Stronger loonie costs River Gold Mines

Lower-grade ore and a rebounding Canadian dollar left River Gold Mines (RIV-T) with a small loss in the first quarter of 2000.

For the three months ended March 31, River Gold posted a loss of $567,550 (2 per share) on revenue of $9.1 million, compared with a profit of $286,572 on $9.2 million in revenue in the first quarter of 1999.

Although the company realized an average price for its gold of US$291 (US$5 higher than in the corresponding period of 1999), that price translated into a Canadian-denominated price that was $9 lower. As a result, River made slightly less revenue on slightly higher production.

In the recent first quarter, River’s gold plant milled 78,300 tonnes of ore from the Eagle River and Edwards mines, producing 21,200 oz. gold. During the corresponding period of 1999, the mill produced 21,000 oz. from 61,100 tonnes of ore. Average millhead grade was down substantially in the first quarter of 2000 because much of the ore came from development headings.

Cash production costs increased as well, to US$234 per oz. from US$205 the year before. The higher costs are chiefly a reflection of the lower grades being mined, as well as the additional costs of deeper mining.

At the Eagle River mine, currently being mined from a decline, a production shaft is at 70 metres and will be sunk to 500 metres. River is considering sinking it further still, to 850 metres, and expects that hoisting, rather than hauling, will mean a production cost saving of US$10-20 per oz.

The mine’s No. 6 Zone is being blocked out by drilling and drifting, though more definition work will be necessary once the shaft is finished. An exploration drift along the No. 6 zone, at the 330-metre level, returned an average of 14.8 grams gold per tonne across an average width of 1.8 metres along a 100-metre drift length.