Richmont Mines to shut Quebec gold mine, cut 150 jobs

Thu Nov 29, 2012 5:16pm EST
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Nov 29 (Reuters) - Richmont Mines Inc said it will shut down its Francoeur gold mine in Quebec from Friday as high costs and lower grades of ore makes the project unfeasible.

The closure will result in about 150 job cuts, the company said in a press release. Richmont had 579 employees as of June 30.

"Low realized grades, difficult mining conditions and a tight labor pool for the experienced miners required for the challenging mining conditions at Francoeur were the main factors that contributed to the higher costs that led to the decision," Richmont Chief Executive Paul Carmel said in a statement.

Richmont said it will take a related pre-tax charge of about C$11 million ($11.09 million) to C$13 million, the majority of which is expected to be accounted for in the fourth quarter this year.

The Francoeur mine, which started commercial production in August, was expected to produce about 20,000 ounces of gold next year, the company said in a presentation in September.

Richmont, which owns and operates the Island Gold mine in Ontario and the Beaufor mine in Quebec, said it expects 2013 production to be between 65,000 ounces and 70,000 ounces of gold, down from its previous forecast of 85,000 to 95,000 ounces.

The company also said it was suspending exploration activities on its Wasamac gold property located near Rouyn-Noranda, Quebec.

Richmont shares, which have lost about 38 percent of their value over the last six months, closed at C$3.80 on the Toronto Stock Exchange on Thursday.