River Gold’s cash flow swells (September 02, 2002)

Despite lower production, River Gold Mines (RIV-T) posted a small profit of $105,957 (or nil per share) for the three months ended June 30.

That compares with earnings of $739,150 (2 per share) in the second quarter of 2001. Revenue between the two periods was virtually unchanged, at $10.6 million, while cash flow crept up to $3.3 million.

For the first half of 2002, River’s net profit was $376,259 (or a penny per share) a nice turnaround from the year-earlier loss of $1.2 million (or 4 per share). Revenue between the two periods climbed to nearly $21 million from $18.4 million, and cash flow nearly tripled to $6.4 million.

During the 3- and 6-month periods, River produced 21,600 oz. and 43,700 oz. gold, respectively — slightly lower than the in corresponding periods of the previous year. Fewer tonnes were milled, but that was partially offset by somewhat higher grades. Cash costs during the recent quarter climbed US$6, to US$201 per oz. For the half-year, cash costs fell US$21 to US$194 per oz. The company realized US$315 and US$303 for each ounce produced during the quarter and half-year period, respectively. Both represent significant improvements over the previous year.

During the quarter, River completed a production shaft at its namesake mine, near Wawa, Ont. The shaft, which should be operational in February, is expected to reduce hauling costs significantly.

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

River has begun mining at the Mishi open pit, 2 km west of the River gold mill. The company is evaluating the project’s resources, which, at last count, stood at 1.4 million tonnes grading 4.2 grams gold per tonne, including an open-pit resource of 772,000 tonnes grading 3.3 grams to a depth of 56 metres. An in-house evaluation 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.

River expects that Mishi’s ore will lower the overall grade treated in the second half of 2002. At the end of June, River had nearly $7 million in cash and equivalents.