DAILY NEWS Dec 3, 2012 4:04 PM - 0 comments

GOLD: Richmont closes Francoeur mine

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2012-12-03

QUEBEC – Richmont Mines of Montreal has announced the closure of the Francoeur gold mine and the suspension of exploration on the Wasamac gold property, both are which are near Rouyn-Noranda.

"Given the ongoing high operating costs at Francoeur, and management's inability to foresee marked improvements in the future, we are obliged to make the difficult but responsible decision to close the mine," said president and CEO Paul Carmel. "Richmont's management team and I would like to thank the employees of the Francoeur mine for their hard work and dedication to the operation, and we regret that no solution was found to make the project economically feasible at present or over the long term."

Richmont will take a pre-tax write-off of approximately $11 million to $13 million related to the closure of the Francoeur mine, the majority of which will be accounted for in Q4 2012. The write-off will consist of $4 million to $5 million in cash (related to employee severance) with the remaining amount being non-cash.

Commercial gold production at Francoeur ceased on Nov. 30, 2012. The company estimates that 115 employees will be laid off immediately and 35 employees will be retained temporarily during a four-month decommissioning period.

Richmont anticipates that a sizeable portion of the costs related to the closure will be recouped in several ways, including the redeployment of equipment to the Island Gold and Beaufor mines, where equipment purchases had been budgeted for 2013. Cost offsets related to surface infrastructure and remnant ore in certain stopes are also expected.

Richmont continues to expect 2012 production of approximately 65,000 oz of gold. 2013 production is forecasted to be 65,000 to 70,000 oz, down from 85,000 to 95,000 oz previously. This revised 2013 guidance does not include potential bulk sample ounces from the Corporation's Monique and W zone advanced exploration projects.  

Scheduled technical work and permitting efforts will proceed as planned on Wasamac throughout 2013 following the completion of the current exploration program. However, additional exploration and development activities have been suspended.

Read the latest news at Richmont-Mines.com.

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