RICHMONT MINES INC.
NYSE Alternext US : RIC
TSX : RIC

RICHMONT MINES INC.

May 09, 2008 08:30 ET

Richmont Mines Reports 46% Increase in Revenue in the First Quarter of 2008

- Precious metals revenue up 48% and ounces sold increase 21% - Average price per ounce sold reaches US$947 - First quarter earnings of $0.4 million or $0.02 per share - Exploration expenses of $1.1 million

MONTREAL, QUEBEC--(Marketwire - May 9, 2008) - Richmont Mines Inc. (TSX:RIC)(AMEX:RIC), a gold exploration, development and production company with operations in Canada, today announced financial and operational results for its first quarter ended March 31, 2008. Financial results are based on Canadian GAAP and dollars are reported in Canadian currency, unless otherwise noted.

Revenue for the first quarter of 2008 was $15.0 million, a 46% increase compared with $10.2 million in the first quarter of 2007. In the 2008 quarter, 14,995 ounces of gold were sold at an average price of US$947 (CAN$947) per ounce, compared with 12,403 ounces of gold sold in the same period the prior year at an average price of US$717 (CAN$771) per ounce. Total precious metals revenue was up $4.6 million, or 48%, to $14.2 million in the first quarter of 2008 compared with $9.6 million in the first quarter of 2007. Sales from the Island Gold Mine, which commenced production during the fourth quarter of 2007, more than offset the loss of gold sales from the East Amphi Mine, which was closed in mid-2007.

Operating costs, including royalties, for the first quarter of 2008 were $10.4 million, a 46% increase compared with $7.2 million in the same period the prior year reflecting increased production and higher operating costs. The cash cost per ounce of gold sold increased 30% to US$697 in the first quarter compared with US$537 in the first quarter of 2007. Relatively high cash costs of US$809 were incurred at the Island Gold Mine as production has not yet reached projected levels, while costs at the Beaufor Mine increased slightly to US$599 from US$587 in the first quarter of 2007.

Exploration and project evaluation costs increased $0.8 million to $1.1 million in the first quarter of 2008 compared with $0.3 million in the same period of 2007. Higher exploration and project evaluation expenses reflect the Company's efforts to grow its reserves. Approximately $0.5 million in exploration costs were incurred at the Beaufor Mine and about $0.5 million at the Golden Wonder project, which is located in the historic precious metal rich Colorado Mineral Belt.

Net earnings for the first quarter of 2008 were $0.4 million, or $0.02 per share, compared with net earnings of $0.3 million, or $0.01 per share, in the first quarter of 2007.

At March 31, 2008, cash and cash equivalents were $30.0 million, a $2.7 million increase from $27.3 million at December 31, 2007. During the quarter, $0.5 million was invested in the development of the Island Gold Mine and $0.3 million was invested in property, plant and equipment. Richmont Mines has no long-term debt obligations and has working capital of $35.3 million.

Island Gold Mine(1)

During the first quarter of 2008, 31,688 tonnes of ore from the Island Gold Mine were processed at an average recovered grade of 6.86 g/t, and 6,992 ounces of gold were sold at an average price of US$937 (CAN$937) per ounce. Although the average recovered grade has improved 6.4% compared with the grade of 6.45 g/t experienced in the fourth quarter of 2007, the mine's initial quarter in commercial production, ore output from production stopes was lower than forecasted due to lower productivity from the long-hole contractor and delays in stope sequencing which adversely impacted results and contributed to a high cash cost of US$809 during the quarter. Major improvements were made to address these issues and better results are expected in the second quarter.

Mr. Martin Rivard, President and CEO of Richmont Mines, commented: "Although we made progress at Island Gold during the quarter, production is still below target. Our biggest challenge is finding mining personnel at a time when the industry is experiencing a shortage of experienced miners. We are revising work schedules and increasing recruiting efforts to meet our production target. A mining contractor was also retained to advance underground development allowing us to refocus our resources to production activities."

Beaufor Mine

During the first quarter of 2008, 30,697 tonnes of ore from the Beaufor Mine were processed at an average recovered grade of 8.11 g/t, and 8,003 ounces of gold were sold at an average price of US$955 (CAN$955) per ounce. In the same quarter the prior year, 29,700 tonnes of ore were processed at an average recovered grade of 6.50 g/t, and 6,211 ounces of gold were sold at an average price of US$726 (CAN$780) per ounce. Despite a higher grade, the average cash cost per ounce increased in 2008 due to maintenance costs at the Camflo Mill which only processed ore from the Beaufor Mine during the quarter and to a higher Canadian dollar compared with 2007. The cash cost of production in the first quarter of 2008 was US$599 per ounce sold, up slightly from US$587 in the first quarter of 2007.

Golden Wonder Project

Site preparation at the Golden Wonder Project, where the Company is exercising its option to acquire a 50% joint venture interest, began at the end of the first quarter of 2008. Preliminary exploration drilling and underground development work is expected to begin during the second quarter.

Annual and Special General Meeting

Richmont Mines' Annual and Special General Meeting will be held on Tuesday, May 13, 2008 in Rooms II and III of the Conference Center of the Sun Life Building, 1155 Metcalfe Street, 7th floor, Montreal, Quebec, at 9:00 a.m. (local time). The presentation will also be available on Richmont Mines' Website.

Outlook

Mr. Rivard concluded, "Improved results in the first quarter provide us with an excellent start to 2008. Higher gold sales at higher prices combined with improved operational discipline enabled us to increase operating leverage, even as we maintain our exploration activity. We continue to build our cash reserves giving us the flexible balance sheet needed to support our exploration activity and we expect to see significant progress at our different properties in 2008, providing us with a project pipeline for the future."

Martin Rivard, President and Chief Executive Officer

About Richmont Mines Inc.

Richmont Mines produces gold from its operations in Canada and has extensive experience in gold exploration, development and mining. Since it began production in 1991, the Company has produced more than one million ounces of gold from its holdings in Quebec, Ontario and Newfoundland. Richmont Mines' strategy is to cost effectively develop its mining assets, exploit mineralized reserves on properties owned and acquired, or develop partnerships to expand its reserve base.

Forward-Looking Statements

This news release contains forward-looking statements that include risks and uncertainties. When used in this news release, the words "estimate", "project", "anticipate", "expect", "intend", "believe", "hope", "may" and similar expressions, as well as "will", "shall" 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 revenue and production costs. Other factors such as uncertainties regarding government regulations could also affect the results. Other risks may be set out in Richmont Mines' Annual Information Form, Annual Reports and periodic reports. Richmont Mines undertakes no obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

Cautionary Note to U.S. Investors Concerning Resource Estimates

The resource estimate in this news release is prepared in accordance with Regulation 43-101 adopted by the Canadian Securities Administrators. The requirements of R 43-101 differ significantly from the requirements of the United States Securities and Exchange Commission (the "SEC"). In this news release, we use the terms "measured", "indicated" and "inferred" resources. Although these terms are recognized and required in Canada, the SEC does not recognize them. The SEC permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that constitute "reserves". Under United States standards, mineralization may not be classified as a reserve unless the determination has been made that the mineralization could be economically and legally extracted at the time the determination is made. United States investors should not assume that all or any portion of a measured or indicated resource will ever be converted into "reserves". Further, "inferred resources" have a great amount of uncertainty as to their existence and whether they can be mined economically or legally, and United States investors should not assume that "inferred resources" exist or can be legally or economically mined, or that they will ever be upgraded to a higher category.


(1) Richmont Mines reports 100% of the consolidated results of the Island Gold Mine, in compliance with AcG-15, which stipulates that a holder of variable interests must consolidate the accounts if it intends to assume the majority of the expected losses and/or receive the majority of the residual returns of the variable interest entity (VIE). Richmont Mines holds a 55% stake in the unincorporated joint venture, and as its share of the earnings and/or losses will differ from the percentage that it owns, the Company is therefore considered the primary beneficiary of the VIE.



FINANCIAL DATA
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Three-month period
ended March 31,
CAN$ 2008 2007
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Results (in thousands of $)
Revenue 14,961 10,237
Net earnings 406 326
Cash flow from operations 3,181 4,002

Results per share ($)
Net earnings basic and diluted 0.02 0.01

Basic weighted average number
of common shares outstanding
(thousands) 24,053 24,242

Average selling price of gold
per ounce US$947 US$717
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March 31, 2008 December 31, 2007
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Financial position
(in thousands of $)
Total assets 87,501 85,976
Working capital 35,336 33,970
Long-term debt - -
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SALES AND PRODUCTION DATA
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Three-month period ended March 31,
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Ounces of gold Cash cost
Year Sales Production (per ounce sold)
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Island Gold Mine 2008 6,992 8,008 US$809
2007 - - -
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Beaufor Mine 2008 8,003 10,385 US$599
2007 6,211 8,642 US$587
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East Amphi Mine 2008 - - -
2007 6,192 5,239 US$487
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Total 2008 14,995 18,393 US$697
2007 12,403 13,881 US$537
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Average exchange rate used for 2007: US$1 = CAN$1.0748
2008 estimated exchange rate: US$1 = CAN$1.0000



CONSOLIDATED STATEMENTS OF EARNINGS
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(in thousands of Canadian dollars)
(Unaudited) Three months ended
March 31, March 31,
2008 2007
$ $
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REVENUE
Precious metals 14,194 9,566
Other 767 671
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14,961 10,237
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EXPENSES
Operating costs 10,097 7,065
Royalties 347 93
Administration 827 803
Exploration and project evaluation 1,081 301
Accretion expense - asset retirement obligations 43 44
Depreciation and depletion 1,205 1,631
Loss (gain) on disposal of mining assets 20 (94)
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13,620 9,843
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EARNINGS BEFORE OTHER ITEMS 1,341 394

MINING AND INCOME TAXES 723 186
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618 208

MINORITY INTEREST 212 (118)
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NET EARNINGS 406 326
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NET EARNINGS PER SHARE
Basic and diluted 0.02 0.01

BASIC WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING (thousands) 24,053 24,242
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See accompanying notes to consolidated financial statements
available on SEDAR.



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CONSOLIDATED BALANCE SHEETS
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(in thousands of Canadian dollars)
March 31, December 31,
2008 2007
$ $
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(Unaudited) (Audited)

ASSETS

CURRENT ASSETS
Cash and cash equivalents 30,015 27,291
Short-term investments 931 1,826
Accounts receivable 3,003 2,859
Mining and income taxes receivable 1,393 1,677
Inventories 6,324 5,438
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41,666 39,091

ADVANCE TO A MINORITY PARTNER 1,500 1,875

PROPERTY, PLANT AND EQUIPMENT 44,335 45,010
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87,501 85,976
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LIABILITIES

CURRENT LIABILITIES
Accounts payable and accrued charges 5,997 5,005
Mining and income taxes payable 333 116
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6,330 5,121

ASSET RETIREMENT OBLIGATIONS 3,401 3,358

MINORITY INTERESTS 14,450 14,238

FUTURE MINING AND INCOME TAXES 1,272 1,446
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25,453 24,163
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SHAREHOLDERS' EQUITY

Capital stock 61,014 61,016
Contributed surplus 5,226 5,092
Deficit (4,253) (4,647)
Accumulated other comprehensive income 61 352
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62,048 61,813
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87,501 85,976
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See accompanying notes to consolidated financial statements
available on SEDAR.



CONSOLIDATED STATEMENTS OF CASH FLOW
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(in thousands of Canadian dollars)
(Unaudited) Three months ended
March 31, March 31,
2008 2007
$ $
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CASH FLOW FROM OPERATING ACTIVITIES
Net earnings 406 326
Adjustments for:
Depreciation and depletion 1,205 1,631
Stock-based compensation 141 123
Accretion expense - asset retirement obligations 43 44
Loss (gain) on disposal of mining assets 20 (70)
Minority interests 212 (118)
Future mining and income taxes (174) (247)
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1,853 1,689

Net change in non-cash working capital items 1,328 2,313
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3,181 4,002
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CASH FLOW USED IN INVESTING ACTIVITIES
Disposal of mining assets 14 157
Property, plant and equipment - Island Gold (475) (1,976)
Property, plant and equipment - Beaufor Mine (80) -
Other property, plant and equipment (270) (78)
Cash received from an advance to a minority
partner 375 -
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(436) (1,897)
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CASH FLOW FROM (USED IN) FINANCING ACTIVITIES
Issue of common shares 19 178
Redemption of common shares (40) (86)
Contribution from a minority partner - 135
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(21) 227
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Net increase in cash and cash equivalents 2,724 2,332

Cash and cash equivalents, beginning of period 27,291 16,126
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Cash and cash equivalents, end of period 30,015 18,458
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See accompanying notes to consolidated financial statements available
on SEDAR.

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