On November 10, Richmont Mines Inc. (NYSEMKT:RIC, TSE:RIC), a Canadian-based gold producer, reported disappointing financial results for the third quarter of 2016. Its gold production, revenue, and earnings plunged. Costs increased substantially.
Richmont Mines gold production was 18,856 ounces for the first quarter of 2016. In the same period a year ago, the company produced 23,478 ounces of gold. This represents a decline of 19.68%. (Source: “Richmont Mines Reports Third Quarter Financial Results; Pivotal Quarter Positions Island Gold for Growth,” Richmont Mines Inc., November 10, 2016.)
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Please note that all financial figures below are in Canadian dollars, unless otherwise indicated.
Looking at Richmont Mines’ revenue, it amounted to $31.24 million for the third quarter of 2016. In the same period a year ago, revenue was $34.10 million. This represents a decline of 8.38% year-over-year.
The company’s costs increased significantly, which was very much against the trend seen in the gold mining sector. In its third quarter, Richmont Mines’ all-in sustaining costs amounted to $1,604. In the third quarter of 2015, all-in sustaining costs for the company were $1,311. This represents an increase of 22% year over year.
With all this, Richmont Mines’ profitability took a severe hit. In its third quarter, the company reported net income of just $0.2 million, a decline from $3.13 million from a year ago.
The company’s liquidity was hurt as well. Operating cash flow per share in the third quarter declined 73% year-over-year.
Despite all this, Richmont Mines remains optimistic. CEO Renaud Adams said, “As we move into the final quarter of the year, we remain on track to achieve our company-wide revised guidance and the Island Gold Mine is well positioned to meet, or exceed, revised guidance as production in the fourth quarter is expected to increase. With a strong cash position and operating cash flow profile that is supported by a disciplined management team, Richmont is well positioned for continued shareholder value creation.” (Source: Ibid.)
At the time of writing on Thursday, Richmont Mines stock was trading at $7.70, down 10.47% from the previous day’s close. Year-to-date, RIC stock has increased over 167%, with a 52-week high of $11.66, and a 52-week low of $2.76.
