Louvem Mines Inc.

Originally formed as a subsidiary of the Quebec provincial government’s Société québécoise d'exploration minière (SOQUEM) branch in the mid 1960s, Louvem Mines Inc. is a Montreal-based gold mining company with a 50 percent interest in the Beaufor Mine as well as a number of other minor interests in exploration properties within the Val-d’Or region of northwestern Quebec.

In 1994, Richmont Mines Inc. (RIC:TSX,AMEX) purchased 9.46 million shares, or 36 percent, of the issued and outstanding shares of Louvem in its strategy for expansion. Furthermore, in 1997, Richmont launched a public share exchange offer for all of the issued and outstanding shares of Louvem that Richmont did not already own. By the end of this offer on July 11, 1997, Richmont had acquired 18,147,790 shares or 69.3 percent of the outstanding shares of Louvem. The 50 percent of the Beaufor Mine that Louvem does not own was acquired from the company by Richmont in April 2001. Richmont is also the current mine operator. Assets, liabilities, revenues, expenses and cash position are all shared equally between the two companies.

Commercial gold production at the Beaufor Mine commenced in January 1996. On August 24, 2000 operations at the Beaufor mine were suspended due to the uncertainty of the operator in the reliability of the mine’s pillars. After Richmont had acquired 50 percent of the Beaufor Mine in April 2001 from its prior owner and operator, Aurizon Mines Ltd. (ARZ:TSX), the work required to secure the mine was initiated in July of the same year. Tasks completed included the backfilling of old stopes, the cabling of some pillars and the erection of concrete barricades, primarily to protect the mine from risks of water infiltration. Work slated for 2002 included the installation of fences around old stopes and the diversion of a stream that crosses the mine site.

Following the completion of the underground work required to fully secure the mine, and after receiving approval from the appropriate authorities, production at the mine resumed in January 2002. The provincial government of Quebec aided the company in the restoration of the mine by providing $2.7 million to be paid out over three years. In addition to its interest in the Beaufor Mine, Louvem holds multiple interests in other gold properties in the area, and with an improved financial position, the company could undertake exploration work on these properties in future years.

For the year ended December 31, 2002, resumption of production at the Beaufor Mine resulted in sales of 27,187 ounces of gold. Production cash cost for the year averaged US$159 per ounce of gold sold. For the fourth quarter ended December 31, 2002, gold sales were 7,052 ounces produced at a cash cost of US$191 per ounce. All ore mined from Beaufor is processed at the Camflo Mill which is 100 percent owned by Richmont Mines. It is important to note that exploration activities at the Beaufor Mine effectively replaced the gold produced during 2002 with new reserves being found primarily in the lateral extensions of zones B and C.

As at December 31, 2002 the proven and probable reserves at the Beaufor Mine stood at 1.1 million tons grading 0.22 ounces of gold per ton for a total of 246,000 ounces. In addition to these reserves, the mine has resources of 805,000 tons grading 0.21 ounces of gold per ton, or 171,000 ounces. In 2003, there will be an extension of three drifts to drill zone B from east to west, and zone C westward and downward.

During 2002, Louvem repaid $4.05 million to the parent company, Richmont, thus reducing its debt to $1 million by the end of 2002. The company’s financial position continued to improve during the first quarter of 2003 with the reimbursement of $500,000 of its debt to Richmont. With this payment, the debt was reduced from $1 million to $500,000 which management expects to have paid off in full by June 30, 2003, which marks the end of the company’s second quarter.