TORONTO, Feb. 2, 2017 /PRNewswire/ - Richmont Mines
Inc. (TSX - NYSE: RIC) ("Richmont" or the "Corporation"),
announces 2017 guidance that includes a projected increase of up to
15% in company-wide production to between 110,000 and 120,000 gold
ounces, primarily driven by another consecutive year of
high-quality production growth from the Island Gold Mine to between
87,000 and 93,000 gold ounces. The increase in production is
expected to drive a decrease of up to 8% in cash costs both
company-wide and at the Island Gold Mine.
2017 Consolidated
Guidance
|
|
|
|
|
2017 Operational
Estimates
|
Island Gold
Mine
|
Beaufor
Mine
|
2017
Guidance
|
Gold Ounces
Produced
|
87,000 -
93,000
|
23,000 -
27,000
|
110,000
- 120,000
|
Cash Costs per Ounce
(CAD$)(1)
|
$715 -
$765
|
$1,265 -
$1,320
|
$835 -
$885
|
Corporate G&A per
Ounce (CAD$)
|
-
|
-
|
$105
- $110
|
All-in Sustaining
Costs per Ounce (CAD$)(1)
|
$945 -
$995
|
$1,540 -
$1,590
|
$1,180
- $1,235
|
Cash Costs per Ounce
(US$)(1)(2)
|
$550 -
$590
|
$975 -
$1,015
|
$640
- $680
|
Corporate G&A per
Ounce (US$)(2)
|
-
|
-
|
$80
- $85
|
All-in Sustaining
Costs per Ounce (US$)(1)(2)
|
$725 -
$765
|
$1,185 -
$1,225
|
$905
- $950
|
2017 Capital and
Exploration ($M)
|
Island Gold
Mine
|
Beaufor
Mine
|
2017
Guidance
|
Sustaining Capital
(CAD$)
|
$19 - $22
|
$6 - $7
|
$25 -
$29
|
Expansion Capital
(CAD$)(3)
|
$33 - $35
|
-
|
$33 -
$35
|
Exploration &
Project Evaluation (CAD$)
|
$14 - $16
|
$2 - $3
|
$16 -
$19
|
Sustaining Capital
(US$)(2)
|
$15 - $17
|
$5 - $6
|
$19 -
$22
|
Expansion Capital
(US$)(2)(3)
|
$25 - $27
|
-
|
$25 -
$27
|
Exploration &
Project Evaluation (US$)(2)
|
$11 - $12
|
$1 - $2
|
$12 -
$14
|
(1)
|
Cash costs and all-in
sustaining costs ("AISC") are non-IFRS measures. Refer to the
Non-IFRS Performance Measures section of this press
release.
|
(2)
|
Assuming an exchange
rate of 1.30 Canadian dollars to 1.0 US dollar.
|
(3)
|
Expansion capital
estimates for 2017 relate exclusively to the Island Gold Mine and
are discretionary in nature. Ongoing deployment of project capital
at the Island Gold Mine is contingent upon the receipt of a
confirmatory Preliminary Economic Assessment ("PEA") for 1,100
tonnes per day and a minimum sustaining gold price of CAD$1,550 per
ounce. Expansion capital is exclusive of capital requirements
related to a mill expansion in 2018 as contemplated in the
PEA.
|
"Richmont is expected to achieve another consecutive year of
strong production growth, primarily driven by the cornerstone
Island Gold Mine, which is positioned to deliver another year of
record operational performance. We are very confident the Island
Gold PEA will confirm the expansion case scenario of 1,100 tonnes
per day, however consistent with our disciplined capital allocation
philosophy, the ultimate decision will be based on which option
generates the maximum free cash flow stream over the next four to
five years," commented Renaud Adams,
President and Chief Executive Officer. He continued, "The improved
performance at the Beaufor Mine in the fourth quarter has given us
confidence that this asset will return to free cash flow levels by
mid-2017, however we are also considering strategic alternatives
for the Beaufor Mine and other Quebec assets that could create additional
shareholder value. In 2017, we are looking forward to another year
of creating value for our shareholders by continuing our
disciplined focus on quality production that drives positive cash
flow streams."
Island Gold Mine: 2017 Guidance
The Island Gold Mine is expected to deliver another year of
strong production growth that exceeds the record production levels
achieved in 2016 by up to 12% (Island Gold production growth
chart), driven by increased underground mine and mill productivity
of 900 tonnes per day at an average head grade of 8.9 g/t
gold. Cash costs are expected to decline up to 8%.
In 2017, the Island Gold Mine is expected to continue to
leverage the low Canadian dollar to continue to advance the
strategic underground development program to best position the
asset for a potential, fully funded expansion case scenario to
1,100 tonnes per day as contemplated in the expansion case PEA that
is currently under review. Richmont is confident that the final PEA
will confirm the positive economics of the expansion case and the
2017 expansion capital estimates have been prepared on that
basis.
|
|
Island Gold Mine
2017 Operational Guidance
|
|
Gold Ounces
Produced
|
87,000 –
93,000
|
|
CAD$
|
US$(2)
|
Cash Costs per
Ounce(1)
|
$715 -
$765
|
$550 -
$590
|
All-in Sustaining
Costs per Ounce(1)
|
$945 -
$995
|
$725 -
$765
|
Sustaining
Capital
|
$19 - $22
|
$15 - $17
|
Island Gold Mine
2017 Project Capital & Exploration ($M)
|
CAD$
|
US$(2)
|
Expansion
Capital(3)
|
|
|
|
Accelerated
Underground Mine Development
|
$20 - $21
|
$15 - $16
|
|
Infrastructure and
Equipment
|
$11 - $12
|
$8 - $9
|
|
Other
Capital
|
$2
|
$2
|
Total
Expansion Capital
|
$33 -
$35
|
$25 -
$27
|
Exploration
(non-sustaining)
|
$14 -
$16
|
$11 -
$12
|
(1)
|
Cash costs and AISC
are non-IFRS measures. Refer to the Non-IFRS Performance Measures
section of this press release.
|
(2)
|
Assuming an exchange
rate of 1.30 Canadian dollars to 1.0 US dollar.
|
(3)
|
Expansion capital
estimates for 2017 are discretionary in nature. Ongoing deployment
of project capital at the Island Gold Mine is contingent upon the
receipt of a confirmatory PEA for 1,100 tonnes per day and a
minimum sustaining gold price of CAD$1,550 per ounce. Expansion
capital is exclusive of capital requirements related to a mill
expansion in 2018 as contemplated in the PEA.
|
- Annual production at Island Gold is expected to increase to
between 87,000 and 93,000 ounces, driven by improved underground
mine and mill productivity of approximately 900 tonnes per day,
in-line with the planned 2017 production scenario considered in the
PEA that is currently under review, at an average mill head grade
of 8.9 g/t gold.
- In 2017, stoping ore is expected to be largely from the first
and second mining horizons. Development in ore (35% of total ore
mined) will be primarily from the third mining horizon between the
740 and 860 metre levels, as well as in the Extension 1 and 2 areas
to the east of the dykes.
- The increased production profile is expected to support a
decrease in cash costs to between $715 and
$765 per ounce (US$550 and
US$590), and AISC of between $945 and
$995 per ounce (US$725 and
US$765).
- 2017 expansion capital estimates, which are primarily related
to accelerated underground development, have been prepared assuming
the current PEA will confirm the economics of an 1,100 tonne per
day expansion case scenario (refer to the November 1, 2016 press release). However,
consistent with management's disciplined capital allocation
philosophy, should the PEA not confirm the economics of the
expansion case or should the gold price breach a minimum sustaining
threshold of CAD$1,550 per ounce,
Richmont would consider deferring all ongoing expansion capital to
future periods and return the operation to sustaining capital
requirements under a 900 tonnes per day scenario.
- Supported by the receipt of the recent permit amendments that
allow for an increase in the ore mining and processing rates to an
average of 1,100 tonnes per day, all engineering studies and
identification of long lead equipment are currently underway for a
potential mill expansion in 2018, as contemplated in the current
PEA.
- The successful 2016 drilling program continued to demonstrate
the significant potential of the Island Gold deposit, contributing
to a 34% increase in reserves (net of depletion) and an 11% higher
grade as well as a 30% increase in inferred resources (net of
conversion) at a 20% higher grade (see January 31, 2017 press release). The
discovery cost during 2016 averaged a low $35 per ounce. In 2017, the drilling program will
focus on advancing the strategic Phase 2 exploration program with
the objective of continuing to grow our reserve base and unlocking
the exploration potential of the Island Gold deposit.
Beaufor Mine and Quebec Division: 2017 Guidance
In 2017, production from the Beaufor Mine is expected to build
on the improved performance realized in the fourth quarter of 2016.
It is expected that the operation will return to free cash flow
levels by mid-2017 as mining from the higher-grade Q Zone increases
and mobile equipment availability returns to target levels. It is
also expected that costs will remain elevated above guidance levels
in the first half of the year and subsequently decrease in the
second half of the year. The Corporation is also considering other
strategic alternatives regarding the Beaufor Mine and Camflo
Mill.
|
|
Beaufor Mine 2017
Operational Guidance
|
|
Gold Ounces
Produced
|
23,000 –
27,000
|
|
CAD$
|
US$(2)
|
Cash Costs per
Ounce(1)
|
$1,265 -
$1,320
|
$975 -
$1,015
|
All-in Sustaining
Costs per Ounce(1)
|
$1,540 -
$1,590
|
$1,185 -
$1,225
|
Sustaining
Capital
|
$6 - $7
|
$5 - $6
|
Quebec Division
2017 Exploration and Project Evaluation ($M)
|
CAD$
|
US$(2)
|
Exploration &
Project Evaluation(3)
|
$2 - $3
|
$1.5 -
$2.3
|
(1)
|
Cash costs and AISC
are non-IFRS measures. Refer to the Non-IFRS Performance Measures
section of this press release.
|
(2)
|
Assuming an exchange
rate of 1.30 Canadian dollars to 1.0 US dollar.
|
(3)
|
Includes $1.2M
(US$0.9M) for an updated PEA on the Wasamac property.
|
- Annual production at the Beaufor Mine is expected to increase
to between 23,000 and 27,000 ounces as a greater proportion of ore
is mined from the higher grade Q Zone and mobile equipment
availability returns to target levels.
- The increased production profile is expected to support a
decrease in cash costs to between $1,265 and
$1,320 per ounce (US$975 and
US$1,015) and AISC of between $1,540
and $1,590 per ounce (US$1,185 and
US$1,225).
- An updated PEA for the Wasamac project is expected to be
completed during 2017, which will incorporate current market
information and revised engineering studies. The Corporation is
also considering other strategic alternatives regarding the Wasamac
Project.
Non-International Financial Reporting Standards ("IFRS")
Performance Measures
In this press release, the terms "cash
costs per ounce" and "all-in sustaining costs per ounce" are used,
which are non-IFRS performance measures, and may not be comparable
to similar measures presented by other companies. The Corporation
believes that, in addition to conventional measures prepared in
accordance with IFRS, the Corporation and certain investors use
this information to evaluate the Corporation's performance.
Accordingly, it is intended to provide additional information and
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS. "Cash
costs per ounce" and "all-in sustaining costs per ounce" are common
performance measures in the gold mining industry, but do not have
any standardized definition. The Corporation reports cash cost per
ounce based on ounces sold. Cash costs include mine site operating
costs, administration, royalties and by-product credits but are
exclusive of depreciation, accretion expense, interests on capital
leases, capital expenditures and exploration and project evaluation
costs.
All-In Sustaining Costs or "AISC" is an extension of the
existing "cash costs" metrics and incorporates costs related to
sustaining production. The Corporation believes that, although
relevant, the cash costs measure does not capture the sustaining
expenditures incurred, and therefore, may not present a complete
picture of the Corporation's operating performance or its ability
to generate free cash flows from its operations. AISC includes cash
costs, sustaining capital expenditures, delineation drilling costs
and evaluation costs, corporate general and administrative costs,
and environmental rehabilitation accretion and depreciation.
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" 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 the Corporation'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 Reserve and
Resource estimates in this press release were prepared in
accordance with National Instrument 43-101 adopted by the
Canadian Securities Administrators. The requirements of National
Instrument 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.
National Instrument 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 National Instrument 43-101.
SOURCE Richmont Mines