Richmont Q4 earnings back in the black, strong outlook underpins Island Gold ops

VANCOUVER (miningweekly.com) – Small-scale gold producer Richmont Mines has reported fourth-quarter earnings coming in below bullish analyst expectations, though it did swing back to a profit for the three-month and full-year period ended December.

The Toronto-headquartered company reported earnings of C$1.1-million, or C$0.02 a share, coming in below Bay Street-analyst forecasts for C$0.05 a share.

The company’s TSX-listed stock closed Tuesday down 8.37% at C$11.17 apiece.

For 2016, Richmont reported earnings of C$12.5-million, or C$0.20 a share, an 84% year-on-year increase over 2015.

Richmont reported fourth-quarter revenues of C$44.2-million, a 39% increase over the comparable period of 2015, and record full-year revenues of C$168.7-million, a 17% increase over 2015.

Operating cash flow for the quarter was C$12.6-million, or C$0.20 a share, an 86% increase over the same period a year earlier. Operating cash flow for 2016 was C$48.2-million, or C$0.79 a share, a 14% increase over 2015.

Company-wide output for the quarter was 29 505 oz of gold, of which it sold 27 759 oz, a 32% increase over the year-earlier period, which contributed to record full-year output of 104 050 oz of gold, of which 102 660 oz were sold – a 6% increase over 2015, achieving the high end of revised production guidance for the year.

Richmont said the strong performance in the quarter was driven by production from the cornerstone Island Gold mine, in Ontario, which lifted output 70% to 24 086 oz of gold, and 83 323 oz in 2016 – a 51% increase over 2015, also topping guidance for the year.

All-in sustaining costs for the Island Gold mine in the quarter came in at C$912/oz, a 42% decrease over the corresponding period of 2015, and at $988/oz for 2016, which was 32% better over 2015.

Richmont ended the year with a cash balance of C$75.1-million, which is expected to fully support the organisation’s organic growth strategy.

Richmont expects to produce 15% more gold this year, between 110 000 oz and 120 000 oz, mainly driven by another consecutive year of high-quality production growth from the Island Gold mine to between 87 000 oz and 93 000 oz of gold.

The increase in output is expected to drive a decrease of up to 8% in cash costs both company-wide and at the Island Gold mine.

The company is working on completing an updated preliminary economic assessment on the Island Gold asset, which is expected to be complete in the second quarter. The study will assess the potential to expand the mine from about 900 t/d currently to 1 100 t/d over the next two years.

The company also expects to release results of an ongoing exploration drill programme before April.