RICHMONT MINES
REPORTS 27.4% INCREASE IN REVENUE IN THE
SECOND QUARTER OF
2008
� Precious metals revenue up 27.8% and ounces sold
increase 2.8%
� Average production cash cost per ounce declines from
trailing first quarter
�
Quarterly exploration expenses
were $3.7 million, $4.7 million year-to-date, focused primarily on Golden
Wonder Project
�
$30.7 million in cash and
equivalents with no long-term debt at quarter-end; generated $3.4 million
in cash in 2008
MONTREAL, Quebec, Canada, July 31, 2008 -
Richmont
Mines Inc. (RIC: AMEX-TSX), a gold
exploration, development and production company with operations in North
America, today announced financial and operational results for its second
quarter ended June 30, 2008. Financial results are based on Canadian GAAP and
dollars are reported in Canadian currency, unless otherwise noted.
Revenue for the second quarter of 2008 was $16.2 million, a 27.4%
increase compared with $12.7 million in the second quarter of 2007.
In the 2008 quarter, 17,111
ounces of gold were sold at an average price of
US$903 (CAN$909) per ounce, compared with 16,640
ounces of gold sold in the same period last year at an
average price of US$680 (CAN$731) per ounce. Total precious metals
revenue was up $3.4 million, or 27.8%, to $15.6 million in the second
quarter of 2008 compared with $12.2 million in the second quarter of 2007.
Sales from the Island Gold Mine, which commenced production during the fourth
quarter of 2007, more than offset the loss of gold sales from the East Amphi
Mine, which was closed in mid-2007.
Operating costs, including royalties, for the second quarter of 2008
were $10.9 million, up from $7.1 million in the same period the prior
year, but only slightly above $10.4 million in the trailing first quarter of
2008. The increased costs in 2008 were incurred mainly at the Island Gold Mine,
which has not yet reached projected production levels. The average cash cost of
production was US$633 (CAN$638) per ounce of gold sold in the second quarter of
2008 compared with US$692 (CAN$697) in the trailing first quarter. The average
cash cost per ounce was US$399 (CAN$429) in the second quarter of 2007, prior
to the start of commercial production at Island Gold. The increase in the
average cash cost per ounce in US dollars when compared with the prior year
period also was impacted by the strong Canadian dollar. Costs at the Beaufor
Mine decreased to US$495 (CAN$498) from US$595 (CAN$599) in the trailing first
quarter on measurably improved grade, but were above the cash cost per ounce of
US$382 (CAN$411) in last year�s second quarter on lower volume and higher
mining and milling costs. As results failed to meet projected levels at the
Island Gold Mine, cash production costs remained high at US$777 (CAN$782)
compared with US$803 (CAN$809) in this year�s first quarter. Included in the
gold sales of the second quarter of 2007 were 4,043
ounces from the East Amphi Mine produced at a cash cost
of US$453 (CAN$487) per ounce.
Exploration and project evaluation costs were $3.7 million in the
second quarter of 2008 and reflect the Company�s efforts to grow its reserves.
Approximately $0.9 million in exploration costs were incurred at the
Beaufor Mine, $0.5 million at the Island Gold Mine and $1.3 million at the
Golden Wonder project in the current quarter. Moreover, an amount of $0.9
million was included in exploration expenses as a result of a reclassification,
for fiscal planning purposes, of exploration tax credits from previous years.
During last year�s second quarter, approximately $0.5 million in exploration
costs were incurred at the Beaufor Mine, $0.1 million at the Island Gold Mine and
$0.2 million at the Valentine Lake
project.
Net earnings for the second quarter of 2008 were $0.04 million,
compared with net earnings of $8.8 million, or $0.36 per share, in the
second quarter of 2007, which included a $7.4 million pre-tax gain on the sale
of mining assets. Lower earnings were also attributable to higher production
cash costs and increased exploration expenses.
At June 30, 2008, cash and cash equivalents were $30.7 million, a
$3.4 million increase from $27.3 million at December 31, 2007 and slightly
more than $30.0 million at March 31, 2008. Richmont Mines has no long-term debt
obligations and has working capital of $36.5 million with only 24 million
shares outstanding.
Island Gold Mine
The Island Gold Mine, which began commercial production in October 2007,
is progressing at a slower pace than anticipated mainly due to a shortage of
skilled labour in the mining industry.
During the 2008 second quarter, 39,818 tonnes of ore from the Island
Gold Mine were processed at an average recovered grade of 6.57 g/t, and 8,409
ounces of gold were sold at an average price of US$895
(CAN$901) per ounce. In the trailing first quarter of 2008, 31,688 tonnes of
ore were processed at an average recovered grade of 6.86 g/t, and 6,992
ounces of gold were sold at an average price of US$930
(CAN$937) per ounce. The 25.7% improvement in processed tonnes reflects the
Company�s ongoing efforts to advance the mine to its projected level of
production.
Mr. Martin Rivard,
President and CEO of Richmont Mines, commented: �While we have made progress at
the Island Gold Mine since it began production last year, we are challenged by
high labour force turnover as well as grade levels that are slightly lower than
expected. We are currently addressing these issues and expect to have improved
results by the fourth quarter.�
Beaufor Mine
During the second quarter of 2008, 29,062 tonnes of ore from the Beaufor
Mine were processed at an average recovered grade of 9.31 g/t, and 8,702
ounces of gold were sold at an average price of US$910
(CAN$917) per ounce. In the same quarter of 2007, 39,874 tonnes of ore were
processed at an average recovered grade of 9.83 g/t, and 12,597
ounces of gold were sold at an average price of US$675
(CAN$725) per ounce. The cash cost per ounce was US$495 (CAN$498) during the
current quarter compared with US$382 (CAN$411) in the same quarter last year
and is in line with the Company�s forecasted production cash cost of US$450 to
US$500 per ounce. During the current quarter, Richmont processed approximately
17,000 tonnes of custom milling ore at the Camflo Mill, and custom milling is
expected to increase for the remainder of 2008.
Exploration Efforts: The Company is
approximately half-way through its planned drilling program for 2008 at Beaufor
and expects to report an exploration update in the next four to six weeks. Its
objective is to identify sufficient reserves to continually replace production
at this mine and to evaluate the potential of the zones discovered last year
below the current mining infrastructures.
Golden Wonder
As recently announced, the Company has completed the portal
rehabilitation work at the Golden Wonder Project and is proceeding with
exploration efforts to identify new mineralized zones. Drilling began this
month and is expected to continue through August. Richmont has initially
planned 6 to 10 drill holes and expects to have lab results this fall. The
Company previously announced its intention to acquire a 50% joint venture
interest in the project, which is owned by LKA International (OTCBB: LKAI).
Valentine Lake
Project
In May, Richmont finalized the parameters of a joint venture agreement
with Mountain Lake Resources and completed plans for the project�s 2008 field
work. Preliminary site work, including exploration mapping and road and bridge
construction, recently started in preparation for a potential drilling program
in 2009. Richmont has a 70% interest in the project.
Six-Month Review
For the six-month period ended June 30, 2008, revenue
was $31.2 million, or 35.8% above revenue of $23.0 million during the same
period of 2007, reflecting increased gold sales at higher prices. In the 2008
six-month period, 32,106 ounces
of gold were sold at an average price of US$920 (CAN$927) per ounce, compared
with 29,043 ounces
of gold sold in the first half of 2007 at an average price of US$696 (CAN$748)
per ounce.
Operating costs, including royalties, for the
six-month period ended June 30, 2008 were $21.4 million, up $7.1 million
over operating costs of $14.3 million during the same period last year
primarily due to the costs associated with advancing the Island Gold Mine to
projected production levels. Island Gold began production during last year�s
fourth quarter.
Exploration and project evaluation costs were $4.8
million during the first half of 2008, compared with $1.5 million during
the same period in 2007. This increase was mainly due to the exploration
program under way at the Golden Wonder project which had exploration costs of
$1.8 million for the first half of 2008 and an amount of $0.9 million was
included in exploration expenses as a result of a reclassification, for fiscal
planning purposes, of exploration tax credits from previous years.
Net earnings were $0.4 million, or $0.02 per share,
compared with net earnings of $9.1 million, or $0.38 per share, during the
six-month period ended June 30, 2007. Last year�s first half included a $7.4
million gain on the sale of mining assets.
Island Gold Mine
During the six-month period ended June 30, 2008,
71,506 tonnes of ore were processed at an average recovered grade of 6.70 g/t,
and 15,401 ounces
of gold were sold at an average price of US$910 (CAN$917) per ounce. The cash
cost of production per ounce was US$790 (CAN$795) during the first half of the
year as the mine produced at around 60% of its design capacity.
Beaufor Mine
During the first half of 2008, 59,759 tonnes of ore were processed at an
average recovered grade of 8.69 g/t, and 16,705
ounces of gold were sold at an average price of US$928
(CAN$935) per ounce. In the first half of 2007, 69,574 tonnes of ore were
processed at an average recovered grade of 8.41 g/t, and 18,808
ounces of gold were sold at an average price of US$691
(CAN$743) per ounce. The cash cost per ounce was US$542 (CAN$546) during the
current period up from US$449 (CAN$483) in last year�s comparable period,
primarily due to higher mining and milling costs as well as the stronger
Canadian dollar.
Outlook
Mr. Rivard concluded: �Beaufor continues to meet production targets, and
we believe it has continued great exploration potential. We are challenged at
Island Gold due to competition for human resources, but continually adjust to
improve production results. Our exploration programs have been expanded
significantly over the years as we focus on our strategic goal of establishing
a proven and probable reserve base of one million ounces. We are pleased that
diamond drilling has finally started at Golden Wonder and are confident it will
yield favourable results.�
Martin Rivard
President and Chief Executive Officer
About Richmont Mines Inc.
Richmont Mines produces gold from its operations in Canada
and has extensive experience in gold exploration, development and mining. Since
it began production in 1991, the Company has produced more than one million
ounces of gold from its holdings in Quebec, Ontario
and Newfoundland. Richmont Mines�
strategy is to cost effectively develop its mining assets, exploit mineralized
reserves on properties owned and acquired, or develop partnerships to expand
its reserve base.
More information on Richmont Mines can be
found on its website at: www.richmont-mines.com.
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.
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 Mines�
Annual Information Form, Annual Reports and
periodic reports.
For more information, please contact Investor
Relations:
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