UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F



| ̈REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
      EXCHANGE ACT OF 1934
|-----------------------------------------------------------------------------------------------------
|OR                                                                                                   
|QANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
      EXCHANGE ACT OF 1934         
|For the fiscal year ended
      December 31, 2007                                                    
|OR                                                                                                   
| ̈TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
      EXCHANGE ACT OF 1934     
|For the transition period from  to                                                                   
|OR                                                                                                   
| ̈SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934   
|Date of event requiring this shell company report                                                    



Commission file number 0-28816



RICHMONT MINES INC.

(Exact name of Registrant as specified in its charter)



Quebec, Canada

(Jurisdiction of incorporation or organization)



110, Avenue Principale, Rouyn-Noranda, Quebec J9X 4P2

(Address of principal executive offices)

|                                                                                          
|------------------------------------------------------------------------------------------
|Martin Rivard                                                                             
|Telephone: 819-797-2465                                                                   
|Facsimile:  819-797-0166                                                                  
|110, Avenue Principale, Rouyn-Noranda,
    Quebec, Canada J9X 4P2                         
|(Name, Telephone, E-mail and/or Facsimile
    number and Address of Company Contact Person



Securities registered pursuant to Section 12(b) of the Act:

|                           |                                                               
|-------------------------- | --------------------------------------------------------------
|Title of each Class        | Name of each Exchange on which Registered                     
|                           |                                                               
|Common Stock, no par value | The Toronto Stock Exchange and the
    American Stock Exchange



Securities registered or to be registered pursuant to Section 12(g) of the Act:



None



Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:



None

---





Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report:



As of December 31, 2007:
24,053,353



Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes
 ̈                     No
Q

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes
 ̈                     No
Q



Note  Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



Yes
Q                     No
 ̈



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act (Check one):



Large Accelerated Filer
 ̈             Accelerated Filer
Q             Non-Accelerated Filer
 ̈



Indicate by check mark which basis of accounting the registrant has used to
prepare the financial statements included in this filing.

| ̈US GAAP |  ̈International Financial Reporting Standards as Issued | Q  Other
|-------- | ------------------------------------------------------ | --------
|         | by the International Accounting Standards
    Board    |         



Indicate by check mark which financial statement item the registrant has elected to follow:



Item 17
Q               Item 18
 ̈



If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



Yes
 ̈                     No
Q



---





|TABLE OF
    CONTENTS
|---------------------
|                     
|                     
|ITEM 1.              
|ITEM 2.              
|ITEM 3.              
|ITEM 4.              
|ITEM 4A.             
|ITEM 5.              
|ITEM 6.              
|ITEM 7.              
|ITEM 8.              
|ITEM 9.              
|ITEM 10.             
|ITEM 11.             
|ITEM 12.             
|ITEM 13.             
|ITEM 14.             
|ITEM 15.             
|ITEM 16.A.           
|ITEM 16.B.           
|ITEM 16.C.           
|ITEM 16.D.           
|ITEM 16.E.           
|ITEM 17.             
|ITEM 18.             
|ITEM 19.             

---



Forward-Looking Information

This Annual Report includes "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). All statements other than statements
of historical facts included in this Annual Report, including, without
limitation, those regarding the Company's financial position, business strategy,
budgets, reserve estimates, development and exploitation opportunities and
projects, classification of reserves, and plans and objectives of management for
future operations, are forward-looking statements. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct. Important factors that could cause actual results to differ
materially from the Company's expectations are disclosed under "Risk Factors"
and elsewhere in this Annual Report including, without limitation, in
conjunction with the forward-looking statements included in this Annual Report.

Note to Investors Concerning Certain Measures
of Performance

Throughout this document, the Company uses
performance indicators that are not defined according to Canadian generally
accepted accounting principles (GAAP), such as the total cash cost of production
per ounce sold for each of the Company's properties, excluding the rates of
depreciation per ounce. These performance indicators are widely used in the
mining industry. Nonetheless, they are in no way a standard prescribed by
Canadian GAAP. The Company believes that some investors use these indicators, in
addition to the financial information prepared in accordance with Canadian GAAP,
to evaluate the Company's performance and its ability to generate cash.
Consequently, this information must be considered supplementary and should not
under any circumstances be regarded as a substitute for the performance
indicators prepared in accordance with Canadian GAAP.

ITEM 1.     IDENTITY OF
DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.     OFFER
STATISTICS AND EXPECTED TIMETABLE

Not applicable.

1

---



ITEM 3.     KEY INFORMATION

A.     Selected
Financial Data

The selected financial data of Richmont Mines
Inc. (consolidated with its wholly-owned subsidiary, Camflo Mill Inc., its
majority-owned subsidiary, Louvem Mines Inc. ("Louvem") and its 55% interest in
the Island Gold Mine, "Richmont Mines," "Richmont" or the "Company") set forth
below has been derived from the consolidated financial statements of the Company
which have been audited by Raymond Chabot Grant Thornton LLP, Chartered
Accountants, as indicated in their Independent Registered Public Accounting
Firm's report as at December 31, 2007 and by KPMG LLP, Chartered Accountants, as
indicated in their Independent Registered Public Accounting Firm's report as at
December 31, 2006 and 2005, and which are included elsewhere in this Annual
Report.

The selected financial data was extracted from
the more detailed consolidated financial statements of the Company and related
notes included in this Annual Report and should be read in conjunction with such
consolidated financial statements and with the information appearing under the
heading "Item 5 - Operating and Financial Review and Prospects."

The Company's consolidated financial
statements are stated in Canadian dollars and are prepared in accordance with
Canadian generally accepted accounting principles ("Canadian GAAP"). Reference
is made to notes to the consolidated financial statements of the Company
included in this Annual Report for a discussion of the material differences
between Canadian GAAP and U.S. generally accepted accounting principles ("U.S.
GAAP"), and their effect on the Company's consolidated financial statements.

Herein, all references to "$" and "CAN$" refer to Canadian
dollars and all references to "US$" refer to United States dollars.

The information contained in this Annual Report on Form 20-F
is current as at December 31, 2007, except where a different date is specified.

The Company has not declared or paid any dividends on its
capital stock during the past five years.

2

---

Selected Financial Data 
(Canadian GAAP) 
(in thousands of Canadian dollars except per share and share data)

|                                                            | 2007   | 2006   | 2005     | 2004   | 2003  
|----------------------------------------------------------- | ------ | ------ | -------- | ------ | ------
|                                                            |        |        |          |        |       
|Total revenues                                              | 38,071 | 32,889 | 21,353   | 39,641 | 50,309
|                                                            |        |        |          |        |       
|Net earnings (loss)                                         | 6,671  | 3,194  | (27,480) | 732    | 5,035 
|                                                            |        |        |          |        |       
|Net earnings (loss) per share                               |        |        |          |        |       
|Basic                                                       | $0.28  | $0.14  | ($1.54)  | $0.05  | $0.32 
|Diluted                                                     | $0.28  | $0.14  | ($1.54)  | $0.04  | $0.31 
|                                                            |        |        |          |        |       
|Total assets                                                | 85,976 | 78,498 | 54,226   | 56,194 | 53,495
|                                                            |        |        |          |        |       
|Long-term debt                                              | -      | -      | -        | -      | -     
|                                                            |        |        |          |        |       
|Working capital                                             | 33,970 | 21,171 | 21,877   | 25,925 | 31,184
|                                                            |        |        |          |        |       
|Shareholders' equity                                        |        |        |          |        |       
|                                                            |        |        |          |        |       
|Total                                                       | 61,813 | 54,690 | 40,464   | 45,412 | 43,608
|                                                            |        |        |          |        |       
|Capital stock                                               | 61,016 | 61,340 | 50,600   | 29,237 | 28,346
|                                                            |        |        |          |        |       
|Number of outstanding common
    shares at year end (000's) | 24,053 | 24,180 | 20,994   | 16,170 | 16,074

3

---

Selected Financial Data 
(U.S. GAAP Reconciliation) 
(in thousands of Canadian dollars except per share and share data)

|                                  | 2007   | 2006     | 2005       | 2004       | 2003      
|--------------------------------- | ------ | -------- | ---------- | ---------- | ----------
|                                  |        |          | (restated) | (restated) | (restated)
|                                  |        |          |            |            |           
|Net income (loss)                 | 6,235  | (11,064) | (31,042)   | (5,572)    | 4,767     
|                                  |        |          |            |            |           
|Net earnings (loss) per share     |        |          |            |            |           
|Basic                             | $0.26  | ($0.48)  | ($1.74)    | ($0.35)    | $0.30     
|Diluted                           | $0.26  | ($0.48)  | ($1.74)    | ($0.34)    | $0.29     
|                                  |        |          |            |            |           
|Weighted average number of        |        |          |            |            |           
|common shares outstanding (000's) | 24,159 | 22,904   | 17,838     | 16,127     | 15,926    
|                                  |        |          |            |            |           
|Shareholders' equity              | 39,989 | 33,270   | 30,001     | 39,434     | 43,912    
|                                  |        |          |            |            |           
|Total assets                      | 53,286 | 46,565   | 43,685     | 50,333     | 53,982    

Restatement

During 2006, the Company reviewed the
classification of its East Amphi and Island Gold mining projects. These
projects, which were improperly considered as development stage, were
reclassified as exploration stage and the capitalized costs related to these
projects were charged to earnings under United States GAAP. Accordingly, the
Company increased its net loss by $3,585,656 in 2005 and $6,185,187 in 2004 and
decreased its net income by $52,997 in 2003 compared to the previously published
results. The net loss per share was increased by $0.20 in 2005 and $0.39 in 2004
and decreased net income per share by $0.003 in 2003. Shareholders' equity as at
January 1, 2005 was decreased by $6,238,184.

Exchange Rates

The Government of Canada permits a floating
exchange rate to determine the value of the Canadian dollar against the U.S.
dollar.

Set forth below are the average rates of
exchange for the Canadian dollar and the U.S. dollar for each of the past five
fiscal years, and the range of high and low rates for each of the past six
calendar months. For purposes of these tables, the rate of exchange means the
noon buying rate in New York City for cable transfers in Canadian dollars as
certified for customs purposes by the Federal Reserve Bank of New York. The
tables set forth the number of Canadian dollars required under that formula to
buy one U.S. dollar. The average rate means the average of the exchange rates on
the last day of each month during the period.

4

---

U.S. Dollar/Canadian Dollar Exchange Rates

Year endedDecember 31
      Average2003
      1.402004
      1.302005
      1.212006
      1.132007
      1.07


The following table sets forth the high and low exchange rate
for the past six months. As of May  2, 2008, the exchange rate was 1.02.

U.S. Dollar/Canadian Dollar Exchange Rates

Month
      High
      LowNovember 2007
      0.9716
      0.9617December 2007
      1.0076
      0.9990January 2008
      1.0149
      1.0056February 2008
      1.0035
      0.9952March 2008
      1.0065
      0.9964April 2008
      1.0234
      1.0014


B.    
Capitalization and Indebtedness

Not applicable.

C.     Reasons for
the Offer and Use of Proceeds

Not applicable.

D.     Risk
Factors

See the discussion regarding forward-looking statements at
page 1.

In addition to the other information contained herein, the
following risk factors should be carefully considered when evaluating an
investment in the Company's common shares:

5

---



Risks Associated with the Mining Industry

Speculative Nature of the Mining Industry

Thegold mining industry is highly
speculative in nature. There is no assurance that Richmont Mines' mineral
development and exploration activities will be successful. Success in increasing
reserves is a result of a number of factors, including the Company's level of
geological and technical expertise, the geological composition of land available
for exploration and other factors. Once gold mineralization is discovered, it
may take several years to identify, delineate and evaluate resources, during
which time the economic feasibility of production may change. Substantial
expendituresare required to establish proven and probable reserves through
drilling, to determine the optimal metallurgical process to extract the metals
from the ore and, in the case of new properties, to construct mining and
processing facilities. As a result of these uncertainties, no assurance can be
given that the Company's exploration programs will result in the expansion or
replacement of current reserves with new reserves.

Mining Risks

Because it holds interest in several mines,
the Company is subject to risks and hazards inherent to the mining industry,
including:

- fluctuations in commodity prices;
- costs of constructing and operating a mine
  as well as processing and refining facilities in a specific environment;
- availability of economic sources of energy
  and adequacy of water supply;
- adequate access to the site, including
  competing land uses and unanticipated transportation costs, delays and repair
  costs resulting from equipment failure;
- data on which engineering assumptions are
  made;
- changes in the regulatory environment
  (including regulations relating to prices, royalties, duties, taxes,
  restrictions on production, quotas on exportation of minerals, as well as the
  costs of protection of the environment and agricultural lands);
- industrial accidents and labor actions or
  unrest;
- unusual or unexpected geologicalor
  geotechnical formations;
- unanticipated ground or water conditions;
- slope failure,rock bursts, cave-ins,failure of pitwalls or dams and fire;
- environmental hazards, including discharge
  of pollutants or hazardous chemicals;
- unanticipated grade and tonnage of ore to be
  mined and processed;
- unusual or unexpected adverse operating
  conditions;

6

---



- hazards involved in the drilling and mining
  of ore;
- availability of qualified workforce;
- natural phenomena and "acts of God", such as inclement
  weather conditions, floods, earthquakes and other phenomena.

The occurrence of any of these factors could
materially and adversely affect a project and as a result materially and
adversely affect the Company's business, financial condition, results of
operations and cash flow. These occurrences could result in damage to, or
destruction of, mineral properties or production facilities, personal injury or
death, environmental damage, delays in mining, monetary losses and possible
legal liability. These factors may cause a mineral deposit that has been mined
profitably in the past to become unprofitable. Also, it is not unusual in new
mining operations to experience unexpected problems during the start-up phase,
and delays often can occur in the commencement of production. No assurance can
be given that current exploration programs will result in any commercial mining
operation.

The processing of ore may subject Richmont
Mines to liability under environmental legislation resulting from a failure to
maintain dams around tailing disposal areas. Richmont Mines may become subject
to liability for pollution, cave-ins or other hazards against which it cannot
insure, due to political or other reasons, or against which it may elect not to
insure because of high premium costs or for other reasons.This can
result in delayed production, increase in production costs or liability. Paying
compensation for obligations resulting from such liability may be very costly
and could have an adverse effect on the Company's financial position.

Failure to Achieve Production Estimates

The ore reserves presented in this Annual
Information Form are in large part estimates, and no assurance can be given that
the anticipated tonnages and grades will be achieved or that the indicated level
of recovery will be realized. There are numerous uncertainties inherent in
estimating proven and probable reserves including many factors beyond the
Company's control. The estimation of reserves is a complex and subjective
process and the accuracy of any such estimate is a function of the quantity and
quality of available data and of the assumptions made and judgements used in
engineering and geological interpretation. Reserve estimates may require
revision based on various factors such as actual production experience,
exploration results, market price fluctuations of gold, results of drilling,
metallurgical testing, production costs or recovery rates. These factors may
render the proven and probable reserves unprofitable to develop at a particular
property or for a specific mine. Any material reduction in estimates of the
Company's reserves or its ability to extract these reserves could have a
material adverse effect on its future cash flow, results of operations and
financial condition.

Also, the grade of ore mined may differ from
that indicated by drilling results, which variation may have an adverse impact
on production results. In addition, the reliability of estimates of future
production might also be affected by factors such as weather, strikes and
environmental occurrences.

7

---



The Company's failure to achieve its
production estimates could have a material and adverse effect on any or all of
the Company's future cash flows, results of operation and financial condition.
The Company's annual production estimates are developed based on, among other
things, mining experience, reserve estimates, assumptions regarding ground
conditions and physical characteristics of ores (such as hardness and presence
or absence of certain metallurgical characteristics) and estimated rates and
costs of production. Actual production may vary from estimates for a variety of
reasons, including risks and hazards of the types discussed above.

Additional Reserves for Gold Production

Because mines have limited lives based on
proven and probable reserves, the Company must continually perform exploration
and development to replace and expand its reserves as they are depleted. The
Company's ability to maintain or increase its annual production of gold will be
dependent in significant part on its ability to bring certain projects into
production and to expand existing operations. There are a number of
uncertainties inherent in any exploration program relating to, amongst other
things, the location of economic mineral reserves, the development of
appropriate metallurgical processes, the receipt of necessary governmental
permits and the construction of mining and processing facilities and the
appropriate financing thereof. Accordingly, there can be no assurance that the
Company's exploration programs will yield new mineral reserves to replace mined
reserves and to expand current mineral reserves.

Exploration and Development Risks

The exploration process generally begins with
the identification and appraisal of mineral prospects. Exploration and
development projects have no operating history upon which to base estimates of
future operating costs and capital requirements. Mining projects frequently
require a number of years and significant expenditures during the mine
development phase before production is possible. Development projects are
subject to the completion of successful feasibility studies and environmental
assessments, issuance of necessary governmental permits and receipt of adequate
financing. The economic feasibility of development projects is based on many
factors such as:

- estimation of reserves;
- anticipated metallurgical recoveries;
- environmental considerations and permitting;
- future gold prices; and
- anticipated capital and operating costs of such projects.

Exploration and development of mineral
deposits thus involve significant financial risks which a combination of careful
evaluation, experience and knowledge may not eliminate. While the discovery of
an ore body may result in substantial rewards, few properties which are explored
are ultimately developed into producing mines. A mine must generate sufficient
revenues to offset operating and development costs such as the costs required to
establish reserves by drilling, to develop metallurgical processes, to construct
facilities and to extract and process metals from the ore. Once in production,
it is impossible to determine whether current exploration and development
programs at any given mine will result in the establishment of new reserves.

8

---



Fluctuations in Gold Prices and Currencies (see p. 51
"Information on the Company - Gold Marketing and Sales")

The profitability of the Company is directly
related to the market price of gold. Gold prices fluctuate considerably and are
affected by numerous factors beyond the Company's control, such as industrial
and jewellery demand, inflation and expectations with respect to the rate of
inflation, the strength of the U.S. dollar and of other currencies, interest
rates, gold sales by central banks, forward sales by producers, production and
cost levels, changes in investment trends and international monetary systems and
changes in the supply and demand for gold on the public and private markets.The gold market is characterized by significant above-ground reserves which
can dramatically affect the price should a portion of these reserves be brought
to market. Gold price is sometimes subject to rapid short-term changes because
of speculative activities. If gold prices were to decline significantly or for
an extended period of time, the Company might be unable to continue its
operations, develop its properties or fulfill its obligations under its
agreements with its partners or under its permits and licenses. As a result, the
Company might lose its interest in, or be forced to sell, some of its
properties.

The following table sets out the annual average gold price
(London PM fix) in U.S. dollars over the past five years:

|     | (US$) | Exchange rate | (CAN$)
|---- | ----- | ------------- | ------
|     |       |               |       
|2003 | 363   | 1.40          | 509   
|2004 | 410   | 1.30          | 534   
|2005 | 444   | 1.21          | 538   
|2006 | 604   | 1.13          | 685   
|2007 | 695   | 1.07          | 747   

When calculating its mineral reserve
estimates, the estimate of the price of gold used by the Company for each of its
mines was CAN$650 per ounce. In the event of a sustained, significant drop in
gold price, the Company may be required to re-evaluate its assets, resulting in
reduced estimates of reserves and in material write-downs of the Company's
investment in mining properties and increased amortization, reclamation and
closure charges.

Furthermore, since gold price is established
in U.S. dollars, a significant increase in the value of the Canadian dollar
relative to the U.S. dollar coupled with stable or declining gold prices could
adversely affect Richmont Mines' results with respect to the sale of gold.

9

---



Richmont Mines has no gold hedging contracts
and no U.S. dollar exchange contracts. However, the Company may engage in
hedging activities in the future. Hedging activities are intended to protect a
company from the fluctuations of the price of gold and to minimize the effect of
declines in gold prices on results of operations for a period of time. Although
hedging activities may protect a company against low gold prices, they may also
limit the price that can be realized on gold that is subject to forward sales
and call options where the market price of gold exceeds the gold price in a
forward sale or call option contract. Also, the Company may in the future, if it
considers it advisable, enter into hedging arrangements with a view to reducing
some risks associated with foreign exchange exposure. However, there is no
assurance that such hedging strategies will be successful or that foreign
exchange fluctuations will not materially adversely affect the Company's
financial performance and results of operations.

Competition

The mining industry is intensely competitive
andthe Company is in competition with other mining companies for the
acquisition of interests in precious and other metal or mineral mining
properties. In the pursuit of such acquisition opportunities, the Company
competes with other Canadian and foreign companies that may have substantially
greater financial and other resources. As a result of this competition, the
Company may be unable to maintain or acquire attractive mining properties on
acceptable terms, or at all. Although the Company has acquired many such assets
in the past, there can be no assurance that its acquisition efforts will succeed
in the future.

Title to Properties

While the Company has verified title to its
properties according to usual industry standards for the stage of development of
such properties, the procedures undertaken do not guarantee the Company's title.
Properties may be subject to prior registered and unregistered agreements,
transfers or aboriginal land claims, and title may be affected by undetected
defects. In addition, transfers of title to certain properties of the Company
are in the process of being completed. There may be valid challenges to the
title of the Company's properties which, if successful, could impair development
and/or operations. Certain of the properties in which the Company has an
interest, including the Island Gold property, are registered in the names of
entities which are not controlled by the Company. The Company's interest in
those properties is evidenced by the agreement between the Company and the
registered owner. In addition to challenges to the registered holder's title,
the Company is subject to the risk that the Company may not have the ability to
enforce each of the terms of the relevant contract in certain circumstances.
Moreover, where the Company's interest in a property is less than 100%, the
Company's entitlement to, and obligations in respect of, the property are
subject to the terms of the agreement relating to that property, which in
certain circumstances may be the subject of differing interpretations as between
the parties to that agreement.

10

---



Laws and Regulations

The Company's mining operations and
exploration activities are subject to various laws and regulations governing the
environment, agricultural zoning, prospecting, development, production, exports,
taxes, labor standards, occupational health, waste disposal, toxic substances,
mine safety and other matters.

The Canadian mining industry is subject to
federal and provincial environmental protection legislation. This legislation
sets high standards on the mining industry in order to reduce or eliminate the
effects of waste generated by extraction and processing operations and
subsequently emitted into the air or water. Consequently, drilling, refining,
extracting and milling are all subject to the restrictions imposed by such
legislation. In addition, the construction and commercial operation of a mine
typically entail compliance with applicable environmental legislation and review
processes, as well as the obtaining of permits, particularly for the use of the
land, permits for the use of water, and similar authorizations from various
governmental bodies.Compliance with such
laws and regulations increases the costs of planning, designing, drilling,
developing, constructing, operating and closing mines and other facilities.
There can be no assurance that additional significant costs and liabilities will
not be incurred to comply with current and future requirements.

All of the Company's operations are subject to
reclamation, site restoration and closure requirements. Costs related to ongoing
site restoration programs are expensed when incurred. The Company calculates its
estimates of the ultimate reclamation liability based on current laws and
regulations and the expected future costs to be incurred in reclaiming,
restoring and closing its operating mine sites. It is possible that the
Company's estimates of its ultimate reclamation liability could change as a
result of possible changes in laws and regulations and changes in cost
estimates.

Failure to comply with applicable laws and
regulations may result in enforcement actions thereunder, and may include
corrective measures requiring capital expenditures, installation of additional
equipment or remedial actions. Parties engaged in mining operations may be
required to compensate those suffering loss or damage by reason of the mining
activities and may become subject to civil or criminal fines or penalties for
violations of applicable laws or regulations.

The Company believes that it is in compliance
with all current laws and regulations material to its activities. However, new
or expanded environmental regulations, if adopted, or more stringent enforcement
of existing laws and regulations, could affect the Company's projects or
otherwise have a material adverse effect on its operations. As a result,
expenditures on any and all projects, actual production quantities and rates and
cash operating costs, among other things, may be materially and adversely
affected and may differ materially from anticipated expenditures, production
quantities and rates, and costs, and estimated production dates may be delayed
materially, in each case. Any such event would materially and adversely affect
the Company's business, financial condition, results of operations and cash
flow.

11

---



Insurance

The Company carries insurance against property
damage and comprehensive general liability insurance for all operations. It is
also insured against gold and silver bullion thefts and losses of goods in
transit. Such insurance, however, contains exclusions and limitations on
coverage. No assurance can be provided that such insurance will continue to be
available, will be at economically acceptably premiums or will be adequate to
cover any liability. In some cases, risk coverage is not available or considered
too expensive relative to the perceived risk.

Risks not insured against include mine
cave-ins, mine flooding or other comparable hazards. Furthermore, there are
risks attributable to most types of environmental pollution against which the
Company cannot insure or against which it has elected not to insure.

Requirement of Additional Financing

The continuing development of the Company's
properties will depend upon the Company's ability to obtain financing through
the joint venturing of projects, debt financing, and equity financing or other
means. No assurance can be given that the Company will be successful in
obtaining the required financing on acceptable terms, if at all.

Permits and Licenses

Mineral exploration and mining activities may
only be conducted by entities that haveobtained or renewed exploration
or mining permits and licenses in accordance with the relevant mining laws and
regulations. No guarantee can be given that the necessary exploration and mining
permits and licenses will be issued to the Company or, if they are issued, that
they will be renewed, or that the Company will be in a position to comply with
all conditions that are imposed.

Nearly all mining projects require government approval. There
can be no certainty that these approvals will be granted to the Company in a
timely manner, or at all.

Joint Ventures

No assurance can be provided that the
Company's joint venture partners will not veto the Company's business plans,
with regard to a specific joint venture, and prevent the Company from achieving
its objectives.

Mining projects are often conducted through an
unincorporated joint venture or an incorporated joint venture company. Joint
ventures can often require unanimous approval of the parties to the joint
venture or their representatives for certain fundamental decisions, such as an
increase or reduction of registered capital, merger, division, dissolution,
amendment of the constating documents and the pledge of the joint venture
assets, which means that each joint venture party has a veto right with respect
to such decisions, which could in turn lead to a deadlock.

12

---



Dependence on Personnel

The Company's ability to manage growth
effectively will require the Company to continue to implement and improve the
Company's management systems and to recruit and train new employees. Although
the Company has done so in the past, the Company cannot assure that it will be
successful in attracting and retraining skilled and experienced personnel.

Risks Inherent in Acquisitions

The Company is actively pursuing the
acquisition of advanced exploration, development and production assets
consistent with its acquisition and growth strategy. From time to time, the
Company may also acquire securities of or other interests in companies with
respect to which the Company may enter into acquisition or other transactions.
Acquisition transactions involve inherent risks, including:

- accurately assessing the value, strengths,
  weaknesses, contingent and other liabilities and potential profitability of
  acquisition candidates;
- ability to achieve identified and
  anticipated operating and financial synergies;
- unanticipated costs;
- diversion of management attention from
  existing business;
- potential loss of key employees or the key
  employees of any business the Company acquires;
- unanticipated changes in business, industry
  or general economic conditions that affect the assumptions underlying the
  acquisition; and
- decline in the value of acquired properties,
  companies or securities.

Any one or more of these factors or other
risks could cause the Company not to realize the benefits anticipated to result
from the acquisition of properties or companies, and could have a material
adverse effect on the Company's ability to grow and on the Company's financial
condition.

13

---



While the Company continues to seek
acquisition opportunities consistent with its acquisition and growth strategy,
the Company cannot be certain that it will be able to identify additional
suitable acquisition candidates available for sale at reasonable prices, to
consummate any acquisition, or to integrate any acquired business into its
operations successfully. Acquisitions may involve a number of special risks,
circumstances or legal liabilities, some or all of which could have a material
adverse effect on the Company's business, results of operations and financial
condition. Risks related to acquiring and operating acquired properties and
companies could have a material adverse effect on the Company's results of
operations and financial condition. In addition, to acquire properties and
companies, the Company would use available cash, incur debt, issue Common Shares
or other securities, or a combination of any one or more of these. This could
limit the Company's flexibility to raise capital, to operate, explore and
develop its properties and to make additional acquisitions, and could further
dilute and decrease the trading price of the Common Shares. When evaluating an
acquisition opportunity, the Company cannot be certain that it will have
correctly identified and managed the risks and costs inherent in the business
that it is acquiring.

From time to time, the Company engages in
discussions and activities with respect to possible acquisitions. At any given
time, discussions and activities can be in process on a number of initiatives,
each at different stages of development. The Company can provide no assurance
that any potential transaction will be successfully completed, and, if
completed, that the business acquired will be successfully integrated into the
Company's operations. If the Company fails to manage its acquisition and growth
strategy successfully it could have a material adverse effect on its business,
results of operations and financial condition.

Risks related to the Company's Common Shares

Fluctuation in Share Price

The market price of the Company's common
shares may fluctuate due to a variety of factors relating to the Company's
business, including the announcement of expanded exploration, development and
production activities by Richmont Mines and its competitors, gold price
volatility, exchange rate fluctuations, consolidations, dispositions,
acquisitions and financings, changes or restatements in the amount of the
Company's mineral reserves, fluctuations in the Company's operating results,
sales of the Company's common shares in the marketplace, failure to meet
analysts' expectations, changes in quarterly revenue or earnings estimates made
by the investment community, speculation in the press or investment community
about Richmont Mines' strategic position, results of operations, business or
significant transactions and general conditions in the mining industry or the
worldwide economy. There can be no assurance that the market price of the
Company's common shares will not continue to experience significant fluctuations
in the future, including fluctuations that are unrelated to the Company's
performance.

14

---



Sales of Common Shares

Sales of substantial amounts of the Company's
common shares, or the availability of Company's common shares for sale, could
adversely affect the prevailing market prices for the Company's common shares. A
decline in the market price of the Company's common shares could impair the
Company's ability to raise additional capital through the sale of securities
should the Company desire to do so.

Equity Financing

The Company may require additional funds to
fund its capital expenditures programs and potential acquisitions. If the
Company raises additional funding by issuing additional equity securities, such
financing may substantially dilute the interests of its existing shareholders.

Existing Agreements Provide for Additional Issuances of Common
Shares

The Company may issue additional common shares in the future
pursuant to existing agreements.

Dividend Policy

The Company has not declared or paid any
dividends on its common shares since its incorporation. Richmont Mines has no
current plans to pay dividends on its common shares. Its present policy is to
retain earnings to finance its capital expenditures program. The Board of
Directors assesses its dividend policy on a yearly basis. In the future, the
Board of Directors may declare dividends according to its assessment of the
financial position of the Company, taking into account its financing
requirements for future growth and other factors that the Board of Directors may
deem relevant in the circumstances.

ITEM 4.     INFORMATION ON THE COMPANY

A.     History and
Development of the Company

General

The legal and commercial name of the Company
is Richmont Mines Inc. The Company is a corporation domiciled in Quebec, Canada.
The Company was incorporated pursuant to Part 1A of the Companies Act
(Quebec) on February 12, 1981 (File number 1843-2286) under the name Ressources
Minières Rouyn Inc. By Article of Amendment filed February 10, 1987 the Company
added the English version Rouyn Mining Resources Inc. and by another amendment
filed with the Government of Quebec on June 20, 1991, the Company changed its
name to Richmont Mines Inc. The Articles of Incorporation of the Company are
registered by the Government of Quebec in register S02473, folio 10.

The Company has no specific objects or purposes set forth in
its Articles of Incorporation or Bylaws.

15

---

The head office and principal place of
business of the Company are located at rented offices of approximately 3,400
square feet at 110 avenue Principale, Rouyn-Noranda, Quebec, J9X 4P2, telephone
number: (819) 797-2465. The Company also utilizes an office of approximately
1,200 square feet in rented premises at 1 Place Ville-Marie, Suite #2130,
Montreal, Quebec H3B 2C6. The common shares of Richmont Mines are listed and
posted for trading on the Toronto Stock Exchange and the American Stock
Exchange. The co-transfer agent for the Company in the United States is
Computershare Trust Company of Canada, 350 Indiana Street, Suite 800, Golden
Colorado, 80401.
Richmont Mines is principally engaged in the
acquisition, exploration, operation, financing, and development of mineral
properties. Richmont Mines began its exploration activities in northwestern
Quebec in the spring of 1984. During the following years, it acquired a
portfolio of properties with gold-bearing potential with a view to development
and commercial operation.
Recent History
Over the last three years, Richmont Mines has
made significant investments on its mining properties, mainly at Island Gold,
East Amphi and at the Beaufor Mine. In 2006, the Company sold its Nugget Pond
property in Newfoundland for a cash consideration of $2,250,000. In 2007, the
Company sold its East Amphi property in Quebec for a cash consideration of
$2,450,000 and 1,109,000 common shares of Osisko Exploration Ltd. ("Osisko")
valued at $6,086,000. The Company currently produces gold from its Beaufor and
Island Gold mines, its material properties. Richmont Mines owns a 55% interest
in the Island Gold Mine, which has been in commercial production since October
1, 2007. On November 5, 2007, Richmont Mines announced that it entered into an
agreement with LKA International Inc. ("LKA"), which granted the Company an
option to earn a 50% joint-venture interest in LKA's Golden Wonder property
located near Lake City, Colorado, contingent upon future mine-related
expenditures by the Company.
Island Gold
Richmont Mines assumed responsibility for
operations at the Island Gold Mine on January 1, 2005. During the course of the
fourth quarter of 2005, after having fulfilled its obligation to invest $10
million for the development of the project, the Company acquired a 55% interest
in the Island Gold Mine. The Island Gold Mine began commercial production on
October 1, 2007.
On January 26, 2006, Richmont Mines and
Patricia Mining Corp. ("Patricia Mining") announced the acquisition of Algoma
Steel Inc.'s ("Algoma Steel") remaining joint venture interest in the Goudreau
property near Dubreuilville, Ontario for an aggregate purchase price of
$100,000. The property will remain subject to a 15% net profits interest, as per
the original joint venture between Algoma Steel and Patricia Mining. Through the
Island Gold joint venture, Patricia Mining owns a 45% interest in the Goudreau
property and Richmont Mines owns the remaining 55% interest.
16
East Amphi
Development work was conducted on the East
Amphi property from 2005 to January 23, 2006, when Richmont Mines announced that
progressive mining activities at the East Amphi Mine had commenced on the basis
of internal studies prepared by the Company. The East Amphi Mine was brought
into commercial production in February 2006 and produced 20,000 ounces of gold
until December 31, 2006. During the year, Richmont Mines appraised the potential
of the A3 zone as well as the B2 and B North zones, which are located to the
west of the deposit and at Level 200, respectively. In view of the substantial
investment needed to gain access to the reserves, the grade falling short of
expectations following exploration drilling, and the disappointing results in
the zones offering the best potential near the current infrastructures, the
probable reserves defined in 2006 were reclassified into resources. Richmont
Mines ended its production work at the East Amphi Mine during the second quarter
of 2007, when all of the proven reserves had been depleted.
In 2007, gold production at the East Amphi
Mine was 128,189 tonnes at an average recovery grade of 3.08 g/t or 12,709
ounces. In May 2007, Richmont Mines announced its intention to sell the property
to Osisko Exploration Ltd. ("Osisko") and the sale was completed on June 29,
2007. In exchange, the Company received a cash payment of $2,450,000 and
1,109,000 common shares of Osisko valued at $6,086,000 at the time of the sale.
The Company retains a net smelter return royalty of 2% on a specified portion of
the future production of the East Amphi property and a similar royalty on future
production of up to 300,000 ounces of gold on another portion of the property.
In connection with the sale, Richmont Mines was released from all claims and
other liabilities relating to the East Amphi Mine.
Nugget Pond
In November 2005, Richmont Mines signed a
12-month option agreement with New Island Resources Inc. ("New Island
Resources") to sell the Nugget Pond property and gold mill on the Baie Verte
Peninsula in Newfoundland. A non-refundable deposit of $250,000 was paid at the
time of the signing of the agreement.
In October 2006 Richmont Mines received from
New Island Resources cash consideration of $2,250,000 to complete the sale of
the Nugget Pond property and gold mill. With the sale, Richmont Mines was
released from all claims and other liabilities relating to this property. In
addition to the cash deposit of $250,000 received, Richmont Mines also received
1,000,000 shares of New Island Resources valued at $300,000 at the time of the
transaction.
Capital Expenditures
The following table sets forth the Company's capital
expenditures on its properties for the past three fiscal years.
17

|                  |           | Years Ended |           
|----------------- | --------- | ----------- | ----------
|                  |           | December 31 |           
|                  | 2007      | 2006        | 2005      
|                  | $         | $           | $         
|                  |           |             |           
|Beaufor Mine      | 1,060,136 | 1,706,421   | 2,770,812 
|East Amphi Mine   | 34,250    | 822,245     | 13,586,302
|Island Gold Mine  | 4,493,937 | 21,934,103  | 11,532,884
|Other investments | 582,034   | 597,233     | 426,719   
|                  |           |             |           
|                  | 6,170,357 | 25,060,002  | 28,316,717

The Company's major investments for 2007 and
2006 were $4,493,937 and $21,934,103 respectively to carry out the necessary
work to bring the Island Gold project into commercial production.

In 2005, in order to maintain the rate of
production at the Beaufor Mine and to proceed with exploration with the aim of
developing the reserves at the East Amphi and Island Gold properties, Richmont
Mines made total investments of $27,889,998 in these three properties. This
amount was allocated to underground development, surface infrastructures and
exploration drilling.

Property Interests

The following table outlines Richmont Mines' interest in its
exploration properties as at December 31, 2007.

|Property                                                                                                                   | Year of acquisition | Number of claims     | Participation1
|-------------------------------------------------------------------------------------------------------------------------- | ------------------- | -------------------- | --------------
|Quebec                                                                                                                     |                     |                      |               
|Francoeur                                                                                                                  | 1992                | 17                   | 100%          
|Monique                                                                                                                    | 1994                | 21                   | 81% by Louvem 
|Wasamac                                                                                                                    | 1988                | 3 mining concessions | 100%          
|                                                                                                                           |                     | + 1 claim            |               
|Camflo Northwest                                                                                                           | 2005                | 13                   | 80%           
|Newfoundland and Labrador                                                                                                  |                     |                      |               
|Valentine Lake                                                                                                             | 2003                | 539                  | 70%           
|Ontario                                                                                                                    |                     |                      |               
|Sewell                                                                                                                     | 2002                | 6                    | 100%          
|Cripple Creek                                                                                                              | 2002                | 27                   | 100%          
|1The Company will be
    required to pay royalties if some of these properties are brought into
    commercial production.

18

---



Exploration and Project Evaluation Expenditures

The following table presents Richmont Mines' exploration and
project evaluation expenses in 2005, 2006 and 2007 and the budgeted estimated
amounts for 2008.

|                                          | 2008        | 2007        | 2006       | 2005       
|----------------------------------------- | ----------- | ----------- | ---------- | -----------
|                                          | $           | $           | $          | $          
|                                          | Estimated   |             |            |            
|Quebec                                    |             |             |            |            
|Beaufor Mine                              | 3,250,000   | 1,873,723   | 1,342,438  | 862,150    
|East Amphi1                               | -           | 18,409      | 248,384    | 15,450,202 
|Francoeur                                 | 150,000     | 96,199      | 146,165    | 49,974     
|Monique                                   | -           | 7,650       | 403        | 19,186     
|Wasamac                                   | 150,000     | 45,387      | 53,855     | 39,685     
|Newfoundland                              |             |             |            |            
|Cripple Creek2                            | -           | -           | 153 297    | -          
|Valentine Lake                            | 100,000     | 1,016,446   | 66,606     | 393,200    
|Ontario                                   |             |             |            |            
|Island Gold                               | 1,000,000   | 1,363,836   | 23,642,315 | 12,763,660 
|Sewell and Cripple Creek                  | 50,000      | 320         | 8,448      | 178,596    
|                                          |             |             |            |            
|USA                                       |             |             |            |            
|Golden Wonder                             | 2,500,000   | 665,287     | -          | -          
|                                          |             |             |            |            
|Other properties                          | 100,000     | 112,443     | 5,411      | 83,831     
|Evaluation of projects                    | 125,000     | 124,082     | 582,646    | 508,746    
|Tax credits                               | (1,100,000) | (1,550,501) | (792,110)  | (2,136,164)
|                                          |             |             |            |            
|                                          | 6,325,000   | 3,773,281   | 25,457,858 | 28,213,066 
|1Property sold in 2007.                   |             |             |            |            
|2This property was abandoned in
    2006. |             |             |            |            

2008 Trends

The Company's strategy is to capitalize on its
existing properties through exploration and development, to acquire advanced
projects in North America where its expertise in narrow vein operations can be
applied and to improve production efficiencies. The Company's corporate goal is
to become a profitable, intermediate North American developer and producer of
gold, operating three to four mines while establishing at least one million
ounces of reserves.

19

---



To advance its strategy in 2008 and increase
the number of its projects, the Company intends to focus on advancing the Island
Gold Mine towards its full rate of production. The Company also expects strong
production results at the Beaufor Mine. The Golden Wonder Mine in Colorado will
also be further evaluated in 2008, with more than 5,000 metres of drilling
planned. The Company will evaluate acquisition and partnership opportunities in
order to expand the value of its portfolio of mineral properties, to build its
reserve base and to accelerate its rate of production. Additionally, the Company
will continue to assess and rationalize the quality of its non-core asset base
in order to maximize future shareholder value.

B.     Business
Overview

Beaufor Mine

Location

The Beaufor Mine property along with other
adjacent properties such as Pascalis, Perron, Colombière, Courvan and Perron
Blocks 2 and 3, are located approximately 27 kilometres to the northeast of the
town of Val-d'Or, in the Abitibi-Est county, Province of Quebec, Canada.

Description of Mineral Rights

The property consists of a series of adjacent
mining rights subdivided into four projects: Perron, Beaufor, Pascalis and
Colombière. The projects are composed of two mining leases, one mining
concession and 23 claims for a total area of 591 hectares (ha). The Courvan
project and Perron blocks 2 and 3 form another group of mining titles with high
economic potential but currently presenting no mining activities. This group
consists of two mining concessions and 64 claims for a total area of 1,255 ha.

|Property                 | Number    | Area | Expiration date                                    
|------------------------ | --------- | ---- | ---------------------------------------------------
|                         | of claims | (ha) |                                                    
|Beaufor                  | 1         | 106  | Mining Concession 280PTA : 01/31/2009              
|Colombière               | 13        | 226  | Claims expire between
    07/22/2009 and 08/15/2009
|Courvan                  | 61        | 1099 | Claims expire between
    08/02/2008 and 06/09/2009
|Pascalis                 | 1         | 37.5 | Mining Lease BM 750 :
    06/02/2016               
|Perron                   | 11        | 222  | Mining Lease BM 858 :
    03/11/2023               
|                         |           |      | Claims expire between
    07/11/2009 and 07/17/2009
|Perron blocks 2, 3 and 4 | 7         | 199  | Claims expire between 09/06/2008 to 10/15/2008     

All of these claims will be renewed before the
anniversary date because there are exceeding credits available. For the Mining
Leases, taxes are paid every year to the government to keep them in good
standing. For a Mining Concession, geological works are performed to keep it in
good standing or the taxes are paid every year. Richmont Mines have an internal
procedure and an external control to insure the follow up of the claims expiry
dates. All the mining claims, mining concessions and mining leases were in good
standing in 2007 and will be for 2008. A detailed list and map of locations can
be found in the Technical Report for the Beaufor Mine as of December 31, 2006
filed on March 29, 2007 under the Company's profile on the SEDAR web site at
www.sedar.com.

20

---



Ownership of Mineral Rights

All the mining titles of the Beaufor property
are jointly held by Richmont Mines (50%), which is the operator of the property,
and by Louvem (50%). Richmont Mines holds 70% of the shares of Louvem.

Mineral Royalties

All the properties jointly held by Richmont Mines and Louvem
are subject to the payment of royalties and financial contractual obligations as
follows:

For Beaufor (only
calculated on the 50% of production held by Richmont Mines)

a)

Royalties

Royalties are payable
to Aurizon Mines Ltd. ("Aurizon") on the 50% of production held by Richmont
Mines. The amount of the royalty is determined by the prevailing price of gold
and the quantity of gold produced in accordance with the following formula:

Gold Price
      Royalties by oz of(US$/oz)
      gold produced<300
      CAN$00.00300 - 325
      CAN$17.00325 - 350
      CAN$18.50350 - 375
      CAN$20.00375 - 400
      CAN$22.50400 - 500
      CAN$24.00>500
      CAN$30.00


b)

Since the signing of an agreement in July 2001 with the Quebec Ministry of
Natural Resources, the amounts of government assistance recorded in revenues and
as a reduction of the cost of property, plant and equipment are $2,125,756 and
$574,244, respectively.

21

---



Perron and Perron Block-1

For each ounce produced on the Perron
property and in relation with the gold price, the royalty calculation, payable
quarterly to Aurizon is made as follows:

Gold Price
      Royalties by oz of(US$/oz)
      gold produced300
      CAN$00.00300 - 325
      CAN$17.00325 - 350
      CAN$18.50350 - 375
      CAN$20.00375 - 400
      CAN$22.50400 - 500
      CAN$24.00>500
      CAN$30.00


Perron Block-2 (Claims
3493171, 3493172 and 3493173)

A Net Smelter Royalty
(NSR) of 2% is payable monthly to Northwest Gold Corp. at the condition that the
average monthly gold price be superior to US$300/oz on production from these
claims.NSR means the value for
marketable minerals and/or metals produced from the Mining Rights and received
by the Purchaser from a purchaser thereof, less deductions incurred for
smelting, refining and marketing.

Pascalis

A Net Profit Interest
(NPI) of 25% payable to New Pascalis Mines Limited.
NPI means a share of net proceeds from
production paid solely from the working interest owner's share.

Colombière

A 2% NSR is payable
quarterly to Cambior inc.

Environmental Obligations and Permitting Status

Over 75% of the development waste material is
hoisted from the underground mine to the surface and placed on a waste dump. The
waste rock is not acid generating and does not require any particular
environmental measures.

The rehabilitation plan for the Beaufor Mine is in the
approval phase by the Ministry of Natural Resources and Wildlife of Quebec.

All necessary permits and authorizations have been requested
and issued.

Infrastructures

Two mine shafts are located on the Beaufor
property, the old Perron shaft No. 5 is currently used for hoisting and the
Pascalis shaft is used as the ventilation air intake shaft. A series of
buildings including warehouses, workshops, offices are used to service a
workforce of about 91 employees and approximately 15 independent contractuals as
of December 31, 2007. Over $1 million was invested to replace the structure of
the wooden headframe between June and August 2007.

22

---



Access

The mine can be accessed from the main road
117, going East from Val-d'Or to the Perron road and then north towards the
village of Perron. The mine can also be accessed using the secondary road 397
from Val-d'Or to Val-Senneville, and going south on the Paré road to the Perron
village.

Climate

The average annual precipitation is some 954
mm with most falling in September (some 102 mm). Snowfalls occur between October
and May with the most snowfall occurring between November and March. The monthly
average for that period is about 54 mm (expressed in mm of water).

The average daily temperature in Val-d'Or is
1.2°C, slightly above freezing. The average temperature for July reaches 17.1°C,
while in January the temperature falls to -17.0°C. The lowest temperature
measured was -43.9°C and the highest temperature measured was 36.1°C. Although
the temperature of the area is below the freezing point an average of 209 days
per year, mining operations aren't affected by the climate.

Local Resources and Basic Infrastructures

The area is well served by existing
infrastructure and human resources. The population of the town of Val-d'Or is
approximately 32,000 people. The town is accessible from the national road
network and commercial flights are available daily at the local airport. The
area also hosts an excellent base of suppliers and manufacturers for the mining
industry.

A railroad is located a few kilometres to the
south of the property and power is supplied by Hydro-Québec.

The local manpower is well trained. Since the
mining town of Val-d'Or is very active, it is generally possible to recruit and
retain a sufficient mining workforce. Professionals, engineers, geologists and
technicians are usually well-trained and available in this area.

Physiography

The regional landscape is typical of the
Abitibi lowlands, with its small rolling hills and widespread swamps, and its
mixed forests of broadleafs and conifers. The forest cover is relatively young,
as a forest fire devastated the area in 1942. The elevation is approximately 300
metres above sea-level.

23

---



Exploration History

Intermittent exploration fieldwork has been
conducted on the Beaufor property since the 1930s. Following a development
period, Aurizon Mines (50%) and Louvem (50%) started commercial production at
the Beaufor Mine in January 1996. In August 2000, Aurizon Mines stopped the
mining operation at Beaufor Mine for reasons of risk instability of the crown
pillar. In spring 2001, Aurizon Mines transferred the mining rights of the
Perron, Beaufor, Pascalis, Colombière and Courvan properties to Richmont Mines
for an amount of $1.8 million. In September 2001, Richmont Mines undertook
construction work to secure the crown pillar and commercial production resumed
at Beaufor Mine jointly with Louvem in January 2002.

Geological Setting

Regional geology

The mining town of Val-d'Or is located in the
South-East of the Abitibi greenstone belt formed of archean volcanic and
sedimentary rocks from the Superior Province. The mining camp of Val-d'Or
belongs to the Malartic group corresponding to a volcanic pile including
ultramafic, basaltic and rhyolitic flows. The Bourlamaque granodiorite intrusion
hosts significant gold concentrations, namely at the Beaufor mine.

Beaufor Mine geology

The Beaufor, Perron, Pascalis, Colombière and
Courvan properties belong to the same gold bearing hydrothermal system with a
similar geometry. The Beaufor deposit is included in the Bourlamarque
granodiorite. Gold mineralization occurs in veins associated with shear zones
moderately dipping south. The mineralization is associated with
quartz-tourmaline veins resulting from the filling of shear and extension
fractures. The gold bearing veins show a close association with mafic dykes
intrusive and undercutting the granodiorite. The dykes seem to have influenced
the structural control of the gold bearing veins.

Mineralization

Gold-bearing veins at the Beaufor mine consist
of quartz-tourmaline-pyrite veins, typical of Archean epigenetic lode gold
deposits, that cross-cut the Bourlamaque Batholith. Mafic dykes that predate the
mineralization are associated with shear-hosted gold-bearing veins. Shallowly
dipping extensional gold-bearing veins are commonly observed at the Beaufor
mine. Shear zones striking N070o and dipping steeply to the southwest
control the opening and gold enrichment of veins.

All the gold-bearing veins are contained in a
strongly-altered granodiorite in the form of chlorite-silica forming anatomosing
corridors of 5 to 30 m in thickness. The veins at the Beaufor Mine form panels
of more than 300 m in length by 350 m in height. The thickness of the veins
varies from 5 cm to 5 metres. The zones are limited by the Beaufor fault (N115o/65o-75o)
at 380 metres from the surface and a rythmic system of shearings (N70
o/sub vertical).

24

---



Work during 2007

In 2007, 97,429 tonnes of ore at an average
recovered grade of 8.36 g/t were extracted from the Beaufor Mine. This
production yielded gold sales of 26,182 ounces, produced at a cash cost of
US$468 per ounce sold. The cash cost of production per ounce declined compared
to 2006 as a result of higher grades, improvements in productivity, refocused
operations and improved mining plans implemented in the first half of 2007. The
following table summarizes the work completed over the last three years.

Beaufor Mine

|                                                           | 2007      | 2006      | 2005     
|---------------------------------------------------------- | --------- | --------- | ---------
|                                                           |           |           |          
|                                                           |           |           |          
|Tonnes                                                     | 97,429    | 139,513   | 199,269  
|Grade (g/t)                                                | 8.36      | 5.54      | 5.72     
|Ounces sold                                                | 26,182    | 24,866    | 36,649   
|Cash cost per ounce (US$)1                                 | 468       | 580       | 377      
|                                                           |           |           |          
|Investment in development ($)                              | 1,060,136 | 1,706,421 | 2,770,812
|Exploration expenses ($)                                   | 1,873,723 | 1,342,438 | 862,150  
|                                                           |           |           |          
|Differed development metres                                | -         | 1,299     | 1,577    
|                                                           |           |           |          
|Exploration drilling metres                                |           |           |          
|Definition                                                 | 3,095     | 18,513    | 21,524   
|Underground                                                | 15,768    | 17,803    | 13,023   
|Surface                                                    | 9,389     | 4,789     | -        
|1 The cash cost includes operating costs and
    royalties |           |           |          

Exploration Work

An important exploration program was started
in 2007 and slightly over $1.8 million has been invested to date. A total of
28,251 metres of drilling has been performed, including 3,095 metres of
definition drilling, 15,768 metres of underground exploration and 9,389 metres
of surface exploration. This drilling combined with the development increased
the reserves by 50% compared to the estimate at the end of 2006. Beaufor has had
promising results as exploration activities in 2007 led to several mineralized
zones. The zones below the 20th level and up to the 12th level showed good gold
intersections and continuities.

25

---



Drilling

Most of the drill holes are planned on vertical cross-sections
in order to undercut at right angles the shear veins. The drilling program is
sub-divided into two main categories as follows:

- Exploration drilling using a 40 to 80 metres by 40 to 80 metres grid;

Drilling operations are performed by a
drilling contractor, under the supervision of the geological staff at the
Beaufor Mine. Underground drill holes are BQ, LTK48 (1 13/32")
and ATW (1 13/64") calibre. Surface drill holes are BQ
size. The core recovery is better than 95%, including the fault zones where the
RQD is more than 75%. A detailed description of the drill cores is logged by
experienced and highly qualified personnel, in accordance with established
Beaufor Mine guidelines.

Sampling

Sampling of the rock mass is performed using
drill cores and blasted rock. Results of the drill cores analyses as well as the
grades of ore samples sent in the ore pass and in the car wagon are taken into
account for mineral reserve calculation. The weight of each sample is around 1⁄2
kg per 3.5 to 5 tonnes wagon. For development purposes, the weight of each
sample is around 1⁄2 kg per 12 tonnes of blasted rock. There are currently no
face-sampling "chips" at the Beaufor Mine.

In definition drill holes, samples are
collected over 1 metre intervals, and frequently include both vein material and
wall rocks, since veins are often less than 1 metre thick. Recuperation of core
is over 90%. The entire core is then analyzed at the chemical assay laboratory.

For exploration holes, the length of the sample varies from
0.5 to 1 metre. The core is split in two using a hydraulic splitting machine.
Recuperation of core is over 90%.

The drill cores and blasted rocks samples are representative
and the mineralization style, with the presence of quartz veins, shows a nugget
effect.

Assays

ALS Chemex Chimitec Laboratories in Val-d'Or,
was selected to analyze samples from the Beaufor mine. This laboratory is
certified ISO 9001-2000 for the "Supply of assays and geochemical analysis
services" by QMI, an ISO certification firm. The step-by-step procedure for
sample analyses is briefly described as follows:

26

---

Upon reception of sample bags, all sample numbers are
  verified and entered into the Laboratory Information Management System (LIMS),
  a sample tracking system used by the laboratory.
  Samples are dried and crushed to 70% passing 2 mm using a
  jaw crusher. A representative sub-sample weighing 250 to 300 g of the -2 mm
  fraction is prepared using a Jones riffle splitter. The sub-sample is then
  pulverized to 85% passing -200 mesh using a ring pulverizer.
  Samples are then analyzed by fire assay with gravimetric finish using 30 g
  per sample.

Quality Control

The first quality control program done by the laboratory at
different steps of the process are as follows:

- Crushing, pulverizing, weighing: daily monitoring;

A second quality control program established
by the Beaufor Mine involves the insertion of blanks and standards. Furthermore,
rejects for all samples exceeding 10 g/t Au are systematically re-assayed.

Security of Samples

There is no formal program established at the
Beaufor Mine relating to shipment of samples. Samples are gathered in plastic
boxes and collected daily by the laboratory. Historical production and milling
data indicate reliability of the laboratory results. When there is a doubt such
as to the location of a sample, the sampling number or any other anomaly, the
data is not used for the resource calculation.

Mineral Reserve Estimates

General

In 2007, the reserve estimates were performed
by qualified persons pursuant to National Instrument 43-101. The methodology and
procedures for mineral reserve estimates have been adopted from a study
completed in 2006 by Golder and Associates, an independent firm. The database,
factors and parameters used in the determination of the mineral reserves are
based on the available information at the Beaufor Mine as of December 31, 2007.
However, these parameters are revised on an annual basis in order to take into
consideration the experience gathered from the current mining operation.

27

---



The mineral reserves estimate is carried out
in accordance with the National Instrument 43-101 requirements and regulations.
Mineral reserves were classified according to the Canadian Institute of Mining,
Metallurgy and Petroleum (CIM) classification and adopted by the CIM Council on
August 20 2000. All standards generally accepted in the mineral industry as well
as National Instrument 43-101 requirements and CIM regulations for mineral
reserve estimates have been fully applied in this study.

A composite table of grades has been prepared
for resource modelling on the basis of the current geological interpretation of
each of the drilling sections, which are 10 metres apart. The composite values
were arranged by zones of economic interest, which allowed for the construction
of distinct longitudinal sections for each zones. Each drilling section was
projected onto the longitudinal sections, which made it possible to estimate the
mineral reserves.

All the geo-scientific data collected at the
Beaufor Mine are grouped into two main databases. Internal procedures have been
prepared in order to validate the information in the databases. All the entire
work, performed by the Beaufor Mine geology department, from data entry to
layout drawings follows strict and established procedures, including crosschecks
to ensure full validity. Access to all databases is restricted to selected
personnel in order to retrieve complete integrity.

The database and the parameters used to
estimate the mineral reserves are based on past mining experience and the
information available as of December 31, 2007. The parameters were reviewed and
modified by Golder and Associates in 2006. Thus, both the dilution and the ore
recovery factors by mining methods used in the reserve estimate are based on
actual results obtained in 2007. All these factors and parameters are updated on
an annual basis in order to account for changes in the mining operations.

The conversion of mineral resources to
reserves is based on economical feasibility. As per National Instrument 43-101,
only mineral resources in the measured and indicated categories can be used to
outline the estimate of mineral reserves.

The budget costs used are based on actual and historic data of
the mining operation and are updated based on experience and to reflect the
changes in the prevailing economic situation.

Technical Parameters

The basis and the parameters used in the economic study for
reserve estimation are given in the following sections.

Mining Methods

The two major underground extraction methods currently used at
Beaufor Mine are the room and pillar and long holes methods:

28

---



Room and Pillar

- Geometry : stopes width from six metres to ten metres in
  the plane of the vein with in-stope pillars of three metres by three metres
  section or two metres long in the plane of the vein;

Internal dilution : the ore block is designed with a true
  thickness of 2.4 metres. The drilling intersects are projected to the same
  lengths. The minimum mining width is 2.4 metres. The dilution grade is assumed
  to be 0 g/t Au;

Long Holes

- Geometry : maximum panel length of 40 metres;

Cut-off Grades

Cut-off grades have been calculated based on both developed
and undeveloped workings for the two major mining methods used at Beaufor Mine,
which are rooms and pillars and long holes.

The main criteria are as follows :

- No profit margin is built-in in the estimate;

Operating costs include fixed costs budgeted for 2008 and
  variable costs (production and development) based on the results from January
  to September 2007 for each method.

29

---

The results of the cut-off grade study by mining methods for
both developed and undeveloped underground workings are listed in the following
table:

|Mining Methods  | Workings    | Cut-off Grade
|--------------- | ----------- | -------------
|                |             | (g/t)        
|Room and pillar | Developed   | 6.79         
|Room and pillar | Undeveloped | 7.70         
|Long holes      | Developed   | 5.16         
|Long holes      | Undeveloped | 6.07         

Reserve Classification

Descriptions with more details about classification of
reserves at the Beaufor Mine are set out below.

Proven Mineral Reserves

Golder and Associates have estimated the
tonnage of mineral reserves in the Proven category based on an economic study in
order to determine the economically mineable part of a Measured Mineral
Resource. At the Beaufor Mine, proven reserves are based on ore blocks developed
from drifts or raises up to a maximum of eight metres from these openings. The
level of accuracy of the economic evaluation is that of a feasibility study.

Probable Mineral Reserves

The mineral reserves estimate in the Probable
category was based on an economic study in order to determine the economically
mineable part of an Indicated Mineral Resource. At the Beaufor Mine, probable
reserves extend to a maximum of ten metres from drilling data. Dilution and
mining recovery rates are included in the reserve calculation.

Reserve Table

As of December 31, 2007, the mineral reserves of the Beaufor
Mine (before milling recovery of 98.5%) were estimated by Golder and Associates
to be as follows:

|Reserve Category          | Tonnes   | Grade    | Au    
|------------------------- | -------- | -------- | ------
|                          | (metric) | (g/t Au) | (oz)  
|Proven                    | 90,822   | 7.56     | 22,085
|Probable                  | 164,879  | 10.10    | 53,547
|                          |          |          |       
|Total (Proven + Probable) | 255,701  | 9.20     | 75,632
|                          |          |          |       

30

---



As of December 31, 2007, the total proven and
probable mineral reserves at the Beaufor Mine are estimated at 75,632 ounces of
gold, calculated using a long-term gold price of CAN$650 per ounce, for an
expected mine life of three years.

Mining Operations and Metallurgy

The two major underground extraction methods currently used at
Beaufor Mine are the room and pillar and long holes methods.

The Beaufor Mine ore is trucked to the Camflo
Mill located approximately 49 kilometres from the mine site. Camflo Mill Inc. is
100% owned by Richmont Mines. The Camflo Mill, with a rated capacity of 1,300
short tons per day, is a Merrill-Crow conventional type mill with circuits for
crushing, grinding, gold cyanidation and precipitation using zinc powder.

The historic average rate of recovery of the
mill is 98.5% when Beaufor ore is milled. No major operating problem was
experienced at this mill nor is anticipated in the near future. Usual
maintenance and repairs are done when deemed appropriate.

Production Summary

In 2007, ore totalling 97,429 tonnes at an
average recovered grade of 8.36 g/t was extracted from the Beaufor Mine. This
production yielded gold sales of 26,182 ounces, produced at a cash cost of
US$468 per ounce, compared to the previous year with 139,513 tonnes of ore at an
average recovered grade of 5.54 g/t, produced at a cash cost of US$580 per
ounce. The cash cost of production per ounce declined as a result of higher
grades, improvements in productivity, refocused operations and improved mining
plans implemented in the first half of 2007.

31

---



Beaufor Mine

|                         | Year ended   | Year ended   | Year ended  
|------------------------ | ------------ | ------------ | ------------
|                         | December 31, | December 31, | December 31,
|                         | 2007         | 2006         | 2005        
|                         |              |              |             
|Precious metals revenues | $19,503,789  | $16,866,158  | $19,686,025 
|                         |              |              |             
|Tonnes processed         | 97,429       | 139,513      | 199,269     
|Grade (g/t)              | 8.47         | 5.62         | 5.81        
|Gold recovery (%)        | 98.72        | 98.56        | 98.51       
|Recovered grade (g/t)    | 8.36         | 5.54         | 5.72        
|Ounces sold              | 26,182       | 24,866       | 36,649      

|                                 |     |      |     |      |     |     
|-------------------------------- | --- | ---- | --- | ---- | --- | ----
|Data per ounce of gold sold      | US$ | CAN$ | US$ | CAN$ | US$ | CAN$
|Cash cost                        | 468 | 503  | 580 | 658  | 377 | 457 
|Depreciation and depletion       | 114 | 122  | 42  | 48   | 23  | 28  
|                                 |     |      |     |      |     |     
|Total                            | 582 | 625  | 622 | 706  | 400 | 485 
|                                 |     |      |     |      |     |     
|Average price obtained per ounce | 693 | 745  | 598 | 678  | 443 | 537 

Island Gold Mine

Location

The Island Gold Project is located
approximately 85 km north east of Wawa, Ontario, Canada, in the Sault Ste. Marie
Mining Division. Dubreuilville is approximately 15 km to the northwest of the
Island Gold Mine.

32

---

Description of Mineral Rights
The Island Gold property consists of 108 patented and leased
claims totalling 5,382 ha and 197 staked claims totalling 3,062 ha.

|Property    | Number    | Area  | Expiration date                                | Patricia Mining /
|----------- | --------- | ----- | ---------------------------------------------- | -----------------
|            | of claims | (ha)  |                                                | Richmont Mines   
|            |           |       |                                                | Ownership (%)    
|Kremzar     | 20        | 1,428 | Patented Claim : taxes are paid
    every year | 45/55            
|Lochalsh    | 31        | 368   | Patented Claim : taxes are paid
    every year | 45/55            
|            |           |       | Mining Lease : 06/30/2009 to
    03/31/2012    |                  
|            |           |       | Claims : 02/06/2009 to 03/26/2009              |                  
|Goudreau    | 65        | 3,716 | Patented Claim : taxes are paid
    every year | 45/55            
|            |           |       | Mining Lease : 08/20/2009                      |                  
|Island Gold | 197       | 2,932 | Claims : 07/14/2009 to 08/20/2012              | 45/55            

The claims will be renewed before the
anniversary date by exceeding credits available. For the Patented Claims and the
Mining Leases, taxes are paid every year to the government to keep them in good
standing. The Mining Leases will be renewed for a term of 21 years. Richmont
Mines has an internal procedure to insure the follow up of the claims expiry
dates. All of the mining claims, mining leases and patented leases were in good
standing in 2007 and will be for 2008.A detailed list and map of
locations can be found in the Island Gold Technical Report as of May 15, 2007,
filed on May 25, 2007 under the Company's profile on the SEDAR web site at www.sedar.com.

Acquisition of Island Gold Interest

Richmont Mines entered into an agreement with
Patricia Mining on August 28, 2003 pursuant to which Richmont Mines subscribed
for of $1.0 million in common shares of Patricia Mining at $0.50 cents per share
and obtained an option to acquire a 55 % interest in the Island Gold property by
investing up to $10 million or by bringing the project into commercial
production. This initial investment of $1 million was used to partly finance a
$3 million exploration program on the Island Gold Project. On December 3, 2004,
Richmont Mines decided to invest up to $10 million in order to acquire a 55%
interest in this project. Richmont Mines became project operator as of January
1, 2005. During the course of the fourth quarter 2005, after having fulfilled
its obligation to invest $10 million for the project development, the Company
acquired its 55% interest.

In January 2006, Richmont Mines and Patricia
Mining announced the purchase of Algoma Steel's remaining joint venture interest
in the Goudreau property near Dubreuilville Ontario, for $100,000. The property
remains subject to the 15% net profits interest as per the original joint
venture agreement between Algoma Steel and Patricia Mining. The Island Gold
joint venture now owns 100% of the property subject to royalties.

33

---



Ownership of Mineral Rights

All mining titles on the Island Gold Mine are jointly held by
Richmont Mines (55% - the "Operator"), and Patricia Mining (45%).

Mineral Royalties

The Kremzar Property is subject to a 4% Net
Smelter Royalty ("NSR") in favour of Algoma Steel. The Algoma NSR will become
payable at such time as the aggregate amount of NSRs received by the Company and
Teck Cominco Limited (Teck) formerly Aur Resources Inc. equals the aggregate
preproduction costs.

The Kremzar Property is also subject to a 3%
NSR in favour of Teck, which is payable until such time as the Algoma NSR
becomes payable. In the event the Algoma NSR becomes payable and is reduced
below 4%, Aur will be entitled to receive a net smelter return equal to 50% of
the amount by which the Algoma royalty is reduced, payable on the same terms as
the Algoma NSR.

The Lochalsh Property is subject to a 3% NSR in favour of Teck.

The Goudreau Property is subject to a 2% NSR in favour of Teck
and a 15% Net Profit Interest ("NPI") royalty in favour of Algoma.

Environmental Obligations and Permitting Status

- The most important permit held at this time is the Ministry
  of the Environment permit number 4-105-86-876, the permit to operate the
  Kremzar Mill. This permit was amended in December 2006 under number
  1032-6SKMAU to include rationalization of cyanide addition locations,
  reduction of cyanide consumption, water reclamation from the primary tailing
  pond and operations optimization at a rate of 650 tonnes per day. Both
  Lochalsh and Kremzar permits to take the water ("PTTW") were amended. The
  Kremzar PTTW number 0138-756RZP allows, for the purpose of mine dewatering, a
  pumping capacity up to 1,500,000 litres per day and is valid until August 16,
  2017 and the Lochalsh PTTW number 3526-758PUD allows a pumping capacity up to
  10,000,000 litres per day and is valid until September 8, 2017.

The Miller pond, west of the Kremzar mine, is fully
  permitted (part of the C of A). The tailing area is presently capable of
  holding approximately two years of tailings. The tailings pond life could be
  extended for an additional 10 years by raising the height of the dam.

The Lochalsh Closure Plan has been approved on April 30,
  2007. A financial assurance of $177,523 is in place to cover the closure
  costs. The closure plan for the Kremzar property was filed with the Ontario
  Ministry of Northern Development and Mines (MNDM) in 1998 by Patricia Mining
  and was approved. Patricia Mining reports that financial assurance for the
  closure costs will be satisfied by payment of $10,000 cash, already paid, and
  a collateral mortgage of $577,800 using the Kremzar Mill as security. The
  closure costs associated to the Kremzar Closure Plan will be reviewed in 2008.
  There are no environmental issues on the property at this time.

34

---



Infrastructures

The Island Gold Mine infrastructure includes
the primary tailings pond, the secondary settling pond, the Kremzar mill (a
carbon-in-pulp mill with a capacity of 650 tonnes per day), the Kremzar ramp and
portal, the Lochalsh ramp and portal, the mine access road, and the hydro lines,
all with respect to the property . An office, a core logging and storage
facility, and a mine dry are also located on the Kremzar mine site.

Access

Access to the Island Gold Mine is via an
all-weather road from Highway 519, just west of Dubreuilville and the access is
located approximately 35 km east of the junction between Highways 17 and 519. It
takes approximately one hour to drive from Wawa to the Mine site.

Climate

The Island Gold Mine is located within the Lake Superior
Regional climatic zone, moderated by the influence of Lake Superior. The average
day time temperature is 2°C, ranging from -41°C to 31°C. Annual precipitation is normally 669 mm
of rain and 278 cm of snow. Winter winds are from the northwest to north and
during the summer south westerly to westerly winds prevail. The climate does not
affect the mining operation, which extend all year long.

Local Resources and Infrastructures

Wawa has a population of approximately 3,500.
Dubreuilville is a forestry community with a lumber mill and a population of
approximately 900. The Island Gold Mine is also within a few kilometres of
railway lines operated by Canadian National Railways and Algoma Railways.
Sidings for each of these railway lines are located at the towns of Goudreau and
Lochalsh.

A power substation connected to the provincial
power grid, water supply, gravel roads, offices, maintenance buildings and
living accommodation are all available within the Mine area. Power is supplied
by Great Lakes Power Corporation.

Richmont Mines also offers living accommodations and flexible
schedules to its employees. Training is offered in order to obtain a local
qualified workforce.

Physiography

The Island Gold Mine area is within the
Precambrian Shield adjacent to Lake Superior, in an area of low rolling hills
that trend in an east-west direction with widespread swamps and mixed forests of
broadleafs and conifers. Property relief is low, from a high point of 488 m
above sea level near Miller and Maskinonge Lakes, to a topographic low point of
381 m above sea level near Goudreau Creek. The mine area has been partially
logged.

35

---



Exploration History

In 1983, Canamax Resources Inc. ("Canamax")
and Algoma Steel Inc. ("Algoma") formed a joint venture to evaluate the mineral
potential of Algoma's 117 patented claims covering the Goudreau iron range. In
1985, drilling by Canamax about two kilometres south of the Kremzar mine
intersected a series of sub-parallel lenses containing gold mineralization
within deformed rocks of the Goudreau Lake Deformation Zone ("GLDZ"). These
lenses, are known as the Lochalsh, Island Gold, Shore, and Goudreau lake Zones.
During 1989 and 1990, a 1,280 m long ramp was driven into the Island deposit
beneath Goudreau lake from an adit on the north shore. Drifts and raises
totalling 382 m were developed on two levels at depths of 125 m and 140 m below
the Goudreau lake elevation at approximately 382 m. A bulk sample weighing 4,167
tonnes was extracted and processed at the Kremzar Mill.

Patricia Mining acquired the project in 1996
and completed 16,862 m of diamond drilling in 49 holes on the Island deposit and
Lochalsh Zone between 1996 and 2002. In 2004, Patricia Mining started an
underground exploration program and completed a resource estimate at a cost of
$3.0 million. A total of 125 drilling drifts, 53 metres of ore sill and 8,137
metres of drilling have been completed.

In 2005, Richmont Mines completed 2,111 metres
of underground development and 7,903 metres of delimitation drilling. A total of
7,259 tonnes with a content of 6.23 g/t Au from ore development were stockpiled
on the surface.

In 2006, Richmont Mines continued the
exploration program. A total of 3,469 metres of development has been completed
including 506.5 metres of ramp and 1,700.5 metres of ore silling. A total of
56,861 tonnes of development ore with a content of 6.96 g/t Au were stockpiled
on the surface. At the end of December, a total of 41,531 tonnes of mineralized
material grading 4.80 g/t Au were processed at the mill. A total of 28,149
metres of underground diamond drilling have been performed on the Island Zone
and 10,602 metres were completed from the surface on the Lochach and Goudreau
zones. Reserve estimates have been performed by Genivar in 2007 based on this
work.

On October 1, 2007, the Island Gold Mine began commercial
production.

Geological Setting

Regional Geology

The Island Gold Mine is part of the
Michipicoten greenstone belt which, is part of the Wawa subprovince and Superior
province of Archean age. The Project is stratigraphically positioned in the
upper portion of the Wawa Assemblage, composed by intermediate to felsic
volcanic rocks capped by pyrite-bearing iron formations.

36

---



Island Gold Project Geology

The Island Gold Mine covers part of the
interface between the Catfish assemblage, composed of mafic rocks, and the Wawa
assemblage, consisting of felsic rocks. The pyrite-rich Goudreau iron formation
lies at the contact between the Wawa and Catfish assemblages. A unit of
pyroclastic rocks marks the transition between the two assemblages and hosts
gold occurrences encountered on the property. This gold mineralization is
controlled by the GLDZ. The GLDZ hosts the Island, Lochalsh, Goudreau, Shore,
and North Shear gold zones, all located within the Island Gold property.

Mineralization

Within the GLDZ are a series of parallel shear
zones, up to 25 m wide by several hundred metres long, with dips ranging from
-70° to -90°, that host the gold mineralization. Moderate to high strain
intensity are present within the shear zones containing pervasive alterations
occurring in the form of iron carbonate, silica and calcite. Within areas of
intense sericitization and silicification with 2% to 5% pyrite are narrow,
subparallel quartz veins carrying gold mineralization. Gold is found primarily
in quartz stringers and veins one centimetres to 1,5 meters wide. Visible gold
("VG") forms clouds of fine gold droplets up to 3 mm in diameter.

At the Island Gold deposit, five zones
referred to as E1, E, D1, D, and C, are defined and characterized by the
presence of alteration halos ranging from 0.5 to over 8 metres in thickness,
comprising intense silica alteration, albite alteration and quartz-carbonate
veins. Two dominant envelopes are defined, namely the C/D envelope and the E/E1
envelope, which includes the D1 zone. An anastamosing pattern defines the
relationship between the zones.

Work During 2007

The work performed in 2007 permitted, among
other things, the development of underground infrastructures in preparation of
production which began on October 1, 2007. 136,904 tonnes of ore were hauled and
159,493 tonnes of ore have been processed at the mill.

During the first quarter of production in
2007, 7,302 ounces of gold, produced at a cash cost of US$621 per ounce, were
sold at an average price of US$726 per ounce. Prior to the beginning of
commercial production in October 2007, a total of 21,933 ounces of gold were
recovered in 2007 from the processing of development ore and mineralized
material. The following table summarizes the work completed over the last three
years.

37

---



Island Gold Mine1

|                                              | 2007      | 2006       | 2005      
|--------------------------------------------- | --------- | ---------- | ----------
|                                              |           |            |           
|Tonnes                                        | 35,202    | -          | -         
|Grade (g/t)                                   | 6.45      | -          | -         
|Ounces sold                                   | 7,302     | -          | -         
|Cash cost per ounce (US$)                     | 621       | -          | -         
|                                              |           |            |           
|Investment in exploration and development ($) | 4,493,937 | 21,934,103 | 11,532,884
|Exploration expenses ($)                      | 505,365   | 263,975    | 141,178   
|                                              |           |            |           
|Development metres                            | 4,075     | 3,469      | 2,111     
|                                              |           |            |           
|Metres of exploration drilling                |           |            |           
|Underground                                   | 12,940    | 28,149     | 7,903     
|Surface                                       | -         | 10,602     | -         

1

In its
consolidated financial statements, Richmont Mines consolidated 100% 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). As 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.

Exploration work

Reserve estimates were performed by Genivar on
May 15, 2007 based on work completed up to January 31, 2007. Proven and probable
reserves of 1,013,854 tonnes at 8.55 g/t Au containing 278,711 ounces of gold
have been evaluated.

In preparation of production which began on
October 1, 2007, 4,075 metres of development were completed, including 338
metres of ramp and 133 metres of raise. A total of 12,940 metres of underground
drilling in 147 drill holes has been completed. From this drilling, 35 drill
holes, for a total of 5,513 metres, were drilled in a new zone east of the
diabase dyke (East of 15 200 E).

Drilling

A total of 763 holes totalling 144,124 metres
of surface and underground diamond drilling were completed on the property from
the early 1980's to December 2007. The majority of the drill-holes used for
resource estimates were BQ size. In 2007, 147 drill holes for 12,940 metres were
drilled from underground.

38

---



Most of the drill holes are planned on
vertical cross-sections, in order to intercept mineralized zones at right angles
along a grid spacing of 20 by 15 metres, targeting alteration assemblages in the
E1/E Zone. Drilling operations are performed by a drilling contractor, under the
supervision of the geological staff at the Island Gold Mine. Underground drill
holes are BQ calibre. Core recovery is 100%. The drill core is logged in detail
by experienced and highly skilled staff, following established guidelines for
the Island Gold Mine. A rock quality designation ("RQD") analysis was completed
for all drill holes drilled in the 2007 program and the RQD for the zones is
excellent.The interpretation and development of each section was
completed after receipt of the drill holes assays and section plots. This
interpretation has served to complete the reserves estimate.

Sampling

For the drill hole, the sampling approach is
defined to coincide with lithological contacts and the samples have a minimum
width of 0.3 metre and a maximum length of 1 metre. The core recovery is very
good and can be considered to be representative.

The panel (or chip) sampling method consisted
of taking horizontal representative samples of the geology (units or alteration)
that was exposed either in the face or in the adjacent walls. The samples
weighed an average of 1.5 to 2 kg for a zone of 1.5 metres vertically by 0.3 to
1.0 metre horizontally. Each face was sampled and the number of assays varied
based on the geology and the opening.

The drill cores and chip samples are representative and the
mineralization style, with the presence of quartz veins and free gold shows a
nugget effect.

Assays

Swastika Laboratories Ltd of Swastika, Ontario
was used for the underground drilling and development program to perform fire
assay, gravimetric and specific gravity analyses for 2007. A number of
underground muck and chip samples were sent to the Wesdome assay lab in Wawa.
Swastika laboratories are accredited ISO 9001-2000, hold a Certificate of
Laboratory Proficiency (PTP-MAL) and have been assessed "Satisfactory" in both
cycles of test samples for Program Years 2004-2005, 2005-2006 and 2006-2007.

Gold assays are completed by fire assay with
30 g of material with either a gravimetric or AA finish. The cut-off for
gravimetric versus AA finish has been established at 3 g/t Au. When the grade
exceeds 30 g/t Au, a Metallic Sieve assay is performed. Detection limit for gold
safely is at 3 ppb. Rejects and pulps are kept by the laboratory or stored at
the Island Gold site. These methods and the routine sample preparation are
described in the following section. A detailed procedure can be found in the
Technical Report for the Island Gold as of May 15, 2007, filed under the
Company's profile at www.sedar.com

The step-by-step procedure for sample analyses is briefly
described as follows:

1)

Dry samples, if
required;

2)

Crush total
sample to 1⁄2 inch (Jaw Crusher);

3)

Split
approximately 350 g using a Jones riffle;

4)

Remaining rejects
are placed in a plastic bag and packed in cartons with sample numbers listed on
the outside;

5)

Pulverize the 350
g sample;

6)

Homogenize the
pulp, it is then ready for assay;

7)

Samples are then analyzed by fire assay with an absorption atomic or gravimetric
finish. A total of 30 g of representative material are subjected to the fire
assay and to gravimetric finish.

39

---



The Pulp and Metallic Method is used to overcome sampling
difficulties caused by coarse particles of gold, native silver or other similar
metals that do not pulverize very well.

Swastika's adaptation of this method for Gold
Assay is as follows: pulverize the entire sample if possible, screen through a
100 Mesh sieve (other Mesh sizes can be used depending on sample size and
allowable deviation). The -100 Mesh fraction is weighted, homogenized and
assayed in duplicate using one assay tonne (30 g) portions. The +100 Mesh
fraction (approximately 20 g) is weighted and entirely fused. The correction
resulting from gold found in the metallic portion is incorporated in the final
calculated result. The weight and grade of both fractions are also reported.

Quality Control

During the course of the geological
confirmation program, an evaluation of "Quality Assurance/Quality Control"
(QA/QC) data was done to address the three (3) main concerns of analytical
determination protocols, namely: (i) contamination, (ii) accuracy, and (iii)
precision, as measured by the results obtained from field and analytical blank
standards, certified reference standards and an assortment of specific duplicate
samples collected and/or prepared, in addition to the regular samples submitted
to the laboratory. A certified standard and blank assay are run with each sample
batch of samples. In addition, a replicate assay is run on every 10th sample to
be used for checking the reproducibility of the assays.

The results of field and analytical blanks
used to monitor for potential contamination during sample processing and
assaying indicate that no significant contamination is likely to have occurred
during the sampling/assaying programs completed for 2007. The assays supporting
the Island Deposit mineral reserves estimate are based on sample preparation and
analytical protocols that meet standard industry practice and are reasonable and
acceptable.

Security of Samples

There is no formal program established at the Island Gold Mine
relating to shipment of the samples.

Mineral Reserve Estimates

In 2007, methodology and procedures for
mineral reserve estimates were reviewed by Genivar, an independent firm, under
the supervision of Nicole Rioux, geo. a qualified person under National
Instrument 43-101. The base data, factors and parameters used in the
determination of the mineral reserve estimates were based on the knowledge of
the Island Gold Mine as of December 31, 2007.

40

---



The mineral reserve estimates were carried out
in accordance with National Instrument 43-101 recommendations and regulations.
Mineral reserves are classified according to the Canadian Institute of Mining,
Metallurgy and Petroleum (CIM) classification and adopted by the CIM Council on
December 11, 2005. All standards generally accepted in the mineral mining
industry as well as National Instrument 43-101 recommendations and CIM
regulations for mineral reserve estimates have been fully complied with in the
determination of mineral reserve estimates included herein.

Procedures and Technical Parameters

At the Island Gold Mine, Promine software was
used to prepare the resource calculation. A block model technique used inverse
distance as interpolation method with a maximum of 4 composites using data
within a maximum radius of 20 metres from diamond drill hole intercepts. A
composite table of grades has been prepared for resource modelling on the basis
of the current geological interpretation of each of the drilling sections, which
are 10 metres apart. The composite values were arranged by zones of economic
interest, which allowed for the construction of distinct longitudinal sections
for each zones.

All the geo-scientific data collected at the
Island Gold Mine are entered into a Gemcom database. Internal procedures have
been prepared in order to validate the information in the database. All this
work is performed by the Island Gold Mine geology department and all steps, from
data entry to layout drawings, follow strict and established procedures,
including crosschecks to ensure full validity. Access to all databases is
restricted to selected personnel in order to ensure complete integrity.

The main parameters used to estimate mineral reserves are as
follows:

- A cut-off grade of 5 g/t Au fixed with a gold price at CAN$650/oz with an
  exchange rate of CAN$1.0 for US$1.0;

The database and the parameters used to estimate the mineral
reserves are based on the results from 2007, the forecast for 2008 and
information available as at December 31, 2007. The technical parameters were
reviewed by Genivar. Thus, both the dilution and the ore-recovery factors by
mining methods used in the reserve estimate are based on actual results obtained
in 2007. All these factors and parameters are updated on an annual basis in
order to account for changes in mining operations.

41

---



The conversion of mineral resources to
reserves is based on economical feasibility. As per National Instrument 43-101,
only mineral resources in the measured and indicated categories can be used to
establish the estimate of mineral reserves.

Reserve Classification

Descriptions with more detail about
classification of reserves at the Island Gold Mine are set out below.

Proven Mineral Reserves

Genivar estimates the tonnage of mineral
reserves in the Proven category based on an economic study in order to determine
the economically mineable part of a Measured Mineral Resource. At the Island
Gold Mine, proven reserves are based on ore blocks developed from drifts to a
maximum of ten metres from the opening.

Probable Mineral Reserves

The mineral reserves estimate in the Probable
category was based on an economic study in order to determine the economically
mineable part of an Indicated Mineral Resource. At the Island Gold Mine,
probable reserves extend to a maximum of 20 metres from drilling intercept.

Dilution and mining recovery rates are
included in the reserve calculation.

Reserve Table

As of December 31, 2007, the mineral reserves
(before mill recovery of 94%) of the Island Gold Mine are estimated were
estimated by Genivar to be as follows:

|Categories of reserves                                                       | Tonnes    | Grade    | Au     
|---------------------------------------------------------------------------- | --------- | -------- | -------
|                                                                             | (metric)  | (g/t Au) | (oz)   
|Proven*                                                                      | 369,325   | 8.91     | 105,773
|Probable*                                                                    | 689,555   | 8.11     | 179,763
|                                                                             |           |          |        
|Total (Proven + Probable)*                                                   | 1,058,880 | 8.39     | 285,536
|* Note that Richmont Mines' equity interest is
    only 55% of these amounts |           |          |        

42

---

As of December 31, 2007, the total proven and
probable mineral reserves at the Island Gold Mine are estimated at 285,536
ounces of gold, calculated using a long-term gold price of CAN$650 per ounce and
an expected mine life of five years.
Mining Operations and Metallurgy
The extraction method is by transversal long hole with a
maximum panel length fixed by hydraulic radius factor of 4.5.
The Island Gold ore was hauled by truck to the
Kremzar mill located at an approximate distance of 0.8 km from the portal of the
ramp. The Kremzar mill is a traditional gold recovery mill using a conventional
Carbon in Pulp ("CIP") process, with circuits for crushing, grinding, gold
cyanidation and carbon-in-pulp and two electrowinning ("EW") cells.
Gold recovery of the Carbon in Pulp circuit at the Kremzar
mill is 94.4%.
Summary of Exploration and Development Work
The Island Gold Mine began commercial
production on October 1, 2007. During the period October 1, 2007 to December 31,
2007, 35,202 tonnes of ore were processed, at an average recovered grade of 6.45
g/t, and 7,302 ounces of gold were sold at an average price of US$726 (CAN$780)
per ounce. Prior to starting commercial production, a total of 23,031 ounces of
gold were recovered in 2007 from the processing of development ore and
mineralized material.
At the Island Gold Mine, proven and probable
reserves were estimated at 1,058,880 tonnes of ore at a grade of 8.39 g/t for
285,536 ounces of gold at December 31, 2007. During the year, underground
drilling confirmed an extension of the Island Zone to the east of previously
defined resources. Further drilling will be completed in this area in 2008. The
extension is strategically located near the exploration drift on the 190 level
east of the Island Zone. Overall, more than 20,000 meters of definition and
exploration drilling are planned for 2008 at Island Gold.
43

|                         | Year ended   | Year ended   | Year ended  
|------------------------ | ------------ | ------------ | ------------
|                         | December 31, | December 31, | December 31,
|                         | 2007         | 2006         | 2005        
|                         |              |              |             
|Precious metals revenues | $5,696,095   | -            | -           
|                         |              |              |             
|Tonnes processed         | 35,202       | -            | -           
|Grade (g/t)              | 6.84         | -            | -           
|Gold recovery (%)        | 94.36        | -            | -           
|Recovered grade (g/t)    | 6.45         | -            | -           
|Ounces sold              | 7,302        | -            | -           

|                                 |     |      |     |      |     |     
|-------------------------------- | --- | ---- | --- | ---- | --- | ----
|Data per ounce of gold sold      | US$ | CAN$ | US$ | CAN$ | US$ | CAN$
|Cash cost                        | 621 | 668  | -   | -    | -   | -   
|Depreciation and depletion       | 98  | 105  | -   | -    | -   | -   
|                                 |     |      |     |      |     |     
|Total                            | 719 | 773  | -   | -    | -   | -   
|                                 |     |      |     |      |     |     
|Average price obtained per ounce | 726 | 780  | -   | -    | -   | -   

Exploration Projects and Other Properties

General

Richmont Mines owns or holds interests in many mining
properties at different stages of exploration. However, the Company has
determined that none of such properties is significant.

Valentine Lake, Newfoundland, Canada

Location and Access

The Valentine Lake Property is located in
Central Newfoundland, 55 km south of the town of Buchans. The property can be
accessed by way of a 75 kilometre long gravel road from Millertown via the
Buchans Highway.

Description of the Property

The Valentine Lake property consists of four grouped mineral
exploration licences covering a total area of 13,475 hectares and a total of 539
claims.

44

---



Agreement

In November 2003, Richmont Mines signed an
option agreement to acquire a 70% interest in the Valentine Lake Property from
Mountain Lake Resources Inc. by carrying out $2.5 million in exploration work by
October 31, 2007. Richmont Mines met this requirement, entitling it to acquire a
70% interest in the Valentine Lake property. The interest is currently being
transferred to Richmont Mines and a joint venture agreement is in preparation.

2007 Work and Results

In 2007, Richmont Mines completed a helicopter
high-definition magnetic, spectrometry and Very Low Frequency ("VLF") borne
survey covering more than 1,800 km, encompassing the entire property. A total of
2,281 metres were drilled in eight drill holes. Results from this program to
identify mineralization outside of the main mineralized zones did not identify
any high-grade mineralization. However, two drill holes identified good
geological context, and there was anomalous gold mineralization in one
intersection at 1.2 g/t Au over 7 metres, including 8.3 g/t Au over 0.9 metre.

Wasamac, Quebec, Canada

Location and Access

The Wasamac property is located approximately
15 km southwest of Rouyn-Noranda, Province of Quebec. The property can be
reached from Rouyn-Noranda via the Trans Canada Highway 117 to the town of
Arntfield and then by a secondary road that leads directly to the property.

Description of the Property

The Wasamac property consists of three mining
concessions (CM 349, CM 364, and CM 370) and one claim which represent a total
area of 759.36 hectares in the Beauchastel township. Richmont Mines owns 100% of
the mining concessions relating to the Wasamac property.

2007 Work and Results

In 2007, two drill holes, for a total of 435
metres, were drilled on the Wasamac property. One of two drill holes completed
returned a gold intersection of 6.1 g/t Au over 1.5 metres and 5.3 g/t Au over
3.1 metres (uncut / core length) less than 230 metres from the surface. This
intersection is located at 300 metres south of the Francoeur-Wasamac shear zone
and represents the west extension of the Wildcat zone.

45

---



Francoeur, Quebec, Canada

Location and Access

The Francoeur property is located
approximately 25 km southwest of Rouyn-Noranda, Province of Quebec. The property
can be reached from Rouyn-Noranda via the Trans Canada Highway 117 to the town
of Arntfield and then by a secondary road from the north that crosses the town
of Arnfield and leads directly to the property.

Description and Infrastructures of the Property

The Francoeur property consists of 13 mining
claims, including 3 mining concessions and 4 mining leases, covering a total
surface area of 363 hectares. These claims are located in Beauchastel Township
and are wholly owned by Richmont Mines.

The Francoeur mine was in operation from 1938
to 1947, from 1968 to 1971, and again from 1991 to 2001. Two head frames are
present on the property, as well as various basic infrastructures.

Agreement

In 2004, the Company concluded an agreement
with Cadillac-West Exploration Inc. for the Norcoeur and Lac Fortune group of
properties, adjacent to the Francoeur property. Cadillac-West Exploration
undertook to invest $0.5 million in exploration, after which it would have the
right to acquire from Richmont Mines an interest of 50% in the Norcoeur and Lac
Fortune group of properties by completing exploration programs of $2.2 million
and $1.5 million over three years. The agreement was terminated in 2007 as
Cadillac-West Exploration did not make the expenditures required under the
agreement. Richmont Mines owns 100% of the Norcoeur and Lac Fortune properties.

2007 Work and Results

In 2007, three drill holes, for a total of 735
metres were drilled on the Francoeur property. The results of the drilling
program confirmed the presence of new gold structures south of the main shear
zones of the past-producing Francoeur Mine.

Camflo Northwest, Quebec, Canada

Location and Access

The Camflo Northwest property is located about
21 km west of Val-d'Or, in northwestern Quebec. The property is located west of
the Camflo mill. The property can be reached via the Camflo mill road, which
turns off Trans Canada Highway 117, about 5 km east of Malartic.

Description of the Property

The Camflo Northwest property consists of 13 claims covering
lots 45 to 51 in Range I, and lots 45 to 50 in Range II of Malartic Township. It
covers a total surface area of 453.5 hectares.

46

---



Agreement

Richmont Mines had the option to acquire a 50%
interest in the property by investing $200,000 in exploration work prior to
December 31, 2005 and an additional 30% by spending $125,000 before June 29,
2007. On April 25, 2006, Richmont Mines had acquired a 50% interest in the
Camflo Northwest property and  it acquired an additional 30% interest in
2007; it now holds 80% of the Camflo Northwest property located in the Malartic
Gold Camp.

2007 Work and Results

In April 2007, Richmont Mines completed three
drill holes for a total of 1,366 metres of drilling on this property and
expenditures of $123,468. The program tested geophysic targets inside the
Kewagama sediment along a northeast structure controlling the Camflo intrusion,
site of the past-producing Camflo Mine, although there were no significant
results from this drilling program.

Golden Wonder, Colorado, USA

Location and Access

The Golden Wonder property is located
approximately 4 km south of Lake City, Hinsdale County, Colorado, USA. The
property can be reached by following Colorado State Highway 149 south of Lake
City to the Vickers Dude Ranch and then following an unimproved road through the
ranch to the property.

Description and Infrastructures of the Property

The Golden Wonder Mine is a high-grade,
epithermal deposit, with veins averaging two to three feet in width, located in
the historically precious metal rich Colorado Mineral Belt near the mining
districts of Ouray, Telluride, Silverton and Creede. The Golden Wonder property
consists of 3 patented claims and 25 mining claims, covering a total surface
area of 194 hectares.

Previously in commercial production from 1998
through June 2006, the mine produced approximately 8,400 tons of ore with an
average grade of 16 ounces/ton (oz/t) and yielded 133,701 ounces of gold. Mining
operations were conducted between the third and sixth levels from two horizontal
access drifts along the Gold Hill in the San Juan Mountains. Exploration efforts
in 1998 also included a 100-foot shaft down to the seventh level, with
horizontal extension on the seventh level of about 50 feet. The main lower
access is located on the sixth level and consists of a nine-by-nine foot
trackless haulage crosscut over 1,000 feet in length.

47

---

Agreement
In November 2007, Richmont Mines entered into
an agreement with LKA International, Inc. ("LKA"), pursuant to which LKA agreed
to grant Richmont Mines the option to acquire a 50% joint venture interest in
the Golden Wonder project. Upon exercise of this option LKA would hold the other
50% joint venture interest. As a condition precedent to Richmont Mines' exercise
of this option, Richmont Mines must make US$3 million of certain project-related
expenditures prior to September 1, 2008. Included in this amount are
expenditures for exploration and development of the mine plus an option fee of
US$300,000 and project-related finder's fees. In addition to the US$300,000
option fee, approximately US$250,000 in costs have been incurred by Richmont
Mines to date. The US$3 million commitment is inclusive of these costs. In
addition to this US$3 million obligation, in order to earn the 50% interest in
the Golden Wonder Mine, Richmont Mines must make additional expenditures of
US$15 million over the fifty-six month period following September 1, 2008 and
subscribe for US$1.5 million in common shares of LKA. Under the agreement,
failure by Richmont Mines to make any of the above-described payments would
result in the loss of the option right and forfeiture of any interest of
Richmont Miens in the Golden Wonder project. In accordance with the agreement,
the Company will receive 50% of the net proceeds of gold sales made during all
phases on the project so long as the Company has fulfilled its investment
obligations described above.
2007 Work and Results
In 2007, during Richmont Mines' initial
evaluation, the three accessible levels were visited. The sixth level was mapped
in detail and all of the hydrothermal breccias were sampled. Most of the values
were low except a zone located in the northern drift and a few old stock piles
returned significant gold values of up to 500 g/t Au. Because the sampling of
the level 6 was inconclusive the decision to remove water from the shaft below
the 6th level was taken. The sampling of the zone showed good results that were,
on average, consistent with the historic grades. Five samples of over 300 g/t Au
were obtained. Assays of these samples were taken on the vein over a thirty-two
foot vertical section.



48

---



|TABLE OF RESERVES           
|----------------------------
|                            
|                            
|                            
|                            
|Island Gold1                
|Proven reserves2            
|Probable reserves2          
|                            
|Beaufor Mine                
|Proven reserves2            
|Probable reserves2          
|                            
|East Amphi Mine3            
|Proven reserves2            
|                            
|TOTAL GOLD                  
|Proven and probable reserves

1

Presented at
100%. Commercial production began on October 1, 2007 - 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.

2

In 2007, based
on a price of US$650/oz and an exchange rate of 1.00 (in 2006, a price of US$513
and an exchange rate of 1.12).

3

Property sold in
June 2007.

National Instrument 43-101 - Standards of
Disclosure of Mineral Projects

Mineral reserve calculations for the Company's material
properties were established by "qualified persons" as defined under National
Instrument 43-101, and their names are set out in the table below.

|Mines            | Qualified Persons    | Titles                           
|---------------- | -------------------- | ---------------------------------
|Beaufor Mine     | Richard Dubuc, p.geo | Chief Geologist, Beaufor Mine    
|Island Gold Mine | Nicole Rioux, p.geo  | Senior Geologist for
    Genivar,
|                 |                      | Independent Contractor           

On the next page you will find a map of the Company's
properties.

49

---





50

---

Gold Marketing and Sales

The profitability of gold mining is directly
related to the market price of gold as compared to the cost of production. Gold
prices fluctuate widely and are affected by numerous factors, including
expectations with respect to the rate of inflation, exchange rates (specifically
the U.S. dollar relative to other currencies), interest rates, global and
regional political and economic crises and governmental policies with respect to
gold holdings by a nation's central bank. The demand and supply of gold usually
affect gold prices but not necessarily in the same manner as supply and demand
affect the prices of other commodities. The whole of gold available for sale
includes a combination of mine production, stock and gold bullion held by
governments, public and private financial institutions, industrial organizations
and private individuals. As the amounts produced in any single year account for
a small portion of the total available supply of gold, normal variations in
current production do not have a significant impact on the supply of gold or on
its price.
The following table sets out the annual
average gold price (London PM fix) in U.S. dollars over the past five years:

|                                 |       | Exchange |       
|-------------------------------- | ----- | -------- | ------
|                                 | (US$) | rate     | (CAN$)
|                                 |       |          |       
|2003                             | 363   | 1.40     | 509   
|2004                             | 410   | 1.30     | 534   
|2005                             | 444   | 1.21     | 538   
|2006                             | 604   | 1.13     | 685   
|2007                             | 695   | 1.07     | 747   
|2008 (January 1st until May 2nd) | 918   | 1.01     | 925   

Gold can be easily sold on numerous markets
throughout the world and it is not difficult to ascertain its market price at
any particular time. Richmont Mines is not dependent upon the sale of its gold
to any one customer because of the large number of available gold purchasers.

Richmont Mines may occasionally use put and
call options on gold, and forward sales contracts on gold and U.S. dollars. All
such contracts are previously approved by the Company's Board of Directors.

Gold bars are carried between the mills and
the refinery by commercial armored truck. These bars are refined at the Royal
Canadian Mint of Ottawa refinery under a service contract at competitive rates.
Refined metal is sold on the spot market to commercial bullion dealers (or under
forward sales contracts if previously approved by the Company's Board of
Directors).

As at December 31, 2007 and 2006, Richmont
Mines had not entered into any gold derivatives contracts.

51

---

Governmental Regulation

The principal operations of Richmont Mines are
the production of gold from mining development, extraction and processing of
minerals and mining exploration to maintain and increase its ore reserves. These
operations are subject to various levels of control and strict government
regulations, such as laws and regulations in respect of activities related to
natural resources and the protection of the environment. Richmont Mines Richmont
Mines is not aware of any further legislation or amendments that may have an
impact on its operations.
Environmental protection legislation,
applicable to the Canadian mining industry mandates high standards for the
reduction or elimination of emissions, deposits, issuance or release into the
environment of contaminants caused by the extraction or processing of ore. In
addition, certificates of authorization must be obtained in advance for the
construction and commercial operation of a mine, plant, concentrator or
refinery, since such types of operations that are specific to the mining
industry may result in emissions, deposits, issuance or release of contaminants
into the environment or may affect the quality of the environment.
Quebec & Ontario
Both Quebec and Ontario have adopted
legislations relating to mining matters, including the acquisition and ownership
of mining titles, safety standards, royalties and mining taxes. The Mining
Act (adopted by Quebec and Ontario) requires the rehabilitation and
restoration of lands affected by mining activities. In Ontario, the approval is
delivered by the Ministry of Northern Development and Mines (the "MNDM"),
while in Quebec the same is delivered by the Ministère des Ressources
naturelles et de la Faune (the Ministry of Natural Resources and Wildlife)
(the "MNRW" and together with the MNDM, the "Ministries") for any plan for the
rehabilitation and restoration of land affected by its operations; such person
must comply with the plan and provide a financial guarantee to that effect.
In Quebec, when a person commences mining
operations, it must submit its rehabilitation and restoration plan within one
year following the beginning of its activities. In Ontario, it must be approved
before the beginning of commercial production; moreover, local public
consultation must also be held.
Each Ministry may require or impose additional
conditions or obligations before giving its approval to the rehabilitation and
restoration plan. Each Ministry may review the financial guarantee if it is of
the opinion that the guarantee is insufficient and may require additional
guarantees. A Ministry may require a person who has already ceased its mining
operations on a particular site to perform the rehabilitation and restoration
work required by the presence of tailings.
If the person does not comply with any of the
aforementioned requirements and regulations, the MNRW or the MNDM may have the
rehabilitation and restoration work executed by a third party at the cost of
such person. Richmont Mines does not foresee any specific difficulty in meeting
the requirements under the Mining Act (Quebec and Ontario).

52

---

Richmont Mines also holds certificates of
authorization issued by the Ministère du Développement durable, de
l'Environnement et des Parcs (the Ministry of Sustainable Development,
Environment and Parks, the "MDEP") and by the Ontario's Ministry of the
Environment with respect to its mining operations at the Francoeur Mine, the
Beaufor Mine, and the Island Gold Mine and the operations of its subsidiary,
Camflo Mill Inc.
C.    
Organization Structure

See Exhibit 8.1 to this Annual Report.
D.    
Property, Plants and Equipment

See Item 4.B. "Business Overview."
ITEM 4A.     UNRESOLVED
STAFF COMMENTS

Not applicable.
ITEM 5.     OPERATING AND
FINANCIAL REVIEW AND PROSPECTS

The discussion and analysis of the operating
results and financial position of the Company for the three years ended December
31, 2005, 2006 and 2007 should be read in conjunction with the Company's
consolidated financial statements and the accompanying notes included in this
Annual Report. Notice should also be taken of the cautionary statement regarding
forward-looking statements on page 1 of this Annual Report, in particular with
respect to trend and other forward looking information and disclosure regarding
the Company's contractual obligations.
The preparation of financial statements
involves making estimates and assumptions that have a significant impact on the
reported amounts of revenues, expenses, assets and liabilities. The items most
dependent on the use of estimates include the useful life of assets,
amortization and depletion calculations based on proven and probable reserves,
and the calculation of asset retirement obligations as well as future income and
mining taxes. Consequently, future results may differ from these estimates
A.
Operating Results
Year ended December 31, 2007 compared to year
ended December 31, 2006 (all dollar amounts are in thousands of Canadian dollars
unless otherwise stated except for share and per ounce data).
Overview
Gold Prices and Currency Fluctuations

The gold market continued its strong pricing
trend in 2007 rising from approximately US$640 per ounce at the beginning of the
year to close at more than US$833 per ounce. In the month of March 2008, gold
rose to over US$1,000 per ounce.
In 2007, the average market price of gold rose
more than 15% to US$695 per ounce compared with US$604 in 2006. The rise in gold
prices have resulted in growth that has benefited all gold
producers in recent years, although
the strength of the Canadian dollar has lessened the impact on Canadian
producers. The main factors that continue to have a positive influence on the
price of gold include:

53

---

Depreciation of the
  U.S. dollar relative to other currencies and the low prevailing interest
  rates;
  Non-hedging and
  reduced hedging policies of producers;
  Demand that exceeds
  the industry's annual production; and
  Ongoing
  geopolitical instability.

Production

Richmont achieved significant revenue and income growth in
2007 as the price of gold continued an upward trend that began earlier this
decade. In 2007, Richmont sold 46,193 ounces of gold at an average price of
US$699 per ounce, for revenue of $34,691. The Company produced 45,304 ounces of
gold at an average cash cost per ounce of US$499. Net earnings were $6,671, or
$0.28 per share, including a gain of $7,439 on the sale of the East Amphi
property. These results compare favourably with 2006 when the Company sold
44,866 ounces of gold at an average price of US$600 per ounce and produced
44,865 ounces of gold at an average cash cost per ounce of US$538. Net earnings
in 2006 totalled $3,194 or $0.14 per share.
Richmont is currently producing at the Island Gold Mine in
Ontario and the Beaufor Mine in Quebec. The Island Gold Mine has proven and
probable reserves of 1,058,880 tonnes of ore at a grade of 8.39 g/t, for 285,536
ounces of gold. The Beaufor Mine has proven and probable reserves of 255,701
tonnes of ore at 9.20 g/t, for 75,632 ounces of gold. Total proven and probable
reserves at both operations equate to 361,168 ounces of gold. Richmont Mines has
a 55% equity interest in the Island Gold Mine.
Commercial production at the Island Gold Mine began on
October 1, 2007. Initial production is progressing gradually as expected. The
mine is being developed to maximize production and increase output in order to
build the ore inventory. Once inventory is built, the mill is expected to be
able to operate at the approximately 675 tonnes per day for which it was
designed. More than 20,000 metres of definition and exploration drilling are
planned at Island Gold in 2008.
The Beaufor Mine, which has been in commercial production
since 1996, had strong performance in 2007 despite a five-week shut down that
was required to replace the headframe structure. A measurably improved average
grade enabled the operation to exceed 2006 sales during 2007, despite the shut
down. The higher grade also resulted in a 19% reduction in the cash cost of
production to US$468 per ounce. Richmont has planned an additional 42,000 metres
of drilling at the Beaufor Mine for 2008, of which 19,500 metres will be
dedicated to further test the newly discovered Q zone.
Investments

In 2007, the Company invested $21,270 at Island Gold mainly
in development costs. This investment was reduced by $16,775 from precious metal
sales during development activities. At
Beaufor, the Company invested $1,060
mainly to replace the headframe structure. Total 2007 investments in property,
plant and equipment were $6,171.

54

---

In 2006, the bulk of the Company's investments, or a total of
$21,934, was allocated to the Island Gold project. More modest investments were
made at the Beaufor Mine and at other sites. Total 2006 investments in property,
plant and equipment were $25,059.
The $18,888 decrease in investments in property, plant and
equipment in 2007 compared with 2006 was mainly due to the application of
proceeds from precious metal sales as a reduction of development costs during
development activities at the Island Gold Mine of $16,775.
Summary of operational and financial results

During 2007, the Company had a net profit of
$6,671 or $0.28 per share, compared with a net profit of $3,194 or $0.14 per
share, in 2006.

The Company's mining operations generated cash
flows of $11,811 in 2007 compared with $2,429 in 2006.

The Company had no long-term debt and
possessed working capital of $33,970 as at December 31, 2007 compared with no
long-term debt and $21,171 of working capital as at December 31, 2006. The
Company believes that it would have access to other sources of financing if
additional capital became necessary to finance its operations.

Changes in accounting policies

On January 1, 2007, the Company adopted the
Canadian Institute of Chartered Accountants ("CICA") Handbook Sections "1530
Comprehensive Income", "3251 Equity", "3855 Financial Instruments - Recognition
and Measurement" and "3861 Financial Instruments - Disclosure and Presentation".
These new CICA Handbook Sections provide comprehensive requirements for the
recognition, the measurement and the disclosure of financial instruments. CICA
Handbook Section 1530 establishes standards for reporting comprehensive income.

Comprehensive income is defined as the change
in the Company's net assets that results from transactions from sources other
than the Company's shareholders and includes items that would not normally be
included in net earnings. Other comprehensive income refers to items recognized
in comprehensive income but that are excluded from net earnings calculated in
accordance with Canadian generally accepted accounting principles.

At the adoption date, all financial assets and
liabilities are estimated and recorded at fair value. Subsequently, all
financial instruments are classified into one of the following five categories:
held-for-trading financial assets, held-to-maturity investments, loans and
receivables, available-for-sale financial assets or other financial liabilities.
All financial instruments are recorded on the consolidated balance sheet and are
measured at fair value with the exception of loans and receivables,
held-to-maturity investments and other financial liabilities, which are measured
at amortized cost.

55

---



Available-for-sale financial assets are
measured at fair value with revaluation gains and losses included in other
comprehensive income until the asset is removed from the balance sheet.

As a result of the adoption of these
standards, the Company has classified its cash and cash equivalents as assets
held-for-trading, its short-term investments as available-for-sale financial
assets, its accounts receivable and the advance to a minority partner as loans
and receivables, and its accounts payable and accrued charges as other financial
liabilities.

The adoption of CICA Handbook Sections 1530
and 3855 as of January 1, 2007 had the impact of adjusting the opening balance
of accumulated other comprehensive income by an amount of $323 to reflect the
cumulative unrealized gains on available-for-sale investments at that date.

On January 1, 2007, the Company adopted the
recommendations of Section 1506 of the CICA Handbook, Accounting changes.
The revised Section establishes criteria for changing accounting policies,
together with the accounting treatment and disclosure of changes in accounting
policies, changes in accounting estimates and correction of errors. The adoption
of these recommendations did not have any impact on the financial statements of
the Company.

Future accounting changes

Capital disclosures

In December 2006, the CICA adopted Section
1535 of the Handbook, Capital disclosures, which applies to years
beginning on or after October 1, 2007. This Section establishes standards for
disclosing information about an entity's capital and how it is managed. The
Company is currently evaluating the requirements of the new standards regarding
disclosure and presentation of such information.

Financial instruments - disclosures and
presentation

In December 2006, the CICA adopted two new
Handbook sections: Section 3862, Financial instruments - disclosures and
Section 3863, Financial instruments - presentation. Together, these two
sections replace Section 3861, Financial instruments - disclosures and
presentation which apply to years beginning on or after October 1, 2007.
These Sections require additional disclosure, particularly regarding the
documentation of risks. The Company is currently evaluating the requirements of
the new standards regarding disclosure and presentation of such information.

Inventories

In June 2007, the CICA issued Section 3031, Inventories, which replaces Section 3030 and harmonizes the Canadian
standards related to inventories with International Financial Reporting
Standards ("IFRS"). This Section provides changes to the measurement and more
extensive guidance on the determination of cost, including allocation of
overhead; it reduces the number of methods available to determine cost; it
requires impairment testing; and it expands the disclosure requirements to
increase transparency. This Section applies to interim and annual financial
statements beginning on or after January 1, 2008. The Company has not yet
determined the impact of adopting this standard on its consolidated financial
statements.

56

---



Revenue

Precious metal revenue

Other revenue-
Other revenue of $3,380 in 2007, up $1,030 when compared with 2006, was the
result of higher custom milling revenue at the Camflo Mill, as well as from an
increase in interest income and variation of fair market value on cash
equivalents.

Expenses

Operating costs-
Lower operating costs in 2007 of $2,594 compared with $27,169 in 2006 reflected
improvements in productivity, refocused operations and enhanced mining plans at
the Beaufor Mine, resulting in a 51% increase in the average recovery grade,
from 5.54 g/t in 2006 to 8.36 g/t in 2007. The lower operating costs during 2007
were offset by early phase commercial production costs at the Island Gold Mine.
During the year, a total of 260,820 tonnes of ore from the Island Gold, Beaufor
and East Amphi mines were milled compared with a total of 318,707 tonnes of ore
from the Beaufor and East Amphi mines in 2006. The cash cost of production per
ounce decreased to an average of US$499 in 2007 from US$538 in 2006.

Royalties -The
amount of royalties paid by the Company in 2007 was $565 compared to $189 in
2006, representing a $376 increase primarily due to increased gold production at
the Beaufor Mine, for which the Company has paid royalties of $30.00 per ounce
to a third party on 50% of the ounces produced since November 2006. Prior to
November 2006, the royalty was $12.50/ounce. The increase in royalties paid
during 2007 is also partially attributable to a 3% net smelter return (NSR)
royalty payable since commercial production began at the Island Gold Mine in
October 2007. No royalties were payable on the ounces of gold produced at the
East Amphi Mine.

Custom milling - In 2007, ore totalling
46,317 tonnes was milled by the Company, compared with 33,509 tonnes in 2006. In
2007, with Beaufor and East Amphi mines in production, there was less capacity
for custom milling. Activities related to custom milling represented expenses of
$1,023 in 2007, compared with $591 in 2006. Revenues from custom milling are
presented under the caption "Other revenues" in the consolidated financial
statements of the Company included in this Annual Report. Richmont Mines expects
to perform custom milling of approximately 170 000 tonnes of ore in 2008.

Administration-Administrative
expenses were $3,315 in 2007 compared with $2,957 in 2006, representing a 12%
increase due to higher stock-based compensation, which is a non-cash expense. Of
the 620,000 options granted in 2007, 510,000 options represent renewals of
expired options to directors and employees,
and the balance of 110,000 options represents the granting of options to new
employees or to employees who were promoted. The weighted-average fair value
calculated according to the Black-Scholes model of evaluation at the date on
which each option was granted was $1.06 compared with $1.42 in 2006.

57

---



Exploration and project evaluation -
As in previous years, Richmont Mines continued its
investments related to exploration and project evaluation. These expenses
increased from $2,080 in 2006 to $3,288 in 2007. The increase is attributable to
an increase in actual exploration and project evaluation expenditures, as
detailed in the table below.

Investments for exploration and project
evaluation

|                                     | 2007    | 2006 
|------------------------------------ | ------- | -----
|                                     | $       | $    
|                                     |         |      
|Exploration costs - Mines            |         |      
|Beaufor Mine                         | 1,874   | 1,342
|East Amphi Mine                      | -       | 248  
|Island Gold Mine                     | 505     | 264  
|                                     |         |      
|                                     | 2,379   | 1,854
|                                     |         |      
|Exploration costs - Other properties |         |      
|Valentine Lake property              | 1,017   | 67   
|Golden Wonder property               | 665     | -    
|Francoeur property                   | 96      | 146  
|Wasamac property                     | 46      | 54   
|Other properties                     | 162     | 168  
|Project evaluation                   | 124     | 583  
|                                     |         |      
|                                     | 4,489   | 2,872
|                                     |         |      
|Exploration tax credits              | (1,201) | (792)
|                                     |         |      
|                                     | 3,288   | 2,080

Accretion expense of asset retirement
obligations- This charge was $178 in 2007, compared
with $214 in 2006, representing a 17% decrease due to ending of mining at East
Amphi.  As the Company's production and exploration activities are subject to a
variety of laws and federal and provincial regulations governing the protection
of the environment, the Company has reported the asset retirement obligations
for the mining sites on the basis of management's best estimate of the future
costs. These estimates may be subject to changes if the laws and regulations are
changed or if new circumstances arise.

Depreciation and depletion -The amounts related to depreciation and depletion totalled $5,628 in 2007,
compared with $3,146 in 2006. The increase is attributable primarily to the
increase ingold sales, which
were 46,193 ounces in 2007, compared with 44,866 ounces in 2006 and by the
decline in the Beaufor and East Amphi properties' mineral reserve, which were
determined at the end of 2006.

58

---



Gain on disposal of mining assets -
A factor that contributed to the improvement in earnings in
2007 was the gain on disposal of mining assets of the East Amphi property in
the amount of $7,439 compared to 2006 with the $3,224 gain on the sale of the
assets of Richmont's Nugget Pond property, located in Newfoundland.

Write-down of mining assets - As part
of its periodic evaluation of the book value of its assets as described in note
1 g) of the Company's consolidated financial statements included in this Annual
Report, the Company determined that no write-down of the mining assets was
required as at December 31, 2007.

Mining and income taxes

In 2007, current income taxes of $1,640 were
comprised of federal and provincial taxes and mining taxes applicable to the
year 2007 in the amount of $1,891, offset by $251 in adjustments for previous
years not previously recorded. The tax expense calculated at the combined
stationary rate was impacted by a reduction in the valuation allowance. The
future income tax credit of $334 was mainly due to a reduction in liabilities
for future mining taxes.

Unrecorded available tax credits of $350 were
used during the year and applied against property, plant and equipment while
$1,201 was applied against exploration expenses.

In 2006, Richmont had a tax recovery of $885
due principally to a federal tax refund of $955, resulting from the carry-back
of losses to prior years and to a tax expense of $85 related to the $7,500
flow-through share financing completed in 2005. The $1,801 future income tax was
attributable primarily to the recovery of $2,293 in future taxes related to the
reduction in the valuation allowance. This reduction was related to the future
income tax liability recognized during the year as a result of the issue of
$7,500 in flow-through shares completed in December 2005, for which the Company
renounced its tax deductions, to the benefit of the shareholders, in February
2006. Furthermore, a reduction of $578 in future tax assets, related to the
reduction in valuation allowance for the subsidiary Louvem Mines Inc.,
diminished the future tax recovery.

Details on taxes are found in note 8 of the
Company's consolidated financial statements included in this Annual Report.

Minority interest

Minority interest recovery totalled $36 in
2007, compared with a recovery of $730 in 2006. This amount represents the share
of earnings or losses due to the minority shareholders of Louvem, in which
Richmont Mines owns a 70% interest, and the share of the losses from the Island
Gold project for 2007 that belongs to Patricia Mining Corp., a partner in this
project.

59

---



Net earnings

Net earnings were $6,671, or $0.28 per share,
including a gain of $7,439 on the sale of the East Amphi property. Net earnings
in 2006 totalled $3,194 or $0.14 per share.

Balance sheet

Assets

The total assets of Richmont Mines rose from
$78,498 as at December 31, 2006, to $85,976 at the end of 2007. The increase is
due to the increase in the cash and cash equivalents.

As at December 31, 2007, the Company had
working capital of $33,970 compared with $21,171 as of December 31, 2006. The
increase was primarily the result of a $12,234 increase in cash and short-term
investments due to higher cash generated from operations of $3,494 and proceeds
of $8,536 realized on the sale of the assets of the East Amphi property. The
cash balance was $27,291 on December 31, 2007 compared with $16,126 on December
31, 2006, an increase of 69%.

The total advance to Patricia Mining Corp.,
the minority partner in the Island Gold Mine, was $3,375 at December 31, 2007
compared with $4,500 at December 31, 2006. An amount of $1,500 compared with
$1,125 at December 31, 2006 is presented in accounts receivable as it is
reimbursable within the next twelve months. The total advance bears interest at
prime rate plus 3% (effective rate of 9% in 2007 and 2006) and is to be
reimbursed in 36 equal and consecutive monthly instalments, which started on
April, 2007. This advance is secured by the 45% interest which the borrower has
in the Island Gold Mine.

An amount of $159 included in accounts
receivable which represents Patricia Mining Corp's share of the November 2007
cash call of $90 and accrued interest of $69 had not been settled at December
31, 2007.

Liabilities

The amount of liabilities of the Company was
$24,163 as at December 31, 2007, compared with $23,808 at December 31, 2006, and
is composed of short-term liabilities, asset retirement obligations, the
minority interest and future mining and income taxes. Richmont Mines has no
long-term debt.

60

---



Asset retirement obligations

Richmont Mines must evaluate on a periodic
basis the assumptions used in the calculation of the asset retirement
obligations related to eventual closure of its mining sites. At the end of the
fiscal year ended December 31, 2007, the Company had the following financial
legal obligations:

|                   | Total amount     |                  |                
|------------------ | ---------------- | ---------------- | ---------------
|                   | of the estimated | Cash flow        | Credit-adjusted
|                   | cash flow        | payment schedule | risk-free rate 
|                   | $                |                  | %              
|                   |                  |                  |                
|Beaufor Mine       | 391              | 2011             | 5.5            
|Camflo Mill        | 2,381            | 2010             | 5.5            
|Island Gold Mine   | 901              | 2010             | 5.5            
|Francoeur property | 193              | 2010             | 5.5            
|                   |                  |                  |                
|                   | 3,866            |                  |                

Future mining and income taxes

Note that future mining and income taxes, in
2006, were recorded as both assets and liabilities, since these amounts come
from different corporate entities and a variety of legislation, such as
federal, provincial and mining taxes. Note 8 of the Company's consolidated
financial statements included in this Annual Report provides detailed
information about tax reconciliation as well as future income tax assets and
liabilities.

The available non-refundable provincial and
federal tax credits of $4,572 and $2,181, respectively, can be carried forward
for the next ten to twenty years and were not reported as assets because the
Company assessed that it was not more likely than not that they will reduce the
taxes due in future years.

Shareholders' equity

Shareholders' equity totalled $61,813 as at
December 31, 2007, compared with $54,690 as at December 31, 2006.

At December 31, 2007, Richmont Mines had
24,053,353 shares outstanding and 2,023,000 options granted under its
stock-purchase plan compared with 24,180,353 shares outstanding and 2,117,700
options granted at December 31, 2006.

61

---



Commitments and contingencies

On November 5, 2007, the Company signed an
agreement (amended December 21, 2007) with LKA International, Inc. ("LKA") to
acquire an option to acquire a 50% interest in the Golden Wonder property,
located near Lake City, Colorado, USA. In accordance with the terms of the
agreement, the Company paid an initial option payment of US$150 to evaluate the
Golden Wonder property. In December 2007, the Company paid an additional option
fee amount of US$150. As a condition precedent to Richmont Mines' exercise of
this option, the Company must invest a total amount of US$3,000 prior to
September 1, 2008, which amount includes exploration and development
expenditures, the option payment of US$300 and transaction costs. In addition,
in order to acquire the 50% interest in the Golden Wonder project, the Company
must (i) subscribe to US$1,500 in common shares of LKA and (ii) make
additional mine-related expenditures of US$3,000 (during an 8-month period
starting September 1, 2008), US$6,000 (during the following 24-month period)
and a final amount of US$6,000 (during the 24-month period ending on April
30, 2013). Under the agreement, failure by the Company to make any of the
above-described payments would result in the loss of the option right and
forfeiture of any interest of the Company in the Golden Wonder project. In
accordance with the agreement, the Company will receive 50% of the net proceeds
of gold sales made during all phases on the project so long as the Company has
fulfilled its investment obligations described above.

In addition, the Company is subject to royalty
payments on 50% of the production of the Beaufor Mine at the rate of $30 per
ounce produced, a 3% royalty per ounce produced at the Island Gold Mine, and
also on other properties, if they enter into commercial production which are
detailed under "Item 4. INFORMATION ON THE COMPANY - Business Overview - Mineral
Royalties".

Critical accounting estimates

The preparation of financial statements
requires the use of estimates and the formulation of assumptions that have a
significant impact on revenues and expenses as well as on the amounts of assets
and liabilities. The following factors represent the estimates that management
considers the most significant and for which the actual amounts may differ
considerably and affect operating results.

Mineral reserves

The main parameters used to determine the
mineral reserves are the following:

|                         | 2007 | 2006 | 2005
|------------------------ | ---- | ---- | ----
|                         |      |      |     
|Gold (US$/ounce)         | 650  | 513  | 450 
|Exchange rate (US$/CAN$) | 1.00 | 1.12 | 1.20
|Gold (CAN$/ounce)        | 650  | 575  | 540 

62

---

U.S. GAAP Reconciliation

Please refer to note 21 to the Company's
consolidated financial statements included in this Annual Report.

Year ended December 31, 2006 compared to year
ended December 31, 2005 (all dollar amounts are in thousands of Canadian dollars
unless otherwise stated except per share and per ounce data)

Overview

Gold Prices and Currency Fluctuations

In 2006, the average market price of gold rose more than 36%
up to US$604 per ounce compared with US$444 in 2005. The rising gold price has
benefited all gold producers in recent years, although the strength of the
Canadian dollar has lessened the impact on Canadian producers. Over the past two
years, the Canadian dollar has risen in value, rising from an average of US$0.83
in 2005 and again to US$0.88 in 2006 which represents a 6% increase.

Production

Gold sales for 2006 totalled 44,866 ounces,
compared with 36,956 ounces in 2005. This increase in gold sales is due to the
addition of the 20,000 ounces from the East Amphi Mine that came into production
during 2006, partially offset by a decline in production at the Beaufor Mine,
which fell from 36,649 ounces of gold in 2005 to 24,866 ounces of gold in 2006
as a result a lower availability of ore and lower grades.

In 2006, 139,513 tonnes of ore at an average
recovered grade of 5.54 g/t were processed from the Beaufor Mine, yielding
24,866 ounces of gold sold at an average price of US$598. In 2005, 199,269
tonnes of ore at an average recovered grade of 5.72 g/t were processed from the
Beaufor Mine, yielding 36,649 ounces of gold sold at an average price of US$443.

In 2006, 179,194 tonnes of ore at an average
recovered grade of 3.47 g/t were extracted from the East Amphi Mine, yielding
20,000 ounces of gold sold at an average price of US$603. Despite a grade that
was weaker than expected, the cash cost of production met expectations at US$485
per ounce. No production took place in 2005 since the project was an advanced
exploration project at the time.

Investments

In 2006, the bulk of the Company's investments, or a total of
$21,934 were made in connection with the Island Gold project. $3,125 of
investments were made at the Beaufor and East Amphi mines and in other property,
plant and equipment. In 2005, beyond $3,197 invested at the Beaufor Mine and
other property, plant and equipment, investments included $11,533 at the Island
Gold property and $13,586 at the East Amphi advanced exploration project.

63

---



Financial aspects

The preparation of financial statements
involves making estimates and assumptions that have a significant impact on the
reported amounts of revenues, expenses, assets and liabilities. The items most
dependent on the use of estimates include the useful life of assets,
depreciation and depletion calculations based on proven and probable reserves,
and the calculation of asset retirement obligations as well as future income and
mining taxes. Consequently, future results may differ from these estimates.

Summary of operational and financial
results

During 2006, the Company had a net profit of
$3,194, or $0.14 per share, compared with net loss of $27,480 or $1.54 per
share, in 2005.

The Company's mining operations generated cash
flows of $2,429 in 2006 compared with the use of cash $3,996 in 2005.

The Company had no long-term debt and
possessed working capital of $21,171 as at December 31, 2006 compared with no
long-term debt and $21,877 of working capital as at December 31, 2005. The
Company believes that it would have access to other sources of financing if
additional capital became necessary to finance its expansion.

Changes in accounting policies

The Company did not adopt any new accounting
policies in 2006.

Revenue

Precious metal revenue
- For the year ended December 31, 2006, revenue from sales of
precious metal reached $30,539, compared with $19,845 in 2005. For 2006, the 53%
increase in precious metal revenue was attributable primarily to the 21%
increase in ounces of gold sold by Richmont Mines, which was directly related to
the production from the East Amphi Mine, which came into production during 2006
as well as the 36% increase in the gold price, partially offset by the reduced
production at the Beaufor Mine and a lower availability of ore.

Other revenue-
Other revenue totalled $2,350 at the end of 2006 compared to $1,508 in 2005.
This increase was primarily a result of an increase in interest revenue from
short-term investments due to the increase in liquid assets following the
financing that was completed in June 2006.

Expenses

Operating costs -Operating costs during 2006 were $27,169 compared with $16,522 during 2005. The
difference of $10,647 between the total operating costs during 2006 and 2005 was
a result of the start of commercial production of the East Amphi Mine in
February 2006, which brought the total number of tonnes of ore milled from the
Beaufor and East Amphi mines during 2006 to 318,707, compared with the 199,269
tonnes of ore produced solely at the Beaufor Mine in 2005.

64

---



Royalties -Due to
the decline in production at the Beaufor Mine in 2006, and consequently in
sales, the royalties paid by the Company in 2006 totalled $189, compared with
$231 in 2005.

Custom milling- In
2006, ore totalling 33,509 tonnes was milled by the Company, compared with
42,842 tonnes in 2005. In 2006, with Beaufor and East Amphi mines in production,
there was less capacity for custom milling. Activities related to custom milling
represented expenses of $591 in 2006, compared with $722 in 2005. Revenues from
custom milling are presented under the caption "Other revenue" in the
consolidated financial statements of the Company included in this Annual Report.

Administration -Expenses related to administration totalled $2,957 in 2006, compared with $3,923
in 2005. The decrease in these expenses is mainly due to stock-based
compensation, which was $393 in 2006, compared with $1,350 in 2005.

Exploration and project evaluation -
As in previous years, Richmont Mines continued its
investments related to exploration and project evaluation. These expenses fell
from $2,375 in 2005 to $2,080 in 2006. The decrease is attributable primarily to
an increase in exploration tax credits, partially offset by an increase in
actual exploration and project evaluation expenditures, as detailed in the table
below.

Investments for exploration and project
evaluation

|                        | 2006  | 2005 
|----------------------- | ----- | -----
|                        | $     | $    
|                        |       |      
|Beaufor Mine            | 1,342 | 862  
|Francoeur property      | 146   | 50   
|Valentine Lake property | 67    | 393  
|Wasamac property        | 54    | 40   
|Other properties        | 680   | 623  
|Project evaluation      | 583   | 509  
|                        |       |      
|                        | 2,872 | 2,477
|                        |       |      
|Exploration tax credits | (792) | (102)
|                        |       |      
|                        | 2,080 | 2,375

Accretion expense of asset retirement
obligations- This charge was $214 in 2006, compared
with $167 in 2005. As the Company's production and exploration activities are
subject to a variety of laws and federal and provincial regulations governing
the protection of the environment, the Company has reported the asset retirement
obligations for the mining sites on the basis of management's best estimate of
the future costs. These estimates may be subject to changes if the laws and
regulations are changed or if new events arise.

65

---



Depreciation and depletion -The amounts related to depreciation and depletion totalled $3,146 in 2006,
compared with $1,618 in 2005. The differences are attributable primarily to the
increase in gold sales, which were 44,866 ounces in 2006, compared with 36,956
ounces in 2005.

Gain on disposal of mining assets -

Write-down of mining assets - As part
of its periodic evaluation of the book value of its assets as described in note
1 g) of the Company's consolidated financial statements included in this Annual
Report, the Company determined that no write-down of the mining assets was
required as at December 31, 2006.

Mining and income taxes

In 2006, mining and income taxes showed a
recovery of $2,686, compared with a recovery of $2,480 in 2005. The recovery of
current taxes in 2006 was mainly due to a federal tax refund of $955, resulting
from the carry-back of losses to prior years, and the reduction in the valuation
allowance related to the future tax recovery. Details on taxes are found in note
8 of the Company's consolidated financial statements included in this Annual
Report.

Minority interest

In the Company's consolidated financial
statements, the minority interest recovery totalled $730 in 2006, compared with
an expense of $6 in 2005. This amount represents the share of earnings or losses
due to the minority shareholders of Louvem, in which Richmont Mines owns a 70%
interest, and the share of the losses from the Island Gold project for 2006 that
belongs to Patricia Mining Corp., a partner in this project.

Net earnings (loss)

Net earnings were $3,194 for 2006 compared with a net loss of
$27,480 for 2005. The difference of $30,674 between the net earnings of 2006 and
the net loss of 2005 can be explained primarily by the non-cash write-down of
the mining assets of the East Amphi property, for which a charge of $26,041 was
recorded in 2005. When the reduction of $3,135 in future mining and income taxes
was taken into account, the net write-down was $22,906. The second factor that
contributed to the variance in earnings was the $3,259 gain on the sale, on
October 30, 2006, of the assets of the Nugget Pond property, located in
Newfoundland. This amount includes the sale price of $2,250, the elimination of
the property's asset retirement obligations in the amount of $709, and the issue
to the Company of 1,000,000 shares in the acquiring company, New Island
Resources Inc. (TSX-V: NIS), having a market value of $300 at the time of the
transaction. Finally, the Company recovered mining and income taxes for a net
amount of $2,686 in 2006 following a federal tax refund due to the carry-back of
losses and reduction in the valuation allowance related to the future income tax
liability recognized as a result of the 2005 flow-through share financing.

66

---



Balance sheet

Assets

The total assets of Richmont Mines rose from
$54,226 as at December 31, 2005, to $78,498 at the end of 2006. The increase is
due to the increase in the mining assets of the Island Gold property.

As at December 31, 2006, the Company had
working capital of $21,171, compared with $21,877 as of December 31, 2005.
Although investments in property, plant and equipment during the year totalled
$28,316, this stability of working capital was attributable primarily to the
financing completed in June 2006, which yielded the Company net proceeds of
$13,777, the recovery of $4,892 in taxes; and proceeds of $2,250 realized on the
sale of the assets of the Nugget Pond property.

Total advances to a minority partner in the
Island Gold project (Patricia Mining Corp. (TSX: PAT)) was $4.5 million during
2006. Since this advance is repayable in 36 equal and consecutive monthly
payments starting on April 1, 2007, and bears interest at 3% over the prime
rate, an amount of $1,125 was recorded in short-term accounts receivable in
2006. This advance is guaranteed by the 45% interest that the borrower owns in
the Island Gold mining project, which is held jointly with the Company.

Liabilities

The amount of liabilities of the Company was
$23,808 as at December 31, 2006, compared with $13,763 at December 31, 2005, and
is composed of short-term liabilities, asset retirement obligations, the
minority interest and future mining and income taxes. Richmont Mines has no
long-term debt.

The substantial increase in liabilities is
attributable to an increase in the minority interest. In 2006, an amount of
$9,342 was accounted for under "Minority interest" in accordance with AcG-15,
which has been in effect since January 2005, which relates to the "Consolidation
of variable interest entities" following the consolidation of the Island Gold
project.

67

---

Richmont Mines must evaluate on a periodic basis the
assumptions used in the calculation of the asset retirement obligations related
to eventual closure of its mining sites. At the end of the fiscal year ended
December 31, 2006, the Company had the following financial legal obligations:

|                     | Total amount     |                  |                
|-------------------- | ---------------- | ---------------- | ---------------
|                     | of the estimated | Cash flow        | Credit-adjusted
|                     | cash flow        | payment schedule | risk-free rate 
|                     | $                |                  | %              
|                     |                  |                  |                
|Francoeur property   | 192              | 2007             | 5.5            
|Beaufor Mine         | 391              | 2008             | 5.5            
|Camflo Mill          | 2,381            | 2010             | 5.5            
|East Amphi Mine      | 133              | 2007             | 5.5            
|Island Gold property | 901              | 2010             | 5.5            
|                     |                  |                  |                
|                     | 3,998            |                  |                

Future mining and income taxes

Note that future mining and income taxes were
recorded as both assets and liabilities, since these amounts come from different
corporate entities and various legislations, such as federal, provincial and
mining taxes. Note 8 of the Company's consolidated financial statements included
in this Annual Report provides detailed information about tax reconciliation as
well as future income tax assets and liabilities.

The available non-refundable provincial and
federal tax credits of $4,567 and $2,287, respectively, can be carried forward
for the next ten to twenty years and were not reported as assets because the
Company assessed that it was not more likely than not that they will reduce the
taxes due in future years.

Shareholders' equity

Shareholders' equity totalled $54,690 as at
December 31, 2006, compared with $40,464 as at December 31, 2005. The increase
is primarily due to the rise in capital stock, which increased from $50,600 in
2005 to $61,340 in 2006 as a result of the June 2006 public offering.

At December 31, 2006, Richmont Mines had
24,180,353 shares outstanding and 2,117,700 options granted under its
stock-purchase plan compared with 20,994,553 shares outstanding and 1,948,000
options granted at December 31, 2005.

68

---



Commitments and contingency

Since the conclusion of an agreement with the
Quebec Ministry of Natural Resources in July 2001, the amounts of government
assistance recorded as revenues and as a reduction of property, plant and
equipment totalled $2,126 and $574, respectively. According to the agreement, an
amount of $900 must be repaid on July 31, 2007, if the Beaufor Mine is in
production during the twelve months preceding the date of repayment and if the
average daily price of an ounce of gold on the "AM FIX" of the London exchange
is greater than or equal to US$325. Currently it is impossible to predict the
amount that could become repayable; consequently, no provision for this purpose
has been recorded in the financial statements.

In addition, the Company is subject to royalty
payments on the output of the Beaufor Mine and also on certain other properties,
if they enter into commercial production which are detailed under "Item 4.
INFORMATION ON THE COMPANY - Business Overview - Mineral Royalties".

New Accounting Pronouncements

Financial instruments - recognition and
measurement

In January 2005, the Canadian Institute of
Chartered Accountants (the "CICA") issued new Handbook Section 3855 "Financial
instruments - recognition and measurement", effective for annual periods
beginning on October 1, 2006. This standard prescribes when a financial asset,
financial liability, or non-financial derivate is to be recognized on the
balance sheet and whether the fair value or cost-based methods are used to
measure the amounts. It also specifies how financial instrument gains and losses
are to be presented. The application of these standards is not expected to have
a significant effect on the Company.

Comprehensive Income

In January 2005, the CICA issued new Handbook
Section 1530 "Comprehensive Income", effective for annual periods beginning on
October 1, 2006. This section introduce a new requirement to present certain
revenues, expenses, gains and losses, that otherwise would not be immediately
recorded in income, in a comprehensive income statement with the same prominence
as other statements that constitute a complete set of financial statements.
Richmont will therefore include a new statement entitled "Comprehensive income"
in order to provide the required information in accordance with this standard.

Critical accounting estimates

The preparation of financial statements
requires the use of estimates and the formulation of assumptions that have a
significant impact on revenues and expenses as well as on the amounts of assets
and liabilities. The following factors represent the estimates that management
considers the most significant and for which the actual amounts may differ
considerably and affect operating results.

69

---



Mineral reserves

The main parameters used to determine the
mineral reserves are the following:

|                         | 2006 | 2005 | 2004
|------------------------ | ---- | ---- | ----
|                         |      |      |     
|Gold (US$/ounce)         | 513  | 450  | 400 
|Exchange rate (US$/CAN$) | 1.12 | 1.20 | 1.31
|Gold (CAN$/ounce)        | 575  | 540  | 524 

U.S. GAAP Reconciliation

Please refer to note 21 to the Company's
consolidated financial statements included in this Annual Report.

B.

Liquidity and Capital Resources (all dollar amounts are in thousands of Canadian
dollars)

On December 31, 2007, the Company had working
capital of $33,970 compared with $21,171 on December 31, 2006. The increase was
primarily the result of a $12,234 increase in cash and short-term investments
due to higher cash generated from operations of $3,494 and proceeds of $8,536
realized on the sale of the assets of the East Amphi property. The Company's
cash balance was $27,291 on December 31, 2007 compared with $16,126 on December
31, 2006, an increase of 69%. After three years of active capital expenditures
on its projects, Richmont Mines current investment forecast for its existing
projects is limited and is expected to be funded with existing cash and cash
equivalents and with cash flow from operations.

As at December 31, 2007, the Company has a
credit facility of $3,000, with no security requirement other than the
maintenance of cash and cash equivalents in excess of $10,000, for the
issuance of letters of credit in regard to the settlement of asset retirement
obligations.

Cash flow from operating activities

Cash flow from operations increased from an
earning of $2,429 in 2006 to an amount of $11,811 in 2007 mainly due to the net
change in non-cash working capital items which used an amount of $1,283 in 2006
compared to generating an amount of $7,171 in 2007.

70

---



Cash flow used in investing activities

In 2007, the bulk of the Company's
investments, or a total of $4,495, was mainly allocated to the Island Gold Mine
while in 2006 this amount was $21,934 for the Island Gold project.

Cash flow from financing activities

The Company issued 102,000 common shares
during 2007 and 143,300 common shares during 2006 following the exercise of
options, for a total cash consideration of $183 and $334, respectively.

Under its normal course issuer bid programs,
which the Board of Directors deems an appropriate use of the Company's funds
considering the price of its common shares and the Company's strong balance
sheet and outlook, Richmont Mines bought back 229,000 common shares during 2007
and 57,500 common shares in 2006 for a total amount of $658 and $171
respectively. The shares were cancelled immediately after their repurchase.

In 2006, Richmont Mines issued 3,100,000
common shares at $4.90 each, for gross proceeds of $15,190 as part of a
financing by short-form prospectus concluded in June 2006, for net proceeds of
$13,777. This financing was completed in order to fund the exploration and
development of the Island Gold project and the ongoing exploration programs.

In 2006, one of the Company's subsidiaries,
Louvem Mines Inc., bought back 35,000 common shares under its own share buyback
program, for a total amount of $13.

After three years of active capital
expenditures on its projects, Richmont Mines current investment forecast for its
existing projects is limited and is expected to be funded with existing cash and
cash equivalents and with cash flow from operations.

As at December 31, 2007, Richmont Mines Inc.
had working capital of $33,970 cash and cash equivalents of $27,291 and no
long-term debt.

C.

Research and Development, Patents and Licenses, etc.

None.

71

---



D.

Trend Information

See discussions in Parts A and B of Item 5 Operating Results
and Financial Review and Prospects. There were no other significant trend
information to report.

E.

Off-Balance Sheet
Arrangements

The Company did not have any off-balance sheet
arrangements as of December 31, 2007 that have or are reasonably likely to have
a current or future effect on the Company's financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors other
than the ones disclosed in note 5 c) of the financial statements.

F.

Tabular
Disclosure of Contractual Obligations

As of December 31, 2007, the Company had the
following long-term liabilities required to be reflected on the Company's
balance sheet under Canadian generally accepted accounting principles.

|                             | Payments due by period (in thousand $)
|---------------------------- | --------------------------------------
|                             |                                       
|Contractual obligations      | Total                                 
|Asset retirement obligations | $3,866                                

As of December 31, 2007, the Company had no long-term debt obligations,
capital lease obligations, operating lease obligations or purchase obligations.

72

---

ITEM 6.     DIRECTORS, SENIOR MANAGEMENT
AND EMPLOYEES
A.     Directors
and Senior ManagementThe names, offices, principal occupations, length of service and share
ownership of the directors and senior management of the Company are as follows:

|                              | Office held      |                       | Director   | Number of      
|----------------------------- | ---------------- | --------------------- | ---------- | ---------------
|Name and Municipality         | with the         | Principal             | or Officer | shares owned on
|of Residence                  | Company          | Occupation            | since      | May 2, 2008 1  
|                              |                  |                       |            |                
|Jean-Guy Rivard               | Chairman of the  | Chairman of the       | Feb. 25,   | 1,220,800      
|Rouyn-Noranda (QC)            | Board and        | Board of Richmont     | 1981       |                
|Canada                        | Director         | Mines                 |            |                
|                              |                  |                       |            |                
|Martin Rivard2                | President, Chief | President and CEO     | Oct. 1,    | 14,000         
|Rouyn-Noranda (QC)            | Executive        | of Richmont Mines     | 2005       |                
|Canada                        | Officer and      |                       |            |                
|                              | Director         |                       |            |                
|                              |                  |                       |            |                
|Denis Arcand 3, 4             | Director         | President of a        | Sept. 28,  | 36,348         
|Brossard (QC)                 |                  | private holding       | 1995       |                
|Canada                        |                  | company               |            |                
|                              |                  |                       |            |                
|Raynald Vézina, Eng. 3,
    4 | Director         | Consultant            | Oct. 30,   | Nil            
|Québec (QC)                   |                  |                       | 2006       |                
|Canada                        |                  |                       |            |                
|                              |                  |                       |            |                
|Réjean Houle 3, 4             | Director         | Ambassador,           | Jan. 27,   | 39,000         
|Montréal (QC)                 |                  | Canadien Hockey       | 1989       |                
|Canada                        |                  | Club Inc.             |            |                
|                              |                  |                       |            |                
|Stephanie Lee                 | Secretary        | Lawyer, McCarthy      | April 13,  | Nil            
|Montréal (QC)                 |                  | Tétrault LLP, law     | 2007       |                
|Canada                        |                  | firm                  |            |                
|                              |                  |                       |            |                
|Christian Pichette            | Vice President,  | Vice President,       | October 6, | 4,500          
|Brossard (QC)                 | Operations       | Operations of         | 2005       |                
|Canada                        |                  | Richmont Mines        |            |                
|                              |                  |                       |            |                
|Nicole Veilleux               | Financial        | Financial Director of | March 1,   | 1,000          
|Rouyn-Noranda (QC)            | Director         | Richmont Mines        | 2006       |                
|Canada                        |                  |                       |            |                

1

As the Company has no direct knowledge of the number of shares
controlled by the above-mentioned directors and officers, the information was
provided by each of them.

2

Martin Rivard is Jean-Guy
Rivard's son.

3

Member of the Audit Committee

4

Member of the Compensation
Committee

73

---



The Company does not have any other Board
committee other than those mentioned above.

The above-mentioned individuals have held
their principal occupation as indicated opposite their respective names during
the last five years, except for Mr. Martin Rivard, who, prior to October 2005,
was Executive Vice-President of Richmont Mines, Mr. Christian Pichette, who was,
prior to October 2005, General Manager of Niobec Mine, Cambior Inc.; and Ms.
Nicole Veilleux, who was, prior to March 2006, Controller of Richmont Mines.

Each director shall, unless he resigns from
the Board or leaves the Board for any reason, hold his directorship until the
close of the next annual meeting of shareholders or until his successor is
elected or appointed.

The directors and officers mentioned above own
a total of 1,315,648 voting shares, of the Company as of May 2, 2008, which
represents about 5.5% of all the shares issued and outstanding of Richmont Mines
Inc. Furthermore, no director or officer owns voting shares of Louvem Mines
Inc.

B.    
Compensation

Compensation of Directors

On December 14, 2006, the compensation
committee of the Company adopted an amendment to the remuneration plan for the
directors who are not senior officers of the Company or its affiliates or who do
not receive any remuneration as such. Pursuant to the remuneration plan as
amended, an annual fee of $5,000 is paid to each such director plus an
attendance fee of $500 per meeting including the meetings of committees. As
such, three directors have received an aggregate remuneration of $33,000 during
the year ended December 31, 2007. A total of 50,000 options to acquire common
shares of the Company at an exercise price of $2.74 per common share were
granted to the independent directors in 2007 pursuant to the terms of the
Company's share option plan described below.

Compensation of senior officers

During the year ended December 31, 2007 the
four Named Executive Officers of the Company (as hereinafter defined) were paid
an aggregate cash remuneration of $807,265,

The following information indicates the
remuneration paid for the financial year ended December 31, 2007 and the two
previous financial years by the Company and its subsidiaries to the Company's
President and Chief Executive Officer, the Financial Director and other members
of the Company's senior management (collectively, the "Named Executive Officers.

74

---

Summary Compensation Table

|                   |        | Annual          | Long-Term Compensation |        
|------------------ | ------ | --------------- | ---------------------- | -------
|                   |        | Compensation(1) | Awards                 |        
|                   |        |                 |                        |        
|Name and           |        |                 |                        |        
|Principal          |        |                 |                        | Shares 
|Position of the    |        |                 |                        | Under  
|named Executive    | Period | Salary          | Bonus                  | Options
|Officers           |        | ($)             | ($)                    | (#)    
|Jean-Guy Rivard    |        |                 |                        |        
|Chairman of the    | 2007   | 177,288         | 25,000                 | 100,000
|Board (2) (3)      |        |                 |                        | 200,000
|Martin Rivard      |        |                 |                        |        
|President and      | 2007   | 177,500         | 50,000                 | 50,000 
|Chief Executive    |        |                 |                        | 50,000 
|Officer            |        |                 |                        |        
|Christian Pichette |        |                 |                        |        
|Vice President,    | 2007   | 218,048         | 45,000                 | -      
|Operations(4)      |        |                 |                        |        
|Nicole Veilleux    |        |                 |                        |        
|Financial          | 2007   | 99,429          | 15,000                 | 15,000 
|Director(5)        |        |                 |                        |        

(1)

Does not include
perquisites and other personal benefits, securities or property, the aggregate
of which is no greater than $50,000 or 10% of the total of the annual salary and
bonus of the Named Executive Officer for the financial year.

(2)

During the
period from August 1, 2005 to September 30, 2005, Mr. Jean-Guy Rivard was also
President and Chief Executive Officer of the Company.

(3)

In addition to
this amount, Mr. Rivard has received $120,016 in 2007, $120,016 in 2006 and
$23,080 in 2005 in salary as President and Chief Executive Officer of Louvem
Mines Inc., a subsidiary of the Company.

(4)

Mr. Christian
Pichette was appointed Vice President, Operations on September 12, 2005.

(5)

Ms. Nicole
Veilleux was appointed Financial Director and Chief Financial Officer on March
1, 2006. Prior to this date, Ms. Veilleux was controller of Richmont Mines Inc.

Remuneration pursuant to plans

The Company has only one equity compensation
plan, which is a share option plan for the benefit of the directors, officers,
employees and service providers (providing ongoing services) of the Company and
its affiliates (the "Plan"). The Plan was amended by shareholders on May 18,
2007 to be more closely aligned with applicable regulatory requirements.

The total number of common shares authorized
to be issued under the Plan is 4,444,400, representing 18.49% of the currently
issued and outstanding common shares of the Company. As of May 2, 2008, options
to purchase an aggregate of 2,064,000 common shares were outstanding under the
Plan, representing 8.58% of the currently issued and outstanding common shares
of the Company.

75

---

Under the Plan, the number of common shares issued to any one
insider and such insider's associates within any  one year period, under all
security-based compensation arrangements, cannot exceed 5% of issued and
outstanding common shares of the Company. Also, the number of common shares issuable to insiders under all security-based compensation arrangements,cannot exceed 10% of issued and outstanding common shares of the Company at the
time that the relevant options are granted. Finally, the number of common shares
issued to insiders, within any one-year period, under all security-based
compensation arrangements, cannot exceed 10% of issued and outstanding common
shares of the Company.

The Plan is administered by the Company's
board of directors which determines those directors, officers, employees and
service providers to whom stock options will be granted and the terms and
conditions of grants of options, including the number of options to be granted
and the exercise price; provided, however, that the exercise price may not be
less than the average closing price of one common share sold as part of the last
board lot traded on the Toronto Stock Exchange and the American Stock Exchange
on the trading day immediately preceding the date of grant and on which a board
lot of common shares was sold on these exchanges. In the absence of such a
closing price, the exercise price may not be less than the average daily bid and
ask prices on the Toronto Stock Exchange and American Stock Exchange on the
trading day immediately preceding the date of grant. The minimum exercise price
fixed by the board of directors at the time of grant will be the closing sale
price of one common share on the Toronto Stock Exchange on the trading day
immediately preceding the date of grant.

Options that have been granted under the Plan
vest or become exercisable according to determinations made by the board of
directors on the date of grant. Also, options cease to be exercisable and expire
on the date decided by the board of directors on the date of grant, which cannot
exceed ten years from the date of the grant. Upon death, termination without
cause, resignation or early retirement, options that have not been exercised
must be exercised during a period that is 60 days from the date of termination
without cause, resignation or early retirement or 6 months from the date of
death. The board of directors has the discretion to vary these terms and
conditions and to vary these periods, provided that the maximum term for any
option is 10 years from the date of grant. Upon the occurrence of certain events
such as the merger, amalgamation, winding-up, liquidation, dissolution or
takeover of the Company, the board of directors may accelerate the date on which
options become exercisable so that all options become exercisable within a
period of 30 days of the relevant optionholders being notified and all options
which remain unexercised at the end of such period will immediately expire.

Options may not be assigned or transferred
with the exception of exercises by a personal representative of a deceased
optionholder or one unable to manage its own affairs.

The following is a detailed summary of the
certain amendments to the Plan adopted by the shareholders of the Company on May
18, 2007.

Extension of exercise periods for options
which expire within or shortly after a blackout period

Options must normally not be exercised by
insiders when a trading blackout period is in effect. This poses a potential
problem when an option is set to expire during a blackout period. The policies
of the Toronto Stock Exchange allow issuers' stock option plans to be amended to
extend the exercise period for up to 10 business days beyond the issuer's
trading blackout period. The Plan was amended to provide that if the date on
which an option expires occurs during a blackout period or within 10 business
days after the last day of a blackout period, the date of expiry of such option
will be the last day of such 10 business day period.

76

---



New amendment provisions

Formerly, the Plan provided that it could be
amended with the approval of the board of directors and the Toronto Stock
Exchange. The Toronto Stock Exchange has a policy that sets out when shareholder
approval is required for plan amendments. The Toronto Stock Exchange has
encouraged issuers to adopt more detailed amendment provisions that distinguish
between plan amendments that do, and those that do not, require shareholder
approval. The amendment provisions of the Plan were amended to meet the
requirements of the Toronto Stock Exchange.

The new amendment provisions of the Plan are
described below.

- 

- obtaining approval of the shareholders of the Company, unless
    not required pursuant to the Plan or applicable regulatory authority or
    stock exchange requirements;
- obtaining any required approval of any applicable regulatory
    authority or stock exchange;
- in the case of issued and outstanding options, obtaining the
    consent or, subject to regulatory approval, the deemed consent of the
    concerned option holder in the event that the amendment materially
    prejudices the option holder's rights.



- changing the eligibility for, and limitations on,
    participation in the Plan;
- modifying the periods during which options may be exercised,
    subject to, as the case may be, (i) the expiry date occurring on or before
    the tenth anniversary of the award date, and (ii) a maximum extension of
    three years beyond the initial expiry date for any option holder;
- changing the terms on which options may be awarded and
    exercised including the provisions relating to the exercise price, the date
    on which an option becomes exercisable, the expiry date, the right to assign
    an option and the adjustments to be made pursuant to the Plan;

77

---



> making any addition to, deletion from or alteration to the
>     provisions of the Plan that are necessary to comply with applicable law or
>     the requirements of any applicable regulatory authority or stock exchange;
>     correcting or
>     rectifying any ambiguity, defective provision, error or omission in the
>     Plan; and
>     changing the
>     provisions relating to the administration of the Plan;

unless any amendment
made to the Plan would reduce the exercise price of an issued and outstanding
option, lead to a significant or unreasonable dilution of the outstanding shares
or provide additional material benefits to insiders, in which case approval of
the shareholders of the Company must be obtained. In addition, if an amendment
would reduce the exercise price of any outstanding option held by an insider or
would extend the expiry date of options held by Insiders beyond the exercise
periods contemplated under the Plan or provided on the relevant option
certificate, approval of the shareholders of the Company, other than the
relevant insiders, must be obtained.



78

---

Information on the Plan as at December 31, 2007

|                  | Number of securities to | Weighted-average    | Number of securities     
|----------------- | ----------------------- | ------------------- | -------------------------
|                  | be issued upon exercise | exercise price of   | remaining available for  
|                  | of outstanding options  | outstanding options | future issuance under the
|                  |                         |                     | plan (excluding          
|                  |                         |                     | securities reflected in  
|                  |                         |                     | column (a))              
|Plan Category     | (a)                     | (b)                 | (c)                      
|                  |                         |                     |                          
|Share Option Plan | 2,023,000               | $4.22               | 662,200                  
|(approved by the  |                         |                     |                          
|shareholders)     |                         |                     |                          

As at May 2, 2008, options giving the right to
purchase an aggregate of 2,064,000 shares were outstanding under the Plan at
exercise prices ranging from $2.74 to $6.60 per share. During the financial year
ended December 31, 2007, options giving the right to purchase a total of 475,000
shares at prices ranging from $2.74 to $3.15 per share were granted under the
Plan to directors and officers and options to purchase an aggregate of 100,000
shares at the price of $1.78 per share were exercised by directors and officers.

The Company has directors' and officers'
liability insurance for a maximum amount of $5,000,000 for which the Company
pays an annual premium of $57,225. The insurance policy does not contain a
deductible for the directors and officers but a deductible of $100,000 per event
and US$250,000 if within the limits of the territories of the United States.

No director or executive officer of the
Company is currently indebted to the Company or was indebted to the Company
during the year ended December 31, 2007.

No funds were set aside or accrued by the
Company or its subsidiaries during 2007 to provide pension, retirement or
similar benefits.

Except for the Plan, the Company has no bonus
or profit sharing plans pursuant to which cash or non-cash compensation is or
may be paid to the Company's directors or officers.

C.    
Board Practices

The directors serve as directors of the
Company from their election on the day of the Annual General Meeting of the
Company, last held on May 18, 2007, until the next Annual and Special General
Meeting that will be held on May 13, 2008 or until a successor is duly elected.

79

---

Directors

Name
      Elected orAppointed DirectorJean-Guy Rivard
      February 1981Martin Rivard
      October 2005Denis Arcand
      September 1995Réjean Houle
      January 1989Raynald Vézina
      October 2006


There are no director's service contracts with
the Company or any of its subsidiaries providing for benefits upon termination
of employment.

The Compensation Committee reviews annually
the compensation paid to the directors and senior management by taking into
account and comparing it with compensation paid to directors and senior
management of comparable companies. The Compensation Committee takes into
account senior management's responsibilities and workload in setting each
officer's compensation. The Committee favours competitive compensation
in order to keep competent key employees. The Compensation Committee meets at
least annually.

The Audit Committee meets at least four times
a year in order to review the Company's financial position, meets with auditors
and analyzes performance, existing and potential investments and the mining
property portfolio. The Company's audit committee charter is annexed hereto as
Exhibit 15.1.

Senior Management

Name
      Appointed to CurrentOfficeJean-Guy Rivard
      February 25, 1981Martin Rivard
      October 1, 2005Christian Pichette
      September 12, 2005Nicole Veilleux
      March 1, 2006


The above officers of the Company have no set term of office
and serve at the pleasure of the Board.

80

---



D.    
Employees

The number of employees of the Company as of
December 31, 2007, 2006 and 2005, was 262, 305 and 257 respectively. The
distribution of the employees was the following:

Category of Activity or
      December 31,Geographical Location
      2007
      2006
      2005Corporate Office
      14
      12
      13Exploration
      3
      2
      1Beaufor
      91
      104
      119Camflo
      22
      26
      28Island Gold
      132
      135
      55Newfoundland
      -
      -
      4East Amphi
      -
      26
      37Total
      262
      305
      257


Share Ownership

Set forth below is the amount of the Company's
common stock and options owned by the Company's directors and senior management
as of May 2, 2008.

Shareholdings of Directors and Senior
Management

|Title of | Identity of Person or | Number of Shares of | Percent of
|-------- | --------------------- | ------------------- | ----------
|class    | Group                 | Common Stock        | Class(1)  
|         |                       | Beneficially Owned  |           
|Common   | Jean-Guy Rivard       | 1,220,800(2)        | 5.08%     
|Common   | Denis Arcand          | 36,348              | 0.15%     
|Common   | Réjean Houle          | 39,000              | 0.16%     
|Common   | Raynald Vézina        | -                   | -         
|Common   | Martin Rivard         | 14,000              | 0.06%     
|Common   | Christian Pichette    | 4,500               | 0.02%     
|Common   | Nicole Veilleux       | 1,000               | -         

(1)

Based upon
24,041,653 shares outstanding at May 2, 2008. Percentages do not include shares
issuable upon exercise of options owned by the holder.

(2)

1,000,000 shares
are held indirectly through Les Entreprises Tremoy Ltee, a private company
controlled by Mr. Rivard and 220,800 are directly held.

81

---



Information regarding the outstanding stock
options held by directors and senior management of the Company as of May 2,
2008, is set forth below.

Stock Options Outstanding

|Name               | Number of shares of | CAN$           | Expiration
|------------------ | ------------------- | -------------- | ----------
|                   | common stock        | Exercise price | date      
|                   | options             |                |           
|Jean-Guy Rivard    | 150,000             | 6.60           | 01-14-2009
|Jean-Guy Rivard    | 100,000             | 5.30           | 06-29-2010
|Jean-Guy Rivard    | 200,000             | 5.30           | 07-07-2010
|Jean-Guy Rivard    | 100,000             | 4.04           | 08-03-2011
|Jean-Guy Rivard    | 100,000             | 2.83           | 12-13-2011
|Jean-Guy Rivard    | 100,000             | 3.11           | 04-04-2012
|Jean-Guy Rivard    | 200,000             | 3.15           | 12-13-2012
|Raynald Vézina     | 50,000              | 2.95           | 10-30-2011
|Réjean Houle       | 50,000              | 5.30           | 06-29-2010
|Réjean Houle       | 25,000              | 2.74           | 01-07-2012
|Denis Arcand       | 50,000              | 5.30           | 06-29-2010
|Denis Arcand       | 25,000              | 2.74           | 01-07-2012
|Martin Rivard      | 50,000              | 5.30           | 07-07-2010
|Martin Rivard      | 50,000              | 4.36           | 01-30-2011
|Martin Rivard      | 50,000              | 2.83           | 12-13-2011
|Martin Rivard      | 50,000              | 2.88           | 08-07-2012
|Martin Rivard      | 50,000              | 3.15           | 12-13-2012
|Christian Pichette | 50,000              | 4.97           | 10-05-2010
|Christian Pichette | 50,000              | 4.36           | 01-30-2011
|Christian Pichette | 50,000              | 2.83           | 12-13-2011
|Nicole Veilleux    | 25,000              | 5.16           | 08-25-2008
|Nicole Veilleux    | 10,000              | 5.30           | 07-07-2010
|Nicole Veilleux    | 15,000              | 4.04           | 08-03-2011
|Nicole Veilleux    | 15,000              | 2.74           | 01-07-2012

ITEM 7.     MAJOR
SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.    
Major Shareholders

Except for Jean-Guy Rivard, as disclosed in
item 6.E "Directors, Senior Management and Employees - Share Ownership" above,
the Company does not know of any person who owns, beneficially, directly or
indirectly, more than 5% of any class of the Company's voting securities.

There has been no significant change in the
percentage ownership of company common stock held by Jean-Guy Rivard during the
past three years.

Mr. Rivard does not have different voting
rights from the Company's other shareholders.

82

---



On December 31, 2007, the shareholders' list
for the Company's common stock showed 256 registered shareholders and 24,053,353
shares outstanding. A total of 118 (46.1%) of these shareholders were US
residents, owning 3,061,457 shares representing approximately 12.7% of the
issued and outstanding shares of common stock.

The Company is not directly or indirectly owned or controlled
by another corporation or by any foreign government or by any other national or
legal person, severally or jointly.

The Company has no knowledge of any arrangement that may, at a
subsequent date, result in a change of control of the Company.

B.     Related Party Transactions

During the period since the beginning of the Company's
preceding financial year up to the date of this Annual Report, there have been
no transactions or loans between the Company and (a) enterprises that directly
or indirectly through one or more intermediaries, control or are controlled by,
or are under common control with, the Company; (b) associates; (c) individuals
owning, directly or indirectly, an interest in the voting power of the Company
that gives them significant influence over the Company, and close members of any
such individual's family; (d) key management personnel, that is, those persons
having authority and responsibility for planning, directing and controlling the
activities of the Company, including directors and senior management and close
members of such individuals' families; and (e) enterprises in which a
substantial interest in the voting power is owned, directly or indirectly, by
any person described in (c) or (d) or over which such a person is able to
exercise significant influence.

C.     Interests of Experts and
Counsel

Not applicable.

ITEM 8.     FINANCIAL INFORMATION

A.    
Consolidated Statements and Other Financial Information

> The following
>   consolidated financial statements of the Company are attached to this Annual
>   Report:
>   Report of the
>   Independent Registered Public Accounting Firm on Internal Control dated
>   February 8, 2008
>   Report of the
>   Independent Registered Public Accounting Firm dated February 8, 2008
>   Comments by
>   Auditors for American Readers on Canada - US Reporting differences dated
>   February 8, 2008
>   Consolidated
>   Balance Sheets at December 31, 2007 and December 31, 2006
>   Consolidated
>   Statements of Earnings for the Years ended December 31, 2007, December 31,
>   2006 and December 31, 2005

83

---



> Consolidated
>   Statements of Comprehensive Income and Deficit for the Years ended December
>   31, 2007, December 31, 2006 and December 31, 2005
>   Consolidated
>   Statements of Cash Flow for the Years ended December 31, 2007, December 31,
>   2006 and December 31, 2005
>   Notes to Consolidated Financial Statements

The Company has not declared or paid any
dividends on its common shares since its incorporation. Richmont Mines has no
current plans to pay dividends on its common shares. Its present policy is to
retain earnings to finance its capital expenditures program. In the future, the
Board of Directors may declare dividends according to its assessment of the
financial position of the Company, taking into account its financing
requirements for future growth and other factors that the Board of Directors may
deem relevant in the circumstances.
The Company had no export sales during
2007.

The Company knows of no active, pending or
overtly threatened legal or arbitration proceeding to which the Company is a
party or to which any of its properties is subject which may have, or has had in
the recent past, a significant effect on the Company's financial position or
profitability.

B.    
Significant Changes

No significant change has occurred since December 31, 2007 in
the Company's financial condition or results of operations.

ITEM 9.     THE OFFER AND LISTING

The Company's common stock is traded on the
Toronto Stock Exchange under the symbol "RIC" and on the American Stock Exchange
also under the symbol "RIC".

Toronto Stock
Exchange

Set forth below are the high and low sell
prices on the Toronto Stock Exchange for actual trades of shares of the
Company's common stock for the periods indicated.

Last Five Full Years 
Toronto Stock Exchange Common 
Stock Trading Activity

- Price -Canadian DollarsYear Ended
      High
      LowDecember 31, 2003
      $6.90
      $3.80December 31, 2004
      $6.90
      $4.00December 31, 2005
      $5.85
      $3.82December 31, 2006
      $5.40
      $2.40December 31, 2007
      $4.00
      $2.56


84

---

Last Two Full Years 
Toronto Stock Exchange 
Common Stock Trading Activity

- Price -Canadian DollarsQuarter Ended
      High
      LowMarch 31, 2006
      $4.65
      $3.55June 30, 2006
      $5.40
      $3.78September 30, 2006
      $4.30
      $2.63December 31, 2006
      $3.52
      $2.40March 31, 2007
      $3.30
      $2.56June 30, 2007
      $4.00
      $2.84September 30, 2007
      $3.10
      $2.65December 31, 2007
      $3.79
      $2.91


Last Six Months 
Toronto Stock Exchange 
Common Stock Trading Activity

- Price -Canadian DollarsMonth Ended
      High
      LowNovember 30, 2007
      $3.75
      $3.00December 31, 2007
      $3.49
      $2.91January 31, 2008
      $3.58
      $2.03February 29, 2008
      $3.93
      $3.25March 31, 2008
      $4.18
      $3.38April 30, 2008
      $4.20
      $3.40


American Stock
Exchange

The Company's common stock was listed for
trading on the American Stock Exchange effective on March 6, 1997. Set forth
below are the high and low sell prices on the American Stock Exchange for actual
trades of shares of the Company's Common Stock for the periods indicated.

85

---

Last Five Full Years 
American Stock Exchange 
Common Stock Trading Activity

- Price -US DollarsYear Ended
      High
      LowDecember 31, 2003
      $5.29
      $2.78December 31, 2004
      $5.39
      $3.00December 31, 2005
      $4.73
      $3.20December 31, 2006
      $4.75
      $2.18December 31, 2007
      $4.07
      $2.19Last Two Full YearsAmerican Stock ExchangeCommon Stock Trading
      Activity- Price -US DollarsQuarter Ended
      High
      LowMarch 31, 2006
      $4.00
      $3.21June 30, 2006
      $4.75
      $3.36September 30, 2006
      $3.87
      $2.36December 31, 2006
      $3.10
      $2.18March 31, 2007
      $2.82
      $2.19June 30, 2007
      $3.44
      $2.49September 30, 2007
      $3.05
      $2.50December 31, 2007
      $4.07
      $2.95Last Six MonthsAmerican Stock ExchangeCommon Stock Trading
      Activity- Price -US DollarsMonth Ended
      High
      LowNovember 30, 2007
      $4.07
      $3.02December 31, 2007
      $3.45
      $3.00January 31, 2008
      $3.59
      $3.00February 29, 2008
      $3.92
      $3.20March 31, 2008
      $4.17
      $3.22April 30, 2008
      $4.10
      $3.40


86

---



ITEM 10.     ADDITIONAL
INFORMATION

A.    
Share Capital

Not applicable.

B.    
Memorandum and Articles of Association

The Company was incorporated pursuant to Part
1A of the Companies Act (Quebec) on February 12, 1981 (File number
1843-2286) under the name Resources Minières Rouyn Inc. By Article of Amendment
filed February 10, 1987 the Company added the English version Rouyn Mining
Resources Inc. and another amendment filed with the Government of Quebec on June
20, 1991, the Company changed its name to Richmont Mines Inc. The Articles of
Incorporation of the Company are registered by the Government of Quebec in
register S02473, folio 10.

The Company has no specific objects or
purposes set forth in its Articles of Incorporation or Bylaws.

Directors

A director who is a party to a contract or
proposed contract with the Company or who is a director or officer of a company
which is a party to a contract or proposed contract with the Company must
disclose such interest in writing to the Company and ask that the nature and
extent of his interest be recorded in the minutes of the Board of Director's
meetings.

Such director may not attend nor participate
in discussions relating to such contract or proposed contract, unless authorized
by the Board, nor vote on any resolution regarding approval of the contract or
proposed contract.

However, notwithstanding the foregoing,
directors have the right to vote on determining the compensation of directors;
provided that no director who is a paid employee or officer of the Company may
receive fees from the Company.

The directors of the Company may:

(a)

borrow funds on the Company's credit for the amounts and on conditions that are
deemed suitable;

(b)

hypothecate or pledge all or part of the real property of the Company, or pawn
or otherwise encumber all or part of the moveable property of the Company, or
give various guarantees to ensure payment of loans other than through the issue
of bonds, as well as the payment or execution of other debts, contracts or
commitments of the Company;

(c)

issue bills, bonds (debentures) and debenture-stock or other securities of the
Company for such amounts and on such conditions they deem appropriate, and give
as security or sell them for the amounts and prices deemed suitable;

87

---



(d)

hypothecate, pledge, pawn, assign and convey the movable or immovable property,
present or future, of the Company, to secure payment of such bonds or other
securities, or give only part of such guarantees for the same purposes; and
constitute the aforementioned hypothecation, pledge, pawn, assignment and
conveyance by way of a trust deed, or in any other manner; and

(e)

delegate to one or more members of management or to one or more directors of the
Company who may be designated by the Directors, all or part of the powers
conferred by the aforementioned clause to the extent and in the manner that the
Board of Directors determines in such delegation of the said powers.

There is no age limitation, or minimum share ownership
requirement, for the Company's directors. Directors are elected for one year
terms.

Capital Stock

There is only one authorized class of capital
stock of the Company: common stock. All issued and outstanding common shares are
fully paid and non-assessable. Each holder of record of common shares is
entitled to one vote for each common share so held on all matters requiring a
vote of shareholders, including the election of directors. The holders of common
shares will be entitled to dividends on a pro-rata basis, if and when as
declared by the board of directors. There are no preferences, conversion rights,
pre-emptive rights, subscription rights, or restrictions or transfers attached
to the common shares. In the event of liquidation, dissolution, or winding up of
the Company, the holders of common shares are entitled to participate in the
assets of the Company available for distribution after satisfaction of the
claims of creditors. There are no redemption or sinking fund provisions
applicable to the common shares or any liability to further capital calls by the
Company.

Under Quebec law (i) the Articles of
Incorporation of the Company may be amended by the affirmative vote of the
holders of two thirds (2/3) of the vote cast by the shareholders at a special
meeting and (ii) the Bylaws of the Company may be amended by the Company's
directors and ratified by the majority of the vote cast by the shareholders at
the meeting.

The annual meeting of shareholders must be
held each year within six (6) months of the end of the fiscal year. For any
general meeting, a notice specifying the date, time and place of the meeting and
the items to be discussed at the meeting must be sent to each shareholder
entitled to vote at that meeting at least twenty-one (21) days before the date
of such a meeting at the address indicated in the books of the Company or, if no
address is indicated, the last address known by the registrar.

Quorum at any shareholders' meeting is two (2)
shareholders attending in person and holding or representing by proxies at least
ten per cent (10%) of the voting shares issued by the Company and carrying the
right to vote at the meeting. Two shareholders attending in person and entitled
to vote will constitute the quorum at any meeting of shareholders for the choice
of the Chairman and adjournment of the meeting.

No business may be transacted unless the required quorum has
been achieved.

88

---



There is no limitation imposed by the laws of
Canada or by the charter or other constituent documents of the Company on the
right of a non-resident to hold or vote the common shares, other than as
provided in the Investment Canada Act, (the "Investment Act")
discussed below under item 10.D. "Additional Information - Exchange Controls."

C.     Material
Contracts

East Amphi Sale Agreement

On June 29, 2007, Richmont Mines entered into
the Asset Purchase Agreement between Richmont Mines and Osisko Exploration Ltd
("Osisko"), pursuant to which Richmont Mines sold its East Amphi property and
related surface equipment to Osisko in consideration for a cash payment of
$2,450,000 and 1,109,000 common shares of Osisko valued at $6,086,000 at the
time of the sale. In connection with the sale, Richmont Mines was released from
all claims and other liabilities relating to the East Amphi Mine

Golden Wonder Option Agreement

On November 5, 2007, the Company entered into
the Letter Agreement with LKA, pursuant to which LKA granted the Company the
option to acquire a 50% interest in the Golden Wonder property, located near
Lake City, Colorado, USA. Under this agreement, in order to exercise its option
to acquire the 50% interest in the Golden Wonder property, the Company is
obligated to (i) pay an upfront option fee of $300,000, which the Company has
already paid, (ii) invest $3 million prior to September 8, 2008, inclusive of
the $300,000 option fee and transaction costs incurred by the Company, (iii)
invest a further $15 million over a 56-month period following September 1, 2008,
and (iv) subscribe for US$1.5 million of LKA common shares. Under the agreement,
failure by the Company to make any of the above-described payments would result
in the loss of the option right and forfeiture of any interest of the Company in
the Golden Wonder project. Upon fulfillment of all such conditions, the
Company's 50% interest in the Golden Wonder property will be fully earned. Under
this agreement, the Company is entitled to 50% of the net proceeds of gold sales
so long as it has not failed to make any of the required investments described
above.

D.     Exchange
Controls

There are no governmental laws, decrees,
regulations or other legislation in Canada that may affect the export or import
of capital, or the remittance of interest, dividends or other payments to
non-residents holders of the Company's common shares, except that any remittance
of dividends to United States residents are subject to a 15% withholding tax (5%
if the shareholder is a corporation owning at least 10% of the common shares of
the Company) pursuant to Article X of the reciprocal income treaty between
Canada and the United States.

Except as provided in the Investment Canada
Act, there are no limitations under the laws of Canada, the Province of
Quebec or in the Articles of Incorporation of the Company on the right of
foreigners to hold or vote the common shares of the Company.

89

---

The Investment Canada Act (the "ICA"),
which became effective on June 30, 1985, regulates the acquisition by
non-Canadians of control of a Canadian business enterprise. In effect, the ICA
required review by Investment Canada, the agency which administers the ICA, and
approval by the Canadian government in the case of an acquisition of control of
a Canadian business by a non-Canadian where: (i) in the case of a direct
acquisition (for example, through a share purchase or asset purchase), the
assets of the Canadian business are $5 million or more in value; or (ii) in the
case of an indirect acquisition (for example, the acquisition of the foreign
parent of the Canadian business) where the Canadian business has assets of $50
million or more in value or if the Canadian business represents more than 50% of
the assets of the original group and the Canadian business has assets of $5
million or more in value. Review and approval are also required to the
acquisition or establishment of a new business in areas concerning "Canada's
cultural heritage or national identity" such as book publishing, film production
and distribution, television and radio, production and distribution of music,
and the oil and natural gas industry, regardless of the size of the investment.
In the context of the Company, in essence,
three methods of acquiring control of a Canadian business are regulated by the
ICA: (i) the acquisition of all or substantially all of the assets used in
carrying on the Canadian business; (ii) the acquisition, directly or indirectly,
of voting shares of a Canadian corporation carrying on the Canadian business;
(iii) the acquisition of voting shares of an entity which controls, directly or
indirectly, another entity carrying on a Canadian business. An acquisition of a
majority of the voting interests of an entity, including a corporation, is
deemed to be an acquisition of control under the ICA. An acquisition of less
than one-third of the voting shares of a corporation is deemed not to be an
acquisition of control. An acquisition of less than a majority, but one-third or
more, of the voting shares of a corporation is presumed to be an acquisition of
control unless it can be established that on the acquisition, the corporation is
not, in fact, controlled by the acquirer through the ownership of voting shares.
For partnerships, trusts, joint ventures or other unincorporated entities, an
acquisition of less than a majority of the voting interests is deemed not to be
an acquisition of control.
In 1988, the ICA was amended pursuant to the
North American Free Trade Agreement dated January 2, 1988 between Canada and the
United States to relax the restrictions of the ICA. As a result of these
amendments, except where the Canadian business is in the cultural, oil and gas,
uranium, financial services or transportation sectors, the threshold for direct
acquisition of control by US investors and other foreign investors acquiring
control of a Canadian business from US investors has been raised from $5 million
to $150 million of gross assets, and indirect acquisitions are not reviewable.
In addition to the foregoing, the ICA requires
that all other acquisitions of control of Canadian businesses by non-Canadians
are subject to formal notification to the Canadian government.

E.     Taxation

The following summary of the material Canadian federal income
tax considerations generally applicable in respect of the common stock reflects
the Company's opinion. The tax consequences to any particular holder of common
stock will vary according to the status of that holder as an individual, trust,
corporation or member of a partnership, the jurisdiction in which that holder is
subject to taxation, the place where that holder is resident and, generally,
according to that holder's particular circumstances. This summary is applicable
only to holders who are resident in the United States, have never been resident
in Canada, deal at arm's length with the Company, hold their common stock as
capital property and who will not use or hold the common stock in carrying on
business in Canada. Special rules, which are not discussed in this summary, may
apply to a United States holder that is an issuer that carries on business in
Canada and elsewhere.

90

---



This summary is not exhaustive of all possible
income tax consequences. It is not intended as legal or tax advice to any
particular holder of common stock and should not be so construed. Each holder
should consult his own tax advisor with respect to the income tax consequences
applicable to him in his own particular circumstances.

Disposition of Common
Stock

If a non-resident were to dispose of common
stock of the Company to another Canadian corporation which deals or is deemed to
deal on a non-arm's length basis with the non-resident and which, immediately
after the disposition, is connected with the Company (i.e., the nonresident and
any person with whom the non-resident does not deal at arm's length holds
directly or indirectly shares representing more than 10% of the voting power and
more than 10% of the market value of all issued and outstanding shares of the
Company), the amount by which the fair market value of any consideration (other
than any shares of the purchaser corporation) exceeds the paid-up capital of the
common stock sold will be deemed to be taxable as a dividend paid by the
purchasing corporation, either immediately or eventually by means of a deduction
in computing the paid-up capital of the purchasing corporation, and subject to
withholding taxes as described below.

Under the Income Tax Act (Canada), a
gain from the sale of common stock of the Company by a non-resident will not be
subject to Canadian tax since the common stock of the Company is listed on a
prescribed stock exchange, provided the shareholder (and persons who do not deal
at arm's length with the shareholder) have not held a "substantial interest" in
the Company (25% or more of the shares of any class of the Company's stock) at
any time in the five years preceding the disposition. Generally, the
Canada-United States Income Tax Convention (1980) (the "Treaty") will exempt
from Canadian taxation any capital gain realized by a resident of the United
States, provided that the value of the common stock is not derived principally
from real property situated in Canada.

Dividend

In the case of any dividends paid to
non-residents, the Canadian tax is withheld by the Company, which remits only
the net amount to the shareholder. By virtue of Article X of the Treaty, the
rate of tax on dividends paid to residents of the United States is generally
limited to 15% of the gross dividend (or 5%, in the case of certain corporate
shareholders owning at least 10% of the Company's voting shares). In the absence
of treaty provisions, the rate of Canadian withholding tax imposed on
non-residents is 25% of the gross dividend. Stock dividends received by
nonresidents from the Company are taxable by Canada as ordinary dividends.

If a non-resident holder disposes of common
stock to the Company (unless the Company acquired the common stock in the open
market in the manner in which shares would normally be purchased by any member
of the public), this will result in a deemed dividend to the non-resident
holder equal to the amount by which
the consideration paid by the Company exceeds the paid-up capital of such stock.
The amount of such dividend will be subject to withholding tax as described
above.

91

---

Capital GainsA non-resident of Canada is not subject to tax
under theIncome Tax
Act(Canada) in
respect of a capital gain realized upon the disposition of a share of a capital
gain realized upon the disposition of a share of a class that is listed on a
prescribed stock exchange unless the share represents "taxable Canadian
property" to other holder thereof. A common share of the Company will be taxable
Canadian property to a non-resident holder if, at any time during the period of
five years immediately preceding the disposition, the non-resident holder,
persons with whom the nonresident holder did not deal at arm's length, or the
non-resident holder and persons with he/she did not deal at arm's length owned
25% or more of the issued shares of any class or series of the Company. In the
case of a non-resident holder to whom shares of the Company represent taxable
Canadian property and who is resident in the United States, American tax will be
payable on a capital gain realized on such shares by reason of the Treaty unless
the value of such shares is derived principally from real property situated in
Canada or the non-resident holder previously held the shares while resident in
Canada. However, in such a case, certain transitional relief under the Treaty
may be available.

Certain United States Federal Income
Tax Consequences

The following is a summary of the material US
federal income tax consequences of the acquisition, ownership and disposition of
common shares of the Company by a US Holder (as defined below) that holds the
common shares as a capital asset. The discussion does not cover all aspects of
US federal income taxation that may be relevant to, or the actual tax effect
that any of the matters described herein will have on, the acquisition,
ownership or disposition of common shares of the Company by particular
shareholders, and does not address state, local, foreign or other tax laws. In
particular, this summary does not address tax considerations applicable to
persons that own (directly or indirectly) 10 percent or more of the Company's
voting shares, nor does this summary discuss all of the tax considerations that
may be relevant to certain types of persons subject to special treatment under
the US federal income tax laws (such as financial institutions, insurance
companies, persons liable for the alternative minimum tax, individual retirement
accounts and other tax-deferred accounts, tax-exempt organisations, dealers in
securities or currencies, persons that hold the common shares as part of
straddles, hedging transactions or conversion transactions for US federal income
tax purposes or persons whose functional currency is not the US dollar).

As used herein, the term "US Holder" means a
beneficial owner of the Company's common shares that is (i) a citizen or
resident of the United States for US federal income tax purposes, (ii) a
corporation, or other entity treated as a corporation, created or organised
under the laws of the United States or any State thereof, (iii) an estate the
income of which is subject to US federal income tax without regard to its source
or (iv) a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more US persons have
the authority to control all substantial decisions of the trust.

92

---



The summary is based on the tax laws of the
United States, including the Internal Revenue Code of 1986, as amended (the
"Code"), its legislative history, existing and proposed regulations thereunder,
published rulings and court decisions, as well as on the income tax treaty
between the United States and Canada (the "Treaty"), all as currently in effect
and all subject to change at any time, possibly with retroactive effect.

Distributions on Common Shares of the
Company

General. US
Holders receiving dividend distributions (including constructive dividends) with
respect to common shares of the Company are required to include in gross income
for US Federal income tax purposes the gross amount of such distributions to the
extent that the Company has current or accumulated earnings and profits (as
determined for US federal income tax purposes), without reduction for any
Canadian income tax withheld from such distributions. Such income will be
foreign source dividend income and generally will not be eligible for the
dividends received deduction allowed to corporations. Canadian tax withheld from
such distributions may be credited, subject to certain limitations, against the
US Holder's US Federal income tax liability or, alternatively, may be deducted
in computing the US Holder's US Federal taxable income by those who itemize
deductions. (See more detailed discussion in the section captioned "Foreign Tax
Credit" below). To the extent that distributions exceed current or accumulated
earnings and profits of the Company, they will be treated first as a return of
capital up to the US Holder's adjusted basis in the common shares, and then as
capital gain. Preferential tax rates for long-term capital gains are applicable
to a US Holder that is an individual, estate or trust. There are currently no
preferential tax rates for long-term capital gains for a US Holder that is a
corporation. The Company does not maintain calculations of its earnings and
profits in accordance with US Federal income tax accounting principles.

Under Section 1(h)(11) of the Code dividends
paid by foreign qualified corporations to non-corporate taxpayers will be taxed
at the same rate as capital gains, rather than at the higher ordinary income tax
rate. A foreign corporation such as the Company is a qualified corporation (i)
if the corporation is eligible for the benefits of a comprehensive income tax
treaty with the US which the US Internal Revenue Service ("IRS") determines is
satisfactory and which contains an exchange of information provision, or (ii) to
the extent that the dividends are paid with respect to stock that is readily
tradable on an established securities market in the United States. The IRS has
ruled that the Treaty is a satisfactory treaty for this purpose. Accordingly,
dividends paid with respect to shares of the Company should be eligible for the
reduced tax rate. Eligibility for the reduced tax rate is dependent on
satisfying a holding period and certain other limitations. The reduced tax rate
also cannot be claimed with respect to dividends that are included as investment
income for purposes of the limitation on the deduction of investment interest.

Foreign Currency Dividends.Dividends paid in Canadian dollars will be included in income in a US dollar
amount calculated by reference to the exchange rate in effect on the day the
dividends are received by the US Holder, regardless of whether the Canadian
dollars are converted into US dollars at that time. If dividends received in
Canadian dollars are converted into US dollars on the day they are received, the
US Holder generally will not be required to recognize foreign currency gain or
loss with respect to the dividend income.

93

---



Effect of Canadian Withholding Taxes.As discussed above in Taxation, Dividend, under current law payments by the
Company to foreign investors are subject to a 25 % Canadian withholding tax. The
rate of withholding applicable to US Holders that are eligible for benefits
under the Treaty generally is reduced to a maximum rate of 15 % (except for
certain corporate holders). For US federal income tax purposes, US Holders will
be treated as having received the amount of Canadian taxes withheld by the
Company, and as then having paid over the withheld taxes to the Canadian taxing
authorities. As a result of this rule, the amount of dividend income included in
gross income for US federal income tax purposes by a US Holder with respect to
the payment of dividends may be greater than the amount of cash actually
received (or receivable) by the US Holder from the Company with respect to the
payment.

US Holders that are accrual basis taxpayers
must translate Canadian taxes into US dollars at a rate equal to the average
exchange rate for the taxable year in which the taxes accrue, while all US
Holders must translate taxable dividend income into US dollars at the spot rate
on the date received. This difference in exchange rates may reduce the US dollar
value of the credits for Canadian taxes relative to the US Holder's US federal
income tax liability attributable to a dividend.

Foreign Tax Credit

Subject to certain limitations, a US Holder
who pays (or has withheld from distributions) Canadian income tax with respect
to the ownership of common shares of the Company may be entitled, at the option
of the US Holder, to either a deduction or a tax credit for such foreign tax
paid or withheld. US Holders that are eligible for benefits under the Treaty
will not be entitled to a foreign tax credit for the amount of Canadian taxes
withheld in excess of the 15 % maximum rate available under the Treaty, and with
respect to which the US Holder can obtain a refund from the Canadian taxing
authorities. There are significant and complex limitations which apply to the
credit, among which is the general limitation that the credit cannot exceed the
proportionate share of the US Holder's US Federal income tax liability that the
US Holder's foreign source income bears to his/her or its worldwide taxable
income. In the determination of the application of this limitation, the various
items of income and deduction must be classified into foreign and domestic
sources. Under the Code, taxpayers also must account for the rate differential
on dividend income (i.e., the difference between the highest applicable tax rate
and the highest dividend tax rate) in applying these limitations. Complex rules
govern this classification process. There are further limitations on the foreign
tax credit for certain types of income such as "passive category income", and
"general category income." The availability of the foreign tax credit and the
application of the limitations on the credit are fact specific and holders and
prospective holders of common shares of the Company should consult their own tax
advisors regarding their individual circumstances.

Disposition of Common
Shares of the Company

A US Holder will recognize gain or loss from
the sale of common shares of the Company equal to the difference, if any,
between (i) the amount of cash plus the fair market value of any property
received, and (ii) the shareholder's tax basis in the common shares of the
Company. This gain or loss will be capital gain or loss if the common shares are
a capital asset in the hands of the US Holder, which will be a short-term or
long-term capital gain or loss depending upon the holding period of the US
Holder. Gains and losses are netted and combined according to special rules in
arriving at the overall capital gain or loss for a particular tax year.
Deductions for net capital losses are subject to significant limitations. For US
Holders that are not corporations, net capital loss may be offset against up to
$3,000 of ordinary income each tax year, and any unused portion of such net
capital loss may be carried over to be used in later tax years until such net
capital loss is thereby exhausted. For US Holders that are corporations (other
than corporations subject to Subchapter S of the Code), an unused net capital
loss may be carried back three years from the loss year and carried forward five
years from the loss year to be offset against capital gains until the earlier of
five years or the exhaustion of the net capital loss.

94

---



Backup Withholding and
Information Reporting

Payments of dividends or other proceeds with
respect to common shares of the Company by a US paying agent or other US
intermediary will be reported to the IRS and to the US Holder as may be required
under applicable regulations. Backup withholding at a rate of 28 per cent may
apply to these payments if the US Holder fails to provide an accurate taxpayer
identification number or certification of foreign or other exempt status or
fails to report all interest and dividends required to be shown on its US
federal income tax returns. Certain US Holders (including, among others,
corporations) are not subject to backup withholding. US Holders should consult
their tax advisors as to their qualification for exemption from backup
withholding and the procedure for obtaining exemption.

F.    
Dividends and Paying Agents

Not applicable.

G.    
Statement by Experts

Not applicable.

H.    
Documents on Display

Subject to confidentiality concerns, all
documents concerning the Company that are referred to in this Report may be
inspected by shareholders upon reasonable advance notice, at the Company's
headquarters at 110, Avenue Principale, Rouyn-Noranda, Quebec J9X 4P2. A summary
in English of any such document not in English will be provided.

I.    
Subsidiary Information

Not applicable.

ITEM 11.     QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Commodity Price Risk
Disclosure

See Item 4.B "Information on the Company -
Gold Marketing and Sales" above.

95

---



At current 2008 estimates of production of
80,000 ounces of gold and at an estimated average gold price of US$730,
including management's estimates of the Company's operating expenses, a US$73.00
change in the market price of gold would result in an increase or decrease of
approximately CAN$5,700,000 in annual net income and in annual cash flows.

Foreign Currency Risk
Disclosure

The Company's revenues are mainly denominated
in US dollars, while investments and operating costs, primarily accrue in
Canadian dollars. The Company's cash flow and results of operations will
therefore be affected by fluctuations in the US/CAN dollar exchange rate.

At current 2008 estimates of production of
80,000 ounces of gold and at an estimated average gold price of US$730 excluding
management's estimates of the Company's operating expenses, a $0.10 change in
the CAN dollar exchange rate would result in an increase or decrease of
approximately CAN$5,800,000 in annual net income and in annual cash flow.

To reduce the effects of fluctuations in
US/CAN dollar exchange rates, the Company may use financial instruments to hedge
currency exposures in the ordinary course of business. The Company has not
entered into such agreements over the last three (3) years.

The Company does not require or place
collateral for its foreign currency and gold hedging derivatives. However, the
Company seeks to minimize its credit risk by dealing with only major
international banks and financial institutions.

Interest Rate Risk
Disclosure

At December 31, 2007, the Company had no
outstanding long-term debt. Therefore, the Company does not believe it is
exposed to significant interest rate risk.

ITEM 12.     DESCRIPTION
OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II

ITEM 13.     DEFAULTS,
DIVIDEND ARREARAGES AND DELINQUENCIES

There have been no defaults, dividend
arrearages or delinquencies.

ITEM 14.     MATERIAL
MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

There have been no material modifications to
the rights of security holders.

ITEM 15.     CONTROLS AND
PROCEDURES

a)

Disclosure Controls and Procedures. Based on their evaluation of the
Company's disclosure controls and procedures as of the end of the period covered
by this Annual Report, and pursuant to Rule 13a-15 or Rule 15d-15 of the
Securities Exchange Act of 1934,
Martin Rivard, President and Chief
Executive Officer and Nicole Veilleux, Financial Director and Chief Financial
Officer, have concluded that the Company's disclosure controls and procedures
(as defined in Rule 13a-15(e) or Rule 15d-15(e)) are designed to ensure that
information required to be disclosed by the Company in the reports that it files
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms and are
operating in an effective manner.

96

---

b)
Management's Annual Report on Internal Control Over Financial Reporting.
Management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) under
the Exchange Act. Our internal control system was designed to provide reasonable
assurance to our management and board of directors regarding the reliability of
financial reporting and the preparation of published financial statements in
accordance with generally accepted accounting principles. All internal control
systems, no matter how well designed, have inherent limitations. Therefore, even
those systems determined to be effective may not prevent or detect misstatements
and can provide only reasonable assurance with respect to financial statement
preparation and presentation.
Management assessed
the effectiveness of our internal control over financial reporting as of
December 31, 2007. In making this assessment, management used the criteria for
effective internal control over financial reporting set forth by the Committee
of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal
Control-Integrated Framework. Based on this assessment, management has concluded
that, as of December 31, 2007, our internal control over financial reporting was
effective based on those criteria.
The effectiveness of
the Company's internal control over financial reporting as of December 31, 2007
has been audited by Raymond Chabot Grant Thorton LLP, an independent registered
public accounting firm, as stated in their report which appears herein.
The Company will
continue to periodically review its disclosure controls and procedures and
internal controls over financial reporting and may make modifications from time
to time as considered necessary or desirable.
c)
Changes in Internal Control Over Financial Reporting. Management
regularly reviews its system of internal control over financial reporting and
make changes to the Company's processes and systems to improve controls and
increase efficiency, while ensuring that the Company maintains an effective
internal control environment. Changes may include such activities as
implementing new, more efficient systems, consolidating activities, and
migrating processes.
There were no changes
in the Company's internal control over financial reporting that occurred during
the period covered by this Annual Report on Form 20-F that have materially
affected, or are reasonable likely to materially affect, the Company's internal
control over financial reporting.

97

---

ITEM 16.A.     AUDIT COMMITTEE FINANCIAL EXPERT

The Company's board of directors has determined that Raynald
Vézina serves as "audit committee financial expert" on its audit committee and
that he is also an "independent" director as defined under the listing standards
of the American Stock Exchange.
ITEM 16.B.     CODE OF ETHICS

The Company has adopted a Code of Ethics that applies to the
Company's principal executive officer, principal financial officer and principal
accounting officer or controller. The Company will provide to any person,
without charge a copy of the Company's Code of Ethics, upon a request in writing
made to Richmont Mines, Inc., 110, Avenue Principale, Rouyn-Noranda, Quebec, JPX
4P2, Canada, Attention: Corporation Secretary.
ITEM 16.C.     PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Committee's Pre-Approval Policies and
Procedures

Beginning in 2004, the Company's audit committee provided to
the Company's principal independent accounting firm a list of preapproved
services. If officers of Richmont Mines request such firm to perform other
services on behalf of the Company, the independent accounting firm must have the
approval of the audit committee president before accepting the mandate, which
request must also be formally approved by the audit committee at the next audit
committee meeting. The list of services provided to the Company's principal
independent accounting firm is subject to revision every year by the audit
committee and can be modified by the audit committee at any time by sending
written notice to the Company's principal independent accounting firm.
The following tables show the total fees billed for each of
the two past fiscal years by the Company's principal independent accounting
firm.



98

---



Audit Fees

The aggregate fees billed by Company's
principal independent accounting firm for the audit of the Company's annual
financial statements or services that are normally provided by such firm in
connection with statutory and regulatory filings
for each of the last two
fiscal years are the following:

|                | 2007      | 2006    
|--------------- | --------- | --------
|Audit services* | *$219,900 | $154,500

* Includes the audit of the internal controls and financial reporting as
required by the Sarbanes-Oxley Act of 2002.

Audit Related Fees

The aggregate fees billed for each of the last
two fiscal years for assurance and related services provided by the Company's
principal independent accounting firm that are reasonably related to the
performance of the audit or review of the Company's financial statements and are
not reported in the above table are described in the following table:

|Nature of services | 2007    | 2006     
|------------------ | ------- | ---------
|Traveling expenses | $11,314 | $13,566  
|Special work       | $23,400 | *$136,658

*Includes an amount of $116,658 used in order to prepare the
prospectus for the financing by prospectus realized in June 2006.

Taxation Fees

The aggregate fees billed for each of the last
two fiscal years for the professional services provided by the Company's
principal independent accounting firm with regards to tax compliance, tax advice
and tax planning are described in the following table:

|Nature of services         | 2007    | 2006  
|-------------------------- | ------- | ------
|Review quarterly estimates | $5,700  | $9,640
|Planning and tax advice    | $15,400 | $5,300

All Other Fees

The aggregate fees billed for each of the last
two fiscal years for the products and services provided by the Company's
principal independent accounting firm, other than the services previously
stated, are described in the following table:

|Nature of services* | 2007    | 2006   
|------------------- | ------- | -------
|Other consultations | $10,500 | $4,500 
|Other expenses*     | $19,051 | $15,395

*Includes administrative expenses of $17,320 in 2007 and
$12,395 in 2006.

99

---

100% of all Audit Related Fees, Tax Fees and
All Other Fees reported above were approved by the Company's audit committee.
ITEM 16.D.     EXEMPTIONS
FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

The Company did not rely on any exemption from
the listing standards for audit committees.
ITEM 16.E.     PURCHASES
OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

|                     |              |                | Total Number     | Maximum        
|-------------------- | ------------ | -------------- | ---------------- | ---------------
|                     |              |                | of Shares        | Number of      
|                     |              |                | Purchased as     | Shares that May
|                     |              |                | Part of Publicly | Yet be         
|                     | Total Number |                | Announced        | Purchased      
|                     | of Shares    | Average Price  | Plans or         | Under the Plans
|Period               | Purchased    | Paid per Share | Programs         | or Programs    
|                     |              |                |                  |                
|January 1-31, 2007   | 3,700        | $2.67          | 3,700            | 1,138,800      
|February 1-28, 2007  | 5,200        | $3.01          | 5,200            | 1,133,600      
|March 1-31, 2007     | 22,200       | $2.73          | 22,200           | 1,111,400      
|April 1-30, 2007     | 10,000       | $2.87          | 10,000           | 1,101,400      
|May 1-31, 2007       | 33,300       | $2.98          | 33,300           | 1,068,100      
|June 1-30, 2007      | 40,000       | $2.98          | 40,000           | 1,028,100      
|July 1-31, 2007      | 65,000       | $2.85          | 65,000           | 963,100        
|August 1-31, 2007    | 35,000       | $2.81          | 35,000           | 928,100        
|September 1-30, 2007 | 14,600       | $2.86          | 14,600           | 913,500        
|October 1-31, 2007   | -            | -              | -                | 913,500        
|November 1-30, 2007  | -            | -              | -                | 913,500        
|December 1-31, 2007  | -            | -              | -                |                

Only one Richmont Mines share repurchase program was in
effect in 2007. On November 3, 2006, Richmont Mines publicly announced a Normal
Course Issuer bid commencing November 3, 2006 and expiring November 2, 2007 for
up to 1,200,000 shares of its common stock.

PART III

ITEM 17.     CONSOLIDATED FINANCIAL
STATEMENTS

The audited consolidated financial statements referred to
below are included herein and found immediately following the text of this
Annual Report. The report of the Independent Registered Public Accounting Firm
on such consolidated financial statements is included herein immediately
preceding such audited consolidated financial statements.

100

---



Audited Consolidated Financial Statements

Report of the
Independent Registered Public Accounting Firm on Internal Control dated February
8, 2008

Report of the
Independent Registered Public Accounting Firm dated February 8, 2008

Comments by Auditors
for American Readers on Canada - US Reporting differences dated February 8, 2008

Consolidated Balance
Sheets at December 31, 2007 and December 31, 2006

Consolidated
Statements of Earnings for the Years ended December 31, 2007, December 31, 2006
and December 31, 2005

Consolidated
Statements of Comprehensive Income and Deficit for the Years ended December 31,
2007, December 31, 2006 and December 31, 2005

Consolidated
Statements of Cash Flow for the Years ended December 31, 2007, December 31, 2006
and December 31, 2005

Notes to Consolidated
Financial Statements

ITEM 18.     CONSOLIDATED
FINANCIAL STATEMENTS

The Company has elected to provide
consolidated financial statements pursuant to Item 17 of Form 20-F.



101

---

ITEM 19.EXHIBITS

|Exhibit |                                                                                                                                                                                               
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|No.     | Exhibit                                                                                                                                                                                       
|        |                                                                                                                                                                                               
|1.1     | Articles of Incorporation of the
    Company, including all amendments thereto(1)                                                                                                             
|1.2     | Bylaws of the Company, including
    all amendments thereto(1)                                                                                                                                
|2.1     | Shareholder Rights Plan(2)                                                                                                                                                                    
|5.1     | Option/Joint Venture Agreement
    for the Island Gold project between Patricia Mining Corp. and Richmont Mines
    Inc. dated August 28, 2003(3)                                             
|5.3     | Beaufor Mine Purchase Agreement
    dated April 5, 2001 between Richmont Mines Inc. and Aurizon Mines Ltd., as
    amended by a letter agreement dated August 15, 2002 between the parties.(2)
|5.4     | Asset Purchases Agreement dated
    June 29, 2007 between the Company and
    Osisko Exploration Ltd.                                                                                        
|5.5     | Letter Agreement dated December
    21, 2007 between the Company and LKA
    International, Inc.                                                                                             
|8.1     | List of Subsidiaries                                                                                                                                                                         
|12.1    | Rule 13a-14(a)/15d-14(a)
    Certifications                                                                                                                                                  
|13.1    | Certification of periodic
    financial report pursuant to Section 906 of the Sarbanes-Oxley Actof 2002, 18 U.S.C. Section 1350                                                              
|15.1    | Audit Committee Charter(2)                                                                                                                                                                    

_____________________ Filed herewith.

(1)

Incorporated by
reference to Exhibit No. 1 to the Company's Registration Statement on Form 20-F
dated September 25, 1996 filed with the Securities and Exchange Commission.

(2)

Incorporated by
reference to the identically numbered exhibit to the Company's Annual Report on
Form 20-F for the fiscal year ended December 31, 2006 filed with the Securities
and Exchange Commission on May 10, 2007.

(3)

Incorporated by
reference to the identically numbered exhibit to the Company's Annual Report on
Form 20-F for the fiscal year ended December 31, 2003 filed with the Securities
and Exchange Commission on June 29, 2004.

102

---

SIGNATURES

The registrant hereby certifies that
it meets all of the requirements for filing on Form 20-F and that it has duly
caused and authorized the undersigned to sign this annual report on its behalf.

|                   | RICHMONT MINES INC.                           
|------------------ | ----------------------------------------------
|                   | Registrant                                    
|                   |                                               
|                   |                                               
|                   |                                               
|Dated: May 5, 2008 | By:  /s/ Nicole Veilleux                      
|                   | Nicole Veilleux                               
|                   | Financial Director and Chief Financial Officer





---





Consolidated Financial Statements of

RICHMONT MINES INC.

Years ended December 31, 2007, 2006 and 2005







---



|REPORT OF INDEPENDENT REGISTERED PUBLIC
    ACCOUNTING FIRM ON INTERNAL 
    CONTROL OVER FINANCIAL REPORTING
|-------------------------------------------------------------------------------------------------------------
|                                                                                                             

To the Shareholders of Richmont Mines Inc.:

We have audited Richmont Mines Inc.'s internal
control over financial reporting as of December 31, 2007, based on the criteria
established in Internal Control - Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Richmont Mines Inc.'s management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting, included in the
accompanying Management Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on Richmont Mines Inc.'s internal
control over financial reporting based on our audit.

We conducted our audit in accordance with the
standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing
such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial
reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles. A company's internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company's assets that could have a
material effect on the financial statements.

Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may
deteriorate.

In our opinion, Richmont Mines Inc.
maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2007, based on the criteria established in Internal Control - Integrated Framework issued by COSO.

We have also audited, in accordance with
Canadian generally accepted auditing standards and the standards of the Public
Company Accounting Oversight Board (United States), the consolidated balance
sheet of Richmont Mines Inc. as of December 31, 2007 and the consolidated
statements of earnings, comprehensive income, accumulated comprehensive income,
deficit and cash flows for the year ended December 31, 2007 and our report dated
February 8, 2008 expressed an unqualified opinion on those consolidated
financial statements.

-s- Raymond Chabot Grant Thornton LLP

Chartered Accountants

Montreal, Canada 
February 8, 2008

---



|                                                           
|-----------------------------------------------------------
|REPORT OF INDEPENDENT REGISTERED PUBLIC
    ACCOUNTING FIRM
|                                                           

To the Shareholders of Richmont Mines Inc.:

We have audited the consolidated balance sheet
of Richmont Mines Inc. as of December 31, 2007 and the consolidated statements
of earnings, comprehensive income, accumulated comprehensive income, deficit and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audits in accordance with
Canadian generally accepted auditing standards and the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform an audit to obtain reasonable assurance whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.

In our opinion, these consolidated financial
statements present fairly, in all material respects, the financial position of
the Company as of December 31, 2007 and the results of its operations and its
cash flows for the year ended December 31, 2007 in accordance with Canadian
generally accepted accounting principles.

Canadian generally accepted accounting
principles vary in certain significant respects from accounting principles
generally accepted in the United States of America. Information relating to the
nature and effect of such differences is presented in Note 21 to the financial
statements.

The consolidated financial statements as at
December 31, 2006 and for the years ended in each year of the two year period
ended December 31, 2006 were audited by other auditors who expressed an opinion
without reservation on those consolidated financial statements in their report
dated February 2, 2007.

We also have audited, in accordance with the
standards of the Public Company Accounting Oversight Board (United States), the
effectiveness of Richmont Mines Inc.'s internal control over financial reporting
as at December 31, 2007, based on criteria established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) and our report dated February 8,
2008 expressed an unqualified opinion on the effectiveness of the Company's
internal control over financial reporting.

-s- Raymond Chabot Grant Thornton LLP


Chartered Accountants


Montreal, Canada
February 8, 2008

---



|                                                                                  
|----------------------------------------------------------------------------------
|REPORT OF INDEPENDENT REGISTERED PUBLIC
    ACCOUNTING FIRM                       
|COMMENTS BY AUDITORS FOR AMERICAN READERS ON CANADA - US
    REPORTING DIFFERENCES
|                                                                                  

In the United States of America, reporting
standards for auditors require the addition of an explanatory paragraph
(following the opinion paragraph) when there is a change in accounting
principles that has a material effect on the comparability of the Company's
financial statements, such as the changes described in Note 2 to the
consolidated financial statements. Our report to the shareholders dated February
8, 2008 expressed in accordance with Canadian reporting standards which does not
require a reference to such change in accounting principles in the auditors'
report when the change is properly accounted for and adequately disclosed in the
consolidated financial statements.

-s- Raymond Chabot Grant Thornton LLP


Chartered Accountants


Montreal, Canada
February 8, 2008







---



|RICHMONT MINES INC.Consolidated Financial Statements
    Years ended December 31, 2007, 2006 and 2005
|-----------------------------------------------------------------------------------------------------
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Consolidated Financial Statements                                                                    
|                                                                                                     
|                                                                                                     
|Consolidated Statements of Earnings                                                                  
|                                                                                                     
|Consolidated Statements of
    Comprehensive Income and Deficit                                      
|                                                                                                     
|Consolidated Balance Sheets                                                                          
|                                                                                                     
|Consolidated Statements of Cash Flow                                                                 
|                                                                                                     
|Notes to Consolidated Financial
    Statements                                                       



---



RICHMONT MINES INC. Consolidated Statements of Earnings 
  Years ended December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)




2007
      $
      
      2006
      $
      
      2005
      $REVENUEPrecious metals
      
      
      34,691
      
      
      30,539
      
      
      19,845Other (note 3)
      
      
      3,380
      
      
      2,350
      
      
      1,50838,071
      
      
      32,889
      
      
      21,353EXPENSESOperating costs
      
      
      24,199
      
      
      27,169
      
      
      16,522Royalties
      
      
      565
      
      
      189
      
      
      231Custom milling
      
      
      1,023
      
      
      591
      
      
      722Administration
      
      
      3,315
      
      
      2,957
      
      
      3,923Exploration and project evaluation (note 4)
      
      
      3,288
      
      
      2,080
      
      
      2,375Accretion expense - asset retirement obligations (note 5)
      
      
      178
      
      
      214
      
      
      167Depreciation and depletion
      
      
      5,628
      
      
      3,146
      
      
      1,618Gain on disposal of mining assets (note 6)
      
      
      (8,066
      )
      
      (3,235
      )
      
      (292
      )Write-down of mining assets (note 7)
      
      
      -
      
      
      -
      
      
      26,04130,130
      
      
      33,111
      
      
      51,307EARNINGS (LOSS) BEFORE OTHER ITEMS
      
      
      7,941
      
      
      (222
      )
      
      (29,954
      )MINING
      AND INCOME TAXES (note 8)
      
      
      1,306
      
      
      (2,686
      )
      
      (2,480
      )6,635
      
      
      2,464
      
      
      (27,474
      )MINORITY INTEREST
      
      
      (36
      )
      
      (730
      )
      
      6NET
      EARNINGS (LOSS)
      
      
      6,671
      
      
      3,194
      
      
      (27,480
      )NET EARNINGS (LOSS) PER SHARE(note 9)basic and diluted
      
      
      0.28
      
      
      0.14
      
      
      (1.54
      )BASIC
      WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (thousands)
      
      
      24,159
      
      
      22,904
      
      
      17,838DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (thousands)
      
      
      24,138
      
      
      22,844
      
      
      17,838


The accompanying notes are an integral part of the
consolidated financial statements.

F-1

---



RICHMONT MINES INC. Consolidated Statements of Comprehensive Income and Deficit
  Years ended December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)


2007
      $
      
      2006
      $
      
      2005
      $COMPREHENSIVE INCOMENet
      earnings (loss)
      
      
      6,671
      
      
      3,194
      
      
      (27,480
      )Comprehensive income, net of income taxes:Change in unrealized gain on available-for-sale investments
      
      
      473
      
      
      -
      
      
      -Realized gains on available-for-sale investments included
      in earnings
      
      
      (444
      )
      
      -
      
      
      -29
      
      
      -
      
      
      -Comprehensive income (loss)
      
      
      6,700
      
      
      3,194
      
      
      (27,480
      )DEFICITBALANCE, BEGINNING OF YEAR
      
      
      (11,241
      )
      
      (14,410
      )
      
      13,280Net
      earnings (loss)
      
      
      6,671
      
      
      3,194
      
      
      (27,480
      )Redemption of shares (note 14)
      
      
      (77
      )
      
      (25
      )
      
      (210
      )BALANCE, END OF YEAR
      
      
      (4,647
      )
      
      (11,241
      )
      
      (14,410
      )ACCUMULATED OTHER COMPREHENSIVE INCOMEAdjustment due to the adoption of CICA Handbook Section 
      3855 for the cumulative unrealized gain on available-for-
      sale investments as at January 1st, 2007 (note 2a)
      
      
      323Changes in other comprehensive income for the year
      
      
      29BALANCE, END OF YEAR
      
      
      352


The accompanying notes are an integral part of the
consolidated financial statements.

F-2

---



RICHMONT MINES INC. Consolidated Balance Sheets 
  December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)




2007
      $
      
      2006
      $ASSETSCURRENT ASSETSCash and cash equivalents
      
      
      27,291
      
      
      16,126Short-term investments(note 10)
      
      
      1,826
      
      
      757Accounts receivable (note 12)
      
      
      2,859
      
      
      2,599Mining and income taxes receivable
      
      
      1,677
      
      
      2,192Inventories (note 11)
      
      
      5,438
      
      
      5,39339,091
      
      
      27,067ADVANCE TO A MINORITY PARTNER (note 12)
      
      
      1,875
      
      
      3,375PROPERTY, PLANT AND EQUIPMENT (note 13)
      
      
      45,010
      
      
      48,001FUTURE
      MINING AND INCOME TAXES (note 8)
      
      
      -
      
      
      5585,976
      
      
      78,498LIABILITIESCURRENT LIABILITIESAccounts payable and accrued charges
      
      
      5,005
      
      
      5,853Mining and income taxes payable
      
      
      116
      
      
      435,121
      
      
      5,896ASSET
      RETIREMENT OBLIGATIONS (note 5)
      
      
      3,358
      
      
      3,333MINORITY INTEREST
      
      
      14,238
      
      
      12,745FUTURE
      MINING AND INCOME TAXES (note 8)
      
      
      1,446
      
      
      1,83424,163
      
      
      23,808SHAREHOLDERS' EQUITYCapital stock (note 14)
      
      
      61,016
      
      
      61,340Contributed surplus (note 15)
      
      
      5,092
      
      
      4,591Deficit
      
      
      (4,647
      )
      
      (11,241
      )Accumulated other comprehensive income
      
      
      352
      
      
      -61,813
      
      
      54,69085,976
      
      
      78,498Commitments (note 18)


The accompanying notes are an integral part of the
consolidated financial statements.

|                             |  |                          
|---------------------------- |  | -------------------------
|On behalf of the Board:      |  |                          
|-s- Jean-Guy Rivard          |  | -s- Réjean Houle         
|                             |  |                          
|Jean-Guy Rivard
    Director |  | Réjean Houle
    Director

F-3

---



RICHMONT MINES INC. Consolidated Statements of Comprehensive Income and Deficit
  Years ended December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)




2007
      $
      
      2006
      $
      
      2005
      $CASH FLOW FROM (USED IN) OPERATING ACTIVITIESNet earnings (loss)
      
      
      6,671
      
      
      3,194
      
      
      (27,480
      )Adjustments for:Depreciation and depletion
      
      
      5,628
      
      
      3,146
      
      
      1,618Stock-based compensation
      
      
      575
      
      
      393
      
      
      1,350Accretion expense - asset retirement obligations
      
      
      178
      
      
      214
      
      
      167Gain on disposal of mining assets
      
      
      (8,042
      )
      
      (3,270
      )
      
      (292
      )Write-down of mining assets
      
      
      -
      
      
      -
      
      
      26,041Minority interest
      
      
      (36
      )
      
      (730
      )
      
      6Future mining and income taxes
      
      
      (334
      )
      
      (1,801
      )
      
      4794,640
      
      
      1,146
      
      
      1,889Net change in non-cash working capital items (note 16)
      
      
      7,171
      
      
      1,283
      
      
      (5,885
      )11,811
      
      
      2,429
      
      
      (3,996
      )CASH FLOW USED IN INVESTING ACTIVITIESDisposal of mining assets
      
      
      3,435
      
      
      2,685
      
      
      292Property, plant and equipment - Island Gold Mine
      
      
      (4,495
      )
      
      (21,934
      )
      
      (11,533
      )Property, plant and equipment - Beaufor Mine
      
      
      (1,060
      )
      
      (1,706
      )
      
      (2,771
      )Property, plant and equipment - East Amphi Mine
      
      
      (34
      )
      
      (822
      )
      
      (13,586
      )Other property, plant and equipment
      
      
      (582
      )
      
      (597
      )
      
      (426
      )Cash received from an advance to a minority partner
      
      
      1,125
      
      
      1,300
      
      
      -Redemption of shares held by minority interests
      
      
      -
      
      
      (13
      )
      
      (61
      )(1,611
      )
      
      (21,087
      )
      
      (28,085
      )CASH FLOW FROM FINANCING ACTIVITIESIssue of common shares
      
      
      183
      
      
      15,524
      
      
      23,695Redemption of common shares
      
      
      (658
      )
      
      (171
      )
      
      (346
      )Common share issue costs
      
      
      -
      
      
      (1,413
      )
      
      (1,859
      )Contribution from a minority partner
      
      
      1,440
      
      
      6,165
      
      
      -965
      
      
      20,105
      
      
      21,490Net
      increase (decrease) in cash and cash equivalents
      
      
      11,165
      
      
      1,447
      
      
      (10,591
      )Cash
      and cash equivalents, beginning of year
      
      
      16,126
      
      
      14,679
      
      
      25,270Cash
      and cash equivalents, end of year
      
      
      27,291
      
      
      16,126
      
      
      14,679


The accompanying notes are an integral part of the
consolidated financial statements.

F-4

---



RICHMONT MINES INC. Notes to Consolidated Financial Statements
  Years ended December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)


Richmont Mines Inc. (the Company),
incorporated under Part 1A of the Quebec Companies Act, is engaged in mining,
exploration and development of mining properties, principally gold.

1.
      Significant accounting policiesThe consolidated financial statements
      are prepared in accordance with Canadian generally accepted accounting
      principles. As described in note 21, these principles differ in certain
      material respects from the principles that the Company would have followed
      had its consolidated financial statements been prepared in accordance with
      generally accepted accounting principles in the United States, after
      taking into account the restatement, made during the year ended December
      31, 2006, for the capitalization of exploration and development costs for
      the year ended December 31,2005. The significant accounting policies
      followed by the Company are as follows:a)
      Basis of consolidationThese consolidated financial statements
      reflect the accounts of the Company and of its subsidiaries: Camflo Mill
      Inc. and Louvem Mines Inc.All inter-company transactions have been
      eliminated.The Company's 55% interest in the Island
      Gold Mine is consolidated using the principles outlined in AcG-15, on the
      consolidation of variable interest entities due to an agreement for the
      financing of the interest held by the other participant of the development
      costs of the project.b)
      Revenue recognitionPrecious metals revenue, based upon spot
      metal prices, is recorded when rights and obligations related to ownership
      are transferred to the purchaser. Milling revenue is recorded when the
      service of ore processing is rendered.c)
      Cash and cash equivalentsCash and cash equivalents comprise cash
      and short-term investments with original maturity dates of less than 90
      days.d)
      Short-term investmentsShort-term investments are recorded at
      market value.e)
      InventoriesSupply inventories and ore inventories
      are valued at the lower of average cost and replacement cost. Precious
      metal inventories are valued at the lower of average cost and net
      realizable value.f)
      Exploration propertiesThe acquisition costs of exploration
      properties are capitalized as property, plant and equipment. Mining
      exploration expenditures are expensed as incurred until the date when the
      property is identified as having a development potential.g)
      Property, plant and equipmentProperty, plant and equipment are
      recorded at cost, net of related government assistance. Expenditures
      incurred on properties identified as having development potential are
      capitalized as property, plant and equipment. Costs include interest on
      funds borrowed during a construction period and future costs of asset
      retirement. Upon commencement of commercial production, construction costs
      are transferred to the various categories of property, plant and
      equipment. Property, plant and equipment at mine sites are depreciated in
      accordance with the number of ounces sold. The depreciation rate is
      calculated according to the units-of-production method, using proven and
      probable reserves. Depreciation of corporate assets is calculated using
      the straight-line method based on their anticipated useful life.The Company periodically reviews the
      carrying amount of its property, plant and equipment. When the net
      carrying value of an asset exceeds the sum of the undiscounted estimated
      future cash flows expected to result from its use and eventual disposal, a
      write-down is recorded to reflect fair value and an impairment loss is
      recorded in the results of operations. The fair value is based on the
      present value of the estimated future cash flows.


F-5

---



RICHMONT MINES INC.Notes to Consolidated Financial Statements
  Years ended December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)


1.
      Significant accounting policies
      (continued)g)
      Property, plant and equipment
      (continued)Net estimated future cash flows, on an
      undiscounted basis from each mine are calculated based on anticipated
      future metal production (proven and probable reserves), estimated future
      realized metal prices, operating, capital and site restoration expenses
      and estimated future foreign exchange rates.h)
      Future mining and income taxesThe Company accounts for mining and
      income taxes under the asset and liability method. Under this method,
      future tax assets and liabilities are recognized for the tax consequences
      attributable to differences between the financial statement carrying
      amounts of existing assets and liabilities and their respective tax bases.
      Future tax assets and liabilities are measured using current tax rates or
      tax rates expected to apply to taxable income in the years in which those
      temporary differences are expected to be recovered or settled. The impact
      on future tax assets and liabilities of a change in tax rates is
      recognized in the statement of earnings in the year in which the revised
      tax rate comes into effect.The Company renounces to tax deductions
      relating to resource expenditures that are financed by the issuance of
      flow-through shares to the benefit of its shareholders, in accordance with
      current tax legislation. Future income taxes related to the temporary
      differences created by this renouncement are recorded, at the time that
      the Company renounces to its right to these deductions and the offset is
      recorded as a reduction of capital stock.i)
      Environmental costsThe Company is subject to environmental
      laws and regulations enacted by federal and provincial authorities.
      Environmental expenditures that will benefit the Company in future years
      are recorded at cost and capitalized as part of property, plant and
      equipment. Depreciation and depletion are charged to earnings over the
      estimated future benefit period of the assets. Environmental expenditures,
      that are not expected to provide a benefit to the Company in future
      periods, are accrued and expensed to earnings, on a site-by-site basis,
      when a requirement to remedy an environmental exposure is probable and a
      cost can be reasonably estimated.j)
      Asset retirement obligationsTotal estimated cash flow required to
      settle the obligations arising from environmentally acceptable closure
      plans are discounted based on the credit-adjusted risk-free interest rate
      and are recorded as a liability with a corresponding increase to property,
      plant and equipment and, thereafter, depreciated in accordance with the
      units-of-production method using proven and probable reserves. The asset
      retirement obligations are adjusted for accumulated accretion in
      accordance with the expected timing of payment of the cash flow required
      to settle these obligations.k)
      Foreign currency translationTransactions pertaining to the statement
      of earnings are translated at the rate of exchange prevailing at the date
      of the transaction. Monetary assets and liabilities resulting from these
      transactions are translated at the rate of exchange in effect at the
      balance sheet date. Exchange gains or losses are included in earnings of
      the year.l)
      Exploration tax creditsExploration tax credits are recorded as
      a reduction of exploration expenses or as a reduction of property, plant
      and equipment.m)
      Net earnings (loss) per shareNet earnings (loss) per share are the
      result of net earnings (loss) divided by the weighted average number of
      shares outstanding during the year. Diluted earnings per share are
      determined by taking into account the dilutive effect of arrangements to
      issue common shares as if these arrangements were exercised at the
      beginning of the year or at the grant date when the grant date occurs
      after the beginning of the year. The treasury-stock method is used to
      determine the dilutive effect of stock options. This method assumes that
      the proceeds from the exercise of stock options are used to redeem common
      shares at the average trade price during the year.


F-6

---



RICHMONT MINES INC. Notes to Consolidated Financial Statements
  Years ended December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)


1.
      Significant accounting policies
      (continued)n)
      GuaranteesA guarantee is a contract or an
      indemnification agreement that contingently requires the Company to make
      payments (either in cash, financial instruments, other assets, the
      issuance of shares or providing services) to the other party, following, i)
      changes to an interest rate, a foreign exchange rate, a stock price, the
      price of a commodity, an index, a fair value or another element that is
      related to an asset, a liability or an equity security of the other party,
      ii) a third party failure to perform under an obligation agreement or iii)
      the default by a third party to reimburse its debt when it becomes due. In
      management's opinion, the Company does not have significant guarantees,
      other than those disclosed in notes 5 and 18.o)
      Stock-based compensationThe Company uses the fair value method
      based on the Black-Scholes pricing model to record the compensation cost
      related to the issue of stock options to its employees, its directors and
      its officers over the vesting period with a corresponding credit to
      contributed surplus.p)
      Pension planThe Company maintains a defined
      contribution plan covering all of its employees. The plan is funded by
      Company contributions based on a percentage of employee salaries. The
      Company does not offer any other post-retirement benefits to its
      employees.q)
      Use of estimatesThe preparation of financial statements
      in accordance with generally accepted accounting principles requires
      management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities, disclosure of contingent assets and
      liabilities and the reported amounts of related revenue and expenses.
      Significant areas requiring the use of management estimates relate to the
      useful life of assets for amortization and depletion purposes and for the
      evaluation of their net recoverable amount, the calculation of the asset
      retirement obligations, the calculation of stock-based compensation and
      mining and income taxes. Accordingly, actual results could differ from
      these estimates.2.
      Accounting changesa)
      2007 Accounting changesOn January 1, 2007, the Company adopted
      the Canadian Institute of Chartered Accountants (CICA) Handbook Sections
      1530, Comprehensive Income, 3251, Equity, 3855, Financial Instruments
      - Recognition and Measurement and 3861, Financial Instruments -
      Disclosure and Presentation. These new Handbook Sections provide
      comprehensive requirements for the recognition, the measurement and the
      disclosure of financial instruments. Handbook Section 1530 establishes
      standards for reporting comprehensive income.Comprehensive income is defined as the
      change in the Company's net assets that results from transactions from
      sources other than the Company's shareholders and includes items that
      would not normally be included in net earnings. Other comprehensive income
      refers to items recognized in comprehensive income but that are excluded
      from net earnings calculated in accordance with generally accepted
      accounting principles.At the adoption date, all financial
      assets and liabilities are estimated and recorded at fair value.
      Subsequently, all financial instruments are classified into one of the
      following five categories: held-for-trading financial assets,
      held-to-maturity investments, loans and receivables, available-for-sale
      financial assets or other financial liabilities. All financial instruments
      are recorded on the consolidated balance sheet and are measured at fair
      value with the exception of loans and receivables, held-to-maturity
      investments and other financial liabilities, which are measured at
      amortized cost.Available-for-sale financial assets are
      measured at fair value with revaluation gains and losses included in other
      comprehensive income until the asset is removed from the balance sheet.As a result of the adoption of these
      standards, the Company has classified its cash and cash equivalents as
      assets held-for-trading, its short-term investments as available-for-sale
      financial assets, its accounts receivable and the advance to a minority
      partner as loans and receivables, and its accounts payable and accrued
      charges as other financial liabilities.


F-7

---



RICHMONT MINES INC. Notes to Consolidated Financial Statements
  Years ended December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)


2.
      Accounting changes (continued)a)
      2007 Accounting changes (continued)The adoption of sections 1530 and 3855
      as of January 1st, 2007 had the impact of adjusting the opening
      balance of accumulated other comprehensive income by an amount of $323 to
      reflect the cumulative unrealized gains on available-for-sale investments
      at that date.On January 1, 2007, the Company adopted
      the recommendations of Section 1506 of the CICA Handbook, Accounting
      changes. The revised section establishes criteria for changing
      accounting policies, together with the accounting treatment and disclosure
      of changes in accounting policies, changes in accounting estimates and
      correction of errors. The adoption of these recommendations did not have
      any impact on the financial statements of the Company.b)
      Future accounting changesCapital disclosuresIn December 2006, the CICA adopted
      Section 1535 of the Handbook, Capital disclosures, which applies to
      years beginning on or after October 1, 2007. This section establishes
      standards for disclosing information about an entity's capital and how it
      is managed. The Company is currently evaluating the requirements of the
      new standards regarding disclosure and presentation of such information.Financial instruments - disclosures
      and presentationIn December 2006, the CICA adopted two
      new Handbook sections: Section 3862, Financial instruments -
      disclosures and Section 3863, Financial instruments - presentation.
      Together, these two sections replace Section 3861, Financial
      instruments - disclosures and presentation and apply to years
      beginning on or after October 1, 2007. These Sections require additional
      disclosure, particularly regarding the documentation of risks. The Company
      is currently evaluating the requirements of the new standards regarding
      disclosure and presentation of such information.InventoriesIn June 2007, the CICA issued Section
      3031, Inventories, which replaces Section 3030 and harmonizes the
      Canadian standards related to inventories with International Financial
      Reporting Standards (IFRS). This Section provides changes to the
      measurement and more extensive guidance on the determination of cost,
      including allocation of overhead; it reduces the number of methods
      available to determine cost; it requires impairment testing; and it
      expands the disclosure requirements to increase transparency. This Section
      applies to interim and annual financial statements beginning on or after
      January 1, 2008. The Company has not yet determined the impact of adopting
      this standard on its consolidated financial statements.3.
      Other revenueOther revenue includes interest income
      on cash and variation on fair value on cash equivalents of $706, gain on
      disposal of short-term investments and revenue from custom milling.4.
      Exploration and project evaluation


2007
      
      2006
      
      2005$
      
      $
      
      $Beaufor Mine
      
      
      1,874
      
      
      1,342
      
      
      862Island Gold Mine
      
      
      505
      
      
      264
      
      
      141Francoeur / Wasamac properties
      
      
      142
      
      
      200
      
      
      90Valentine Lake property
      
      
      1,017
      
      
      67
      
      
      393Camflo Northwest property
      
      
      112
      
      
      4
      
      
      68Golden Wonder property a)
      
      
      665
      
      
      -
      
      
      -Other properties
      
      
      50
      
      
      412
      
      
      414Project evaluation
      
      
      124
      
      
      583
      
      
      5094,489
      
      
      2,872
      
      
      2,477Exploration tax credits
      
      
      (1,201
      )
      
      (792
      )
      
      (102
      )3,288
      
      
      2,080
      
      
      2,375


F-8

---



RICHMONT MINES INC. Notes to Consolidated Financial Statements
  Years ended December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)


4.
      Exploration and project evaluation
      (continued)a)
      In December 2007, the Company exercised
      its option to acquire a 50% joint venture interest in the Golden Wonder
      property located near Lake City, Colorado, USA. (See note 18)5.
      Asset retirement obligationsThe Company's production and exploration
      activities are subject to various federal and provincial laws and
      regulations governing the protection of the environment. These laws and
      regulations are continually changing and are generally becoming more
      restrictive. The Company conducts its operations so as to protect public
      health and the environment. The Company has therefore recorded the asset
      retirement obligations of its mining sites based on management's best
      estimate of the future costs. Such estimates are, however, subject to
      change based on modifications to laws and regulations or as new
      information becomes available.a)
      Information used in the calculation
      of obligationsThe following table sets forth the
      assumptions used in the calculation of the asset retirement obligations
      for the year ended December 31, 2007:


Total amount
      of the estimated
      cash flow
      $
      
      Cash flow
      payment schedule
      
      Credit-adjusted
      risk-free rate
      %Beaufor Mine
      
      
      391
      
      
      2011
      
      
      5.5Camflo Mill
      
      
      2,381
      
      
      2010
      
      
      5.5Island Gold Mine
      
      
      901
      
      
      2010
      
      
      5.5Francoeur property
      
      
      193
      
      
      2010
      
      
      5.53,866


|   |                                                                                                                                               
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                               
|b) | Changes in obligations                                                                                                                        
|   |                                                                                                                                               
|   | The following table sets forth the
    evolution of the asset retirement obligations for the years ended December
    31, 2007, 2006 and 2005:
|   |                                                                                                                                               

2007
      $
      
      2006
      $
      
      2005
      $Balance, beginning of year
      
      
      3,333
      
      
      3,789
      
      
      2,968Accretion expense
      
      
      178
      
      
      214
      
      
      167Changes to estimated cash flow
      
      
      -
      
      
      39
      
      
      -Settlement of obligations
      
      
      -
      
      
      -
      
      
      (16
      )New liability related to the acquisition
      of the Island Gold project
      
      
      -
      
      
      -
      
      
      670Decrease related to the disposal of
      properties
      
      
      (153
      )
      
      (709
      )
      
      -Balance, end of year
      
      
      3,358
      
      
      3,333
      
      
      3,789


|   |                                                                                                                                                                                                                                                                                                                                                                       
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                       
|c) | Letters of credit                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                       
|   | As at December 31, 2007, the Company has
    available a credit facility in the amount of $3,000 for the issuance of
    letters of credit as guarantee for the settlement of asset retirement
    obligations. The credit facility has a fixed cost of 0.75%. The following
    table provides the allocation of these letters of credit as at December 31,
    2007:
|   |                                                                                                                                                                                                                                                                                                                                                                       

2007
      $
      
      
      Date of
      renewalCamflo Mill
      
      
      1,227
      
      
      July 20, 2008Beaufor Mine
      
      
      27
      
      
      August 11, 2008Francoeur property
      
      
      54
      
      
      August 11, 20081,308


F-9

---



RICHMONT MINES INC. Notes to Consolidated Financial Statements
  Years ended December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)


5.
      Asset retirement obligations
      (continued)c)
      Letters of credit (continued)As at December 31, 2006, the Company had
      guaranteed the restoration of its mining sites by the pledge of letters of
      credit amounting to $1,391.As at December 31, 2006 and 2007, the
      Island Gold property has been pledged by third party to the Ontario
      Ministry of Northern Development and Mines in the amount of $578.6.
      Gain on disposal of mining assetsThe gain on disposal of mining assets
      includes the following items:


2007
      $
      
      2006
      $
      
      2005
      $East Amphi property a)
      
      
      7,439
      
      
      -
      
      
      -Nugget Pond property b)
      
      
      -
      
      
      3,224
      
      
      -Other mining equipment
      
      
      627
      
      
      11
      
      
      2928,066
      
      
      3,235
      
      
      292


a)
      The mining operation at the East Amphi
      Mine ceased at the end of June 2007, following the depletion of its
      reserves. Work required for the closure of mining activities was completed
      in August 2007. In 2007, the Company generated precious metal revenue from
      the milling of ore extracted until the end of June 2007 and assumed the
      closing costs.On June 29, 2007, the Company concluded
      the sale of its East Amphi property in Quebec (including some service
      buildings, the rights, the mining concession and the exploration and
      drilling data) to Osisko Exploration Ltd. (Osisko) in exchange for a
      cash payment of $2,450 and a total of 1,109,000 common shares of Osisko
      valued at $6,086 of which 1,009,000 have been sold for a net amount of
      $5,543. The Company retains a net smelter return royalty of 2% on a
      specified portion of the future production of the East Amphi property and
      a similar royalty on future production of up to 300,000 ounces of gold on
      another portion of the property.Under this agreement, the Company has
      agreed to pay any amount in excess of $300 that Osisko incurs for the
      rehabilitation work of the mine for a period of six months starting from
      the date of the mine's definitive closure. Taking into account existing
      provisions of $129 included in accounts payable and accrued charges,
      management of the Company estimates that, at this time, no additional
      expenses will be incurred to this effect.The gain on disposal of the East Amphi
      property was calculated net of transaction costs and the book value of the
      assets sold.b)
      In October 2006, the Company sold the
      Nugget Pond property and gold mill located in Newfoundland for a cash
      consideration of $2,250 and $300 in shares of a public company. Following
      this sale, the Company wrote-down the asset retirement obligations
      relating to this property in the amount of $709. The transaction costs
      were taken into account in the calculation of the gain on disposal of this
      property.


7.
      Write-down of mining assetsIn 2005, the Company recorded a non-cash
      expense of $26,041 related to the reduction of the carrying value of the
      East Amphi property following the establishment of proven and probable
      reserves. The Company used the discounted future cash flow method to
      establish the fair value of this mining asset.


F-10

---



RICHMONT MINES INC. Notes to Consolidated Financial Statements
  Years ended December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)


8.
      Mining and income taxesThe income tax expense (recovery)
      attributable to earnings (loss) differs from the amounts computed by
      applying the combined federal and provincial income tax rate of 33.39%
      (32.27% in 2006 and 33.55% in 2005) to earnings (loss) before mining and
      income taxes as a result of the following:2007
      $
      
      2006
      $
      
      2005
      $Earnings (loss) before mining and income taxes
      
      
      7,941
      
      
      (222
      )
      
      (29,954
      )Tax
      expense (recovery) at combined statutory rate
      
      
      2,651
      
      
      (72
      )
      
      (10,050
      )Increase (decrease) in mining and income taxes resulting from:Resource allowance deduction
      
      
      -
      
      
      32
      
      
      109Deductible mining taxes
      
      
      (558
      )
      
      -
      
      
      -Change in the valuation allowance
      
      
      (1,130
      )
      
      (2,293
      )
      
      9,060Impact of the change in tax rates
      
      
      80
      
      
      625
      
      
      (573
      )Tax benefits not recorded previously
      
      
      (197
      )
      
      (784
      )
      
      65Other
      
      
      101
      
      
      (125
      )
      
      354Income
      taxes
      
      
      947
      
      
      (2,617
      )
      
      (1,035
      )Large
      corporation tax
      
      
      -
      
      
      39
      
      
      -Mining
      duties
      
      
      359
      
      
      (108
      )
      
      (1,445
      )Total mining and income tax expense (recovery)
      
      
      1,306
      
      
      (2,686
      )
      
      (2,480
      )


Mining and income tax
expense (recovery) attributable to earnings (loss) consist of:

2007
      $
      
      2006
      $
      
      2005
      $Current
      
      
      1,640
      
      
      (885
      )
      
      (2,959
      )Future
      
      
      (334
      )
      
      (1,801
      )
      
      4791,306
      
      
      (2,686
      )
      
      (2,480
      )


F-11

---



RICHMONT MINES INC. Notes to Consolidated Financial Statements
  Years ended December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)


|  
|--
|8.
|  
|  
|  

|                                                 |  |            |        |            |  |        |  
|------------------------------------------------ |  | ---------- | ------ | ---------- |  | ------ | -
|                                                 |  |            |        |            |  |        |  
|                                                 |  | 2007
    $ |        | 2006
    $ | 
|                                                 |  |            |        |            | 
|                                                 |  |            |        |            |  |        |  
|Long-term future tax asset:                      |  |            |        |            |  |        |  
|Property, plant and equipment                    |  |            | 4,283  |            |  | 8,093  |  
|Asset
    retirement obligations                 |  |            | 1,066  |            |  | 1,059  |  
|Share
    issue costs                            |  |            | 494    |            |  | 752    |  
|Losses
    carried forward                       |  |            | 821    |            |  | 513    |  
|Deductible future mining taxes                   |  |            | 353    |            |  | -      |  
|                                                 |  |            |        |            |  |        |  
|                                                 |  |            |        |            |  |        |  
|Future
    tax asset                             |  |            | 7,017  |            |  | 10,417 |  
|Less
    valuation allowance                     |  |            | (6,522 | )          |  | (7,653 | )
|                                                 |  |            |        |            |  |        |  
|                                                 |  |            |        |            |  |        |  
|                                                 |  |            | 495    |            |  | 2,764  |  
|                                                 |  |            |        |            |  |        |  
|                                                 |  |            |        |            |  |        |  
|Long-term future tax liability:                  |  |            |        |            |  |        |  
|Property, plant and equipment                    |  |            | (1,941 | )          |  | (1 217 | )
|Flow-through share financing                     |  |            | -      |            |  | (3 326 | )
|                                                 |  |            |        |            |  |        |  
|                                                 |  |            |        |            |  |        |  
|                                                 |  |            | (1,941 | )          |  | (4,543 | )
|                                                 |  |            |        |            |  |        |  
|                                                 |  |            |        |            |  |        |  
|Net
    long-term future tax liability           |  |            | (1,446 | )          |  | (1,779 | )
|                                                 |  |            |        |            |  |        |  
|                                                 |  |            |        |            |  |        |  
|As
    presented on consolidated balance sheets: |  |            |        |            |  |        |  
|Future
    mining and income tax asset           |  |            | -      |            |  | 55     |  
|Future
    mining and income tax liability       |  |            | (1,446 | )          |  | (1,834 | )
|                                                 |  |            |        |            |  |        |  
|                                                 |  |            |        |            |  |        |  
|                                                 |  |            | (1,446 | )          |  | (1,779 | )
|                                                 |  |            |        |            |  |        |  

|   |                                                                                                                                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                          
|   | Non-refundable provincial tax credits of
    $4,572 and non-refundable federal tax credits of $2,181, which may be used
    within the next ten to twenty years to reduce income taxes otherwise
    payable, have not been accounted for by the Company.
|   |                                                                                                                                                                                                                                                          
|9. | Net earnings (loss) per share                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                          

2007
      $
      
      2006
      $
      
      2005
      $Net
      earnings (loss) attributable to common shareholders ($)
      
      
      6,671
      
      
      3,194
      
      
      (27,480
      )Weighted average number of shares outstanding (thousands)
      
      
      24,159
      
      
      22,904
      
      
      17,838Effect
      of dilutive share purchase options (thousands)
      
      
      (21
      )
      
      (60
      )
      
      -Weighted average number of dilutive shares outstanding(thousands)
      
      
      24,138
      
      
      22,844
      
      
      17,838Basic
      earnings (loss) per share ($)
      
      
      0.28
      
      
      0.14
      
      
      (1.54
      )Diluted earnings (loss) per share ($)
      
      
      0.28
      
      
      0.14
      
      
      (1.54
      )


|    |                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                      
|10. | Short-term investments                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                      
|    | Short-term investments include investments
    in shares of publicly-traded companies. At December 31, 2006, these
    investments were carried at the lower of cost and market value. At that
    date, the market value was $1,080.

F-12

---



RICHMONT MINES INC. Notes to Consolidated Financial Statements
  Years ended December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)


11.
      Inventories


|                    |  |            |       |            |  |       | 
|------------------- |  | ---------- | ----- | ---------- |  | ----- | 
|                    |  |            |       |            |  |       | 
|                    |  | 2007
    $ |       | 2006
    $ | 
|                    |  |            |       |            | 
|                    |  |            |       |            |  |       | 
|Precious
    metals |  |            | 210   |            |  | 1,462 | 
|Ore                 |  |            | 3,663 |            |  | 2,593 | 
|Supplies            |  |            | 1,565 |            |  | 1,338 | 
|                    |  |            |       |            |  |       | 
|                    |  |            |       |            |  |       | 
|                    |  |            | 5,438 |            |  | 5,393 | 
|                    |  |            |       |            |  |       | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|12. | Advance to a minority partner                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The total advance to Patricia Mining
    Corp., the minority partner in the Island Gold Mine, is $3,375 as at
    December 31, 2007 ($4,500 as at December 31, 2006). An amount of $1,500
    ($1,125 as at December 31, 2006) is presented in accounts receivable as it
    is reimbursable within the next twelve months. The total advance bears
    interest at prime rate plus 3% (effective rate of 9% in 2007 and 2006) and
    is to be reimbursed in 36 equal and consecutive monthly instalments, which
    started on April 1, 2007. This advance is secured by the 45% interest which
    the borrower has in the property jointly owned with the Company.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | An amount of $159 included in accounts
    receivable which represents Patricia Mining Corp's share of the November
    2007 cash call of $90 and accrued interests of $69 had not been settled at
    December 31, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|13. | Property, plant and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|                                       |  |            |        |                                                      |  |                                   |  |            |        |                                                      |  |                                   |  |  |        |  |  |        | 
|-------------------------------------- |  | ---------- | ------ | ---------------------------------------------------- |  | --------------------------------- |  | ---------- | ------ | ---------------------------------------------------- |  | --------------------------------- |  |  | ------ |  |  | ------ | 
|                                       |  |            |        |                                                      |  |                                   |  |            |        |                                                      |  |                                   | 
|                                       |  | Cost
    $ |        | Accumulated
    depreciation
    and depletion
    $ |  | 2007
    Net book
    value
    $ |  | Cost
    $ |        | Accumulated
    depreciation
    and depletion
    $ |  | 2006
    Net book
    value
    $ | 
|                                       |  |            |        |                                                      |  |                                   |  |            |        |                                                      |  |                                   | 
|                                       |  |            |        |                                                      |  |                                   |  |            |        |                                                      |  |                                   |  |  |        |  |  |        | 
|Mining
    properties                  |  |            | 1,442  |                                                      |  | 818                               |  |            | 624    |                                                      |  | 6,792                             |  |  | 6,037  |  |  | 755    | 
|Development costs a)                   |  |            | 42,033 |                                                      |  | 6,965                             |  |            | 35 068 |                                                      |  | 10,164                            |  |  | 5,169  |  |  | 4,995  | 
|Buildings                              |  |            | 5,502  |                                                      |  | 1,973                             |  |            | 3 529  |                                                      |  | 2,719                             |  |  | 1,505  |  |  | 1,214  | 
|Equipment                              |  |            | 9,294  |                                                      |  | 4,228                             |  |            | 5 066  |                                                      |  | 7,860                             |  |  | 3,603  |  |  | 4,257  | 
|Asset
    retirement costs             |  |            | 1,930  |                                                      |  | 1,207                             |  |            | 723    |                                                      |  | 2,227                             |  |  | 1,375  |  |  | 852    | 
|                                       |  |            |        |                                                      |  |                                   |  |            |        |                                                      |  |                                   |  |  |        |  |  |        | 
|                                       |  |            |        |                                                      |  |                                   |  |            |        |                                                      |  |                                   |  |  |        |  |  |        | 
|                                       |  |            | 60,201 |                                                      |  | 15,191                            |  |            | 45,010 |                                                      |  | 29,762                            |  |  | 17,689 |  |  | 12,073 | 
|                                       |  |            |        |                                                      |  |                                   |  |            |        |                                                      |  |                                   |  |  |        |  |  |        | 
|                                       |  |            |        |                                                      |  |                                   |  |            |        |                                                      |  |                                   |  |  |        |  |  |        | 
|Projects
    under 
    development b) |  |            | -      |                                                      |  | -                                 |  |            | -      |                                                      |  | 35,928                            |  |  | -      |  |  | 35,928 | 
|                                       |  |            |        |                                                      |  |                                   |  |            |        |                                                      |  |                                   |  |  |        |  |  |        | 
|                                      
|Total                                  |  |            | 60,201 |                                                      |  | 15,191                            |  |            | 45,010 |                                                      |  | 65,690                            |  |  | 17,689 |  |  | 48,001 | 
|                                       |  |            |        |                                                      |  |                                   |  |            |        |                                                      |  |                                   |  |  |        |  |  |        | 

| |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                              
| | a)                                                                                                                                                                                                                                                       | In 2007, exploration tax credits of $350
    ($2,035 in 2005) were applied as a reduction of development costs.                                                                                                                              
| |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                              
| | b)                                                                                                                                                                                                                                                       | Proceeds from precious metal sales from
    development activities of the Island Gold Property of $16,775 were applied
    as a reduction of development costs in 2007 ($1,543 in 2006 applied to costs
    from projects under development).
| |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                              
| | As at October 1, 2007, the Island Gold
    Project entered into commercial production. All project under development
    costs, which totalled $37,177 at that date, were transferred to the
    applicable categories of property, plant and equipment.

| |  | 
| |  | 

F-13

---



RICHMONT MINES INC. Notes to Consolidated Financial Statements
  Years ended December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)


14.
      Capital stock


|                                                                    |  |                                     |        |                       |  |                                     |   |                       |        |                                     |   |                       |   |  |        |   |  |        |  
|------------------------------------------------------------------- |  | ----------------------------------- | ------ | --------------------- |  | ----------------------------------- | - | --------------------- | ------ | ----------------------------------- | - | --------------------- | - |  | ------ | - |  | ------ | -
|Authorized: Unlimited number
    of common shares with no par value |  |                                     |        |                       |  |                                     |   |                       |       
|                                                                    |  |                                     |        |                       |  |                                     |   |                       |        |                                     |   |                       |   |  |        |   |  |        |  
|                                                                    |  |                                     |        |                       |  |                                     |   |                       |        |                                     |   |                       |  
|                                                                    |  | Number
    of shares
    (thousands | )      | 2007
    Amount
    $ |  | Number
    of shares
    (thousands | ) | 2006
    Amount
    $ |        | Number
    of shares
    (thousands | ) | 2005
    Amount
    $ |  
|                                                                    |  |                                     |        |                       |  |                                     |   |                       |        |                                     |   |                       |  
|                                                                    |  |                                     |        |                       |  |                                     |   |                       |        |                                     |   |                       |   |  |        |   |  |        |  
|Issued and paid:                                                    |  |                                     |        |                       |  |                                     |   |                       |        |                                     |   |                       |   |  |        |   |  |        |  
|Common shares                                                       |  |                                     |        |                       |  |                                     |   |                       |        |                                     |   |                       |   |  |        |   |  |        |  
|Balance,
    beginning of year                                      |  |                                     | 24,180 |                       |  | 61,340                              |   |                       | 20,994 |                                     |   | 50,600                |   |  | 16,170 |   |  | 29,237 |  
|Issue of
    shares for cash a)                                     |  |                                     |        |                       |  |                                     |   |                       |        |                                     |   |                       |   |  |        |   |  |        |  
|Common                                                              |  |                                     | -      |                       |  | -                                   |   |                       | 3,100  |                                     |   | 15,190                |   |  | 3,246  |   |  | 15,905 |  
|Exercise
    of stock options                                       |  |                                     | 102    |                       |  | 257                                 |   |                       | 143    |                                     |   | 409                   |   |  | 154    |   |  | 306    |  
|Flow
    through                                                    |  |                                     | -      |                       |  | -                                   |   |                       | -      |                                     |   | -                     |   |  | 1,500  |   |  | 7,500  |  
|Common
    share issue costs a)                                     |  |                                     | -      |                       |  | -                                   |   |                       | -      |                                     |   | (1,413                | ) |  | -      |   |  | (1,905 | )
|Renouncement of tax deductions b)                                   |  |                                     | -      |                       |  | -                                   |   |                       | -      |                                     |   | (3,300                | ) |  | -      |   |  | (308   | )
|Redemption of shares c)                                             |  |                                     | (229   | )                     |  | (581                                | ) |                       | (57    | )                                   |   | (146                  | ) |  | (76    | ) |  | (135   | )
|                                                                    |  |                                     |        |                       |  |                                     |   |                       |        |                                     |   |                       |   |  |        |   |  |        |  
|                                                                    |  |                                     |        |                       |  |                                     |   |                       |        |                                     |   |                       |   |  |        |   |  |        |  
|Balance, end of year                                                |  |                                     | 24,053 |                       |  | 61,016                              |   |                       | 24,180 |                                     |   | 61,340                |   |  | 20,994 |   |  | 50,600 |  
|                                                                    |  |                                     |        |                       |  |                                     |   |                       |        |                                     |   |                       |   |  |        |   |  |        |  

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|a) | Issue of shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In 2006, the Company issued, through a
    public offering, 3,100,000 common shares. The Company received cash proceeds
    of $15,190. An amount of $1,413 was incurred as share issue costs.                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In 2005, the Company issued, through a
    private placement, 3,246,000 common shares and 1,500,000 flow-through
    shares. The Company received cash proceeds of $15,905 and $7,500,
    respectively. Share issue costs related of those transactions totalled
    $1,905.                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|b) | Renouncement of tax deductions                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In accordance with the 2005 flow-through
    share agreements of $7,500, the Company has renounced the related tax
    deductions in the amount of $3,300 with a corresponding amount presented as
    future income tax liabilities.                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|c) | Redemption of shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In December 2007, the Company made a
    normal course issuer bid to purchase its outstanding common shares. The
    Company may purchase between December 5, 2007 and December 4, 2008, up to
    1,200,000 common shares, representing approximately 5% of the 24,053,353
    common shares of the Company issued and outstanding on November 30, 2007.                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In 2007, the Company redeemed 229,000
    common shares for $658 in cash. This transaction increased the deficit by
    $77.                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In 2006, the Company redeemed 57,500
    common shares for $171 in cash. This transaction increased the deficit by
    $25.                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In 2005, the Company redeemed 75,600
    common shares for $345 in cash. This transaction increased the deficit by
    $210.                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|d) | Stock Option Purchase Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company has a Stock Option Purchase
    Plan under which options to acquire common shares may be granted to its
    directors, officers, employees and non-employees. According to this plan,
    established in 1995 and amended in 1997, 2002, 2003 and 2007, the Company
    may grant options for up to 4,444,400 common shares. The exercise price of
    each option is the market price of the Company's stock on the date of grant
    and the maximum term of the options granted is 10 years.

F-14

---



RICHMONT MINES INC. Notes to Consolidated Financial Statements
  Years ended December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)


14.
      Capital stock (continued)d)
    Stock Option Purchase Plan
    (continued)A summary of the status, in 2007 and
      2006, of the Company's Stock Option Purchase Plan, and changes during the
      years then ended, is presented below:


|                                                                                                          |  |                                      |       |                                                        |  |                                      |   |                                                        |       |   |  |      | 
|--------------------------------------------------------------------------------------------------------- |  | ------------------------------------ | ----- | ------------------------------------------------------ |  | ------------------------------------ | - | ------------------------------------------------------ | ----- | - |  | ---- | 
|                                                                                                          |  |                                      |       |                                                        |  |                                      |   |                                                        |      
|                                                                                                          |  | Number
    of options
    (thousands | )     | 2007
    Weighted
    average
    exercise price
    $ |  | Number
    of options
    (thousands | ) | 2006
    Weighted
    average
    exercise price
    $ |      
|                                                                                                          |  |                                      |       |                                                        |  |                                      |   |                                                        |      
|                                                                                                          |  |                                      |       |                                                        |  |                                      |   |                                                        |       |   |  |      | 
|Options
    outstanding, beginning of year                                                                |  |                                      | 2,118 |                                                        |  | 4.50                                 |   |                                                        | 1,948 |   |  | 4.73 | 
|Granted                                                                                                   |  |                                      | 620   |                                                        |  | 3.00                                 |   |                                                        | 630   |   |  | 3.59 | 
|Exercised                                                                                                 |  |                                      | (102  | )                                                      |  | 1.80                                 |   |                                                        | (143  | ) |  | 2.33 | 
|Cancelled                                                                                                 |  |                                      | (133  | )                                                      |  | 4.76                                 |   |                                                        | (317  | ) |  | 5.19 | 
|Expired                                                                                                   |  |                                      | (480  | )                                                      |  | 4.26                                 |   |                                                        | -     |   |  | -    | 
|                                                                                                          |  |                                      |       |                                                        |  |                                      |   |                                                        |       |   |  |      | 
|                                                                                                          |  |                                      |       |                                                        |  |                                      |   |                                                        |       |   |  |      | 
|Options outstanding, end of year                                                                          |  |                                      | 2,023 |                                                        |  | 4.22                                 |   |                                                        | 2,118 |   |  | 4.50 | 
|                                                                                                          |  |                                      |       |                                                        |  |                                      |   |                                                        |       |   |  |      | 
|                                                                                                          |  |                                      |       |                                                        |  |                                      |   |                                                        |       |   |  |      | 
|Exercisable options, end of year                                                                          |  |                                      | 1,020 |                                                        |  | 4.82                                 |   |                                                        | 1,350 |   |  | 4.66 | 
|                                                                                                          |  |                                      |       |                                                        |  |                                      |   |                                                        |       |   |  |      | 
|                                                                                                          |  |                                      |       |                                                        |  |                                      |   |                                                        |       |   |  |      | 
|The following table summarizes information
    about the Stock Option Purchase Plan at December 31, 2007: | 
|                                                                                                          | 

|                   |  |                                              |       |                                                             |  |                                           |  |                                      |      |                                           |  |       |  |  |      | 
|------------------ |  | -------------------------------------------- | ----- | ----------------------------------------------------------- |  | ----------------------------------------- |  | ------------------------------------ | ---- | ----------------------------------------- |  | ----- |  |  | ---- | 
|                   |  |                                              |       |                                                             |  |                                           |  |                                      |      |                                           |  |       |  |  |      | 
|                   |  | Options outstanding at
    December 31, 2007 |       | Exercisable options at
    December 31, 2007                | 
|Exercise
    price |  | Number
    of options
    (thousands         | )     | Weighted average
    remaining contractual
    life (years) |  | Weighted average
    exercise price
    $ |  | Number
    of options
    (thousands | )    | Weighted average
    exercise price
    $ | 
|                   |  |                                              |       |                                                             |  |                                           |  |                                      |      |                                           | 
|                   |  |                                              |       |                                                             |  |                                           |  |                                      |      |                                           |  |       |  |  |      | 
|$2.74 to $3.15     |  |                                              | 850   |                                                             |  | 4.4                                       |  |                                      | 2.96 |                                           |  | 222   |  |  | 2.94 | 
|$4.04 to $5.16     |  |                                              | 508   |                                                             |  | 2.1                                       |  |                                      | 4.43 |                                           |  | 253   |  |  | 4.53 | 
|$5.30 to $6.60     |  |                                              | 665   |                                                             |  | 2.1                                       |  |                                      | 5.65 |                                           |  | 545   |  |  | 5.72 | 
|                   |  |                                              |       |                                                             |  |                                           |  |                                      |      |                                           |  |       |  |  |      | 
|                   |  |                                              |       |                                                             |  |                                           |  |                                      |      |                                           |  |       |  |  |      | 
|                   |  |                                              | 2,023 |                                                             |  | 3.3                                       |  |                                      | 4.22 |                                           |  | 1,020 |  |  | 4.82 | 
|                   |  |                                              |       |                                                             |  |                                           |  |                                      |      |                                           |  |       |  |  |      | 

During 2007, the
Company granted 620,000 stock options (630,000 in 2006) to senior executives and
management. The weighted average fair value of these stock options at the grant
date, calculated using the Black- Scholes option pricing model, is $1.06 ($1.42
in 2006 and $2.35 in 2005).

The compensation costs
were calculated using the Black-Scholes option pricing model with the following
assumptions:

|                            |  |         |   |         |     |         |  |     |   | 
|--------------------------- |  | ------- | - | ------- | --- | ------- |  | --- | - | 
|                            |  | 2007    |   | 2006    |     | 2005    | 
|                            |  |         |   |         |     |         | 
|Risk-free interest rate     |  | 4.0     | % |         | 4.0 | %       |  | 3.0 | % | 
|Expected
    life           |  | 4 years |   | 4 years |     | 4 years | 
|Expected
    volatility     |  | 38      | % |         | 43  | %       |  | 55  | % | 
|Expected
    dividend yield |  | 0.0     | % |         | 0.0 | %       |  | 0.0 | % | 

In 2007, the
stock-based compensation costs charged to earnings amount to $575 ($393 in 2006
and $1,350 in 2005). The contributed surplus was increased by the same amounts.

F-15

---



RICHMONT MINES INC. Notes to Consolidated Financial Statements
  Years ended December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)


|    |                    
|--- | -------------------
|    |                    
|15. | Contributed surplus
|    |                    

|                               |  |            |       |            |  |       |  
|------------------------------ |  | ---------- | ----- | ---------- |  | ----- | -
|                               |  |            |       |            | 
|                               |  | 2007
    $ |       | 2006
    $ | 
|                               |  |            |       |            | 
|                               |  |            |       |            |  |       |  
|Balance,
    beginning of year |  |            | 4,591 |            |  | 4,273 |  
|                               |  |            |       |            |  |       |  
|Stock-based compensation       |  |            | 575   |            |  | 393   |  
|Options
    exercised          |  |            | (74   | )          |  | (75   | )
|                               |  |            |       |            |  |       |  
|                               |  |            |       |            |  |       |  
|Balance,
    end of year       |  |            | 5,092 |            |  | 4,591 |  
|                               |  |            |       |            |  |       |  

|    |                                     
|--- | ------------------------------------
|    |                                     
|16. | Consolidated statements of cash flow
|    |                                     

|                                                                                                                |  |            |       |            |  |            |   |  |        |  
|--------------------------------------------------------------------------------------------------------------- |  | ---------- | ----- | ---------- |  | ---------- | - |  | ------ | -
|                                                                                                                |  |            |       |            |  |            |  
|                                                                                                                |  | 2007
    $ |       | 2006
    $ |  | 2005
    $ |  
|                                                                                                                |  |            |       |            |  |            |  
|                                                                                                                |  |            |       |            |  |            |   |  |        |  
|Change
    in non-cash working capital items                                                                    |  |            |       |            |  |            |   |  |        |  
|                                                                                                                |  |            |       |            |  |            |   |  |        |  
|Short-term investments                                                                                          |  |            | 5,369 |            |  | 356        |   |  | (3     | )
|Accounts receivable                                                                                             |  |            | 205   |            |  | (364       | ) |  | 249    |  
|Mining and income taxes receivable (payable)                                                                    |  |            | 588   |            |  | 3,272      |   |  | (3,822 | )
|Inventories                                                                                                     |  |            | (45   | )          |  | (2,025     | ) |  | (2,023 | )
|Accounts payable and accrued charges                                                                            |  |            | 1,054 |            |  | 44         |   |  | (286   | )
|                                                                                                                |  |            |       |            |  |            |   |  |        |  
|                                                                                                                |  |            |       |            |  |            |   |  |        |  
|                                                                                                                |  |            | 7,171 |            |  | 1,283      |   |  | (5,885 | )
|                                                                                                                |  |            |       |            |  |            |   |  |        |  
|                                                                                                                |  |            |       |            |  |            |   |  |        |  
|Supplemental information                                                                                        |  |            |       |            |  |            |   |  |        |  
|Cash received during the year:                                                                                  |  |            |       |            |  |            |   |  |        |  
|Interests                                                                                                       |  |            | 1,450 |            |  | 982        |   |  | 472    |  
|Mining and income taxes                                                                                         |  |            | 303   |            |  | 4,892      |   |  | 326    |  
|Items not affecting cash and cash equivalents:                                                                  |  |            |       |            |  |            |   |  |        |  
|Advances to a minority partner presented as an increase to
    minority interest                                |  |            | -     |            |  | 4,121      |   |  | -      |  
|Asset retirement obligation transferred to accounts payable
    and accrued charges                             |  |            | 129   |            |  | -          |   |  | -      |  
|Common shares of public company received as consideration
    from disposal of mining assets (note 6)           |  |            | 6,086 |            |  | 300        |   |  | -      |  
|                                                                                                                |  |            |       |            |  |            |   |  |        |  
|Accounts payable and accrued charges related to development
    projects an other property, plant and equipment |  |            | 477   |            |  | 2,533      |   |  | 1,912  |  

17.
      Pension planThe Company contributes a percentage of
      its Canadian payroll expense to a defined contribution plan. The expense
      in 2007 was $289 ($162 in 2006 and $139 in 2005).18.
      CommitmentsThe Company is subject to pay royalties
      on 50% of the production of the Beaufor Mine at the rate of $30 per ounce
      produced, a 3% royalty per ounce produced at the Island Gold Mine, and on
      other properties if such other properties are brought into commercial
      production.


F-16

---



RICHMONT MINES INC. Notes to Consolidated Financial Statements
  Years ended December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)


18.
      Commitments (continued)On November 5, 2007 (with amendment
      dated December 21, 2007), the Company signed an agreement with LKA
      International, Inc. (LKA) to acquire an option with the intent of
      acquiring a 50% interest in the Golden Wonder property, located near Lake
      City, Colorado, USA. In accordance with the terms of the agreement, the
      Company paid an initial amount of $US150 to evaluate the Golden Wonder
      property. In December 2007, the Company exercised the option and paid an
      additional amount of US$150. The Company must invest a total amount of
      US$3 million prior to September 1, 2008, including exploration and
      development expenditures, the option payment of US$300 and transaction
      costs. In order to maintain its rights in an option and joint venture
      agreement to be signed no later than September 1, 2008, the Company is
      committed to subscribe to US$1.5 million in common shares of LKA. The
      Company will subsequently have the option to invest supplementary amounts
      of US$3 million (during an 8-month period starting September 1, 2008),
      US$6 million (during the following 24-month period) and a final amount of
      US$6 million (during the 24-month period ending on April 30, 2013) to earn
      its 50% interest in the property. In accordance with the agreement, the
      Company will receive 50% of the net proceeds of gold sales made during all
      phases on the project.19.
      Financial instruments and risk
      managementThe Company is exposed to gold price
      fluctuations and to fluctuations of the US dollar compared to the Canadian
      dollar. The Company manages its exposure to these risks through the
      occasional use of derivative financial instruments and gold commodity
      contracts.The Board of Directors approves all
      policies concerning the use of derivative financial instruments and gold
      sales contracts. The Company holds no financial instrument or derivative
      financial instrument for trading or speculative purposes.a)
      Foreign exchange riskThe price of gold is established in US
      dollars; to manage its exposure due to the fluctuation of the US dollar,
      the Company can occasionally enter into various types of foreign exchange
      contracts. During the years 2007, 2006 and 2005, the Company did not enter
      into any forward exchange contracts. As at December 31, 2007, an amount of
      US$3,604 was included in cash and cash equivalents (US$28 as at December
      31, 2006).b)
      Commodity price riskFor its gold production, the Company can
      reduce its risk of a decrease in the price of gold through the occasional
      use of forward sales contracts and put and call options. In 2007, 2006 and
      2005, the Company did not enter into hedging contracts for its gold
      production.c)
      Credit riskFinancial instruments that expose the
      Company to market risk and concentration of credit risk consist primarily
      of cash and cash equivalents, accounts receivable, forward contracts and
      option contracts for currencies and gold, when used. The Company invests
      its cash and cash equivalents in high-quality securities issued by
      government agencies, financial institutions and major corporations, and
      limits the amount of credit exposure by diversifying its holdings. The
      Company is exposed to credit risk in the event of non-performance by
      counterparties in connection with, when applicable, its currency and gold
      forward option contracts and its hedging. The Company does not obtain any
      security to support financial instruments subject to credit risk but
      mitigates this risk by dealing only with a diverse group of financially
      sound counterparties and, accordingly, does not anticipate any loss for
      non-performance.d)
      Fair value of financial instrumentsThe Company owns and assumes other
      assets and liabilities such as cash and cash equivalents, accounts
      receivable, as well as accounts payable and accrued charges. The fair
      value of these financial assets and liabilities approximates their book
      value as these items will be realized or paid within one year.The fair value of the advance to a
      minority partner approximates its book value as it bears interest at a
      variable rate.The fair value of short-term investments
      in publicly-traded companies is the bid price and for the options issued
      by publicly-traded companies, the fair value is calculated using the
      Black-Scholes option pricing model with the following assumptions:
      risk-free interest rate of 3.78%, expected life of 14 months and 19
      months, expected volatility of 100% and no expected dividend yield.


F-17

---



RICHMONT MINES INC. Notes to Consolidated Financial Statements
  Years ended December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)


|    |                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                  
|20. | Segmented information                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The Company operates gold mines at
    different sites in Quebec and Ontario. These sites are managed separately
    given their different locations. The Company assesses the performance of
    each segment based on earnings (loss) before other items. Accounting
    policies for each segment are the same as those used for the preparation of
    the consolidated financial statements.
|    |                                                                                                                                                                                                                                                                                                                                                                                                  

2007
      
      Quebec
      $
      
      Ontario
      $
      
      Exploration,
      corporate
      and others
      $
      
      Total
      $Revenue
      
      
      30,363
      
      
      5,743
      
      
      1,965
      
      
      38,071Mine operating costs and others
      
      
      21,290
      
      
      4,912
      
      
      3,078
      
      
      29,280Exploration and
      project evaluation
      
      
      1,578
      
      
      506
      
      
      1,204
      
      
      3,288Depreciation and depletion
      
      
      4,683
      
      
      763
      
      
      182
      
      
      5,628Gain on disposal of
      mining assets
      
      
      (8,044
      )
      
      -
      
      
      (22
      )
      
      (8,066
      )Earnings (loss) before other items
      
      
      10,856
      
      
      (438
      )
      
      (2,477
      )
      
      7,941Acquisition (sale) of
      property, plant and equipment
      
      
      (908
      )
      
      2,308
      
      
      1,237
      
      
      2,637Current assets
      
      
      5,741
      
      
      2,341
      
      
      31,009
      
      
      39,091Advance to a minority
      partner
      
      
      -
      
      
      -
      
      
      1,875
      
      
      1,875Property, plant and equipment
      
      
      4,969
      
      
      38,242
      
      
      1,799
      
      
      45,010Total assets
      
      
      10,710
      
      
      40,583
      
      
      34,683
      
      
      85,976




2006
      
      Quebec
      $
      
      Ontario
      $
      
      Exploration,
      corporate
      and others
      $
      
      Total
      $Revenue
      
      
      31,449
      
      
      73
      
      
      1,367
      
      
      32,889Mine operating costs and others
      
      
      28,374
      
      
      38
      
      
      2,708
      
      
      31,120Exploration and
      project evaluation
      
      
      1,528
      
      
      272
      
      
      280
      
      
      2,080Depreciation and depletion
      
      
      3,050
      
      
      -
      
      
      96
      
      
      3,146Gain on disposal of
      mining assets
      
      
      -
      
      
      -
      
      
      (3,235
      )
      
      (3,235
      )Earnings (loss) before other items
      
      
      (1,503
      )
      
      (237
      )
      
      1,518
      
      
      (222
      )Acquisition of
      property, plant and equipment
      
      
      2,026
      
      
      23,391
      
      
      377
      
      
      25,794Current assets
      
      
      6,633
      
      
      2,058
      
      
      18,376
      
      
      27,067Advance to a minority
      partner
      
      
      -
      
      
      -
      
      
      3,375
      
      
      3,375Property, plant and equipment
      
      
      10,560
      
      
      36,697
      
      
      744
      
      
      48,001Future mining and
      income taxes
      
      
      55
      
      
      -
      
      
      -
      
      
      55Total assets
      
      
      17,248
      
      
      38,755
      
      
      22,495
      
      
      78,498


F-18

---



RICHMONT MINES INC. Notes to Consolidated Financial Statements
  Years ended December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)




2005
      
      Quebec
      $
      
      Ontario
      $
      
      Exploration,
      corporate
      and others
      $
      
      Total
      $Revenue
      
      
      20,682
      
      
      8
      
      
      663
      
      
      21,353Mine
      operating costs and others
      
      
      17,750
      
      
      -
      
      
      3,815
      
      
      21,565Exploration and project evaluation
      
      
      1,080
      
      
      320
      
      
      975
      
      
      2,375Depreciation and depletion
      
      
      1,532
      
      
      -
      
      
      86
      
      
      1,618Gain
      on disposal of mining assets
      
      
      -
      
      
      -
      
      
      (292
      )
      
      (292
      )Write-down of mining assets
      
      
      26,041
      
      
      -
      
      
      -
      
      
      26,041Loss
      before other items
      
      
      (25,721
      )
      
      (312
      )
      
      (3,921
      )
      
      (29,954
      )Acquisition of property, plant and equipment
      
      
      16,352
      
      
      12,622
      
      
      61
      
      
      29,035Current assets
      
      
      7,727
      
      
      612
      
      
      18,745
      
      
      27,084Property, plant and equipment
      
      
      12,028
      
      
      13,306
      
      
      517
      
      
      25,851Future
      mining and income taxes
      
      
      662
      
      
      -
      
      
      629
      
      
      1,291Total
      assets
      
      
      20,417
      
      
      13,918
      
      
      19,891
      
      
      54,226


F-19

---



RICHMONT MINES INC. Notes to Consolidated Financial Statements
  Years ended December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)


21.
      Effect of applying United States
      generally accepted accounting principlesThese consolidated financial statements
      have been prepared in accordance with Canadian generally accepted
      accounting principles (Canadian GAAP). Had these consolidated financial
      statements been prepared in accordance with United States generally
      accepted accounting principles (US GAAP), the effect on net earnings
      (loss), property, plant and equipment, minority interest, accumulated
      other comprehensive income, shareholders' equity and on consolidated
      statements of cash flow would have been as follows:


2007
      
      2006
      
      2005$
      
      
      $
      
      
      $(Restated)Net
      earnings (loss) reported under Canadian GAAP
      
      
      6,671
      
      
      3,194
      
      
      (27,480
      )Add
      (deduct):Difference in accounting related to investments a)
      
      
      (412
      )
      
      (394
      )
      
      180Difference in accounting related to stock-based
      compensation b)
      
      
      57
      
      
      -
      
      
      -Exploration and development costs related to mining
      properties c)
      
      
      (509
      )
      
      (20,593
      )
      
      (21,548
      )Depreciation and depletion d)
      
      
      75
      
      
      (405
      )
      
      (839
      )Flow-through shares e)
      
      
      -
      
      
      (2,070
      )
      
      (130
      )Write-down of mining assets f)
      
      
      -
      
      
      -
      
      
      20,302Mining and income taxes g)
      
      
      -
      
      
      -
      
      
      (2,836
      )Minority interest h)
      
      
      353
      
      
      9,204
      
      
      1,309Net
      earnings (loss) reported under US GAAP
      
      
      6,235
      
      
      (11,064
      )
      
      (31,042
      )Net
      earnings (loss) per share reported under US GAAPBasic and diluted
      
      
      0.26
      
      
      (0.48
      )
      
      (1.74
      )Property, plant and equipment reported under Canadian GAAP
      
      
      45,010
      
      
      48,001
      
      
      25,851Exploration and development costs related to mining properties c)
      
      
      (31,258
      )
      
      (30,749
      )
      
      (30,458
      )Write-down of mining assets f)
      
      
      -
      
      
      -
      
      
      20,302Cumulative depreciation and depletion d)
      
      
      (1,432
      )
      
      (1,507
      )
      
      (1,102
      )Property, plant and equipment reported under US GAAP
      
      
      12,320
      
      
      15,745
      
      
      14,593Minority interest under Canadian GAAP
      
      
      14,238
      
      
      12,745
      
      
      3,196Minority interest h)
      
      
      (10,866
      )
      
      (10,513
      )
      
      (1,309
      )Minority interest under US GAAP
      
      
      3,372
      
      
      2,232
      
      
      1,887Accumulated other comprehensive income under Canadian GAAP
      
      
      352
      
      
      -
      
      
      -Difference in accounting related to investments a)
      
      
      88
      
      
      -
      
      
      -Accumulated other comprehensive income under US GAAP
      
      
      440
      
      
      -
      
      
      -Shareholders' equity reported under Canadian GAAP
      
      
      61,813
      
      
      54,690
      
      
      40,463Difference in accounting related to exploration costs c)
      
      
      (31,258
      )
      
      (30,749
      )
      
      (30,458
      )Write-down of mining assets f)
      
      
      -
      
      
      -
      
      
      20,302Depreciation and depletion d)
      
      
      (1,432
      )
      
      (1,507
      )
      
      (1,102
      )Difference in accounting related to investments a)
      
      
      -
      
      
      323
      
      
      717Difference in accounting related to share of a minority
      partner h)
      
      
      10,866
      
      
      10,513
      
      
      1,309Flow-through shares e)
      
      
      -
      
      
      -
      
      
      (1,230
      )Shareholders' equity reported under US GAAP
      
      
      39,989
      
      
      33,270
      
      
      30,001


F-20

---



RICHMONT MINES INC. Notes to Consolidated Financial Statements
  Years ended December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)


2007
      
      2006
      
      2005$
      
      
      $
      
      
      $(Restated)Cash flow from (used in) operating activities under Canadian GAAP
      
      
      11,811
      
      
      2,429
      
      
      (3,996
      )Exploration and development costs related to mining properties c)
      
      
      (509
      )
      
      (20,593
      )
      
      (21,548
      )Flow-through shares e)
      
      
      -
      
      
      (2,070
      )
      
      (130
      )Cash flow from (used in) operating activities under US GAAP
      
      
      11,302
      
      
      (20,234
      )
      
      (25,674
      )Cash flow used in investing activities under Canadian GAAP
      
      
      (1,611
      )
      
      (21,087
      )
      
      (28,085
      )Exploration and development costs related to mining properties c)
      
      
      509
      
      
      20,593
      
      
      21,548Cash flow used in investing activities under US GAAP
      
      
      (1,102
      )
      
      (494
      )
      
      (6,537
      )Cash flow from financing activities under Canadian GAAP
      
      
      965
      
      
      20,105
      
      
      21,490Flow-through shares e)
      
      
      -
      
      
      2,070
      
      
      130Cash flow from financing activities under US GAAP
      
      
      965
      
      
      22,175
      
      
      21,620


2005 RestatementDuring 2006, the Company reviewed the
      classification of its East Amphi and Island Gold mining projects. These
      projects, which were improperly considered as development stage, were
      reclassified as exploration stage and the capitalized costs related to
      these projects were charged to earnings under US GAAP. Accordingly, the
      Company increased its net loss by $3,586 in 2005 compared to the
      previously published results. The net loss per share was increased by
      $0.20 in 2005. Shareholders' equity as at January 1, 2006 was decreased by
      $9,824.a)
      Short-term investments acquired before
      December 31, 2006 were classified as held-for-trading and were recorded at
      fair value and changes in value were accounted for in earnings under
      SFAS-133. Following the adoption of Section 3855 of the CICA Handbook, on
      January 1, 2007, the Company classified the short-term investments
      acquired in 2007 as available-for-sale. These investments must be recorded
      at fair value and changes to their value must be included in other
      comprehensive income.b)
      Under US GAAP, the cost of stock based
      compensation must take into account a factor for employee turnover,
      related to employees having received such stock options, and reduce the
      cost accordingly.c)
      Under Canadian GAAP, exploration and
      development costs incurred, subsequent to the date of establishing that a
      property has mineral resources which have the potential of being
      economically recoverable are capitalized to property, plant and equipment.
      Under United States Securities and Exchange Commission (SEC) guidelines,
      all costs incurred before a commercially mineable deposit is established,
      generally by completing a bankable feasibility study, must be charged to
      earnings as incurred.d)
      Depreciation calculated under US GAAP is
      higher than the amount calculated under Canadian GAAP as buildings and
      equipment relating to mining properties, which commercial viability has
      yet to be determined, are depreciated using the straight-line method based
      on their anticipated useful life. Under Canadian GAAP, this expense is
      capitalized. Following the start of commercial production, capitalized
      development costs are depreciated according to the units-of-production
      method, using proven and probable reserves.


F-21

---



RICHMONT MINES INC. Notes to Consolidated Financial Statements
  Years ended December 31, 2007, 2006 and 2005 
  (in thousands of Canadian dollars)


21.
      Effect of applying United States
      generally accepted accounting principles (continued)2005 Restatement
      (continued)e)
      Under US GAAP, the premium paid on
      flow-through shares issued must be recognized as a liability when these
      shares are issued; under GAAP in Canada, the tax effect of the
      renouncement of the deductibility of exploration expenses by the Company
      is deducted from shareholders' equity on the date of such renouncement.f)
      The Company periodically reviews the
      book value of its property, plant and equipment under the Canadian and
      United States GAAP. The impact on the 2005 net loss is attributable to a
      lower net book value of the affected assets under US GAAP compared to
      Canadian GAAP since exploration and development costs were charged to
      earnings under US GAAP as explained in c) above.g)
      Amounts represent the tax impact
      relating to the adjustments described in a), b), c), d), e) and f) above.h)
      Amounts represent the impact on the
      share of a minority interest to the adjustments described in c) and d)
      related to expenses attributable to the Island Gold project.New Accounting
      Pronouncement sOn January 1,
      2007, the FASB Interpretation No. 48, Accounting for Uncertainty in Tax
      Positions, an Interpretation of FASB Statement No. 109, (FIN 48),
      became effective for the Company. FIN 48 addresses the recognition and
      measurement of all tax positions. The recognition process involves
      determining whether it is more likely than not that a tax position would
      be sustained on audit based solely on its technical merits. The amount of
      benefit recognized in the financial statements is the maximum amount which
      is more likely than not to be realized based on a cumulative probability
      approach. The adoption of FIN 48 did not have any impact on the financial
      statements of the Company.Recent Accounting PronouncementsIn September 2006, the FASB issued FAS
      Statement No 157, Fair Value Measurements (FAS 157). FAS 157 provides
      guidance on how to use fair values to measure assets and liabilities and
      applies whenever other standards require or permit assets or liabilities
      to be measured at fair value. Expanded disclosures about the use of fair
      value to measure assets and liabilities are also required. FAS 157 is
      effective for the Company on January 1, 2008. The Company is currently
      assessing the impact of FAS 157 on its consolidated financial statements.In February 2007, the FASB issued FAS
      No. 159 The Fair Value Option for Financial Assets and Financial
      Liabilities including an amendment of FASB Statement No. 115. This
      Statement permits entities to choose to measure many financial instruments
      and certain other items at fair value. This Statement applies to all
      entities, including not-for-profit organizations. Most of the provisions
      of this Statement apply only to entities that elect the fair value option.
      FAS No. 159 is effective for fiscal years beginning after November 15,
      2007. The Company is currently evaluating the impact that FAS 159 will
      have on its consolidated financial statements.In December 2007, the FASB issued SFAS
      No. 141 (revised 2007), Business Combinations (FAS 141R), which
      replaces FAS 141 and SFAS no. 160, Non-controlling Interest in
      Consolidated Financial Statements, an amendment of ARB No. 51 (FAS
      160). FAS 141R establishes principles and requirements for how an
      acquirer in a business combination recognizes and measures in its
      financial statements the identifiable assets acquired, the liabilities
      assumed, and any controlling interest; recognizes and measures the
      goodwill acquired in the business combination or a gain from a bargain
      purchase; and determines what information to disclose to enable users of
      the financial statements to evaluate the nature and financial effects of
      the business combination. FAS 160 requires retroactive adoption of the
      presentation and disclosure requirements for existing minority interests.
      FAS 141R and FAS 160 shall be applied prospectively on or after an
      entity's fiscal year that begins on or after December 15, 2008. The
      Company is currently assessing the impact that FAS 141R and FAS 160 will
      have on its consolidated financial statements.22.
      Comparative figuresCertain comparative figures provided for
      fiscal years 2006 and 2005 have been reclassified to conform with the
      presentation adopted for the fiscal year ended December 31, 2007.


F-22

---