MINING IN CANADA — Richmont ready for new ventures

With three small but profitable gold mines in operation in Canada, Rouyn-Noranda, Que.-based Richmont Mines (RIC-T) is looking to take on a larger project.

“We would like to get our hands on something a little bigger than what we have now,” explains President Jean-Guy Rivard. The company owns the Francoeur mine, roughly 26 km west of Rouyn-Noranda, and the Nugget Pond mine on Newfoundland’s Baie Verte Peninsula, as well as a 69.3% interest in Louvem Mines, half-owner of the Beaufor gold mine near Val d’Or, Que.

“We’ve acquired some expertise and we feel that we could go in for something bigger, maybe 75,000 to 100,000 ounces,” says Rivard.

The company is splitting its time between exploring for additional reserves at existing operations and searching for new projects to take on.

Exploration at Francoeur last year led to the discovery of a new gold zone at the 600-ft. level, dubbed Zone 7. Rivard says Richmont will spend $4.5 million over the next twelve months developing the zone, which hosts a reserve of 525,000 tonnes grading 0.2 oz. gold per ton. Total reserves at Francoeur now stand at 1.7 million tonnes grading 0.19 oz. gold. The average cash cost at Francoeur last year was US$273 per oz. gold.

“Next year, [if the price of gold remains low] we’ll need ore we can mine at a better price,” Rivard explains. “We’re always exploring there to replace the tons we mine out.” Most of the exploration occurs underground, but it was surface drilling that uncovered Zone 7.

Rivard also says that the company is attempting to uncover additional mineralization at Nugget Pond, where reserves currently stand at 475,000 tons grading 0.34 oz. gold, sufficient for a mine life of four years.

Richmont has budgeted $500,000 for exploration on the Nugget Pond property in 1998, some of which will be spent investigating a showing found 3.2 km from the mine last year. The company also hit a previously undiscovered zone when sinking the ramp into the mine, and is planning to conduct further exploration of the zone from surface.

From the start of production, on April 1, to the end of the year, Nugget Pond produced 34,800 oz. gold at a cash cost of US$143 per oz., bettering Richmont’s forecast of 32,000 oz. at US$153. The improvement was attributed to higher grades and better-than-expected mill recovery.

As for the future of the company, Rivard explains that Richmont is “aggressively looking” for new projects.

“Nugget Pond is generating nice cash flow, and that will be used to make new acquisitions. We’re knocking at many doors, and sooner or later someone will answer,” he says, adding that the company is searching for an advanced project near the feasibility or production stage.

Richmont’s net earnings for 1997 dropped to $2.37 million from $2.9 million in the previous year. Nevertheless, it was the company’s sixth consecutive year of profitability.

The company produced a total of 72,800 oz. gold in 1997, up from 30,100 oz.

in 1996. The cost of production fell to US$215 per oz. gold from $275 per oz. in the previous year.