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Richmont’s quarterly output falls 31% on planned lower grades, looks for more gold

12th July 2016

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – Boutique gold producer Richmont Mines has recorded a near-31% drop in gold output during the three months ended June 30, as it worked through planned lower grades at its flagship Island Gold mine in Ontario.

Toronto-based Richmont early on Tuesday reported consolidated output of 23 320 oz of gold for the period, with the Island Gold mine accounting for 18 617 oz, and the Beafor mine, in Quebec, contributing 4 703 oz, with no contribution from the Monique mine during the quarter.

Richmont advised that the milled head grade averaged 7.51 g/t during the period, compared with a planned 7 g/t to 7.5 g/t, and versus the grade of 11.3 g/t in the first quarter.

The Island Gold mine had realised 8% positive tonnage reconciliation and 10% positive grade reconciliation in the second quarter. The mining continues to pick up pace, averaging 911 t/d, compared with 853 t/d in the previous quarter. The company expected to average 900 t/d in 2017.

Milling rates also rose, averaging 878 t/d in the period, up from the 834 t/d in the first quarter.

Total cash costs for the company came in at $701/oz, up 19% quarter-on-quarter, placing the company on track to hit its 2016 guidance of $680/oz to $730/oz.

Desjardins Capital Markets analyst Michael Parkin noted that the cash costs were good, given that development tonnes at Island Gold remained above plan at 48% of total tonnes, against a planned 40%, while development tonnes cost about triple the stoping tonnes.

“By averaging above plan, the company is getting ahead of the overall plan and, as it moves to sub-40%, costs should fall further,” the analysts stated in a note to clients.

The Island Gold mine had scheduled a three-week shutdown in the current quarter, starting in late July, to upgrade a number of items.

“Overall, we see the 2016 operating results as in line on production, and good on mining and milling rates at Island Gold; thus, overall, we are slightly positive on the news. With grades to rise over the coming quarters, and mining and milling rates trending up, we see good potential for significant [earnings before interest, taxes, depreciation and amortisation] growth from Richmont,” Parkin advised.

Richmont planned to produce between 87 000 oz and 97 000 oz of gold this year.

EXPLORATION PHASE 2
Meanwhile, Richmont announced last week a final update to its 50 000 m Phase 1 drilling programme at the Island Gold mine, which started in September 2015. The company had achieved all three goals of testing the lateral continuity of the deposit, would continue to explore for mineralisation at depth, and would test other regional targets on the Island Gold property.

The Phase 1 programme had successfully identified high-grade mineralisation in the eastern lateral portion of the deposit above 1 000 m, which supported the decision for a potential expansion that was currently being considered.

Highlights from the final portion of Phase 1 included the lateral drilling programme, which intersected 17.41 g/t over 2.27 m, 21 g/t over 2.78 m and 10.55 g/t over 2.46 m (true widths with grades capped at 95 g/t). This compares well with the 8.5 g/t reserve grade for the zone below 400 m.

Drilling from the deep directional drilling programme between 860 m and 1 500 m also yielded strong results, with highlight drill holes of 18.63 g/t over 6.6 m and 9.11 g/t over 4.12 m. All of the holes from the deep programme intercepted the mineralised structure, the company advised.

In a potential high-grade block located between the 900 m and 1 250 m levels, the weighted average grade of the 20 holes was 10.85 g/t over an average true width of 4.35 g/t, while the main discovery zone that was being mined had an average grade of 10.73 g/t over 4.5 m true widths, according to the company.

Richmont also last week provided first details on its Phase 2 drilling programme, which had started and aimed at building on the success of Phase 1.

The Phase 2 drilling programme was expected to see the company complete up to 142 000 m of drilling over the next 18 to 24 months, with 39 000 m expected in 2016 alone.

The main goal would be to extend the mineralisation along strike above the 1 000 m level. This could extend the mine life and further support a potential expansion.

The company was expected to also focus on expansion of the deep zone between the 1 000 m and 1 500 m levels and would spend a modest amount on regional targets, which had also returned favourable results.

Edited by Samantha Herbst
Creamer Media Deputy Editor

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