Richmont Mines reports strong results in the first quarter of 2011
Richmont Mines Inc. (TSX:RIC)(NYSE Amex:RIC) is pleased to announce financial and operational results for its first quarter ended March 31, 2011. Financial results are based on International Financial Reporting Standards (“IFRS”) and dollars are reported in Canadian currency, unless otherwise noted.
- Q1 2011 net earnings of $8.7 million, or $0.28 per share, versus Q1 2010 net earnings of $1.8 million, or $0.07 per share;
- Gold sales of 19,234 ounces at an average selling price of US$1,389 (CAN$1,369) in Q1 2011, versus gold sales of 15,841 ounces at an average selling price of US$1,116 (CAN$1,149) in the prior year;
- Significant increase in resource base at Wasamac; 35,000 metre drill program on Wasamac in 2011 continues to yield positive results;
- Strong initial drill result on Monique property; exploration program extended to 8,170 metres from 5,500 metres;
- Sale of Valentine Lake property completed for proceeds of CAN$3.0 million;
- Strong financial position: $47.0 million in cash and cash equivalents and no long-term debt at March 31, 2011.
Commenting on the first quarter, Mr. Martin Rivard, President and CEO of Richmont Mines noted:
“We are very pleased with our first quarter results. Recovered grades were notably higher at both of our operating mines year-over-year, with grades up 22% at the Island Gold Mine and up 37% at our Beaufor Mine. Island Gold Mine had a particularly strong first quarter, with tonnage levels and gold recovery rates also improving by a respective 7% and 2% year-over-year.
“Combined, these factors translated into a first quarter cost per tonne at Island Gold of $128, a notable 13% decrease from the 2010 annual rate of $147 per tonne for this mine. Recovered grades improved significantly at Beaufor, 18,826 tonnes of ore were processed this quarter and the remaining stockpile of 7,932 tonnes available at the end of Q1 was processed in Q2. This, in conjunction with the fact that more development is necessary to access ore zones at this mine, resulted in higher cash costs. As we have stated in the past, extensive development will be needed to access mining zones at Beaufor on a go-forward basis and, as a result, cash costs will remain at current levels. However, we continue to assess our mining plans in order to reach mineable reserves more efficiently, and are also actively evaluating the potential of promising near-surface zones on the property.”
Commenting on the Company’s exploration efforts, Mr. Rivard added: “On the exploration front, we had a very active quarter. We completed 9,900 out of our planned 35,000 metre exploration program on Wasamac in 2011, and approximately 8,000 metres of exploration drilling on our Monique property. To date, preliminary drill results at both of these projects have been very favourable, and we look forward to further evaluating their potential long-term benefit for the Company as 2011 progresses.”
Revenue for the first quarter of 2011 was $26.4 million up 32% from revenues of $20.0 million in the first quarter of 2010. A total of 19,234 ounces of gold were sold at an average price of US$1,389 (CAN$1,369) per ounce in the current quarter, versus gold sales of 15,841 ounces and an average realized sales price of US$1,116 (CAN$1,149) per ounce in the same period last year. Total precious metals revenue increased notably to $26.3 million from $18.2 million in the first quarter of 2010, a reflection of the 21% increase in the number of ounces sold, and the 19% increase in the average selling price per ounce in Canadian dollars.
Cost of sales, which includes operating costs, royalties, custom milling expenses and some related amortization expense, totalled $16.5 million in the first quarter of 2011, up slightly from $16.1 million in the comparable period last year. The increase reflected higher costs per tonne at the Beaufor Mine, increased milling costs and higher amortization expense related to increased sales and a higher depreciation rate. These were partially mitigated by lower custom milling expenses reflecting the fact that no custom milling was performed during the current quarter. The average cash cost per ounce of gold sold declined 12% in US dollar terms and 15% in Canadian dollar terms, to US$743 (CAN$732) in the first quarter, from US$841 (CAN$866) in the first quarter of 2010. This substantial decline was mostly driven by higher recovered grades at both operating mines and higher tonnage at the Island Gold Mine.
Exploration and project evaluation costs totalled $0.9 million in the first quarter of 2011, versus $0.8 million spent in the same period last year. However, when excluding exploration tax credits of $1.6 million during the current quarter and $0.4 million in the comparable period of 2010, exploration and project evaluation costs were $2.5 million and $1.2 million respectively. The year-over-year increase was driven by a significant expansion in exploration drilling, most notably on the Wasamac and Monique properties. On a segmented basis, exploration costs before tax credits were approximately $0.2 million at the Beaufor Mine, $0.4 million at the Island Gold Mine, $0.7 million on Wasamac, and $0.9 million on Monique, while exploration and project evaluations costs at other properties amounted to $0.3 million during the current quarter.
Net earnings for the first quarter of 2011, which include proceeds from the sale of Valentine Lake, increased significantly to $8.7 million, or $0.28 per share, compared with net earnings of $1.8 million, or $0.07 per share, in the first quarter of 2010.
About Richmont Mines Inc.
Richmont Mines has produced over 1,200,000 ounces of gold from its operations in Quebec, Ontario and Newfoundland since beginning production in 1991. The Company currently produces gold from its Island Gold and Beaufor mines, and is currently advancing the Francoeur Mine to commercial production, which will increase Richmont’s production to 100,000 ounces of gold on an annual basis. With extensive experience in gold exploration, development and mining, the Company is well positioned to cost-effectively build its North American reserve base through a combination of organic growth, strategic acquisitions and partnerships. Richmont routinely posts news and other important information on its website (www.richmont-mines.com).
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