The Investment Doctor
Long/short equity, value, debt, base metals

Richmont Mines: Bleeding Cash Despite 2 Producing Mines

Introduction

In this article I'll have a look at Richmont Mines (NYSEMKT:RIC), a Canadian company operating several gold mines in Northeast Canada in Ontario and Québec. I'll have a closer look at the company's operating projects, its balance sheet and the company's outlook. This will result in my investment thesis at the end of this article.

As the company's mines are producing at a cash cost of almost $1000/oz, its operational cash flow is extremely limited. Add the continuous spending on exploration and development, and it's clear the company is bleeding cash. Based on the net cash outflow in the second quarter of 2013, the company's working capital can only support the same level of spending for just...

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