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Richmont Mines Inc. (TSX:RIC,NYSEMKT:RIC) reported that for the first quarter of 2015, gold production was at 25,859 ounces – a 23% increase over the prior year. Gold sales was at 24,791 ounces at an average price of $1,496 (US$1,205), a 21% increase over the prior year. Also in Q1 2015, net earnings reported was $4.6 million, or $0.09 per share, versus Q1 2014 net loss of ($1.9) million, or ($0.05) per share.
First Quarter Results
Gold production in the first three months of 2015 increased 23% over the prior year to 25,859 ounces, driven by a strong performance from the Quebec operations owing to a combination of increased tonnage, a higher processed grade at both operations, and the addition of 1,624 ounces derived from the refining of accumulated slag at the Camflo Mill. This robust performance was offset by slightly lower gold production from the Island Gold Mine, where production was ramped up and new optimisation initiatives were implemented during the first quarter in accordance with the Corporation’s 2015 plans. These efforts culminated in an average production of 860 tonnes per day at the Island Gold Mine in March which resulted in establishing a surface stockpile of 6,700 tonnes of ore at the end of the quarter.
On a consolidated basis, first quarter cash cost per ounce of gold sold decreased 16% to $979 (US$789) from $1,169 (US$1,060) in the comparable period of 2014, and AISC decreased 9% to $1,255 (US$1,011) from $1,384 (US$1,255) in the first quarter of 2014. These cost improvements were driven by significantly lower costs at the Beaufor Mine, attributable to improved grades from a more selective mining approach and the 1,624 ounces from the milling of accumulated slag, and lower costs at the Monique Mine due to the prioritized milling of higher grade ore. As expected, production costs at Island Gold Mine increased year-over-year primarily as a result of the significantly greater amount of development ore processed during the quarter, for which handling costs are considerably higher than ore derived from long-hole stoping. Cost levels are also a result of the ramping up of production, and the implementation of the Corporation’s accelerated mine optimization and development plans.
Revenues increased 26% to $37.2 million in the first quarter of 2015, from $29.5 million in the first quarter of 2014, reflecting a 21% increase in gold ounces sold and a 4% increase in the average Canadian dollar selling price in the current period. A total of 24,791 ounces of gold were sold at an average price of $1,496 (US$1,205) per ounce in the current quarter, versus gold sales of 20,412 ounces and an average realized price of $1,441 (US$1,306) per ounce in the comparable period last year.
The Corporation spent a total of $9.2 million on capital expenditures in the first quarter of 2015, versus $5.9 million in the first three months of 2014. Total capital expenditures of $8.7 million at Island Gold accounted for the majority of total investments in the current period, and consisted of approximately $3.8 million of sustaining investments, out of total planned $19.1 million for the year, and $4.9 million of accelerated development costs, out of a total planned $29.2 million for the year. Capital investments in Quebec, all of which were sustaining, amounted to $0.5 million in the current period.
Exploration and project evaluation costs totaled $1.1 million in the current quarter, versus $0.7 million in the comparable period of 2014. On a segmented basis, exploration expenses excluding depreciation and exploration tax credits were approximately $0.5 million at the Island Gold Mine and $0.5 million at the Beaufor Mine, while exploration and project evaluation costs at other properties amounted to $0.1 million during the current quarter.
The Corporation generated net earnings of $4.6 million, or $0.09 per share, in the first quarter of 2015, a $6.5 million improvement over the net loss of ($1.9) million, or ($0.05) per share, generated in the first quarter of 2014.
Operating cash flows of $9.1 million in Q1 2015, or $0.17 per share, compared to Q1 2014 operating cash flows of $2.4 million, or $0.06 per share, a 183% increase on a per share basis. First quarter net free cash flow (operating cash flows less capital expenditures) was ($0.1) million, or nil per share, compared to net free cash flow of ($3.5) million, or ($0.09) per share in the year-ago period.
Cash Position and Capital Structure
The Corporation’s cash position totaled $70.7 million at March 31, 2015, compared to $67.5 million at February 11, 2015 subsequent to the closing of the bought deal financing announced in January 2015, and up from $35.3 million at year-end 2014. As of March 31, 2015, Richmont Mines had 400 employees, compared to 430 as of March 31, 2014. The Corporation had working capital of $72.2 million, 57.9 million shares outstanding, and minimal long term debt of $5.2 million.
Richmont Mines President and CEO, Renaud Adams, said:
The transition of Island Gold into a higher grade, lower cost mine remains our focus for this year. In this regard we are very pleased with our progress to date, as the implementation of our accelerated development plan came in both on time and on budget for the first three months of 2015. I am also delighted with the continued strong momentum generated by our operations this quarter. Of particular note was the robust performance of our Quebec assets which returned cash cost and all-in-sustaining-cost levels that were below expectations, providing us with increased financial flexibility as we continue to implement our Island Gold development initiatives. Production at Island Gold ramped up throughout the quarter, and we are pleased with the progress that the mine achieved in March. As anticipated, costs at Island Gold were higher in the first quarter, primarily as a result of the large amount of development ore processed, which accounted for 70% of total ore tonnage in the period. We are pleased with our development progress to date, and look forward to reaching additional milestones as we continue to implement our strategic infrastructure and operational improvements, and build on what we believe is the potential for significant long-term growth at Island Gold.
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