Richmont Mines Inc. (RIC, Financial) released its operating results for the first quarter of 2017 on April 13.
The Canadian mining company produced 29,401 ounces of gold, a 9.2% decrease from the same quarter a year ago and in line with its guidance. For 2017, the miner expects to produce between 110,000 and 120,000 ounces of gold.
The gold producer sustained a total cash cost of $598 per ounce of gold processed, an increase from a total cash cost of $583 per ounce a year ago. This figure, however, is below the company's guidance of $640 to $680 per ounce.
At Island Gold Mine, the company produced 23,772 ounces of gold, a 10.6% decrease on a year-over-year basis, at a cash cost of $504 per ounce of gold, a 3.7% increase from the comparable quarter of 2016. The mine contributes nearly 81% of Richmont's total gold production.
Located near Dubreuilville in the Canadian province of Ontario, the wholly-owned mine produces an average of 950 tonnes of mineral per day through underground mining operations.
Renaud Adams, the company's president and CEO, commented on the mine's solid production.
“The Island Gold Mine has delivered another quarter of solid production as well as lower cash costs, confirming the potential of this operation as we continue to transform the mine into one of the lowest-cost underground gold producers in the Americas," Adams said. "The expansion case PEA (preliminary economic assessment) is nearing completion and we remain confident that we will issue a positive report that will support the 1,100 tonnes-per-day expansion scenario while achieving our overall low-cost objective."
At the Beaufor mine, Richmont produced 5,629 ounces of gold at a cash cost of $956. Gold production in the first quarter was nearly 22% higher than one year ago at a cash cost per one ounce almost 6% lower.
During the first quarter, Richmont Mines sold 28,528 ounces of gold. With the gold price averaging around $1,219.36 per troy ounce on the Bullion market, the miner will likely report revenue of approximately $34.79 million and beat analysts' expectations. Analysts forecast revenue of $34.16 million on average for the first quarter of 2017, ranging between a low of $33.53 million and a high of $34.8 million.
Concerning earnings, analysts forecast EPS of four cents, a 64% decline from a year ago, ranging between a low of two cents and a high of six cents.
Richmont has an average target price of $10.43, which represents 23.4% upside from the current share price of $8.45. The stock has a price-sales ratio of 4.32 and a price-book ratio of 3.54. The EV/Ebitda ratio is 13.38.
Disclosure: I have no positions in Richmont Mines Inc.
Start a free 7-day trial of Premium Membership to GuruFocus.
