October Gold News: Richmont Mines, Paramount Gold Release PEAs

This month, and this week in particular, those in the gold space have mainly been focused on two things: the US Federal Reserve policy meeting and Q3 results. 
And for good reason. Many were interested to see if the Fed would raise interest rates at its meeting, held from October 27 to 28. The news that rates will stay unchanged, at least until the central bank’s next meeting in December, led to a big price drop for the metal — it was sitting near the $1,180-per-ounce level prior to the news, and as of 3:30 p.m. EST on Thursday was trading hands for just $1,146.70.
Q3 results have also been flying out the door, with major miners Barrick Gold (TSX:ABX,NYSE:ABX) and Goldcorp (TSX:G,NYSE:GG) releasing theirs in the last couple of days. The former reported gold production of 1.66 million ounces and adjusted net earnings of $131 million, while the latter produced 922,200 ounces of gold and saw an adjusted net loss of $37 million.
However, while those gold news events are certainly key, they’ve been accompanied by some important announcements from smaller companies. With that in mind, here’s a brief look at a couple of smaller gold-focused companies that achieved milestones in the month of October.

Gold news: Paramount Gold Nevada

On October 27, Paramount Gold Nevada (NYSEMKT:PZG), the entity created from this year’s merger between Coeur Mining and Paramount Gold and Silver, released a new preliminary economic assessment (PEA) for its Sleeper gold project, located in Nevada.
According to the company, the PEA shows that Sleeper “has the potential to be an attractive economic opportunity at current metal prices.” It points to an IRR of 20 percent, a NPV of $125.8 million at a 5-percent discount and net cash flow of $198.5 million. Those numbers are all after tax, and were derived using a base-case gold price of $1,250 and a base-case silver price of $16 per ounce.
In terms of production, Sleeper is expected to produce 102,000 ounces of gold and 105,000 ounces of silver annually for seven years. Anticipated life-of-mine average cash operating costs are $529 per ounce of gold equivalent produced.

Gold news: Richmont Mines

Just a day after Paramount’s release, Richmont Mines (TSX:RIC,NYSEMKT:RIC) put out a PEA for its Ontario-based Island gold mine. Island is already producing, and the PEA looks specifically at December 31, 2014 mineral resources located between the 450-meter and 860-meter levels of the deposit.
The PEA considers a base-case 800-tonne-per-day mining operation. At that operating level, the operation would produce about 78,000 ounces of gold a year from 2017 to 2022, following a transitional period from 2015 to 2016. Average cash costs are estimated at $552 per ounce for that period. In terms of capital expenditures, Richmont anticipates most taking place in 2016, with only sustaining capital investments to the tune of $40.5 million needed from 2017 to 2022.
Additionally, the PEA looks at an expanded-case scenario, noting that in 2017 the operation could shift to running 1,150 tonnes per day.
In Q2 2015, Island produced 14,997 ounces of gold, a new quarterly record and a 40-percent rise from the year-ago period. Richmont’s Q3 results are set for release on November 5, 2015, and the company is also currently working to complete drilling at Island, among other things; it anticipates updated reserve and resource estimates in Q1 2016.
 
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. 
Editorial Disclosure: Richmont Mines is a client of the Investing News Network. This article is not paid-for content.