Record gold production, thanks in part to a switch to longhole mining methods and development of higher grade ore at the Eagle River mine near Wawa, Ont., more than offset the lowest realized gold price in company history and helped River Gold Mines (RIV-T) return to profitability during 2001.
For the year, River recorded net earnings of $930,000 (or 3 per share) on revenue of $38.2 million, compared with the year-ago loss of $7.2 million (23 per share) on $35.4 million. Cash flow nearly doubled to $8 million from $4.2 million. The 2000 loss included a $3.8-million, non-recurring writedown of the carrying values of some exploration properties.
River ended 2001 with a flourish earning $1 million (3 per share) on revenue of $8.8 million during the final three months, compared with a loss of $4 million (13 per share) on $10 million in the same period of 2000. Cash flow climbed to $2.5 million from $1.9 million.
On the production front, River reached a record 89,900 oz. at a cash cost of US$198 per oz., compared with 85,100 oz. at US$223 apiece in 2000. Tonnes milled between the two periods fell 9,000 tonnes to 322,000, but recovery grade picked up the slack climbing to 8.7 grams gold per tonne from 8 grams. Fourth-quarter production tallied to 20,700 oz. at US$177 each, down from 24,400 at US$190 per oz. the previous year. The company realized US$271 per oz. for its 2001 production, US$9 per oz. off the pace in 2000.
The company spent $6.5 million on production shaft sinking at Eagle River during the year, in line with 2000 expenditures. The shaft advanced to a depth of 505 metres. Construction and final commissioning of the ore handling system is anticipated by the end of the first quarter. The new shaft is expected to generate saving of about $1.5 million annually.
Mining at the Edwards mine wrapped up in September as reserves were depleted. The company expects production from the Mishi project is to Edwards’ millfeed in 2002. Probable reserves within Mishi’s defined pit limits stand at 100,000 tonnes running 3.8 grams gold. Previous owners pegged Mishi’s total resources at 1.4 million tonnes grading 4.2 grams of gold per tonne. River sees Mishi as a low cost, seasonal operation.
At the end of 2001 River’s total proven and probable ore reserves were 1 million tonnes grading 9.8 grams gold off slightly from year-end 2000.
On the exploration front, the company has begun a $3-million program. Drilling from a drift on the 460-metre level is testing the potential of ore zones to a depth of 750 metres or 300 metres below the limits of current reserves. Early results indicate the No.6 zone weakens below 440 metres and resumes below 500 metres. The also points to encouraging between the No.6 and the No.2 zones, which suggest the presence of a new zone.
The company also plans to use some of the recently raised $5.4 to systematically explore a parallel structure located 400 metres south of the mine from a drilling drift being established on the 330-metre level. Surface exploration will focus along the main structure east and west of the Eagle River mine and will provide an evaluation of known gold occurrences on the Magnacon property.
Looking into the crystal ball, River forecast 2002 production at 75,000 oz. at lower cash costs thanks to commissioning of the new shaft. After wrapping up the shaft sinking, River plans on refocusing its efforts to building reserves.
At the end of 2001, River had $7.5 million in cash and equivalents, up from about $4 million at year-end 2000.
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