Rio Narcea still in red

Low gold prices have taken their toll on Rio Narcea Gold Mines (RNG-T), which posted a loss of US$2.1 million last year on revenue of US$31.7 million from its mining operations in northern Spain.

In the previous year, the company lost US$2.7 million on revenue of US$16.9 million based on 10 months of production from the new El Valle mine in Asturias province. In 1999, the first full year of production, El Valle produced 103,785 oz. gold at a cash cost of US$185 per oz. In the previous year, cash costs averaged US$221 per oz.

Exploration is ongoing at the company’s El Valle project area, where proven and probable reserves in 1999 were boosted by 19% to 4.6 million tonnes grading 5.73 grams gold per tonne, or 862,000 contained ounces. The increase is attributed to the high-grade Charnela discovery in the main pit and definition drilling at the Boinas East pit.

Rio Narcea notes that open-pit production from the Charnela zone (300,000 tonnes of 17 grams) should begin next year and have a significant impact on the mine’s profitability.

The El Valle mine and nearby Carles project have combined total reserves of 5 million tonnes averaging 5.6 grams. The company’s land package has additional resources estimated at 17.5 million tonnes averaging 3.89 grams.

Rio Narcea expects to produce 122,000 oz. gold this year at a cash cost of US$190 per oz. Commercial production at Carles, scheduled for the third quarter, is expected to contribute 20,000 oz. to the company’s annual production at a projected cash cost of US$165 per oz.