POSITIONING FOR SUSTAINABLE GROWTH

Transcription

1 POSITIONING FOR SUSTAINABLE GROWTH Island Gold Mine Expansion Case PEA May 29, 2017 TSX NYSE : RIC

2 RICHMONT MINES FORWARD-LOOKING STATEMENTS Safe Harbor Statement & Cautionary Note to U.S. Investors Concerning Resources Estimates This presentation contains forward-looking statements that include risks and uncertainties. When used in this presentation, the words estimate, projects, anticipate, expects, 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. Except as required by law or regulation, Richmont Mines Inc. ( Richmont or the Corporation ) undertakes no obligation and disclaims any responsibility to publicly update or revise any forward-looking statements of information, whether as a result of new information, future events or otherwise. The factors that could cause actual results to differ materially from those indicated in such forward-looking statements include the ability to ramp up productivity to 1,100 tonnes per day in a timely manner, the ability to achieve the enhanced production levels expected, the ability to realize further expansion scenarios, any increases in capital and development or infrastructure costs,, changes in the prevailing price of gold, the Canadian-U.S. 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 detailed from time to time in Richmont s Annual Information Form and other public disclosure. The resource estimates in this presentation were prepared in accordance with National Instrument Standards of Disclosure of Mineral Projects ( NI ) adopted by the Canadian Securities Administrators. The requirements of NI differ significantly from the requirements of the United States Securities and Exchange Commission (the SEC ). In this presentation, we use the terms Measured, Indicated and Inferred Resources. Although these terms are recognized and required to be used in Canada, the SEC does not recognize them. The SEC permits U.S. mining corporations, 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. Furthermore. 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 more certain category. An NI Technical Report for the Island Gold Mine Expansion Preliminary Economic Assessment ( PEA ) will be filed within 45 days. For additional information regarding the Mineral Reserves and Resources referred to in this presentation, please refer to the press release dated Jan. 31, 2017 reporting Richmont s Mineral Reserve and Resource estimates as of Dec U.S. Investors are urged to consider the disclosure in our annual report on Form 40-F. File No , which may be obtained from us or from the SEC s web site: (All amounts are in Canadian dollars. unless otherwise indicated.) 2 RIC: TSX NYSE

3 ISLAND GOLD MINE EXPANSION CASE PEA A DISCIPLINED APPROACH The objective of the PEA was to consider the most cost and capital effective strategy to mine the portion of the mineral resources that is located within the main area of interest over four mining horizons, to a maximum depth of 1,000 metres below surface, using the current mine infrastructure. The Expansion Case PEA represents only the first step in a disciplined multi-phased strategy Use of current infrastructure; postponing the need for additional infrastructure to a further phase Approximately 24% of Inferred Resources were incorporated in the PEA; +750k ounces Inferred Resources available for further growth phase Maximizing mine productivity while maintaining a minimum mine life of 8 years Positioning the mine as a low cost operation that generates strong cash flow streams, with minimal capital requirements Currently realized cost data used; Further cost reduction and productivity enhancement initiatives not considered in the PEA 3 RIC: TSX NYSE

4 ISLAND GOLD MINE 1,100 TPD EXPANSION CASE PEA PEA Highlights: Increased productivity (mine and mill) to 1,100 tpd by 2018 over a PEA period of 8 years The operation is expected to produce an average of 125,000 gold ounces per year, excluding the 2017 and 2018 ramp-up period, or 115,000 ounces over the 8-year mine life considered in the PEA. Low industry cost profile over the PEA period, including cash costs of approximately $650 (US$480) per ounce, All-in Sustaining Costs ( AISC ) of approximately $835 (US$620) per ounce and All-in Costs ( AIC ), which includes all project and sustaining capital, of approximately $910 (US$675) per ounce. Minimal incremental capital investment of $28.2 (US$20.9) million is estimated to support a productivity increase from 900 to 1,100 tonnes per day, which will contribute to a strong cumulative pre-tax net cash flow stream, after all capital expenditures, of $749 (US$555) million at a spot gold price of $1,700 (US$1,260) per ounce, or $615 (US$456) million at a downside case gold price of $1,550 (US$1,150) per ounce over the eight years covered by the PEA. Additional opportunities remain for further expansion scenarios and mine life extension as the PEA only incorporates approximately 24% of the current total inferred resources (as at Dec. 31, 2016) and excludes more than 750,000 inferred resource ounces and does not take into consideration the most recent drilling success laterally to the east and at depth below the 1,000m level. 4 RIC: TSX NYSE

5 Expansion Case PEA Cautionary Statement The production and cost estimates contained in this the Expansion Case PEA are partly based on Inferred Resources, and are therefore preliminary in nature. Inferred Resources are considered too geologically speculative to have mining and economic parameters applied to them, or to be categorized as Mineral Reserves. There is no certainty that the conversion of Mineral Resources to Mineral Reserves or the production and cost forecasts on which the Expansion Case PEA is based, will be realized. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

6 EXPANSION CASE PEA KEY TECHNICAL ASSUMPTIONS Expansion Case PEA based on the December 31, 2016 Mineral Reserves and Resources Accelerated development of the dual ramp system to allow multi-stope mining beginning in 2018 Mining by ramp down to 1,000 m level; no additional infrastructure required Phase-in of higher capacity 42t trucks; supports mining at depth Alimak mining in the isolated western block by 2020 Minimum mill upgrade required; 1,100 tpd run rate by the latter part of 2018 Actual cost information utilized including mining, milling, site G&A and royalties, as well as underground development and infrastructure capital costs Future costs were adjusted to reflect economies of scale and decreased productivity as mining operations transition to 1,000 m level Minimal incremental capital required to increase productivity to 1,100 tpd from 900 tpd 6 RIC: TSX NYSE

7 EXPANSION CASE PEA MINERAL RESOURCES & RESERVES USED IN 2017 PEA STUDY Reserves December 31, 2016 Used for Expansion Case PEA Tonnes Grade g/t Au Gold Ounces Tonnes Grade g/t Au Gold Ounces Proven 572, ,811 Resources (1,2) Probable 1,978, ,398 Total Reserves 2,551, ,209 Measured & Indicated 478, ,427 2,565, ,689 Inferred 3,041, , , ,494 (1) Mineral Resources presented are exclusive of Mineral Reserves. (2) Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. PEA Mining Plan Production All Dec 31, 2016 Reserves (incl. Upper Mine) were used in the Expansion Case PEA. For the purpose of this PEA all Mineral Reserves included in the mine plan were considered at the Measured and Indicated Resource level. All Dec 31, 2016 M&I Resources were included in the PEA. Only the Dec. 31, 2016 Inferred Resources within the main continuous structure, primarily located in the fourth mining horizon and to a maximum depth of 1,000 metre level, were incorporated in the PEA. Total undiluted resources used in the PEA: M&I: g/t gold for 0.88 million ounces Inf.: g/t gold for 0.24 million ounces 3,096, ,000 The Dec. 31, 2016 mining dilution, mining recovery and cut-off grade criteria were used to estimate a total mining plan production of 9.68 g/t gold used in the PEA. 7

8 EXPANSION CASE PEA MINERAL RESOURCES & RESERVES USED IN 2017 PEA STUDY W Surface LOCHALSH ISLAND EXT1 EXT2 GOUDREAU E Crown pillar 190 m Level Upper Mine Reserves Ounces Considered in the PEA Tonnes Grade (g/t) Ounces P&P 341, ,500 First Mining Horizon Tonnes Grade (g/t) Ounces P&P 427, ,450 Second Mining Horizon P&P 490, ,950 Third Mining Horizon P&P 984, ,460 Inferred 63, ,710 Fourth Mining Horizon P&P 309, ,830 Inferred 472, ,970 Resources in table only include Island - Lower C Zone. Extension1 - Lower C Zone. and Extension 2 - Lower E1E Zone EXPANSION CASE PEA AREA 740 m Level Explo. & Delineation Drift 340 m Level 620m Level Planned Exploration Drift 860 m Level Planned Exploration Drift m 635 m Level 740 m Level 860 m Level 1000 m Level m Total diluted and recovered mineralized material considered in the PEA mining plan: 9.68 g/t = 964 koz gold Approx. 24% of the inferred resources were used in the PEA All resources outside the main area were excluded in the PEA Note: Mineral Resources presented are exclusive of Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Proven Reserves Probable Reserves Measured & Indicated Resources Legend 200 m Ramps and Actual Development Mined Out Inferred Resources Planned Development ( Mineral Reserves and Resources as of December ) 8 RIC: TSX NYSE

9 EXPANSION CASE PEA PROGRESS REPORT Received amended permits for processing avg. 1,100 tpd (Dec. 2016) Main ramp development at target 860 m level Ore development advancing in higher-grade 3 rd mining horizon Stoping in 3 rd horizon in tailings expansion increased capacity to 2.1 Mt; Expansion Case PEA considers additional capacity of 1.5 Mt in 2020 as sustaining capital Mill currently operating at base case 900 tpd (Avg. 920 tpd Q1 2017) Long lead mill equipment being sourced; engineering ongoing 9

10 Mine Plan 1,100 tpd

11 MINE PLAN 1,100 TPD TOTAL ORE MINED PEA Ore Tonnes Total Total ore mined (tonnes) 364, , , , , , , ,800 3,096,700 Total ore mined (g/t) Total development ore (tonnes) 134,700 94,400 98,200 83,600 26,900 3, ,400 Total development ore (g/t) Total stoping ore (tonnes) 229, , , , , , , ,800 2,655,300 Total stoping ore (g/t) Ratio: development/total ore Ounces Mined 95,300 99, , , , , ,900 89, ,000 Expanded mining rate of 1,100 tpd via dual ramp system Accelerated development strategy will support higher mining rates Development in ore completed in early 2022 Mining over 4 horizons; down to 1,000 metre level Alimak mining for the western block in 2020 PEA period of 8 years with no need for additional underground infrastructure 11

12 MINE PLAN 1,100 TPD TOTAL ORE MINED Mining Production and Grade 450, , , , Ore Tonnes / Ounces Mined 250, , , ,000 50,000 0 Historical Expansion Case PEA Grade g/t Au Ounces mined Total ore mined (tonnes) Mined grade (g/t) 12

13 MINE PLAN 1,100 TPD TOTAL WASTE MINED PEA Waste Mined Total Total waste development (t) 308, , , ,800 53, ,028,400 Total waste development (tpd) Total waste development (m) 4,859 4,211 3,762 2, ,993 Central East (t) 58,400 23,800 48,100 35, ,700 Central East (m) ,685 Central West (t) 15,300 74,600 72,100 64,500 41, ,200 Central West (m) 233 1,173 1,119 1, ,251 Ramp (t) 72,200 89,000 80,200 42,900 11, ,800 Ramp (m) 1,105 1,355 1, ,510 Other (t) 162,700 94,200 41, ,700 Other (m) 2,591 1, ,547 Total waste mined (t) 308, , , ,800 53, ,028,400 Total ore mined (t) 364, , , , , , , ,800 3,096,800 Total tonnes mined (t) 673, , , , , , , ,800 4,125,100 Total tonnes mined (tpd) 1,844 1,785 1,776 1,509 1,246 1,102 1,100 1,100 ~1,450 Ratio: Waste/Ore Accelerated development of dual ramp system ( ) Sustaining ramp development ( ); Eastern ramp completed to 1,000 m level in 2020; Western ramp completed to 1,000 m level in

14 MINE PLAN 1,100 TPD TOTAL TONNES MINED Total Tonnes Mined & Waste to Ore Ratio 700, , Total Tonnes Mined 500, , , , Waste to Ore Ratio 100,000 0 Historical Expansion Case PEA Total development ore (tonnes) Total waste development (t) Total stoping ore (tonnes) Ratio: Waste/Ore 14

15 MINE PLAN 1,100 TPD MINING SEQUENCE RIC: TSX NYSE

16 MINE PLAN 1,100 TPD MINING UNIT COSTS PEA Mining Unit Costs Total Total operating costs ($M) Underground ($/t) Mechanical/Electrical ($/t) Engineering/Geology ($/t) Surface/Camp ($/t) Environmental/Health&Safety ($/t) Total operating costs ($/t) Total operating costs (US$/t) Mining unit costs decline over the PEA period as the proportion of development in ore decreases; partially offset by the decrease in productivities as mining transitions to the fourth mining horizon Alimak mining in the western block, partially offsets reduction in mining unit costs in 2020 Opportunity to reduce Camp/Transportation costs as focus shifts to hiring local workers 16

17 MINE PLAN 1,100 TPD MINING UNIT COSTS Mining Unit & Total Operating Costs Total Operating Unit Cost $/t Total Operating Cost $M Historical Expansion Case PEA Underground ($/t) Engineering/Geology ($/t) Environmental/Health&Safety ($/t) Mechanical/Electrical ($/t) Surface/Camp ($/t) Total operating costs ($M) 17

18 MINE PLAN 1,100 TPD MILL PRODUCTION PEA Mill Production Total Total ore milled (tonnes) 333, , , , , , , ,300 3,092,500 Grade (g/t) Recovery (%) 96.5% 96.0% 96.5% 96.5% 96.5% 96.5% 96.5% 96.5% 96.4% Gold Production 90,400 94, , , , , ,400 86, ,800 Gold Production and Ore Tonnes Milled vs. Gold Grade Total tonnes milled / Ounces produced 400, , , , , , ,000 50, Historical Expansion Case PEA Grade g/t Au Gold Production (ounces) Total ore milled (tonnes) Grade (g/t) 18

19 MINE PLAN 1,100 TPD MILLING UNIT COSTS PEA Milling Unit Costs Total Total milling costs ($M) Labour ($/t) Cyanide ($/t) Other reagent ($/t) Power ($/t) Maintenance ($/t) Other ($/t) Total milling costs ($/t) Total milling costs (US$/t) Milling unit costs decrease by ~8% (PEA) after mill capacity expansion to 1,100 tpd Cost efficiencies driven by higher level of productivity, economies of scale 10% increase in labour supports a ~22% increase in capacity Costs decrease in 2019 and remain stable over the PEA Variable cost structure consistent (PEA) as no metallurgical changes are anticipated 19

20 MINE PLAN 1,100 TPD MILLING UNIT COSTS Milling Unit Costs & Tonnes Milled 450, , , ,000 Milling Unit Cost $/t , , , ,000 50,000 Tonnes Milled Labour ($/t) Cyanide ($/t) Other reagent ($/t) Power ($/t) Maintenance ($/t) Other ($/t) Total ore milled (tonnes) 0 In 2016 the mill processed 298k tonnes at unit costs of $35 per tonne 20

21 MINE PLAN 1,100 TPD G&A UNIT COSTS PEA G&A Unit Costs Total Total G&A ($M) Human Resources Information Technology (IT) Administration Total G&A ($/t) Total G&A (US$/t) Human Resources include all coordinators salaries and hiring fees IT includes all hardware and software updates Administration includes all site management and supervisors 21

22 MINE PLAN 1,100 TPD LABOUR SUMMARY Total Labour (1) Island Gold Mine Total Island Gold Underground Technical Services Mechanical/Electrical Mill G&A Contractors Total Contractors Underground Mechanical/Electrical Mill Site Services Other (1) Excludes exploration drilling. U/G contractors: Production, definition/delineation drilling and waste development U/G contractors begin to be phased out beginning in 2017; transitioned to internal workforce U/G contractor will be used for Alimak mining in 2020 Mill contractors increase in 2018 for mill expansion Other contractors primarily relate to site security Site services increases in 2020 due to Tailings expansion 22 RIC: TSX NYSE

23 MINE PLAN 1,100 TPD SUSTAINING CAPITAL PEA annual average sustaining capital of ~$21M (~US$15.5M) Key elements of sustaining capital in : Development of dual ramp system down to 1,000 m level and lateral development for Alimak mining Infrastructure: Kitchen and camp upgrade, mining services Truck fleet upgrade to 42t trucks PEA Sustaining Capital ($M) Total Total Sustaining Capital (C$) Mine Development Infrastructure Mill and Environment Delineation Drilling Mobile Equipment Other Total Sustaining Capital (US$) Mine Development Infrastructure Mill and Environment Delineation Drilling Mobile Equipment Other

24 MINE PLAN 1,100 TPD PROJECT CAPITAL PEA Project Capital ($M) Total Total Project Capital (C$) Mine Development Infrastructure Mill Expansion Mobile Equipment Other Total Project Capital (US$) Mine Development Infrastructure Mill Expansion Mobile Equipment Other Project capital primarily related to: Accelerated ramp development ($29M) and infrastructure ($11M) to support increased productivity to 1,100 tpd; both of which would have been advanced on a sustaining basis under a 900 tpd scenario Mine infrastructure includes underground and surface maintenance shops, ventilation and mine dewatering (majority required for 900 tpd scenario later in the PEA period) Capital for mobile equipment presented on a capital lease basis Incremental expansion capital ($28.2M) Mill expansion ($15.7M) Extra/Upgrade mobile equipment: 3-42t trucks / 2 scoops / 1 boom truck ($7.4M) Additional/Optimization of underground mine ventilation ($5.2M) 24

25 MINE PLAN 1,100 TPD PROJECT CAPITAL - MILL EXPANSION Mill expansion capital: Primarily related to upgrading the grinding circuit (additional ball mill) and extension of the mill building Mill Expansion Capital ($M) Total Total Expansion Capital (C$) Crushing Grinding Leaching Thickener Other Total Expansion Capital (US$) Crushing Grinding Leaching Thickener Other Mill expansion to be completed in the latter part of 2018 Ball mill being sourced Basic engineering ongoing; detailed engineering to begin in June Use of construction management firm considered in the estimate 25

26 MINE PLAN 1,100 TPD MILL FLOW SHEET Cone head modification (short head to standard) Increase capacity by opening screen size Thickener: Retro fit to high capacity unit or additional thickener Convert Leach #5 in CIL Additional ball mill used as a primary mill Reconfiguration of existing ball mills as secondary mills Legend Modified or relocated from existing Additional at 1,100 tpd 26

27 MINE PLAN 1,100 TPD INCREMENTAL BENEFITS (1,100 TPD VS. 900 TPD) Incremental Capital ($M) C$ US$ Mill Expansion Mobile Equipment Ventilation Optimization Total Incremental Capital Estimated Incremental Benefits: Estimated savings PEA: $50M (US$37M) Based on estimated mining and milling cost structure: 35% fixed / 65% variable Mining savings $15M per year over 2 years: $30M (US$22M) Milling savings $4M per year over 2 years: $8M (US$6M) Saving of 2 years of G&A at $6M per year: $12M (US$9M) Increased annual production by 22% Accelerated revenue stream Upside provided by mill expansion; engineering based on minimum1,200 tpd providing additional short term growth opportunity 27

28 Financial Analysis

29 FINANCIAL ANALYSIS HIGHLIGHTS Expansion Case PEA Summary (1,100 tpd) (C$:US$ exchange rate of 1.35:1) C$ Gold Price US$ Gold Price Spot Gold Downside Case Spot Gold Downside Case $1,700/oz $1,550/oz US$1,260/oz US$1,150/oz Average operating unit cost ($/t) (1,4) Cash Costs ($/oz) (1,2,4) AISC ($/oz) (1,2,4) Sustaining capital ($M) Project capital ($M) (3) AIC ($/oz) (1,2,3,4) Cumulative Net Cash Flow ($M) (5,6) Pre-tax NPV 5%(6) After-tax NPV 5%(6) (1) The Expansion Case PEA assumes a gold price of $1700 (US$1260) and $1,550 (US$1,150) per ounce and a C$:US$ exchange rate of 1.35 (2) Non-IFRS performance measure. Refer to the Non-IFRS performance measures section contained in the Q MD&A. (3) Project capital includes incremental expansion capital of $28.2 million and accelerated mine development/infrastructure capital of $40 million. (4) Including royalties. (5) Net cash flow is pre-tax cash flow after all operating costs, project and sustaining capital. (6) All calculations assume the Dec.31, 2016 cut-off grade and do not incorporate any adjustments related to different gold price assumptions. 29

30 FINANCIAL ANALYSIS PEA OPERATING SUMMARY Including project capital All-In Costs of $906 (US$671) per ounce Exchange rate of 1.35 C$ to 1.00 US$ Royalties presented based on a $1,550 gold price TOTAL MINING Tonnes Mined T 364, , , , , , , ,800 3,096,700 Tonnes Mined TPD 999 1,014 1,112 1,118 1,100 1,102 1, ,061 Grade Mined g/t Au MILLING Tonnes Milled T 333, , , , , , , ,300 3,092,500 Tonnes Milled TPD ,100 1, ,100 1,100 1,080 1,059 Grade Milled g/t Au Recovery % Gold Produced oz 90,400 94, , , , , ,400 86, ,800 COSTS Mining Costs $/t milled Milling Costs $/t milled G&A $/t milled Royalties $1550 Gold Price $/t milled Total Operating Costs $/t milled Total Operating Costs $ x ,910 71,852 80,915 79,232 76,399 73,567 71,162 63, ,923 Cash Costs (Produced) $CD/oz Cash Costs (Produced) $US/oz Sustaining Capex $ x ,827 39,945 41,201 38,979 14,379 5,552 4,187 1, ,537 Sustaining Capex (US$) $ x ,168 29,589 30,520 28,873 10,651 4,112 3,101 1, ,101 AISC (Produced) $CD/oz 993 1, , AISC US$ (Produced) $CD/oz Projects Capex $ x ,918 27,373 1,071 1,790 1, ,152 Projects Capex US$ $ x ,606 20, ,326 1, ,483 30

31 FINANCIAL ANALYSIS TAX ESTIMATES PEA Tax Estimates Gold Price C$1,550/oz Total Tax Paid ($M) Tax Paid (US$M) Gold Price C$1,700/oz Tax Paid ($M) Tax Paid (US$M) Exchange rate: 1.35 C$ to 1.00 US$ Effective tax rate over the PEA period is expected to be approximately 22% At $1,550/oz: expected income taxes of $89M and Ontario mining taxes of $37M At $1,700/oz: expected income taxes of $121M and Ontario mining taxes of $48M 31

32 FINANCIAL ANALYSIS CURRENCY AND GOLD PRICE SENSITIVITIES C$:US$ Pre-tax Net Cash Flow (1,2) ($M) Sensitivity US$ Gold Price 1,000 1,100 1,200 1,300 1, (1) Net cash flow is pre-tax cash flow after all operating costs, project and sustaining capital. (2) All calculations assume the Dec.31, 2016 cut-off grade and do not incorporate any adjustments related to different gold price assumptions. PEA mine plan generates positive pre-tax net cash flow even at a gold price of US$1,000 per ounce and a C$ to US$ exchange rate at parity 32