Louvem Mines Inc. (TSX VENTURE:LOV)
-- Net earnings of $75,430, or nil per share, for the first quarter of
2010, compared with net earnings of $336,844, or $0.01 per share, for
the comparable period of 2009;
-- $5,227,634 in cash and cash equivalents and no long term debt at March
31, 2010;
-- Parent Company Richmont Mines Inc. (TSX:RIC)(NYSE Amex:RIC) announces
intention to acquire outstanding 30% of Louvem that it does not
currently own.
Louvem Mines Inc. (TSX VENTURE:LOV), ("Louvem" or the "Company"), announces its
financial results for the first quarter of 2010, ended March 31, 2010. Financial
results are based on Canadian GAAP and dollars are reported in Canadian
currency, unless otherwise noted.
Revenues were $2,801,882 in the first quarter of 2010, compared with revenues of
$3,393,656 for the comparable period in 2009. A total of 2,452 ounces of gold
were sold at an average price of US$1,096 (CAN$1,140) in the first three months
of 2010, versus gold sales of 3,000 ounces at an average price of US$984
(CAN$1,124) in the first quarter of 2009. The year-over-year decrease in
revenues was mainly attributable to a lower number of gold ounces being sold,
the effects of which were partially offset by an increase in the average price
per ounce of gold sold.
The Company posted net earnings of $75,430, or nil per share, in the first
quarter of 2010, down from earnings of $336,844, or $0.01 per share, for the
first quarter of 2009. Operating cash flow was $81,473 in the quarter, versus
$322,958 in the comparable period of 2009, with the year-over-year difference
due to a lower revenue base that stemmed from fewer gold ounces being sold.
Total expenses for the first quarter of 2010 were $2,706,020, compared with
$2,869,725 in the same period of 2009. Operating costs for the first three
months of 2010 totalled $2,256,547, compared with $2,290,095 in the first
quarter of 2009. Exploration expenses fell by $143,867 year-over-year to
$134,983 in the first quarter of 2010, a reflection of the extensive exploration
program in 2009. Depreciation and depletion expense increased from $75,013 in
2009 to $112,782 in 2010. This was driven by a higher depreciation and depletion
rate per ounce of gold sold, calculated based on proven and probable reserves,
which declined year-over-year at the Beaufor Mine.
First Quarter News
On March 31, 2010, Louvem's parent company, Richmont Mines Inc. (TSX - NYSE
Amex: RIC), ("Richmont"), announced that it intended to acquire the 30% of the
issued and outstanding shares of Louvem that it currently did not own. Under
terms of the transaction proposed by Richmont, Louvem shareholders would receive
one Richmont share for each 5.4 shares of Louvem held. This represents a value
of $0.76 per Louvem share, and is a premium of approximately 48% to Louvem
shareholders, based on the March 30, 2010 closing prices on the TSX Venture
Exchange and the TSX of Louvem shares and Richmont shares, respectively.
Subsequent to this announcement, Louvem's Board of Directors established an
independent committee comprised of Mr. Gaston Gagnon and Mr. Pierre Barbeau,
both independent directors of Louvem, to review and assess the terms of the
proposal made by Richmont. The independent committee retained the services of
Colby, Monet, Demers, Delage & Crevier LLP to act as legal advisor, and KPMG LLP
to act as financial advisor to the independent committee in connection with the
transaction. KPMG LLP was also given the mandate to provide the independent
committee with an opinion as to the fairness of the proposed transaction for
minority Louvem shareholders, from a financial point of view. The transaction
remains subject to the approval of the Board of Directors of Louvem, regulatory
approvals, the execution of definitive documentation and the approval of Louvem
shareholders.
A surface exploration program on the Beaufor Mine property was completed in the
first quarter of 2010. This program identified one promising zone - Zone 350 -
located approximately 800 metres to the southwest of the mine infrastructure.
This zone is composed of a quartz vein that contains pyrite, tourmaline and
visible gold, and varies in thickness from 0.35 metres to 2.8 metres. A total of
2,904 metres over 8 holes were drilled on this zone. Several interesting
intercepts were documented, notably 100.00 g/t over a true width of 0.91 metres
in hole 50-01, and 23.57 g/t over a true width of 0.90 metres in hole 35-01. The
results suggest that Zone 350 covers a minimum lateral distance of 350 metres,
and is open at depth and laterally. More exploration drilling is planned in the
near future on this area of the property, to further investigate the potential
of this zone.
Also during the first quarter of 2010, the Beaufor Mine reached a production
level of 1,000,000 gold ounces over its mine life. The mine produced a total of
517,129 gold ounces over the 27 years that it was in operation during the period
1933 until 1995. Since commercial production resumed in 1996, the mine produced
an additional 482,871 gold ounces, reaching the lifetime production milestone of
1,000,000 gold ounces in March 2010.
Beaufor Mine (100%)
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Three months ended
March 31, March 31,
2010 2009
------------------------------------------------------------------------
Tonnes(1) 25,262 29,463
Head grade (g/t) 6.15 6.47
Gold recovery (%) 98.16 97.86
Recovered grade (g/t) 6.04 6.34
Ounces sold(1) 4,903 6,001
Cash cost per ounce (US$) 885 668
Louvem's share of investment in property,
plant and equipment (CAN$) 348,927 143,530
Louvem's share in exploration expenses
(CAN$) 134,983 278,850
Deferred development (metres) 600 91
Diamond drilling (metres)
Definition 10,808 4,119
Exploration 1,832 5,976
------------------------------------------------------------------------
(1) Louvem's share is 50%.
A total of 25,262 tonnes from the Beaufor Mine were processed in the first
quarter of 2010 at an average recovered grade of 6.04 g/t, versus 29,463 tonnes
at an average recovered grade of 6.34 g/t in the comparable period of 2009.
Total cash cost per ounce produced rose to US$885 (CAN$920) in the current
quarter, from US$668 (CAN$763) in the prior year, a reflection of lower tonnage,
a lower average recovered grade, and higher mining costs associated with
increased development needed to access the mining areas. A total of 4,903 ounces
of gold were sold from this mine in the first quarter of 2010 at an average
price of US$1,096 (CAN$1,140), in line with the mine's annual sales target of
20,000 ounces of gold. This was compared to 6,001 ounces of gold sold at an
average price of US$984 (CAN$1,124) in the comparable period of 2009. Louvem's
share of the gold ounces sold was 2,452 ounces in the first quarter of 2010,
versus 3,000 ounces in the comparable period of 2009. In addition to exploration
and definition drilling, the main priority at the Beaufor Mine is to assess
different mining methods in order to reach ore zones more efficiently, with the
intended result of reducing operating costs and increasing recovered grades.
Annual and Special General Meeting of Shareholders
Louvem will hold its Annual and Special General Meeting of shareholders at 10:00
am on Friday, June 18, 2010, at 1155 Rene-Levesque Boulevard West, 40th floor,
in Montreal. The notice of the Annual and Special General Meeting of
shareholders and Management Information Circular will be sent to shareholders
within the coming days.
Martin Rivard
President and Chief Executive Officer
About Louvem Mines Inc.
The Company has a 50% interest in the Beaufor Mine and owns other exploration
properties located near Val-d'Or, in northwestern Quebec, Canada. More
information on Louvem Mines can be found on its website at: www.louvem.com.
Forward-Looking Statements
This news release contains forward-looking statements that include risks and
uncertainties. When used in this news release, the words "project", "expect",
"may" and similar expressions, as well as "will" and other indications of future
tense, are intended to identify forward-looking statements. The forward-looking
statements are based on current expectations and apply only as of the date on
which they were made. The factors that could cause actual results to differ
materially from those indicated in such forward-looking statements include
changes in the prevailing price of gold, the Canadian-United States exchange
rate, grade of ore mined and unforeseen difficulties in mining operations that
could affect revenues and production costs. Other factors such as uncertainties
regarding government regulations could also affect the results. Other risks may
be set out in Louvem's Annual Information Form, Annual Reports and periodic
reports.
Regulation 43-101
The geological data in this news release has been reviewed by Mr. Daniel Adam,
Geo., Ph.D, Exploration Manager, an employee of Richmont Mines Inc., the
operator of the Beaufor Mine, and a qualified person as defined by regulation
43-101.
KEY FINANCIAL DATA
Three-month period
ended March 31,
2010 2009
--------------------------------------------------------------------------
Results ($)
Revenues 2,801,882 3,393,656
Net earnings 75,430 336,844
Cash flow from operations 81,473 322,958
Results per share ($)
Net earnings basic - 0.01
Weighted average number of common shares
outstanding 25,929,689 25,929,689
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March December
31, 2010 31, 2009
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Financial position ($)
Total assets 8,781,958 8,330,756
Working capital 4,997,635 5,193,254
Long term debt - -
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SALES AND PRODUCTION DATA
--------------------------------------------------------------------------
Three-month period
Beaufor Mine - 50 % ended March 31,
2010 2009
--------------------------------------------------------------------------
Gold sales (ounces) 2,452 3,000
Production of gold (ounces) 2,817 2,425
Cash cost (per ounce sold) (US$) 885 668
Cash cost (per ounce sold) (CAN$) 920 763
Average selling price (per ounce of gold)
(US$) 1,096 984
Average selling price (per ounce of gold)
(CAN$) 1,140 1,124
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Average exchange rate used for 2009: US$1 = CAN$1.1420
2010 ESTIMATED EXCHANGE RATE: US$1 = CAN$1.0401
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term
is defined in the policies of the TSX Venture Exchange) accepts responsibility
for the adequacy or accuracy of this release.
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