Richmont Mines Reports Fourth Quarter and Full Year 2013 Results

MONTREAL, QUEBEC--(Marketwired - Feb 20, 2014) - Richmont Mines Inc. ( RIC.TO )(NYSE MKT:RIC), ("Richmont" or the "Corporation"), announces its fourth quarter and fiscal year results for the period ended December 31, 2013. Financial results are based on International Financial Reporting Standards ("IFRS") and dollars are reported in Canadian currency, unless otherwise noted.

Highlights:

  • Q4 2013 revenues of $27.8 million; net loss from continuing operations of ($28.7) million, or ($0.72) per share; Q4 2012 revenues were $24.9 million, and the net loss from continuing operations was ($2.6) million, or ($0.07) per share;

  • Q4 2013 net loss from continuing operations includes the following charges totalling $23.1 million, or $0.58 per share: a non-cash write-down of the W Zone Mine assets following a reduction of its reserve base, a write-down of deferred income and mining tax assets, a write-off of financing costs following the termination of a debt-financing agreement and severance charges (for details please refer to Table 1 on page 4);

  • 2013 revenues of $90.2 million, from the sale of 63,443 gold ounces at an average price of CAN$1,419 (US$1,378) per ounce. 2012 revenues were $101.7 million, from the sale of 60,741 ounces of gold at an average price of CAN$1,665 (US$1,666) per ounce;

  • 2013 net loss from continuing operations of ($33.2) million or ($0.84) per share, compared to the 2012 net loss from continuing operations of ($3.0) million, or ($0.08) per share; The 2013 net loss was ($34.3) million, or ($0.87) per share, versus the 2012 net loss of ($45.0) million, or ($1.28) per share;

  • Continued promising results obtained at depth at Island Gold Mine; new Indicated resource of 169,000 gold ounces and expanded Inferred resource of 955,000 gold ounces established at January 21, 2014 (on a 100% basis, please refer to Note 5 of the Reserve & Resource estimates table on page 12); Focus in 2014 on defining and upgrading existing resource base;

  • Balance sheet: cash balance at December 31, 2013 of $17.6 million, working capital of $14.0 million, and long-term debt of $5.2 million;

  • 2014 production forecast of 70,000 to 80,000 ounces of gold.

Mr. Paul Carmel, President and CEO of Richmont Mines commented: "During the fourth quarter we announced a significant milestone for the Corporation. With the new resource additions to Island Gold Deep, the Island Gold Mine has now exceeded our one-million ounce target, setting the groundwork for what we believe will be a low-cost, long life mine. The Corporation's task is to incorporate Island Gold Deep into the Island Gold Mine plan and to optimize the overall asset to its full potential. Managing our capital resources is key to this process and one of our priorities in 2014. Revenues from our mines are an important component to our financing plan and in this regard, our W Zone Mine has been a disappointment. A re-interpretation of the geology following exposure from mining, combined with 2013 production, has led to a lower than expected reserve base and ultimately a non-cash write-down of the asset."

Q4 2013 Results

Revenues for the fourth quarter of 2013 were $27.8 million, compared to $24.9 million in the comparable period of last year. The year-over-year increase reflects higher gold ounce sales at the Island Gold and Beaufor mines, and the addition of commercial production from the Monique and W Zone mines in the quarter, which were partially offset by the 21% decrease in the average price of gold sold in Canadian dollars year-over-year. In the fourth quarter of 2013, 20,918 ounces of gold were sold at an average price of CAN$1,328 (US$1,265), versus gold sales of 14,810 ounces at an average price of CAN$1,679 (US$1,694) in the fourth quarter of 2012.

Richmont generated a net loss from continuing operations of ($28.7) million, or ($0.72) per share, in the fourth quarter of 2013, versus a net loss from continuing operations of ($2.6) million, or ($0.07) per share, in the comparable period of 2012. This decrease was driven primarily by the following charges totalling $23.1 million, or $0.58 per share, namely a non-cash write-down on the W Zone Mine assets, a write-off of deferred income and mining tax assets, a write-off of financing costs following the termination of a debt financing agreement and severance payments. Please see Table 1 for details. The year-over-year decrease similarly reflected a significantly lower average realized gold sales price combined with a 14% increase in average production cost per ounce, the effects of which were only partially offset by a notable 41% increase in the number of gold ounces sold. The increase in production cost per ounce was attributable to higher cost year-over-year at Island Gold, the beginning of commercial production at both Monique and W Zone and the reduction of reserves at the W Zone Mine, which materially increased the resulting depreciation cost per ounce in the fourth quarter. Richmont generated a net loss of ($29.1) million, or ($0.73) per share, in the fourth quarter of 2013, versus a net loss of ($16.5) million, or ($0.42) per share, in the comparable period of 2012, which included the write-down related to the discontinued Francoeur Mine operations.

Cost of sales totalled $31.0 million in the fourth quarter of 2013, an increase of 61% from $19.3 million in the year-ago period, primarily reflecting an 83% increase in processed tonnage year-over-year, and high depreciation costs at the W Zone Mine. While the average total production cost per ounce increased by 14% year-over-year, mostly as a result of higher depreciation expense, the average cash cost per ounce of gold sold increased by a marginal 4% in Canadian dollars, and was slightly lower in US dollars. The average cash cost per ounce of gold sold totalled CAN$1,156 (US$1,102) in the fourth quarter of 2013 versus CAN$1,116 (US$1,126) in the year-ago period, as the impact of lower grades at the Island Gold Mine combined with lower ramp-up grades at the Monique and W Zone mines were counterbalanced by significantly improved grades at the Beaufor Mine.

The Corporation spent $0.9 million on exploration and project evaluation efforts in the fourth quarter of 2013, primarily at the Island Gold Deep project, versus $6.3 million in the year-ago period. This decrease primarily reflects exploration and project evaluation costs incurred at the Wasamac property in the fourth quarter last year, versus none in the current period. The Corporation applied $0.1 million on exploration tax credits in the current quarter, versus $0.4 million in the comparable period of last year.

2013 Annual Results

Revenues for the 12 months ended December 31, 2013 totalled $90.2 million, compared to last year's $101.7 million. This decrease was attributable to the 15% decrease in the average price of gold sold during the period, the effects of which were only partially mitigated by the 4% increase in the number of ounces sold. For the year, 63,443 ounces of gold were sold at an average price of CAN$1,419 (US$1,378), versus gold sales of 60,741 ounces in 2012 at an average price of CAN$1,665 (US$1,666).

Cost of sales totalled $85.8 million in 2013, up from $73.8 million in the year-ago period. The increase reflects the addition of 74,803 tonnes following the onset of commercial production at the Monique and W Zone mines on October 1, 2013, high depreciation costs at the W Zone Mine, a 7% increase in tonnage from the Beaufor Mine, and a slightly higher cost per tonne at the Island Gold Mine. The average cash cost per ounce of gold sold increased to CAN$1,128 (US$1,095) for 2013 from CAN$1,044 (US$1,044) in 2012, as higher costs at the Island Gold Mine and high costs at the Monique and W Zone mines in their initial ramp up stage, were only partially offset by lower year-over-year costs at the Beaufor Mine.

Exploration and project evaluation costs totalled $7.9 million in 2013, well below the 2012 level of $20.3 million, as the Corporation focused exploration efforts at the Island Gold Deep project, where costs were capitalized in 2013, versus in 2012 when the Corporation completed an extensive exploration and project evaluation program at the Wasamac Gold Project. The Corporation applied $1.0 million on exploration tax credits in 2013, versus $3.5 million in 2012.

Richmont generated a net loss from continuing operations of ($33.2) million, or ($0.84) per share, in 2013, versus a net loss from continuing operations of ($3.0) million, or ($0.08) per share, in 2012. The variance year-over-year reflects charges totalling $22.8 million, or $0.58 per share, specifically a non-cash write-down of the W Zone Mine assets, a write-off of deferred income and mining tax assets, a write-off of financing costs following the termination of a debt-financing agreement and severance charges. Please see Table 1 for details. The annual variance in results also reflects a 15% decrease in the average realized gold price in Canadian dollars, an 11% increase in the average production cost per ounce stemming partly from the onset of commercial production at the Monique and W Zone mines in the fourth quarter of the year, as well as higher costs at Island Gold, the effects of which were only partially mitigated by a 4% increase in the number of gold ounces sold. In 2013, Richmont generated a net loss of ($34.3) million, or ($0.87) per share, versus a net loss of ($45.0) million, or ($1.28) per share, in 2012.

Non-IFRS Financial Performance Measures

Adjusted net earnings and adjusted net earnings per share do not have any standardized definition under IFRS. Management uses these performance measures to assess the operating performance of the Corporation without the effects of unusual items because they affect the comparability of the financial results and could potentially distort the evaluation of its business performance. Non-IFRS measures are presented in Table 1.

The fourth quarter 2013 and full year 2013 adjusted net losses exclude the charges related to the discontinued Francoeur Mine operations and the charges noted in Table 1 below, and the 2012 adjusted net loss excludes charges from the discontinued Francoeur Mine operation and severance compensation paid to the Corporation's ex-President and CEO. Excluding the charges in all periods, Richmont generated an adjusted net loss of ($5.6) million, or ($0.14) per share, in the fourth quarter of 2013, compared with an adjusted net loss of ($2.6) million, or ($0.07) per share, in the comparable period of 2012. On a full year basis, Richmont generated an adjusted net loss of ($10.3) million, or ($0.26) per share, in 2013, compared with an adjusted net loss of ($1.5) million, or ($0.04) per share, in 2012. Details of these specific charges are presented in Table 1.

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TABLE 1
FOURTH QUARTER AND FULL YEAR CHARGES RELATED TO SPECIFIC ITEMS
(in thousands of $, except per share amounts) Three months ended Fiscal year ended
December 31, December 31, December 31, December 31,
2013 2012 2013 2012
Net loss (29,075 ) (16,495 ) (34,260 ) (45,015 )
Charge related to discontinued operation 389 13,854 1,098 42,038
Net loss from continuing operations (28,686 ) (2,641 ) (33,162 ) (2,977 )
Other adjustments, net of taxes:
Write-off of Deferred Income & Mining Tax assets 8,079 -