Richmont Mines - Very Good Operating Results In 1Q 2017

Today Richmont Mines (RIC) released its 1Q 2017 operating results. Let me show just three charts showing what is going with this miner.

The first chart shows cash costs of production at Richmont's flagship property, the Island Gold mine:

source: Simple Digressions

This year the company is going deeper into Island Gold (deeper than 400 metres below surface) and expects to increase production (to 87 - 93 thousand ounces vs. 83.3 thousand ounces in 2016) and cut cash costs of production (C$715 - C$765 per ounce). As the chart shows, the start into 2017 was really good and the cash cost of production was much lower than company's estimates (C$668 per ounce for 2017, on average).

However, the second mine, Beaufor, was kind of a problem to Richmont:

source: Simple Digressions

As the chart shows, between the beginning of 2015 and middle 2016 Beaufor's production was in a steep decline. This negative trend was stopped last year (red arrow) and the company expects Beaufor to deliver 23 - 27 thousand ounces of gold this year (19.6 thousand ounces in 2016).  

What is more, the declining production was not the only problem at Beaufor because last year the mine was a high-cost gold producer:

source: Simple Digressions

According to the company, this year Beaufor should be producing gold at cash cost of C$1,265 - C$1,320 per ounce (C$1,444 in 2016) so the first quarter (red circle) shows that this forecast is not overly optimistic...