Quebec gold miner surges after reserves update

Shares in Richmont Mines Ic (TSE:RIC, NYSE:RIC jumped on Tuesday day after the company updated mineral reserves and resources at its  Island Gold Mine in Ontario.

During lunchtime trade the Quebec-based producer was exchanging hands at $8.30, up 12.2% in New York, in higher than usual volumes. Richmont is now worth $515 million after a 26% year to date gain.

In a statement Richmont said Mineral Reserves at the producing Island Gold Mine increased by 34% (net of depletion), to 752,200 oz Au, with average grade increasing by 11% to 9.17 g/t Au. Contained ounces in both the Indicated and Inferred categories also increased by 28% and 30%, respectively.

At the underground mine located 83km northeast of Wawa on Lake Superior, the 2016 delineation drill program (48,000 metres) converted the majority of the resources blocks in the main C Zone to reserves. During 2016, 83,000 metres of exploration drilling were completed and successfully identified three new inferred resource blocks.

Richmont said its 2017 drill program should be similar in size to last year's activity ($14 million, 108,000 metres) and an update on the Island Gold Phase 2 exploration drill program will be provided in late February. Island Gold has produced some 320,000 ounces since October 2007.

The company was less successful at its other operating mine, Beaufor in Quebec, where 2016 delineation and exploration drilling failed to offset mining depletion and converted resources. Certain low-grade uneconomic blocks in the upper part of the mine was also removed. Beaufor, in the Val-d'Or region has produced 500,000 ounces since going into production two decades ago.

Richmont was founded in 1981 and kicked of commercial production ten years later. Over the years the company has operated seven mines in Quebec, Newfoundland and Ontario producing in total 1.5 million ounces.