TORONTO, November 1, 2016 /PRNewswire/ --
Potential for Increased Production
to 1,100 Tonnes per Day with Minimal Capital Investment
Richmont Mines Inc. (TSX: RIC) (NYSE MKT: RIC) ("Richmont" or
the "Corporation"), is providing a status update on an expansion
case Preliminary Economic Assessment (the "Expansion Case PEA")
currently underway for the Island Gold Mine located in northern
Ontario, Canada. The Expansion
Case PEA is expected to be released in the first half of 2017 in
order to incorporate the 2016 year-end Resource estimates and will
consider a potential ore mining and mill processing rate increase
to 1,100 tonnes per day beginning in 2018, with minimal capital
investment being required. For the purposes of this Expansion Case
PEA, only the most contiguous portion of the resources located
between the 450 metre and 1,000 metre levels will be incorporated.
Management will continue to evaluate a further upside scenario of
up to 1,200 tonnes per day as additional resources are included in
the mine plan. (All amounts are in Canadian dollars unless
otherwise indicated).
"The Expansion Case PEA will leverage the impressive performance
from the Island Gold Mine achieved to date as the operation is
already exceeding the production and productivity targets
identified in the PEA released in October
2015. The potential 1,100 tonnes per day expanded case
scenario would require minimal capital investment as the operation
would utilize the current ramp system with no need for an
additional high speed ramp and would be internally funded utilizing
our strong cash balance and growing cash flow profile." stated
Renaud Adams, CEO. He continued,
"Concurrently, the encouraging results reported to date from the
near-mine drilling program support the continued evaluation of a
further expansion scenario of up to 1,200 tonnes per day as we grow
our resource inventory and extend mine life."
EXPANSION CASE PEA OVERVIEW
The objective of the 2016 Expansion Case PEA is to evaluate the
most cost effective plan to mine over four mining horizons the
portion of the mineral resources located in the main area of
interest located between the 450 metre and 1,000 metre levels, in
conjunction with evaluating the project capital, sustaining
capital, operating costs, internal rate of return ("IRR") and
payback of the expansion to 1,100 tonnes per day as compared to the
900 tonnes per day base case scenario currently being executed.
Release of the Expansion Case PEA results is expected to be in the
first half of 2017, which will allow for the incorporation of the
December 31, 2016 Mineral Resource
estimates, which is expected to positively impact production and
cost estimates. The Expansion Case PEA analysis will include
consideration of the following:
- An ore mining and processing rate of 900 tonnes per day in
2017, progressively increasing to 1,100 tonnes per day by the end
of 2018 when the development of the ramp system is completed in the
higher grade third mining horizon.
- The total mining (ore and waste) and haulage rate productivity
improvements achieved to date that would support the continued
utilization of the current ramp haulage system, eliminating the
project capital requirement for an additional high speed haulage
ramp that was outlined in the Preliminary Economic Assessment for
the Island Gold Mine released in October
2015 (the "2015 PEA").
- Mill project capital requirements to increase milling capacity
from the current average of 900 tonnes per day to an average of
1,200 tonnes per day. (Currently estimated to be less than
$15 million, based on the 2015
PEA).
- Underground mine project capital requirements for 2017 to
complete the accelerated development of the current ramp system in
the third mining horizon, related mine utilities and ventilation
system.
- Accelerated capital development in 2017 to positioning the
Island Gold Mine operation to return to sustaining only capital
requirement levels in 2018.
The Expansion Case PEA analysis will be based on a portion of
the resources as shown in Figure 1. For the preliminary analysis
the 2015 Resource estimates (inclusive of Mineral Reserves) have
been used to determine the increased mining rates and potential
infrastructure required. The Expansion Case PEA will incorporate
the 2016 year-end Mineral Resource estimates (expected to be
released in mid-February 2017), which
is anticipated to positively impact production and cost
estimates.
Figure 1: Expansion Case PEA Area
For purposes of the Expansion Case PEA the 2016 Mineral
Resources (inclusive of Mineral Reserves) will be included in the
study. Only the resources within the main continuous structure
between the 450 metre and 1,000 metre levels will be incorporated.
More specifically, all mineral resources above the 450 metre level,
below the 1,000 metre level, and within isolated mineral resource
blocks located outside the main structure, will be excluded from
the Expansion Case PEA.
The economic analysis contained in the Expansion Case PEA
will be partially based on inferred resources, and will therefore
be preliminary in nature. Inferred resources are considered too
geologically speculative to have mining and economic parameters
applied to them, or to be categorized as Mineral Reserves. There is
no certainty that the conversion of mineral resources to mineral
reserves will be realized. Mineral resources that are not mineral
reserves do not have demonstrated economic viability.
EXPANSION CASE PEA BACKGROUND
Near-Mine Resource Growth Potential and Improved
Productivities Support Expansion Case PEA
Based on the significant drilling indications for continued
growth of the near-mine resources, the Expansion Case PEA will
consider an expanded 1,100 tonnes per day scenario, while
maintaining a minimum projected life of mine of 7 years. The
Expansion Case PEA will consider a base case production rate of 900
tonnes per day in 2017, progressively increasing to 1,100 tonnes
per day by the end of 2018, once the accelerated development of the
ramp system in the third mining horizon is completed, and an
adequate number of mining stopes are established.
During the second and third quarters of 2016, the mine achieved
base case productivity of 900 tonnes per day (excluding the 16 days
of the underground mine shutdown) even though approximately 50% of
the ore mined came from ore development, which has a lower
productivity rate when compared to long-hole stoping. For the first
nine months of the year, long-hole stoping activities were
primarily limited to the first mining horizon with long-hole
stoping in the extensions of the second mining horizon only
recently initiated in October. Including ore and waste, the mine
has maintained an average total mining rate year to date of
approximately 1,900 tonnes per day, which includes extra waste
development required from the accelerated development strategy. As
of the end of the third quarter, the eastern section of the ramp
system located in the third mining horizon has reached a level of
810 vertical metres and is expected to be completed in the first
quarter of 2017. The accelerated development of the western section
of the ramp system in the third mining horizon will be initiated in
the first half of 2017 and is expected to be completed in the first
half of 2018. This will allow for multiple stopes and reduced cycle
times in the higher grade third mining horizon during the second
half of 2018.
The Expanded Case PEA is considering: (1) the total mining (ore
and waste) and haulage productivity improvements achieved to date;
(2) the projected increase in ore mining productivity as the ramp
system is completed along the third mining horizon; and (3) the
projected reduction in waste requirements after 2018 as the
operation returns to sustaining only waste development levels. The
Expansion Case PEA will not consider the need for the additional
high speed haulage ramp previously identified in the 2015 PEA,
thereby limiting the extra infrastructure requirement to only the
expansion of milling capacity, which should significantly improve
financial returns.
The Expanded Case PEA will consider an expanded milling capacity
from the current average rate of 900 tonnes per day to an average
throughput of 1,200 tonnes per day. A conceptual study prepared by
Soutex Inc. that was incorporated into the 2015 PEA indicated that
the mill capacity could be increased to 1,200 tonnes per day with
an investment of less than $15
million. It is expected that the expanded milling capacity
to 1,200 tonnes per day could be completed in time to accommodate
the increased mining rate in 2018.
The Corporation has been operating the Island Gold Mine since
2007. The Expansion Case PEA will utilize the current actual cost
structure including mining, milling, site G&A and royalties, as
well as underground development and infrastructure capital costs.
For mining of the deeper mineral resources, the current cost
structure will be adjusted to consider the impact of mining from
these lower elevations while also considering the economies of
scale of the increased mining rate.
While the Expansion Case PEA will limit the increased production
rate to 1,100 tonnes per day (based only on the contiguous portion
of the resources as described earlier), an upside opportunity does
exist to further increase the production to up to 1,200 tonnes per
day as additional resources are delineated, more parallel
structures are accessed and the upper resources (not included in
the Expansion Case PEA) are incorporated. The 1,200 tonnes per day
scenario could require additional waste development if the
exploration drilling program discovers new resource blocks in the
eastern lateral extension, which is located outside the Expansion
Case PEA area (Refer to Figure 1). The Expansion Case PEA will not
take into consideration the exploration potential of the deposit
both laterally and at depth. Any additional resources identified
through the Phase 2 exploration drilling program could eventually
be part of a further evaluation process.
2016 MINERAL RESERVES AND RESOURCES
Near-Mine Delineation and Infill Drilling (Figure 2 and
Figure 3)
As previously disclosed in a press release dated October 12, 2016, the Corporation is advancing
delineation and infill exploration drilling programs within the
Expansion Case PEA area, with results to date demonstrating the
significant potential to grow the near-mine reserves and identify
new resource blocks located within the Expansion Case PEA area.
Positive Grade and Tonnage Reconciliations
During the first nine months of 2016, the Island Gold Mine
experienced positive grade and tonnage reconciliations over the
December 31, 2015 resource block
model, which was used to develop the 2016 mine plan. For the
nine-month period, which included mining in the first and second
mining horizons only, with no tonnes mined in the higher grade
third mining horizon, the mine achieved overall positive
reconciliations on grades and tonnes of 25% and 6%, respectively,
or 32% more ounces, as compared with the December 31, 2015 resource model. The model caps
high grade assays at 95 g/t gold. Mine management is currently
analysing the impact of the capping value used, as well as other
resource modeling parameters, all of which will be considered in
the upcoming December 31, 2016
Mineral Reserve and Resource estimates. The details of the
nine-month reconciliation are presented below:
Island Gold Mine
2016 Reconciliation Summary (as of Sept. 30, 2016)
Reserves (as of Dec.,
2015; Dilution 30% at
0.5 g/t) Mined (reconciled)
Diluted Diluted Diluted Reconciled Reconciled Reconciled
Tonnes Grade Ounces Tonnes Grade Ounces
Total Development 2016 113,399 6.33 23,094 112,522 8.23 29,756
Total Stope 2016 101,539 7.53 24,596 115,642 8.99 33,427
Total Underground 2016 214,939 6.90 47,690 228,164 8.61 63,183
% Development 2016 53% 48% 49% 47%
% Stope 2016 47% 52% 51% 53%
(table continued)
Island Gold Mine
2016 Reconciliation Summary (as of Sept. 30, 2016)
Variance
(Mined vs Reserves)
Tonnes Grade Ounces
Total Development 2016 99% 130% 129%
Total Stope 2016 114% 119% 136%
Total Underground 2016 106% 125% 132%
The reconciliation to date is based on mining in the first
and second mining horizons only, and should not be extrapolated to
the third and fourth mining horizons.
Additional information about the Mineral resources and
Mineral Reserves can be found in the technical report entitled
"Amended Technical Report on the Mineral Reserve and Resource
Estimate as of December 31, 2015 for
the Island Gold Mine" dated April 5,
2016 and effective as of December 31,
2015.
QUALIFIED PERSONS
The Expansion Case PEA is being prepared through the combined
efforts of the Corporation's internal technical team and
independent consultants at InnovExplo Inc. and Soutex Inc. The
scientific and technical content and interpretations contained in
this news release have been reviewed, verified and approved by
Daniel Adam P. Geo., Ph.D.,
Richmont's Vice-President, Exploration, a Qualified Person as
defined by National Instrument 43-101 ("NI 43-101").
NEXT STEPS
- Complete the 2016 resource delineation drilling program by
mid-November 2016.
- Confirm the new capping and resource modeling parameters
analysis to be used in the December 31,
2016 Mineral Resource estimates.
- Release of the December 31, 2016
Mineral Reserve and Resource estimates in February 2017.
- Release the results of the Expansion Case PEA in the first half
2017.
- File a NI 43-101 technical report within 45 days of release of
results of the Expansion Case PEA.
About Richmont Mines Inc.
Richmont Mines 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 35 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.
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", "objective" 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
or regulation, 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,
without limitation, the impact of the 2016 Mineral Reserves and
Resources estimates, the ability to increase production utilizing
the current ramp system, the capital requirements to increase
milling capacity, 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 and the failure of our exploration
drilling programs to identify significant new resources or targets
or expand existing resources could also affect the results. Other
risks are set out in Richmont's 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 requirements of National Instrument
43-101 - Standards of Disclosure for Mineral Projects ("NI
43-101) adopted by the Canadian Securities Administrators
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.
Renaud Adams, President and CEO,
Phone: +1-416-368-0291 ext. 101; Anne
Day, Vice-President, Investor Relations, Phone:
+1-416-368-0291 ext. 105