAN$947) per ounce. Total precious metals revenue was up $4.6 million, or 32%, to $18.8 million in the first quarter of 2009 compared with $14.2 million in the first quarter of 2008, driven by the increase in ounces sold at a 19% higher average selling price per ounce in Canadian dollars.
Operating costs, including royalties, for the first quarter of 2009 were $13.5 million compared with $10.4 million in the same period the prior year reflecting increased production. The average cash cost per ounce of gold sold was relatively flat at US$653 (CAN$813) in the first quarter compared with US$654 (CAN$697) in the first quarter of 2008 reflecting the impact of a stronger US dollar.
Exploration and project evaluation costs increased $0.1 million to $1.2 million in the first quarter of 2009, as the Company continued its efforts to grow its reserves. Exploration costs were approximately $0.8 million at the Beaufor Mine, $0.4 million at the Island Gold Mine, $0.2 million at the Francoeur property and about $0.1 million on other properties during the current quarter. The Company recorded exploration tax credits of $0.3 million during the quarter.
Net earnings for the first quarter of 2009 were $1.4 million, or $0.05 per share, compared with net earnings of $0.4 million, or $0.02 per share, in the first quarter of 2008.
Strong Cash Position and Solid Capital Structure
At March 31, 2009, cash and cash equivalents were $27.4 million, a $1.4 million increase from $26.0 million at December 31, 2008. The cash equivalents included $12.4 million of Canadian bankers acceptance and bank discount notes with high level credit ratings and $15.0 million in cash deposited in a major Canadian chartered bank. During the quarter, $1.6 million was invested in property, plant and equipment, the majority of which was at the Island Gold Mine. Richmont Mines has no long-term debt obligations, working capital of $28.3 million and only 26.1 million shares outstanding.
Island Gold Mine
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Three months ended
March 31, March 31,
2009 2008
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Tonnes 51,028 31,688
Head grade (g/t) 6.85 7.23
Gold recovery (%) 94.39 94.95
Recovered grade (g/t) 6.47 6.86
Ounces sold 10,613 6,992
Cash cost per ounce (US$) 671 759
Investment in property, plant and equipment
(thousands of CAN$) 1,291 475
Exploration expenses (thousands of CAN$) 368 312
Differed development metres 437 118
Diamond drilling (metres)
Definition 3,566 1,088
Exploration - 3,393
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During the first quarter of 2009, 51,028 tonnes of ore from the Island Gold Mine were processed at an average recovered grade of 6.47 g/t, and 10,613 ounces of gold were sold at an average price of US$911 (CAN$1,135) per ounce. For the same period last year, 31,688 tonnes of ore were processed at an average recovered grade of 6.86 g/t, and 6,992 ounces of gold were sold at an average price of US$879 (CAN$937) per ounce. Although the increase in tonnes processed, the mining costs were higher because of major repairs at the mill that resulted in several loss days of operations. The mill upgrade is advancing well as daily output reached peaks in excess of 700 tonnes per day. The cash cost was US$671 (CAN$836) during the quarter as compared with a cash cost of US$759 (CAN$809) for the same quarter the prior year. The higher cash cost in Canadian dollars is mainly due to a lower recovered grade of 6%, which is mainly attributable to lower grades in the development ore, and to increased definition drilling of 3,566 metres in 2009 compared with 1,088 metres in 2008.
Mr. Martin Rivard, President and CEO of Richmont Mines, commented, "During the first quarter we accelerated our development activities at Island Gold and the ore from the development zone was of a lower grade than we had previously experienced, resulting in an increase in cash cost per ounce in CAN$. We are confident that the grade levels will improve as the development activities progress. The mine is now producing near our projected level of around 600 tonnes per day and we anticipate strong production from this mine in 2009 and beyond and our focus is to significantly reduce operating costs."
Beaufor Mine
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Three months ended
March 31, March 31,
2009 2008
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Tonnes 29,463 30,697
Head grade (g/t) 6.47 8.28
Gold recovery (%) 97.86 97.98
Recovered grade (g/t) 6.34 8.11
Ounces sold 6,001 8,003
Cash cost per ounce (US$) 621 562
Investment in property, plant and equipment
(thousands of CAN$) 209 80
Exploration expenses (thousands of CAN$) 806 550
Differed development metres 91 -
Diamond drilling (metres)
Definition 4,119 1,749
Exploration 5,976 5,857
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During the first quarter of 2009, 29,463 tonnes of ore from the Beaufor Mine were processed at an average recovered grade of 6.34 g/t, and 6,001 ounces of gold were sold at an average price of US$902 (CAN$1,124) per ounce. In the same quarter the prior year, 30,697 tonnes of ore were processed at an average recovered grade of 8.11 g/t, and 8,003 ounces of gold were sold at an average price of US$896 (CAN$955) per ounce. The cash cost of production in the first quarter of 2009 was US$621 (CAN$773) per ounce sold, up from US$562 (CAN$599) in the first quarter of 2008, due to increased definition drilling, higher mining costs and a lower grade level of ore recovered during the current period. During the current quarter, Richmont processed 27,869 tonnes of custom milling ore at the Camflo Mill while there was no custom milling at Camflo Mill in the 2008 first quarter.
Mr. Rivard continued, "We are increasing our efforts to reduce our operating costs at Beaufor Mine while maintaining a significant exploration program of approximately 45,000 metres of drilling for 2009."
Francoeur
Richmont has decided to move forward with exploration activities at the Francoeur Project in Quebec, where it previously mined 345,000 ounces of gold, which were mainly processed at the Camflo Mill, prior to ceasing operations in 2001 when the relatively low price of gold at the time could not justify additional capital expenditures. The mine was subsequently flooded in 2003. The Company began preparation work to start dewatering activities of the underground openings and will upgrade the existing hoist and related infrastructure. This work is expected to be completed over an eight month period. A surface drilling program consisting of approximately 8,000 metres is planned for this summer with the objective of increasing known resources. Richmont's 2009 budget for dewatering and drilling program is approximately CAN$4.5 million. The Company also plans to file a technical report (NI 43-101) during the third quarter of 2009.
Appointment
After the passing of Mr. Jean-Guy Rivard, founder and Chairman of Richmont Mines, on March 28, 2009, the Company appointed Mr. Denis Arcand as Interim Chairman of the Board of Directors until the next Annual and Special General Meeting of the Company. Mr. Arcand was Vice President of the Board of Directors and has been a Director of Richmont Mines since September 1995.
Furthermore, Ms. Sandra Cauchon, lawyer of Richmont Mines, has been appointed as secretary of the Company on February 24, 2009, in replacement of Ms. Stephanie Lee.
Outlook
Mr. Rivard concluded, "We will increase our efforts on production cost reductions at both operating mines while maximising our exploration efforts. We are pleased to initiate exploration and development work at our past producing Francoeur Mine, which fits well into our growth plan. We will also continue to evaluate potential acquisition and partnership opportunities to fill our pipeline with additional reserves and resources."
Annual and Special General Meeting
Richmont Mines'Annual and Special General Meeting will be held on Thursday, May 14, 2009, at Suite 2500, Salle Lafleur A, 1000 De la Gauchetiere West Street, Montreal, Quebec, at 9:00 a.m.. The annual meeting presentation will also be available on Richmont Mines' Web site.
Other Upcoming Events
Mr. Martin Rivard, President and CEO, will present at the New York Society of Security Analysts' 2009 Metals & Mining conference at the NYSSA New York City offices, 1177 Avenue of the Americas, beginning at 3:40 p.m. on Wednesday, June 3, 2009. A copy of Mr. Rivard's presentation will be available on Richmont Mines' Web site, in the Investor Relations section, on the day of the presentation.
Martin Rivard
President and Chief Executive Officer |
