Guidance for another Record Year at Island Gold,
with a Potential 22% Increase in Production and a Decrease in
All-in-Sustaining Costs
TORONTO, Feb. 11, 2016 /CNW/ - Richmont Mines Inc.
(TSX - NYSE MKT: RIC) ("Richmont" or the "Corporation"),
announces 2016 estimates that include a potential increase in
production of up to 22% from the cornerstone Island Gold mine that
is expected to drive a decrease in All-in Sustaining Costs
("AISC"). (All amounts are in Canadian dollars unless otherwise
indicated).
2016 Consolidated Operational Estimates
In 2016, company-wide production includes another year of
production growth from the cornerstone Island Gold Mine and another
solid year of consistent production from the Beaufor Mine.
Consolidated annual production is expected to be consistent with
2015 as increased production from Island Gold is expected to fully
offset the production decrease related to the 2015 closure of the
Monique Mine. Company-wide cash costs and AISC are expected to be
largely in-line with the prior year's guidance estimates.
Material assumptions include: an average gold
price of CAD$1,500 per ounce
(US$1,100 per ounce); and a foreign
exchange rate of 1.394 Canadian
dollars to the US dollar. Note: 2015 Cash cost and
AISC results are expected to be released on February 22, 2016.
Operational
Estimates
|
Island
Gold
|
Beaufor
|
2016 Consolidated
Estimates
|
Gold Ounces
Produced
|
62,000-67,000
|
25,000-30,000
|
87,000-97,000
|
Cash Costs per Ounce
(CAD$)(1)
|
$900-$960
|
$1,000-$1,060
|
$930-$1,000
|
Sustaining Capital
per Ounce (CAD$)
|
$260-$290
|
$230-$270
|
$250-$280
|
Corporate G&A per
Ounce (CAD$)
|
-
|
-
|
$95-$110
|
All-in Sustaining
Costs per Ounce (CAD$)(1)
|
$1,160-$1,250
|
$1,230-$1,330
|
$1,275-$1,390
|
|
|
|
|
Cash Costs per Ounce
(US$)(1)
|
$660-$705
|
$735-$780
|
$680-$730
|
Sustaining Capital
per Ounce (US$)
|
$190-$215
|
$170-$195
|
$185-$205
|
Corporate G&A per
Ounce (US$)
|
-
|
-
|
$70-$80
|
All-in Sustaining
Costs per Ounce (US$)(1)
|
$850-$920
|
$905-$975
|
$935-$1,015
|
(1) Cash costs and AISC
are non-GAAP measures. Refer to the Non-GAAP performance measures
section in the Third Quarter MD&A.
|
2016 Capital Investment & Exploration Estimates
The Corporation will remain focused on a disciplined and prudent
capital allocation strategy to ensure expenditures are fully funded
internally with sustaining capital investment requirements expected
to reduce compared with the prior year. Project capital investment
for the year is focused on the continued development of the Island
Gold Mine, as detailed in the recent Preliminary Economic
Assessment ("PEA") released in October
2015. Total capital investment estimates for the year
include a potential $10 million
(US$7.3 million) in discretionary
capital with allocation of these funds contingent upon the
prevailing gold price sustainably exceeding $1,500 per ounce (US$1,100 per ounce) in 2016.
Capital and
Exploration Investment
($M)
|
Island
Gold
|
Quebec
Division
|
2016
Consolidated
Estimates
|
Sustaining Capital
(CAD$)
|
$17.3
|
$6.8
|
$24.1
|
Sustaining Capital
(US$)
|
$12.7
|
$5.0
|
$17.7
|
Project Capital
(CAD$)(3)
|
$43.4
|
$ -
|
$43.4
|
Project Capital
(US$)(3)
|
$31.8
|
$ -
|
$31.8
|
Company-wide
Exploration (CAD$)
|
$7.3(1)
|
$1.1(2)
|
$8.4
|
Company-wide
Exploration (US$)
|
$5.4
|
$0.8
|
$6.2
|
(1)
Exploration costs required to complete the drilling programs
announced in September 2015.
(2) All
delineation and exploration drilling for the Beaufor Mine is
included in sustaining capital and $1.1 million is related to the
Quebec division outside the Beaufor property.
(3) Project
Capital for Island Gold includes accelerated underground
development of $25.0 million (US$18.3 million) related to the PEA
and $6.0 million (US$4.4 million) related to discretionary
development outside the scope of the PEA.
|
"The strategy in 2015 was to best position our asset base for
success with a key focus on developing our cornerstone Island Gold
Mine. With a 7-year mine life based on reserves, the accelerated
mine development program completed in 2015 has pre-developed more
than three years of production life. In addition, we have expanded
our tailings facility to accommodate production until 2023, and
increased the capacity of the mill facility to 900 tonnes per day.
As a result of our 2015 project investments, we have the
flexibility to manage project capital to ensure we always maintain
access to adequate liquidity to fully fund our growth strategy.
Supported by the results from the recent PEA completed in October,
we will remain focused on unlocking the significant potential of
the Island Gold Mine through initiatives that will position this
core asset for production growth and significant free cash flow
generation beginning in 2017," commented Renaud Adams, President and Chief Executive
Officer. He continued, "We begin 2016 with a strengthened
management team that brings a renewed commitment to delivering
results that positions Richmont for long-term success."
Island Gold Mine – 2016 Estimates
The Island Gold Mine is expected to deliver another year of
significant production growth that exceeds the record production
achieved in 2015. In 2016, production is expected to increase by up
to 22% over the prior year with cash costs and AISC expected to
decline over prior year guidance estimates. During 2016, the
Corporation will remain focused on an aggressive, but disciplined,
development strategy at the Island Gold Mine, which will position
the operation for significant production growth and increasing free
cash flow streams beginning in 2017, as detailed in the recent
PEA.
Island Gold Operational Estimates
|
|
2016 Island Gold
Estimates
|
|
Gold Ounces
Produced
|
62,000-67,000
|
|
CAD$
|
US$
|
Cash costs per
ounce
|
$900-$960
|
$660-$705
|
|
Sustaining Capex per
ounce
|
$270-$290
|
$195-$215
|
AISC per
ounce
|
$1,170-$1,250
|
$855-$920
|
- Annual production at Island Gold is expected to increase over
the prior year driven by increased underground productivity that is
expected to average approximately 800 tonnes per day in
2016.
- Increased production and enhanced operational efficiencies are
expected to underpin a decrease in cash costs and AISC over the
prior year's guidance estimates.
- During 2016, the operation will target a planned mining ratio
of approximately 60% of tonnes from stoping ore and 40% from
development ore. As a result, in 2016, unit mining costs will
remain at elevated levels of approximately $135 per tonne (approx. $210 per tonne of total operating costs), but are
expected to decline significantly beginning in 2017 as the stoping
versus development ore ratio is expected to substantially increase.
In 2016, stoping ore is expected to be mined from new resources
primarily in the second (60%) and third (20%) mining horizons, with
the remaining tonnes (20%) mined from the Lochalsh West and
Goudreau areas located in the upper area of the mine, which are not
included in the PEA deposit area. Ore development will be primarily
from the second and third horizons of the new resources between the
675 and 825 metre levels.
- Following a mill upgrade completed in October 2015, capacity of the mill facility has
been increased to 900 tonnes per day. In July 2016, an additional 3-week electrical mill
upgrade is scheduled, during which time the underground mine will
continue to operate and ore will be stockpiled for future
processing. As a result, the mill facility is expected to average
800 tonnes per day during the first half of the year, in-line with
underground productivity. Following the completion of the mill
upgrade, mill productivity is expected to increase to accommodate
processing of stockpiled ore by utilizing the excess mill capacity.
Recoveries are expected to average 96.5% during 2016.
Island Gold Capital Investment Estimates
Sustaining Capital
Investment ($M)
|
CAD$
|
US$
|
Capital Projects /
Fixed Assets
|
$13.1
|
$9.6
|
Sustaining
Underground Mine Development
|
$2.8
|
$2.1
|
Delineation
Drilling
|
$1.4
|
$1.0
|
Sustaining Capital
Investment
|
$17.3
|
$12.7
|
Project Capital
($M)(1)
|
CAD$
|
US$
|
Accelerated
Underground Mine Development
|
$31.0
|
$22.8
|
Infrastructure and
Equipment
|
$9.8
|
$7.1
|
Delineation Drilling
(PEA)
|
$2.6
|
$1.9
|
Total Project
Capital
|
$43.4
|
$31.8
|
(1) Accelerated
Underground Mine Development under Project Capital includes $25.0
million (US$18.3 million) in development related to the PEA and
$6.0 million (US$4.4 million) related to discretionary development
outside the scope of the PEA.
|
- Project capital in 2016 will continue to focus on unlocking the
potential of the Island Gold Mine and is primarily allocated to
accelerated mine development as well as related infrastructure
upgrades and equipment purchases as described in the PEA.
- Approximately 2,500 metres of ore development and 5,300 metres
of waste development is expected to be completed during the year,
including 1,000 metres of discretionary development related to new
resources outside the PEA deposit area. It is expected that by the
end of 2016 the main ramp will reach a vertical depth of 860 metres
and the east ramp will reach a vertical depth of 655 metres. Given
the significant near-mine exploration potential identified directly
to the east and west of the main deposit area considered in the
PEA, the Corporation will review the optimal location of the dual
ramp system as described in the PEA, in order to accommodate any
additional resources located outside the scope of the PEA.
- The project capital program for 2016 includes discretionary
capital investment of approximately $10
million (US$7.3 million), with
allocation of these funds contingent upon the prevailing gold price
sustainably exceeding $1,500 per
ounce (US$1,100 per ounce). The
discretionary $10 million
(US$7.3 million) includes 1,000
metres of development outside the PEA of $6
million (US$4.4 million) and
$4 million (US$2.9 million) in infrastructure and
equipment.
- Delineation drilling in 2016 will target the conversion of the
remaining resources located within the scope of the PEA deposit
area.
2016 Island Gold Exploration Estimates
Exploration
($M)
|
CAD$
|
US$
|
Near-mine Lateral
Drilling (12,000 metres)
|
$1.1
|
$0.8
|
Deep Directional
Drilling (17,000 metres)
|
$3.4
|
$2.5
|
Eastern and Western
Lateral Extensions (8,500 metres)
|
$0.9
|
$0.6
|
Regional Surface
Drilling (7,500 metres)
|
$0.8
|
$0.6
|
740 metre level
Exploration Drift (182 metres)
|
$1.1
|
$0.9
|
Total
Exploration
|
$7.3
|
$5.4
|
- During 2016, the Corporation will complete the drilling
programs that were announced in September
2015. All drilling efforts related to this program are
expected to be completed at the end of April
2016, at which time the Corporation will review all drilling
results and, based on that review, will subsequently provide an
update on any additional drilling programs that may be planned for
the second half of 2016.
Quebec Division – 2016 Estimates
The Quebec Division is comprised of the Beaufor Mine and Camflo
Mill, which processes ore from the Beaufor Mine. In 2016, the
Beaufor Mine is expected to deliver another year of consistent
production in-line with the prior year, to deliver a free cash flow
stream. Development of the Q Zone has been advanced with a target
of reaching the mineralized structure in the first quarter of
2016.
Beaufor Mine Operational Estimates
2016
Estimates
|
|
Production per
ounce
|
25,000-30,000
|
|
CAD$
|
US$
|
Cash costs per
ounce
|
$1,000-$1,060
|
$735-$780
|
Sustaining Capex and
Exploration per ounce
|
$230-$270
|
$170-$195
|
AISC per
ounce
|
$1,230-$1,330
|
$905-$975
|
- Annual production at the Beaufor Mine is expected to be
consistent with prior year's production with cash costs and AISC
also expected to be in-line with prior year guidance
estimates.
- The underground mine is expected to average approximately 360
tonnes per day (approx. 134,000 tonnes) with approximately 75% of
the ore feed from stoping ore and 25% from development ore. It is
expected that about 50% of the ore will be sourced from the Q
Zone.
- Unit costs for 2016 are expected to average $205 per tonne, including milling at the Camflo
Mill.
Quebec Division Capital Investment Estimates
Capital Investment
and Exploration ($M)
|
CAD$
|
US$
|
Project Capital
(Camflo)
|
$1.1
|
$0.8
|
Underground Mine
Development and Infrastructure
|
$4.0
|
$2.9
|
Delineation and
Exploration Drilling Beaufor Mine (24,500 metres)
|
$1.7
|
$1.3
|
Sustaining Capital
Investment
|
$6.8
|
$5.0
|
Non-Sustaining
Exploration (excluding Beaufor)
|
$1.1
|
$0.8
|
- Sustaining capital investment requirements are expected to be
in-line with 2015 and include approximately 625 metres of ramp
development and 100 metres of vertical development.
- During the year, the 24,500 metre drilling program will focus
drilling on the Q Zone extension and in the upper mine that will
target new resources and potential mine life extension at the
Beaufor Mine.
About Richmont Mines Inc.
Richmont Mines has produced
over 1.6 million ounces of gold from its operations in Quebec, Ontario and Newfoundland since beginning production. The
Corporation currently produces gold from the Island Gold Mine in
Ontario, and the Beaufor Mine in
Quebec. The Corporation is also
advancing development of the significant high-grade resource
extension at depth of the Island Gold Mine in Ontario. With 25 years of experience in gold
production, exploration and development, and prudent financial
management, the Corporation is well-positioned to cost-effectively
build its Canadian reserve base and to successfully enter its next
phase of growth. Richmont routinely posts news and other important
information on its website (www.richmont-mines.com).
Forward-Looking Statements
This news release contains
forward-looking statements that include risks and uncertainties.
When used in this news release, the words "estimate", "project",
"anticipate", "expect", "intend", "believe", "hope", "may" and
similar expressions, as well as "will", "shall" and other
indications of future tense, are intended to identify
forward-looking statements. The forward-looking statements are
based on current expectations and apply only as of the date on
which they were made. Except as may be required by law, the
Corporation undertakes no obligation and disclaims any
responsibility to publicly update or revise any forward-looking
statements or information, whether as a result of new information,
future events or otherwise.
The factors that could cause actual results to differ materially
from those indicated in such forward-looking statements include
changes in the prevailing price of gold, the Canadian-United States
exchange rate, grade of ore mined and unforeseen difficulties in
mining operations that could affect revenue and production costs.
Other factors such as uncertainties regarding government
regulations could also affect the results. Other risks may be set
out in Richmont Mines' Annual Information Form, Annual Reports and
periodic reports. The forward-looking information contained herein
is made as of the date of this news release.
Cautionary note to US investors concerning resource
estimates
Information in this press release is intended to
comply with the requirements of the Toronto Stock Exchange and
applicable Canadian securities legislation, which differ in certain
respects with the rules and regulations promulgated under the
United States Securities Exchange Act of 1934, as amended
("Exchange Act"), as promulgated by the SEC. The Reserve and
Resource estimates in this press release were prepared in
accordance with Regulation 43‑101 adopted by the Canadian
Securities Administrators. The requirements of
Regulation 43-101 differ significantly from the requirements
of the United States Securities and Exchange Commission (the
"SEC").
U.S. Investors are urged to consider the disclosure in our
annual report on Form 20-F, File No. 001-14598, as filed with the
SEC under the Exchange Act, which may be obtained from us (without
cost) or from the SEC's web site: http://sec.gov/edgar.shtml.
Regulation 43-101
The geological data in this news
release has been reviewed by Mr. Daniel
Adam, Geo., Ph.D., Vice-President, Exploration, an employee
of Richmont Mines Inc., and a qualified person as defined by
Regulation 43-101.
SOURCE Richmont Mines