TSX - NYSE: RIC
Island Gold Mine Delivers Solid Production and
Record Low Cash Costs of US$431 per
ounce; On-Track to Meet or Exceed Annual Guidance
TORONTO, July 13, 2017 /CNW/ - Richmont Mines Inc.
(TSX - NYSE: RIC) ("Richmont" or the "Corporation"),
reports strong second quarter results with company-wide production
of 31,249 ounces of gold, at cash costs1 of
$725 (US$539) per ounce. The strong operational
performance was driven by solid production from the Island Gold
Mine of 26,110 ounces of gold, at record low cash costs of
$580 (US$431) per ounce. (All amounts are in
Canadian dollars unless otherwise indicated.)
SECOND QUARTER HIGHLIGHTS
- Company-wide production was 31,249 ounces of gold
(35,040 ounces sold) for the quarter, primarily driven by
another quarter of solid production from the Island Gold Mine of
26,110 ounces of gold (29,534 ounces sold). The mine is
now well positioned to achieve, or exceed, the high-end of
production guidance for the year of 87,000-93,000 ounces.
- Company-wide cash costs for the quarter were $725 (US$539) per
ounce, positively impacted by record low cash costs from the Island
Gold Mine of $580 (US$431) per ounce. The Island Gold Mine remains
on-track to meet, or beat, the low end of annual cash cost
guidance.
- The Island Gold Mine reported record underground mine
productivity of 1,148 tonnes per day, exceeding the late-2018
target rate of 1,100 tonnes per day. The mill averaged a record 940
tonnes per day and is expected to achieve the target rate of 1,100
tonnes per day once the mill expansion is completed in the latter
part of 2018.
- Revenues for the quarter were $59.3 (US$44.1)
million.
- During the quarter, Richmont announced results from the
Expansion Case Preliminary Economic Assessment ("PEA") completed on
the Island Gold Mine. The PEA confirmed the positive economics of a
low cost 1,100 tonne per day underground mine and mill expansion
and represents another positive step forward in unlocking the
potential of the Island Gold Mine.
"The Island Gold Mine has delivered another solid operational
quarter that positions the operation to potentially exceed annual
production guidance at record low cash costs. As demonstrated in
the recently released PEA, we continue to successfully transform
the mine into one of the lowest cost underground gold producers in
the Americas as we execute on our disciplined, multi-phased growth
strategy," commented Renaud Adams,
President and CEO. He continued, "During the balance of the year
our focus at the Island Gold Mine will remain on enhancing
operational and cost efficiencies, executing on our expansion plan
and advancing our strategic delineation and exploration drilling
programs. All of these initiatives are supported by our strong
balance sheet and our disciplined approach to capital
allocation."
_____________________________________
1 Refer to the Non-IFRS Performance Measures disclosure
presented at the end of this press release.
Second quarter operational highlights for the Island Gold and
Beaufor mines are provided in the tables below:
Production Highlights
|
|
|
|
|
|
|
|
|
|
Q1
16
|
Q2
16
|
Q3
16
|
Q4
16
|
Q1
17
|
Q2
17
|
H1
17
|
2017
Guidance
|
Gold Produced
(oz)
|
|
|
|
|
|
|
|
|
|
Island Gold
Mine
|
26,589
|
18,617
|
14,031(2)
|
24,086
|
23,772
|
26,110
|
49,882
|
87,000-93,000
|
|
Beaufor
Mine
|
4,615
|
4,703
|
4,825
|
5,419
|
5,629
|
5,139
|
10,768
|
23,000-27,000
|
|
Monique
Mine
|
1,165(1)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Total Produced
(oz)
|
32,369
|
23,320
|
18,856
|
29,505
|
29,401
|
31,249
|
60,650
|
110,000-120,000
|
(1) Processing of the
remaining stockpile pad at the depleted Monique Mine was completed
at the end of January 2016. (2) Q3 2016 production
includes a 16-day underground mine shutdown and a 25-day mill
shutdown.
|
Cash Cost Highlights
|
|
|
|
|
|
|
|
|
|
Q1
16
|
Q2
16
|
Q3
16
|
Q4
16
|
Q1
17
|
Q2
17
|
H1
17
|
2017
Guidance
|
Cash Costs
($)(1)
|
|
|
|
|
|
|
|
|
|
Island Gold
Mine
|
$667
|
$757
|
$947
|
$826
|
$668
|
$580
|
$618
|
$715-$765
|
|
Beaufor
Mine
|
$1,396
|
$1,484
|
$1,408
|
$1,480
|
$1,265
|
$1,502
|
$1,380
|
$1,265-$1,320
|
|
Monique
Mine
|
$1,182
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Total Cash Costs
($)(1)
|
$800
|
$895
|
$1,054
|
$952
|
$791
|
$725
|
$754
|
$835-$885
|
Cash Costs
(US$)(1)
|
|
|
|
|
|
|
|
|
|
Island Gold
Mine
|
$486
|
$588
|
$726
|
$619
|
$504
|
$431
|
$463
|
$550-$590(2)
|
|
Beaufor
Mine
|
$1,017
|
$1,152
|
$1,080
|
$1,110
|
$956
|
$1,117
|
$1,034
|
$975-$1,015(2)
|
|
Monique
Mine
|
$861
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Total Cash Costs
(US$)(1)
|
$583
|
$695
|
$808
|
$714
|
$598
|
$539
|
$565
|
$640-$680(2)
|
(1) Refer to the
Non-IFRS Performance Measures disclosure presented at the end of
this press release. (2) Assuming an exchange
rate of 1.30 Canadian dollars to 1.0 US dollar.
|
Operational Highlights
|
|
|
|
|
|
|
|
Q1
16
|
Q2
16
|
Q3
16
|
Q4
16
|
Q1
17
|
Q2
17
|
Island Gold
Mine
|
|
|
Underground
tpd
|
853
|
911
|
735(1)
|
977
|
1,019
|
1,148
|
|
Mill tpd
|
834
|
878
|
640(1)
|
903
|
926
|
940
|
|
Mill head grade
(g/t)
|
11.31
|
7.51
|
7.70
|
9.31
|
9.18
|
9.73
|
Beaufor
Mine
|
|
|
Underground
tpd
|
323
|
286
|
282
|
302
|
354
|
339
|
|
Mill head grade
(g/t)
|
4.96
|
5.27
|
5.62
|
6.16
|
6.00
|
5.21
|
(1) Q3 2016 productivity
includes a 16-day underground mine shutdown and a 25-day mill
shutdown.
|
Island Gold Mine Highlights
- Production for the quarter was 26,110 ounces of gold
(29,534 ounces sold). The mine is now well positioned to
achieve, or exceed, the high-end of production guidance for the
year of 87,000-93,000 ounces.
- Record low cash costs for the quarter of $580 (US$431) per
ounce, significantly below annual guidance of $715-765 (US$550-590) per ounce for the year.
- Mill head grade for the quarter was 9.73 g/t gold, partially
resulting from lower than planned dilution in development ore. The
2017 mine plan, assuming a 900 tonnes per day scenario, forecasts
an overall mill head grade of approximately 8.9 g/t gold for the
year.
- Record underground mine and mill productivities for the
quarter, averaging 1,148 and 940 tonnes per day, respectively, with
lower-grade underground ore stockpiled for future processing, also
contributing to the improved overall mill head grade for the
quarter.
- During the quarter, long-hole stope mining continued in the
first and second mining horizons and development in ore was
advanced as planned in the higher-grade third mining horizon.
Stoping in the lower grade extensions of the third mining horizon
is expected to begin in the fourth quarter.
- The development of the eastern portion of the main ramp system
reached a vertical depth of 860 metres at the end of the first
quarter, which is in-line with the 2017 development plan.
Development of the western portion of the main ramp system was
initiated during the second quarter.
- For the first six months, development of the 620 metre and 840
metre level exploration drifts advanced 250 metres and 80 metres,
respectively, supporting ongoing exploration and delineation
drilling both laterally to the east and at depth.
- During the quarter the transition from underground development
contractors to the internal workforce was initiated as planned,
this is expected to further reduce development costs over the
balance of the year.
- The results of the Expansion Case PEA were released during the
second quarter (see May 29, 2017
press release). The study represents another step in a multi-phased
approach to unlock the potential of the Island Gold Mine. The PEA
confirms the increase in underground mine and mill productivity to
1,100 tonnes per day that will support strong production growth of
22% at low industry cash costs and a robust cash flow stream over
an eight-year Phase 1 period, for a low incremental capital cost of
$28.2 (US$20.9) million. The ramp-up to 1,100 tonnes
per day is currently advancing and the operation is anticipated to
achieve the target run rate in the latter part of 2018.
Beaufor Mine Highlights
- Production for the quarter was 5,139 ounces of gold
(5,506 ounces sold). Production in the quarter was lower than
anticipated, primarily due to lower grades mined as higher than
expected dilution was reported from one stope located in the Q
Zone.
- Cash costs of $1,502 (US$1,117) per ounce, higher than annual
guidance, are primarily related to lower production achieved for
the quarter.
- Underground productivity was 339 tonnes per day. During the
quarter, the majority of mining activities were within the main Q
Zone, however beginning in Q3 mining flexibility is expected to
improve as additional ore will be sourced from new parallel
structures.
- During the quarter, the Corporation advanced the review of
strategic alternatives regarding the Beaufor Mine and Camflo
Mill.
Upcoming News
- Exploration Update (Q3 2017).
- Q2 Financial Results (August
3).
Non-International Financial Reporting Standards ("IFRS")
Performance Measures
In this press release, the term "cash
costs per ounce" is used, which is a non-IFRS performance measure,
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" is a common
performance measure in the gold mining industry, but does 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, interest on capital
leases, capital expenditures and exploration and project evaluation
costs. Refer to the Corporation's 2017 and 2016 MD&A for a
reconciliation of cash costs to cost of sales.
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
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'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 United States Securities
and Exchange Commission (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
SEC.
U.S. Investors are urged to consider the disclosure in our
annual report on Form 40-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 scientific or technical
information in this news release has been reviewed by Mr.
Daniel Adam, Geo., Ph.D.,
Vice-President, Exploration, an employee of Richmont, and a
qualified person as defined by NI 43-101.
SOURCE Richmont Mines