Toronto (ots/PRNewswire) - Guidance for another Record Year at Island Gold, with a Potential 22% Increase in Production and a Decrease in All-in-Sustaining Costs
Richmont Mines Inc. (TSX - NYSE MKT: RIC) ("Richmont" or the "Corporation"), announces 2016 estimates that include a potential increase in production of up to 22% from the cornerstone Island Gold mine that is expected to drive a decrease in All-in Sustaining Costs ("AISC"). (All amounts are in Canadian dollars unless otherwise indicated).
2016 Consolidated Operational Estimates
In 2016, company-wide production includes another year of production growth from the cornerstone Island Gold Mine and another solid year of consistent production from the Beaufor Mine. Consolidated annual production is expected to be consistent with 2015 as increased production from Island Gold is expected to fully offset the production decrease related to the 2015 closure of the Monique Mine. Company-wide cash costs and AISC are expected to be largely in-line with the prior year's guidance estimates.
Material assumptions include: an average gold price of CAD$1,500 per ounce (US$1,100 per ounce); and a foreign exchange rate of 1.394 Canadian dollars to the US dollar. Note: 2015 Cash cost and AISC results are expected to be released on February 22, 2016.
2016 Consolidated Operational Estimates
Island Gold Beaufor Estimates Gold Ounces
Produced 62,000-67,000 25,000-30,000
87,000-97,000 Cash Costs per Ounce (CAD$)(1)
$900-$960 $1,000-$1,060 $930-$1,000
Sustaining Capital per Ounce (CAD$) $260-$290 $230-$270
$250-$280 Corporate G&A per Ounce (CAD$) -
- $95-$110 All-in Sustaining Costs
per Ounce (CAD$)(1) $1,160-$1,250
$1,230-$1,330 $1,275-$1,390 Cash Costs per Ounce (US$)(1)
$660-$705 $735-$780 $680-$730
Sustaining Capital per Ounce (US$) $190-$215 $170-$195
$185-$205 Corporate G&A per Ounce (US$) -
- $70-$80 All-in Sustaining Costs
per Ounce (US$)(1) $850-$920
$905-$975 $935-$1,015 (1) Cash costs and AISC are
non-GAAP measures. Refer to the Non-GAAP performance measures
section in the Third Quarter MD&A.
2016 Capital Investment & Exploration Estimates
The Corporation will remain focused on a disciplined and prudent capital allocation strategy to ensure expenditures are fully funded internally with sustaining capital investment requirements expected to reduce compared with the prior year. Project capital investment for the year is focused on the continued development of the Island Gold Mine, as detailed in the recent Preliminary Economic Assessment ("PEA") released in October 2015. Total capital investment estimates for the year include a potential $10 million (US$7.3 million) in discretionary capital with allocation of these funds contingent upon the prevailing gold price sustainably exceeding $1,500 per ounce (US$1,100 per ounce) in 2016.
Capital and Exploration Investment
($M) Island Gold Quebec Division
Estimates Sustaining Capital (CAD$) $17.3
$6.8 $24.1 Sustaining Capital (US$) $12.7
$5.0 $17.7 Project Capital (CAD$)(3)
$43.4 $ - $43.4 Project Capital (US$)(3)
$31.8 $ - $31.8 Company-wide Exploration
(CAD$) $7.3(1) $1.1(2) $8.4 Company-wide
Exploration (US$) $5.4 $0.8 $6.2 (1)
Exploration costs required to complete the drilling programs
announced in September 2015. (2) All delineation and exploration
drilling for the Beaufor Mine is included in sustaining
capital and $1.1 million is related to the Quebec division
outside the Beaufor property. (3) Project Capital for Island
Gold includes accelerated underground development of $25.0
million (US$18.3 million) related to the PEA and $6.0 million
(US$4.4 million) related to discretionary development outside
the scope of the PEA.
"The strategy in 2015 was to best position our asset base for success with a key focus on developing our cornerstone Island Gold Mine. With a 7-year mine life based on reserves, the accelerated mine development program completed in 2015 has pre-developed more than three years of production life. In addition, we have expanded our tailings facility to accommodate production until 2023, and increased the capacity of the mill facility to 900 tonnes per day. As a result of our 2015 project investments, we have the flexibility to manage project capital to ensure we always maintain access to adequate liquidity to fully fund our growth strategy. Supported by the results from the recent PEA completed in October, we will remain focused on unlocking the significant potential of the Island Gold Mine through initiatives that will position this core asset for production growth and significant free cash flow generation beginning in 2017," commented Renaud Adams, President and Chief Executive Officer. He continued, "We begin 2016 with a strengthened management team that brings a renewed commitment to delivering results that positions Richmont for long-term success."
Island Gold Mine - 2016 Estimates
The Island Gold Mine is expected to deliver another year of significant production growth that exceeds the record production achieved in 2015. In 2016, production is expected to increase by up to 22% over the prior year with cash costs and AISC expected to decline over prior year guidance estimates. During 2016, the Corporation will remain focused on an aggressive, but disciplined, development strategy at the Island Gold Mine, which will position the operation for significant production growth and increasing free cash flow streams beginning in 2017, as detailed in the recent PEA.
Island Gold Operational Estimates
2016 Island Gold Estimates Gold Ounces Produced
CAD$ US$ Cash costs per ounce
$900-$960 $660-$705 Sustaining Capex per ounce
$270-$290 $195-$215 AISC per ounce
- Annual production at Island Gold is expected to increase over the
prior year driven by increased underground productivity that is
expected to average approximately 800 tonnes per day in 2016.
- Increased production and enhanced operational efficiencies are
expected to underpin a decrease in cash costs and AISC over the
prior year's guidance estimates.
- During 2016, the operation will target a planned mining ratio of
approximately 60% of tonnes from stoping ore and 40% from
development ore. As a result, in 2016, unit mining costs will
remain at elevated levels of approximately $135 per tonne (approx.
$210 per tonne of total operating costs), but are expected to
decline significantly beginning in 2017 as the stoping versus
development ore ratio is expected to substantially increase. In
2016, stoping ore is expected to be mined from new resources
primarily in the second (60%) and third (20%) mining horizons, with
the remaining tonnes (20%) mined from the Lochalsh West and
Goudreau areas located in the upper area of the mine, which are not
included in the PEA deposit area. Ore development will be primarily
from the second and third horizons of the new resources between the
675 and 825 metre levels.
- Following a mill upgrade completed in October 2015, capacity of the
mill facility has been increased to 900 tonnes per day. In July
2016, an additional 3-week electrical mill upgrade is scheduled,
during which time the underground mine will continue to operate and
ore will be stockpiled for future processing. As a result, the mill
facility is expected to average 800 tonnes per day during the first
half of the year, in-line with underground productivity. Following
the completion of the mill upgrade, mill productivity is expected
to increase to accommodate processing of stockpiled ore by
utilizing the excess mill capacity. Recoveries are expected to
average 96.5% during 2016.
Island Gold Capital Investment Estimates
Sustaining Capital Investment ($M)
CAD$ US$ Capital Projects / Fixed Assets
$13.1 $9.6 Sustaining Underground Mine Development
$2.8 $2.1 Delineation Drilling
$1.4 $1.0 Sustaining Capital
Investment $17.3 $12.7 Project
Capital ($M)(1) CAD$ US$
Accelerated Underground Mine Development $31.0
$22.8 Infrastructure and Equipment
$9.8 $7.1 Delineation Drilling (PEA)
$2.6 $1.9 Total Project Capital
$43.4 $31.8 (1) Accelerated Underground Mine
Development under Project Capital includes $25.0 million
(US$18.3 million) in development related to the PEA and $6.0
million (US$4.4 million) related to discretionary development
outside the scope of the PEA.
- Project capital in 2016 will continue to focus on unlocking the
potential of the Island Gold Mine and is primarily allocated to
accelerated mine development as well as related infrastructure
upgrades and equipment purchases as described in the PEA.
- Approximately 2,500 metres of ore development and 5,300 metres of
waste development is expected to be completed during the year,
including 1,000 metres of discretionary development related to new
resources outside the PEA deposit area. It is expected that by the
end of 2016 the main ramp will reach a vertical depth of 860 metres
and the east ramp will reach a vertical depth of 655 metres. Given
the significant near-mine exploration potential identified directly
to the east and west of the main deposit area considered in the
PEA, the Corporation will review the optimal location of the dual
ramp system as described in the PEA, in order to accommodate any
additional resources located outside the scope of the PEA.
- The project capital program for 2016 includes discretionary capital
investment of approximately $10 million (US$7.3 million), with
allocation of these funds contingent upon the prevailing gold price
sustainably exceeding $1,500 per ounce (US$1,100 per ounce). The
discretionary $10 million (US$7.3 million) includes 1,000 metres of
development outside the PEA of $6 million (US$4.4 million) and $4
million (US$2.9 million) in infrastructure and equipment.
- Delineation drilling in 2016 will target the conversion of the
remaining resources located within the scope of the PEA deposit
2016 Island Gold Exploration Estimates
Exploration ($M) CAD$
US$ Near-mine Lateral Drilling (12,000 metres) $1.1
$0.8 Deep Directional Drilling (17,000 metres) $3.4
$2.5 Eastern and Western Lateral Extensions (8,500 metres) $0.9
$0.6 Regional Surface Drilling (7,500 metres) $0.8
$0.6 740 metre level Exploration Drift (182 metres) $1.1
$0.9 Total Exploration $7.3
- During 2016, the Corporation will complete the drilling programs
that were announced in September 2015. All drilling efforts related
to this program are expected to be completed at the end of April
2016, at which time the Corporation will review all drilling
results and, based on that review, will subsequently provide an
update on any additional drilling programs that may be planned for
the second half of 2016.
Quebec Division - 2016 Estimates
The Quebec Division is comprised of the Beaufor Mine and Camflo Mill, which processes ore from the Beaufor Mine. In 2016, the Beaufor Mine is expected to deliver another year of consistent production in-line with the prior year, to deliver a free cash flow stream. Development of the Q Zone has been advanced with a target of reaching the mineralized structure in the first quarter of 2016.
Beaufor Mine Operational Estimates
2016 Estimates Production per ounce
CAD$ US$ Cash costs per ounce
$1,000-$1,060 $735-$780 Sustaining Capex and Exploration per
ounce $230-$270 $170-$195 AISC per ounce
- Annual production at the Beaufor Mine is expected to be consistent
with prior year's production with cash costs and AISC also expected
to be in-line with prior year guidance estimates.
- The underground mine is expected to average approximately 360
tonnes per day (approx. 134,000 tonnes) with approximately 75% of
the ore feed from stoping ore and 25% from development ore. It is
expected that about 50% of the ore will be sourced from the Q Zone.
- Unit costs for 2016 are expected to average $205 per tonne,
including milling at the Camflo Mill.
Quebec Division Capital Investment Estimates
Capital Investment and Exploration ($M)
CAD$ US$ Project Capital (Camflo)
$1.1 $0.8 Underground Mine Development and
Infrastructure $4.0 $2.9 Delineation and
Exploration Drilling Beaufor Mine (24,500 metres) $1.7 $1.3
Sustaining Capital Investment
$6.8 $5.0 Non-Sustaining Exploration (excluding Beaufor)
- Sustaining capital investment requirements are expected to be
in-line with 2015 and include approximately 625 metres of ramp
development and 100 metres of vertical development.
- During the year, the 24,500 metre drilling program will focus
drilling on the Q Zone extension and in the upper mine that will
target new resources and potential mine life extension at the
About Richmont Mines Inc.
Richmont Mines has produced over 1.6 million ounces of gold from its operations in Quebec, Ontario and Newfoundland since beginning production. The Corporation currently produces gold from the Island Gold Mine in Ontario, and the Beaufor Mine in Quebec. The Corporation is also advancing development of the significant high-grade resource extension at depth of the Island Gold Mine in Ontario. With 25 years of experience in gold production, exploration and development, and prudent financial management, the Corporation is well-positioned to cost-effectively build its Canadian reserve base and to successfully enter its next phase of growth. Richmont routinely posts news and other important information on its website (http://www.richmont-mines.com).
This news release contains forward-looking statements that include risks and uncertainties. When used in this news release, the words "estimate", "project", "anticipate", "expect", "intend", "believe", "hope", "may" and similar expressions, as well as "will", "shall" and other indications of future tense, are intended to identify forward-looking statements. The forward-looking statements are based on current expectations and apply only as of the date on which they were made. Except as may be required by law, the Corporation undertakes no obligation and disclaims any responsibility to publicly update or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.
The factors that could cause actual results to differ materially from those indicated in such forward-looking statements include changes in the prevailing price of gold, the Canadian-United States exchange rate, grade of ore mined and unforeseen difficulties in mining operations that could affect revenue and production costs. Other factors such as uncertainties regarding government regulations could also affect the results. Other risks may be set out in Richmont Mines' Annual Information Form, Annual Reports and periodic reports. The forward-looking information contained herein is made as of the date of this news release.
Cautionary note to US investors concerning resource estimates
Information in this press release is intended to comply with the requirements of the Toronto Stock Exchange and applicable Canadian securities legislation, which differ in certain respects with the rules and regulations promulgated under the United States Securities Exchange Act of 1934, as amended ("Exchange Act"), as promulgated by the SEC. The Reserve and Resource estimates in this press release were prepared in accordance with Regulation 43-101 adopted by the Canadian Securities Administrators. The requirements of Regulation 43-101 differ significantly from the requirements of the United States Securities and Exchange Commission (the "SEC").
U.S. Investors are urged to consider the disclosure in our annual report on Form 20-F, File No. 001-14598, as filed with the SEC under the Exchange Act, which may be obtained from us (without cost) or from the SEC's web site: http://sec.gov/edgar.shtml.
The geological data in this news release has been reviewed by Mr. Daniel Adam, Geo., Ph.D., Vice-President, Exploration, an employee of Richmont Mines Inc., and a qualified person as defined by Regulation 43-101.
Renaud Adams, President and CEO, Phone: +1-416-368-0291 ext. 101; Anne Day, Vice-President, Investor Relations, Phone: +1-416-368-0291 ext. 105; Richmont Mines Inc., Ticker symbol: RIC, Listings: TSX - NYSE MKT, Web Site: http://www.richmont-mines.com , Visit our Facebook page
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