River Gold Mines rebounds

With higher-grade development ore coming from the no. 6 zone at the Eagle River mine, 50 km west of Wawa, Ont., River Gold Mines (RIV-T) managed to climb back into the black during the second quarter.

For the three months ended June 30, the company posted net earnings of $739,000 (or 2 per share) on revenue of $10.6 million, compared with a year-ago net loss of $1.6 million (5 per share) on $8 million. Cash flow from operations increased to $2.6 million from $398,000.

For the first half of 2001, the company’s net loss amounted to $1.2 million (or 4 per share) on $18.4 million, compared with a year-ago loss of $2.2 million (7 per share) on revenue of $17 million. Cash flow from operations between the two periods climbed about $730,000 to $2.3 million.

Second-quarter gold production totalled 25,400 oz. at a cash cost of US$185 per oz. During the first half of 2001, the company churned out 44,900 oz. at US$215 per oz. River’s production sold for an average of US$268 during the recent quarter and US$266 during the six-month period.

Eagle River’s new production shaft has advanced to the 450-metre level and should reach the targeted depth of 505 metres by year-end. Slated for completion in February of 2002, the shaft is expected to generate significant savings over the current ramp system.

Pressed for cash, the company is attempting to raise $5.4 million by issuing just over 31 million rights to its shareholders. The proceeds are earmarked for debt reduction, working capital and ongoing shaft-sinking.

At last report, reserves at the Eagle River mine stood at 1.2 million tonnes grading 10.14 grams gold per tonne. The orebody extends to 400 metres below surface, except in the shaft area, where it deepens to 460 metres.

Eagle River had 117,000 tonnes of ore in stockpile at the end of June. Production forecasts for 2001 remain at 87,000 oz.; the preliminary estimate for 2002 production is 75,000 oz.

In early July, River put the Edwards mine on care and maintenance, due to low gold prices and dwindling reserves. The company plans deep exploration on the property when gold prices improve significantly. The mine will be depleted during the third quarter.

River also announced that it will put the Mishi mine into production upon completion of the permitting process. This wholly owned, 30-claim property is 2 km west of the River Gold mill and hosts an estimated resource of 1.4 million tonnes grading 4.2 grams of gold per tonne. Included in that figure is an open-pit resource of 772,000 tonnes grading 3.3 grams gold to a depth of 56 metres.

The company’s in-house evaluation has outlined an open-pit resource of 450,000 tonnes grading 3.1 grams gold to a depth of 35 metres, with a stripping ratio of 3-to-1. Mishi is viewed as a low-cost, seasonal operation that will provide mill feed in the years to come.