River posts solid earnings

With higher-grade development ore coming from the new 650 zone at the Eagle River mine, 50 km west of Wawa, Ont., River Gold Mines (RIV-T) posted net earnings of $1 million (or 3 per share) for the three months ended September 30.

During the same period of 2000, the company incurred a loss of $1.1 million (or 2 per share). Revenue between the two periods climbed to $10.9 million from $8.4 million. Cash flow rose to $3.2 million from $764,000 a year earlier.

For the first nine months of the year, River’s loss tallied to $133,000 on revenue of $29.3 million. Losses in the first nine months of 2000 were $3.2 million (10 per share) on $25.4 million. Cash flow more than doubled to $5.5 million from $2.3 million.

Third quarter gold production amounted to 24,300 oz., compared to 20,250 oz. a year earlier. Cash costs averaged US$187 per oz., versus an average realized price of US$274 per oz. For the first three quarters of the year, production topped 69,200 oz. at US$205 per oz. The company averaged US$267 per oz. for its production during the period.

At Eagle River, drifting on the 386-metre level (the deepest yet) has followed the vein for a length of 150 metres with an average grade of 20 grams of gold per tonne and an average width of 2.45 metres. This drift is projected to continue in high grade ore for a further 70 metres. A fourth-quarter drilling program will test the zone to a depth of 550 metres. The deposit remains open at depth.

Shaft-sinking at Eagle River is well advanced with just 38 metres remaining. Following set up, final shaft commissioning should occur March 1, 2002. Completion of the shaft and the transition to longhole mining methods will significantly lower operating and capital costs.

Overburden stripping, in-fill drilling, cost optimization studies and permitting work at the Mishi project, 2 km west of the River Gold mill, continued with the goal of initiating production in 2002.

River expects to pour 87,000 oz. of gold in 2001 and 75,000 oz. in 2002 at a lower cost per ounce. Mishi is expected to chip in about 10,000 oz. of year 2002 production. The company also notes that fourth-quarter production and costs are both expected to be lower.

On the financial front, a fully-subscribed rights issue netted the company about $5.4 million. Of that, $3 million went to debt reduction and the completion of the shaft project.