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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F [   ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR [ XXX ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
    For the fiscal year ended December 31, 2010 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 001-14598 RICHMONT MINES INC.(Exact name of Registrant as specified in its charter) Quebec, Canada(Jurisdiction of incorporation or organization) 161, Avenue Principale, Rouyn-Noranda, Quebec, Canada J9X 4P6(Address of principal executive offices) Martin Rivard 
    Telephone: 819-797-2465 
    Facsimile: 819-797-0166
    161, Avenue Principale, Rouyn-Noranda, Quebec, Canada J9X 4P6
    (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 RegisteredCommon Stock, no par value
        The Toronto Stock Exchange and the NYSE Amex
  Securities registered or to be registered pursuant to Section 12(g) of the Act: None


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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, 2010: 31,230,063. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [   ]  No [ X ] 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 [ X ] 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 [ X ]  No [   ] Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [   ]  No [ X ] 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 [ X ]
        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 by  [   ]
        Other [ X ]the International Accounting Standards Board
  If Other has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow: Item 17 [ X ]  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 [ X ]


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TABLE OF CONTENTS PAGEITEM 1.
        IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
        **3**ITEM 2.
        OFFER STATISTICS AND EXPECTED TIMETABLE
        3ITEM 3.
        KEY INFORMATION
        4ITEM 4.
        INFORMATION ON THE COMPANY
        18ITEM 4A.
        UNRESOLVED STAFF COMMENTS
        62ITEM 5.
        OPERATING AND FINANCIAL REVIEW AND PROSPECTS
        62ITEM 6.
        DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
        88ITEM 7.
        MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
        103ITEM 8.
        FINANCIAL INFORMATION
        106ITEM 9.
        THE OFFER AND LISTING
        107ITEM 10.
        ADDITIONAL INFORMATION
        109**ITEM 11.**
        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
        123**ITEM 12.**
        **DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES**
        124ITEM 13.
        DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
        124ITEM 14.
        MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
        **124**ITEM 15.
        CONTROLS AND PROCEDURES
        124ITEM 16.A.
        AUDIT COMMITTEE FINANCIAL EXPERT
        126ITEM 16.B.
        CODE OF ETHICS
        126ITEM 16.C.
        PRINCIPAL ACCOUNTANT FEES AND SERVICES
        126ITEM 16.D.
        EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
        127ITEM 16.E.
        PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
        127ITEM 16.F.
        CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT
        127ITEM 16.G.
        CORPORATE GOVERNANCE
        127ITEM 17.
        CONSOLIDATED FINANCIAL STATEMENTS
        128ITEM 18.
        CONSOLIDATED FINANCIAL STATEMENTS
        129ITEM 19.
        EXHIBITS
        130


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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. Such forward-looking statements reflect the Company's views as at the date of this Form 20-F and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company or industry results, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the Risk Factors set forth in "Item 3. Key Information  Risk Factors". Given these uncertainties, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as otherwise required by law, the Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based. 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 (Canadian 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. Terminology Unless otherwise specified, all units of measurement used in this report are expressed according to the metric system. The most commonly used conversion factors and their respective abbreviations are shown below: 1 troy ounce (oz) = 31.1035 grams (g)
    1 tonne (t) = 1.1023 short ton (2,000 pounds)
    1 metre (m) = 3.28 feet
    Au: gold
    g/t: gram per tonne
    ha: hectare
    NSR: Net Smelter Return 1


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t/d: tonnes per day
    cm: centimetre
    mm: millimetre
    kg: kilogram
    g: gram
    t/m3: tonnes per cubic metre
    km: Kilometre
    NPI: Net profit interest
    ppb: part per billion Currency and amounts In this Annual Report, all dollar amounts are in thousands of Canadian dollars unless otherwise stated. Definitions Mineral Reserve Mineral Reserves are sub-divided in order of increasing confidence into Probable Mineral Reserves and Proven Mineral Reserves. A Probable Mineral Reserve provides a lower level of confidence than a Proven Mineral Reserve. A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a preliminary feasibility study. Such study must include adequate information on mining, processing, metallurgical, economic parameters and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material is mined. Proven Mineral Reserves A Proven Mineral Reserve is the economically mineable part of a Measured Mineral Resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic parameters and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified. Probable Mineral Reserves A Probable Mineral Reserve is the economically mineable part of an Indicated Mineral Resource and, in some cases, a Measured Mineral Resource, demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic parameters, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. Mineral Resources Mineral Resources are sub-divided in order of increasing geological confidence into Inferred, Indicated and Measured categories. An Inferred Mineral Resource has a lower level of confidence than that applied to an Indicated Mineral Resource. An Indicated Mineral Resource has a higher level of confidence than an Inferred Mineral Resource but has a lower level of confidence than a Measured Mineral Resource. A Mineral Resource is a concentration or occurrence of natural solid inorganic or fossilized organic material in or on the Earths crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. 2


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Measured Mineral Resources A Measured Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, density, shape, and physical characteristics are so well established that they can be estimated with sufficient confidence to allow the appropriate application of technical and economic parameters to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity. Indicated Mineral Resources An Indicated Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, density, shape, and physical characteristics can be estimated with a level of sufficient confidence to allow the appropriate application of technical and economic parameters to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed. Inferred Mineral Resources An Inferred Mineral Resource is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. ITEM 1.
        IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
 Not applicable. ITEM 2.
        OFFER STATISTICS AND EXPECTED TIMETABLE
 Not applicable. 3


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ITEM 3.
        KEY INFORMATION
  A.
        Selected Financial Data
 The selected financial data of Richmont Mines Inc. (consolidated with its wholly-owned subsidiaries, Camflo Mill Inc., Patricia Mining Corporation (Patricia Mining) and Louvem Mines Inc. (Louvem); herein referred to collectively as 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, 2010, 2009 and 2008 and which are included elsewhere in this Annual Report. The selected financial data were 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 thousands of 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, 2010, 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 and currently has no intention of paying dividends subject to a periodic review of this policy by the Board of Directors. 4


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Selected Financial Data(Canadian GAAP)(in thousands of Canadian dollars except per share and share data)2010
        
        2009
        
        2008
        
        2007
        
        2006Total revenues
        
        90,781
        
        71,884
        
        70,591
        
        38,071
        
        32,889Net earnings
        
        9,011
        
        336
        
        1,635
        
        6,671
        
        3,194Net earnings per shareBasic
        
        $0.31
        
        $0.01
        
        $0.07
        
        $0.28
        
        $0.14Diluted
        
        $0.31
        
        $0.01
        
        $0.07
        
        $0.28
        
        $0.14Total assets
        
        117,646
        
        85,230
        
        82,881
        
        85,976
        
        78,498Long-term debt
        
        -
        
        -
        
        -
        
        -
        
        -Working capital
        
        43,880
        
        24,936
        
        26,753
        
        33,970
        
        21,171Shareholders equityTotal
        
        96,851
        
        69,961
        
        69,042
        
        76,051
        
        67,435Capital stock
        
        88,598
        
        64,675
        
        64,672
        
        61,016
        
        61,340Number of outstanding common shares at year end (000s)
        
        31,230
        
        26,104
        
        26,113
        
        24,053
        
        24,180
 5


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Selected Financial Data(U.S. GAAP Reconciliation)(in thousands of Canadian dollars except per share and share data)2010
        
        2009
        
        2008
        
        2007
        
        2006Net income (loss)
        
        3,303
        
        1,579
        
        3,576
        
        6,235
        
        (11,064
        )Net earnings (loss) per shareBasic
        
        $0.11
        
        $0.06
        
        $0.15
        
        $0.26
        
        ($0.48
        )Diluted
        
        $0.11
        
        $0.06
        
        $0.15
        
        $0.26
        
        ($0.48
        )Weighted average number ofcommon shares outstanding (000s)
        
        28,687
        
        26,108
        
        24,047
        
        24,159
        
        22,904Shareholders equity
        
        72,227
        
        51,313
        
        49,192
        
        54,315
        
        46,015
 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 is fixed by the Bank of Canada. 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. 6


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U.S. Dollar/Canadian Dollar Exchange Rates Year endedDecember 31
        Average2006
        1.132007
        1.072008
        1.072009
        1.142010
        1.03
  The following table sets forth the high and low exchange rate for the past six months. As of April 21, 2011, the exchange rate was 1.05. U.S. Dollar/Canadian Dollar Exchange Rates Month
        High
        LowNovember 2010
        0.9980
        1.0286December 2010
        0.9931
        1.0216January 2011
        0.9848
        1.0060February 2011
        0.9710
        0.9984March 2011
        0.9671
        0.9974April 1stto April 21st, 2011
        0.9469
        0.9722
  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: The exploration of mineral properties is highly speculative, involves substantial expenditures and is frequently unsuccessful. The Company's profitability is significantly affected by the costs and results of its exploration and development programs. As mines have limited lives based on Proven and Probable Mineral Reserves, the Company actively seeks to replace and expand its Mineral Reserves, primarily through exploration and development as well as through strategic acquisitions. Exploration for minerals is highly speculative in nature, involves many risks and is frequently unsuccessful. Among the many uncertainties inherent in any gold exploration and development program are the location of economic ore bodies, the development of appropriate metallurgical processes, the receipt of necessary governmental permits and the construction of mining and processing facilities. Substantial expenditures are required to pursue such exploration and development activities. Assuming discovery of an economic ore body, depending on the type of mining operation involved, several years may elapse from the initial phases of drilling until commercial operations are commenced and during such time the economic feasibility of production may change. Accordingly, the Company's current or future exploration and development programs may not result in any new economically viable mining operations or yield new Mineral Reserves to replace and expand current Mineral Reserves. 7


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The Company's financial performance and results may fluctuate widely due to volatile and unpredictable commodity prices and changes in the exchange rate between the U.S. and Canadian Dollars. The Company's earnings are directly related to commodity prices as revenues are derived principally from the sale of gold. Gold prices fluctuate widely and are affected by numerous factors beyond the Company's control, including central bank purchases and sales, producer hedging and de-hedging activities, expectations of inflation, the relative exchange rate of the U.S. dollar with other major currencies, global and regional demand, political and economic conditions, production costs in major gold-producing regions and worldwide production levels. The aggregate effect of these factors is impossible to predict with accuracy. In addition, the price of gold has on occasion been subject to very rapid short-term changes because of speculative activities. Fluctuations in gold prices may materially adversely affect the Company's financial performance or results of operations. If the market price of gold falls below the Company's total cash costs per ounce of production at one or more of its projects at that time and remains so for any sustained period, the Company may experience losses and/or may curtail or suspend some or all of its exploration, development and mining activities at such projects or at other projects. Also, the Company's evaluation of proven and probable reserves at its current mines were based on a market price of gold between $800 and $1,000 per ounce. If the market price of gold falls below this level, the mines may be rendered uneconomic and production may be suspended. The Company's policy and practice is not to sell forward its future gold production; however, under the Company's price risk management policy, approved by the Company's Board of Directors (the "Board"), the Company may review this practice on a project by project basis. See "Item 11 Quantitative and Qualitative Disclosures about Market Risk  Derivatives" for more details on the Company's use of derivative instruments. The Company may occasionally use derivative instruments to mitigate the effects of fluctuating byproduct metal prices; however, these measures may not be successful. The volatility of gold prices is illustrated in the following table which sets out, for the periods indicated, the high, low and average afternoon fixing prices for gold on the London Bullion Market (the "London P.M. Fix"). (US$ per ounce)
        2010
        2009
        2008
        2007
        2006High price
        1,421
        1,212
        1,011
        841
        725Low price
        1,058
        810
        712
        608
        525Average price
        1,225
        972
        872
        695
        604
 On April 21, 2011, the London P.M. Fix was US$1,504 per ounce of gold. The Company's operating results and cash flow are significantly affected by changes in the U.S. dollar/Canadian dollar exchange rate. All of the Company's precious metals revenues are earned in U.S. dollars but the majority of its operating costs at its mines, are in Canadian dollars. The U.S. dollar/Canadian dollar exchange rate has fluctuated significantly over the last several years. From January 1, 2006 to January 1, 2011, the Noon Buying Rate fluctuated from a high of CAN$1.3000 per US$1.00 to a low of CAN$0.9170 per US$1.00. Historical fluctuations in the U.S. dollar/Canadian dollar exchange rate are not necessarily indicative of future exchange rate fluctuations. 8


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The Company 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. Hedging activities may protect a company against low gold prices, however, 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. The Company continually evaluates the potential short- and long-term benefits of engaging in such derivative strategies based upon current market conditions. However, the use of byproduct metal derivative strategies may not benefit the Company in the future. There is a possibility that the Company could lock in forward deliveries at prices lower than the market price at the time of delivery. In addition, the Company could fail to produce enough precious metals to offset its forward delivery obligations, causing the Company to purchase the metal in the spot market at higher prices to fulfill its delivery obligations or, for cash settled contracts, make cash payments to counterparties in excess of precious metals revenue. If the Company is locked into a lower than market price forward contract or has to buy additional quantities at higher prices, its net income could be adversely affected. 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, such hedging strategies may not prove to be successful and foreign exchange fluctuations may materially adversely affect the Company's financial performance and results of operations. If the Company experiences mining accidents or other adverse conditions, the Company's mining operations may yield less gold than indicated by its estimated gold production and to the extent not adequately covered by insurance may result in possible adverse financial consequences to the Company. The Company's gold production may fall below estimated levels as a result of mining accidents such as cave-ins, rock falls, rock bursts, slope and pit wall failures, dams, fires or flooding or as a result of other operational problems such as a failure of mining, production and milling equipment. In addition, production may be reduced or curtailed if, during the course of mining, unfavorable, unusual or unexpected geological or geotechnical formations or seismic activity are encountered, ore grades are lower than expected, the physical or metallurgical characteristics of the ore are less amenable than expected to mining or treatment, data on which engineering assumptions are made prove faulty or dilution increases. The Company may also encounter shortages or interruptions of economical electricity and adequate water supplies at its mines and production facilities which may adversely affect operations. Finally, inclement weather conditions, floods and the occurrence of other adverse natural phenomena at its mine and production sites may curtail, interrupt or delay mining and production operations and the ability of the Company to transport and market its production. Occurrences of this nature and other accidents, adverse conditions or operational problems in future years may result in the Company's failure to achieve current or future production estimates and may make profitable mineral deposits unprofitable for continued production. In addition, the occurrence of industrial accidents may result in personal injury or death and damage to property which may result in possible legal liability to the Company and if not adequately covered by insurance possible adverse financial consequences to the Company. 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. 9


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The exploration and development of new mineral deposits is subject to numerous risks and uncertainties which may adversely affect the Companys ability to expand or replace its existing production. 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, acquiring title to prospects and the 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;estimates of future gold prices; andanticipated 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. The discovery of an ore body may result in substantial rewards; however, 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. Newly opened mines, mine construction projects and expansion projects are subject to risks associated with new mine development, which may result in delays in the start-up of mining operations, delays in existing operations and unanticipated costs. The Company's ability to replace its existing Mineral Reserves as they are produced and depleted will be dependent upon locating new or expanding production from existing economic Mineral Reserves and developing new mines or extending and expanding existing mining operations. The Companys ability to achieve full production rates at its new and expanded mines on schedule is subject to a number of risks and uncertainties. New mines may require the construction of significant new underground mining operations and may present problems in acquiring and achieving access to mine locations. The construction of underground mining facilities is subject to a number of risks, including unforeseen geological formations, implementation of new mining processes, delays in obtaining required title to mining deposits and access to locations, construction, environmental or operating permits and engineering and mine design adjustments and construction delays. These occurrences may result in delays in the planned start up dates and in additional costs being incurred by the Company beyond those budgeted. Moreover, the construction activities at possible mine extensions may take place concurrently with normal mining operations at, which may result in conflicts with, or possible delays to, existing mining operations. 10


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Due to the nature of the Company's mining operations, the Company may face liability, delays and increased production costs from environmental and industrial accidents and pollution, and the Company's insurance coverage may prove inadequate to satisfy future claims against the Company. The business of gold mining is generally subject to risks and hazards, including environmental hazards, industrial accidents, unusual or unexpected rock formations, changes in the regulatory environment, cave-ins, rock bursts, rock falls, slope and pit wall failures and flooding and gold bullion losses. Such 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. The Company carries insurance to protect itself against certain risks of mining and processing which may not provide adequate coverage in certain unforeseen circumstances. The Company may also become subject to liability for pollution, cave-ins or other hazards against which it cannot insure or against which it has elected not to insure because of high premium costs or other reasons, or the Company may become subject to liabilities which exceed policy limits. In these circumstances, the Company may be required to incur significant costs that could have a material adverse effect on its financial performance and results of operations. The Company's operations are subject to numerous laws and extensive government regulations which may cause a reduction in levels of production, delay or the prevention of the development of new mining properties or otherwise cause the Company to incur costs that adversely affect the Company's results of operations. The Company's mining and mineral processing operations and exploration activities are subject to the laws and regulations of federal, provincial, and local governments in the jurisdictions in which the Company operates. These laws and regulations are extensive and govern prospecting, exploration, development, production, exports, taxes, labour standards, occupational health and safety, waste disposal, toxic substances, environmental protection, mine safety and other matters. Compliance with such laws and regulations increases the costs of planning, designing, drilling, developing, constructing, operating, closing, reclaiming and rehabilitating mines and other facilities. New laws or regulations, amendments to current laws and regulations governing operations and activities of mining companies or more stringent implementation or interpretation thereof could have a material adverse impact on the Company, cause a reduction in levels of production and delay or prevent the development of new mining properties. 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. 11


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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. 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. The conduct of mining operations is dependent upon obtaining and renewing applicable governmental permits the issuance of which may be subject to meeting certain conditions which may prove difficult and costly. Mineral exploration and mining activities may only be conducted by entities that have obtained 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 in a timely manner, or at all, or, if they are issued, that they will be renewed, or that the Company will be in a position to comply with or can afford to comply with all conditions that may be imposed. Increased regulation of greenhouse gas emissions and climate change issues may adversely affect the Company's operations. The Company operates in a number of jurisdictions in which regulatory requirements have been introduced or are being contemplated to monitor, report and/or reduce greenhouse gas emissions. Under the Copenhagen Accord, Canada has committed to reducing greenhouse gas emissions by 17%, relative to 2005 levels, by 2020, but this commitment is subject to future alignment with reduction targets in the United States. Canada is currently developing new regulatory requirements to address greenhouse gas emissions. Similarly, the Province of Quebec has passed legislation enabling the establishment of a greenhouse gas emissions registry, greenhouse gas reduction targets and a cap-and-trade system to achieve Quebec's commitment to reduce greenhouse gas emissions by 20%, relative to 1990 levels, by 2020. The Company's operations in Quebec use primarily hydroelectric power and as a consequence are not large producers of greenhouse gases. 12


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Title to the Company's properties may be uncertain and subject to risks. The acquisition of title to mineral properties is a very detailed and time-consuming process. Title to, and the area of, mineral deposits may be disputed. Although the Company believes it has taken reasonable measures to ensure proper title to its properties, there is no guarantee that title to any of its properties will not be challenged or impaired. Third parties may have valid claims on underlying portions of the Company's interests, including prior unregistered liens, agreements, transfers or claims, including native land claims, and title may be affected by, among other things, undetected defects. In addition, the Company may be unable to operate its properties as permitted or to enforce its rights in respect of its properties. 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 between the parties to that agreement. The success of the Company is dependent on good relations with its employees and on its ability to attract and retain key personnel. Production at the Company's mines and mine projects is dependent on the efforts of the Company's employees and contractors. Relationships between the Company and its employees may be affected by changes in the scheme of labour relations that may be introduced by relevant government authorities in the jurisdictions that the Company operates. Changes in applicable legislation or in the relationship between the Company and its employees or contractors may have a material adverse effect on the Company's business, results of operations and financial condition. A first collective agreement for a three-year period ending December 31, 2006 was entered into with the employees of the Camflo Mill in May 2004. At the beginning of 2007, this agreement was renewed for another three-year period ending December 31, 2009, and was again renewed at the beginning of 2010 for another three-year period ending December 31, 2012. The Company is also dependent upon a number of key management personnel. The loss of the services of one or more of such key management personnel could have a material adverse effect on the Company. The Company's ability to manage its operating, development, exploration and financing activities will depend in large part on the efforts of these individuals. The Company faces significant competition for qualified personnel and the Company may not be able to attract and retain such personnel. The quantification of Mineral Reserves and production estimates are subject to numerous uncertainties and production and recovery of the reserve estimates appearing in the Annual Report may not be realized. The ore reserves presented in the Annual Report are in large part estimates, and production of the anticipated tonnages and grades may not be achieved or the indicated level of recovery may not 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 judgments 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. 13


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Also, the grade of ore mined may differ from that indicated by drilling results, and this 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. 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. The mining industry is highly competitive, and the Company may not be successful in competing for new mining properties. The mining industry is intensely competitive and the Company is in competition with other mining companies for the acquisition of interests in precious and other metal or mineral mining properties which are in limited supply. 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. The Company may not have insurance or its insurance coverage may prove inadequate to reimburse the Company for liabilities encountered from operations. 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. The Company believes that its insurance coverage is adequate and appropriate for the perceived risks of its current operations, however, such insurance may not continue to be available, or if available may not continue to be available at economically acceptably premiums or may not continue to be adequate to cover the Companys anticipated liabilities. In some cases, however, risk coverage is not available or is 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. 14


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The Company may have difficulty financing its additional capital requirements for its planned mine construction, exploration and development. The construction of mining facilities and commencement of mining operations, the expansion of existing capacity and the exploration and development of the Company's properties, including continuing exploration and development projects in Quebec, will require substantial capital expenditures. The Company currently estimates that capital expenditures will be approximately $17.5 million in 2011. As at December 31, 2010, the Company had a cash balance of $40 million, approximately $870 thousand available to be borrowed under its existing credit facilities and no long-term debt. Based on current funding available to the Company and expected cash from operations, the Company believes it has sufficient funds available to fund its projected capital expenditures for all of its current properties. However, if cash from operations is lower than expected or capital costs at these projects exceed current estimates, or if the Company incurs major unanticipated expenses related to exploration, development or maintenance of its properties, the Company may be required to seek additional financing to maintain its capital expenditures at planned levels. In addition, the Company will have additional capital requirements to the extent that it decides to expand its present operations and exploration activities; construct additional new mining and processing operations at any of its properties; or take advantage of opportunities for acquisitions, joint ventures or other business opportunities that may arise. Additional financing may not be available when needed or, if available, the terms of such financing may not be favorable to the Company and, if raised by offering equity securities, or securities convertible into equity securities, any additional financing may involve substantial dilution to existing shareholders. Failure to obtain any financing necessary for the Company's capital expenditure plans may result in a delay or indefinite postponement of exploration, development or production on any or all of the Company's properties, which may have a material adverse effect on the Company's business, financial condition and results of operations. The continuing weakness in the global credit and capital markets could have a material adverse impact on the Company's liquidity and capital resources. The credit and capital markets experienced significant deterioration in 2008, including the failure of significant and established financial institutions in the United States and abroad, and continued to show weakness and uncertainty in 2009 and 2010. These unprecedented disruptions in the credit and capital markets have negatively impacted the availability and terms of credit and capital. If uncertainties in these markets continue, or these markets deteriorate further, it could have a material adverse effect on the Company's liquidity, ability to raise capital and costs of capital. Failure to raise capital when needed or on reasonable terms may have a material adverse effect on the Company's business, financial condition and results of operations. The Company could be party to mining joint ventures under which the Companys joint venture partners would be in a position to prevent the Company from meeting 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, including indebtedness 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. As of April 21, 2011, the Company is not party to any mining Joint Venture. Companys future joint venture partners may veto the Companys business plans, with regard to a specific joint venture, and prevent the Company from achieving its objectives. 15


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The Company is actively pursuing potential acquisitions of mining properties and interests in other mining companies which acquisitions entail certain risks. Consistent with its acquisition and growth strategy the Company is actively pursuing the acquisition of advanced exploration, development and production assets. 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, without limitation: 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; anddecline 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, consequently, on the Companys financial condition and results of operations. The Company continues to seek acquisition opportunities consistent with its acquisition and growth strategy; however, it may not 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. In addition, to acquire properties and companies, the Company could 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 additional 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. Potential transactions may not be successfully completed, and, if completed, the business acquired may not 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. 16


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There are certain risks related to owning the Companys common shares The Companys shares fluctuate in 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 the Company 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 the Companys strategic position, results of operations, business or significant transactions and general conditions in the mining industry or the worldwide economy. In addition, wide price swings are currently common in the markets on which the Company's securities trade. This volatility may adversely affect the prices of the Company's common shares regardless of the Company's operating performance. The market price of the Companys common shares may experience significant fluctuations in the future, including fluctuations that are unrelated to the Companys performance. Sales by the Company of additional common shares could affect the market price of the shares and dilute existing shareholders. Sales of substantial amounts of the Companys common shares by the Company, for example, in connection with a potential acquisition or to raise additional capital for operations, or to reduce indebtedness, or pursuant to existing agreements, or the availability of a large number of Company common shares that may be available for sale, could adversely affect the prevailing market prices for the Companys outstanding common shares. A decline in the market price of the Companys outstanding common shares could impair the Companys ability to raise additional capital through the sale of securities should the Company desire to do so. The Company does not currently anticipate declaring any dividends on its common shares. The Company has not declared or paid any dividends on its common shares since its incorporation and it 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. Potential unenforceability of civil liabilities and judgments. The Company is incorporated under the laws of the Province of Quebec, Canada. All of the Company's directors and officers as well as the experts named in the Form 20-F are residents of Canada. Also, all of the Company's assets and the assets of these persons are located outside of the United States. As a result, it may be difficult for shareholders to initiate a lawsuit within the United States against these non-U.S. residents, or to enforce U.S. judgments against the Company or these persons. The Company's Canadian counsel has advised the Company that a monetary judgment of a U.S. court predicated solely upon the civil liability provisions of U.S. federal securities laws would likely be enforceable in Canada if the U.S. court in which the judgment was obtained had a basis for jurisdiction in the matter that was recognized by a Canadian court for such purposes. This result may not always be the case. It is less certain that an action could be brought in Canada in the first instance on the basis of liability predicated solely upon such laws. 17


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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., now governed by the Business Corporations Act(Quebec). The Articles 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 or By-Laws. The head office and principal place of business of the Company are located at offices of approximately 8,391 square feet at 161 avenue Principale, Rouyn-Noranda, Quebec, J9X 4P6, telephone number: (819) 797-2465. The Company also utilizes an office of approximately 1,500 square feet in rented premises at 1501, McGill College, Suite #2930, Montreal, Quebec H3A 3M8. The common shares of Richmont Mines are listed and posted for trading on the Toronto Stock Exchange and the NYSE Amex. 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 activities related to the acquisition, exploration, development and operation 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. Three-year History The Company currently produces gold from its Beaufor Mine and Island Gold Mine, two of its three material properties. The Island Gold Mine began commercial production on October 1, 2007. On December 16, 2008, Richmont Mines acquired 42,929,581 common shares of Patricia Mining (representing approximately 98.2% of Patricia Mining's outstanding common shares) in exchange for CAN$0.15 cash and 0.055 of one common share of Richmont Mines for each common share of Patricia Mining pursuant to a plan of arrangement under the Business Corporations Act(Ontario). 18


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Richmont Mines now owns all 43,704,581 common shares of Patricia Mining. Patricia Minings main asset was its joint venture interest of 45% in the Island Gold Mine. Following this transaction, Richmont Mines owns a 100% interest in the Island Gold Mine. On April 27, 2009, the Company announced it began dewatering the past-producing underground mine at its Francoeur property, located 25 km west of Rouyn-Noranda, Quebec. In addition to dewatering of the mine, which reaches a depth of approximately 820 metres, the Company has also re-commissioned the existing hoist and upgraded related infrastructure. This work was completed during the second quarter of 2010. On June 17th, 2010, the Company completed an equity financing of 3,300,000 common shares at a price of $5.00 per common share, for aggregate gross proceeds of $16.5 million. The net proceeds of the offering has been used for development work at Richmonts projects, primarily the Francoeur Mine in Quebec, for potential acquisitions and for general corporate purposes. On June 30, 2010, Richmont Mines acquired all of the issued and outstanding shares of Louvem Mines Inc. (Louvem) not currently owned by Richmont Mines. Louvem and 9222-0383 Quebec Inc., a wholly-owned subsidiary, amalgamated and the shareholders of Louvem received one share of Richmont Mines for each 5.4 shares of Louvem held by them. The Amalgamation constitutes a business combination within the meaning of Multilateral Instrument 61-101. In September 2010, the Company began a 5,500 metre drilling program on its Monique property. On December 21, 2010, the Company signed an option agreement with SOQUEM Inc. (SOQUEM) to acquire the remaining 19% interest of the Monique property. Under terms of the option agreement with SOQUEM, Richmont Mines paid an amount of CAN$350,000 upon signing the Agreement, and had undertaken to complete exploration work in the amount of CAN$400,000 on or before February 28, 2011, in order to acquire the residual 19% interest of the Monique property. As at February 28, 2011, the Company had spent the required amount of CAN$400,000 in exploration expenditures. A work report was submitted to SOQUEM on March 4, 2011. On April 8, 2011, SOQUEM transferred its 19% of interest to Richmont Mines. By October 31, 2007, Richmont Mines acquired a 70% interest in the Valentine Lake property. On February 5, 2009, Mountain Lake Resources Inc. (Mountain Lake) and Richmont Mines entered into an agreement granting Mountain Lake the option to purchase Richmont Mines 70% interest in the property in accordance with the terms and conditions of the agreement. In accordance with the terms set out in the agreement, Mountain Lake paid Richmont Mines an option fee of 2,500,000 of its common shares in April 2009, incurred an amount of CAN$1 million of exploration and development expenditures on the property, and paid Richmont Mines a sum of CAN$3 million in cash on January 24, 2011 to satisfy all cash option payments set out in the agreement. With all conditions met, Richmont Mines has proceeded with the transfer of its 70% interest in the property to Mountain Lake. On December 8, 2010, the Company announced the additional drilling results of the Wasamac property and confirmed the drilling campaign was expended to 20,000 metres. 19


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Capital Expenditures The following table sets forth the Companys capital expenditures on its properties for the past three fiscal years. (in thousands of $)
        
        
        
        Years EndedDecember 312010
        
        2009
        
        2008$
        
        $
        
        $Island Gold Mine
        
        4,650
        
        4,318
        
        3,079Beaufor Mine
        
        2,462
        
        1,092
        
        127Francoeur Mine
        
        9,144
        
        1,976
        
        -Other
        
        518
        
        626
        
        1,98716,774
        
        8,012
        
        5,193
 Richmont invested $4.7 million in capital expenditures at the Island Gold Mine in 2010, a reflection of ongoing development costs, refurbishing and acquisition of equipment. The Company spent an additional $2.5 million in capital expenditures at the Beaufor Mine in 2010, up from $1.1 million in 2009, with the year-over-year increase largely attributable to the cost associated with the excavation of a new safety exit from the mines underground operations. Capital expenditures at the Francoeur Mine totaled $9.1 million in 2010, up from $2.0 million in 2009, reflecting higher development costs associated with transitioning this mine into commercial production by mid-2011. Dewatering of the mines 17 levels was completed at the end of June 2010, and underground development work to reach the targeted West Zone began shortly thereafter. As of the end of 2010, a total of 1,239 metres of development had been completed. Surface infrastructure has been re-commissioned, installation of additional underground electrical infrastructure required for commercial production is being done in conjunction with the development work, and definition drilling began in November 2010. Specifically, a total of 1,663 metres of definition drilling were completed over the November and December 2010 period. Recruitment efforts for the mine are progressing well, with 74 employees in place at year-end 2010. 20


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Property Interests The following table outlines Richmont Mines interest in its exploration properties as at December 31, 2010. Property
        Year of acquisition
        Number of Mining titles
        Participation1QuebecMonique
        1994
        18
        81% 2Wasamac
        1988
        4
        100%Camflo Northwest
        2005
        13
        80%OntarioSewell
        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.2On March 4, 2011, a work report was submitted to SOQUEM. On April 8, 2011, SOQUEM transferred its 19% of interest to Richmont Mines.
 Exploration and Project Evaluation Expenditures The following table presents Richmont Mines exploration and project evaluation expenses in 2008, 2009 and 2010 and the budgeted estimated amounts for 2011 (in thousands of CAN$). 2011
        
        2010
        
        2009
        
        2008$
        
        $
        
        $
        
        $EstimatedMinesIsland Gold Mine
        3,451
        
        4,561
        
        3,136
        
        2,293Beaufor Mine
        1,760
        
        2,584
        
        3,006
        
        2,921Francoeur Mine
        1,732
        
        151
        
        1,812
        
        1096,943
        
        7,296
        
        7,954
        
        5,323Other propertiesWasamac property
        3,176
        
        1,712
        
        82
        
        64Cripple Creek property
        478
        
        838
        
        23
        
        18Monique property
        1,000
        
        289
        
        2
        
        1Golden Wonder1and Valentine Lake2
        -
        
        -
        
        -
        
        4,549Other properties
        133
        
        104
        
        47
        
        12Project evaluation
        394
        
        443
        
        305
        
        37312,124
        
        10,682
        
        8,413
        
        10,340Exploration tax credits
        (943
        )
        (3,465
        )
        (1,347
        )
        (643
        )Reversal of exploration tax credits recorded in 2007
        -
        
        -
        
        -
        
        85011,181
        
        7,217
        
        7,066
        
        10,5471The joint venture option was terminated in October 2008.2According to the letter agreement signed by the parties, Richmont Mines transferred its 70% interest in the property to Mountain Lake on January 24, 2011.
 21


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2011 Trends Richmont Mines is focused on the exploration development and production of gold assets. B.
      Business Overview1.
      Beaufor Mine, Val-dOr, Quebec, Canada Location and Property Description The Beaufor Mine property, along with other adjacent properties such as Pascalis, Perron, Colombière, Courvan and Perron Blocks 2, 3 and 4, are located approximately 27 kilometres to the northeast of the town of Val-dOr, in the Abitibi-East County, in the Province of Quebec, Canada. Description of Mining Rights The property, which includes the Mineral Reserves of the Beaufor Mine, 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 over a total area of 591.5 hectares (ha). The Courvan project and Perron blocks 2,3 and 4 form another group of mining titles with potential but currently have no mining activities. This group consists of two mining concessions and 66 claims, over a total area of 1,298 ha. Property
        Number of mining leases,
          concessions and/or claims
        Area
          (ha)
        Expiration dateBeaufor
        1
        106
        Mining Concession 280PTA: 01/31/2012Colombière
        13
        226
        Claims expire between 09/21/2011 and 10/15/2011Courvan
        61
        1,099
        Mining concession 295 and 280PTB and 59 claims expire between 08/09/2011 and 04/30/2013Pascalis
        1
        37.5
        Mining Lease BM 750: 06/02/2016Perron
        11
        222
        Mining Lease BM 858: 03/11/2023
          10 claims expire between 09/10/2011 and 09/11/2012Perron blocks 2, 3 and 4
        7
        199
        Claims expire between 09/06/2012 to 12/15/2012
 All of these claims are expected to be renewed before the anniversary date because there are exceeding credits available. For the mining leases, taxes are paid to the government every year to keep them in good standing. For a mining concession, geological work is performed to keep it in good standing or taxes are paid every year. Richmont Mines has an internal procedure and an external control to insure appropriate follow up of regarding claims expiry dates. All the mining claims, mining concessions and mining leases were in good standing in 2010 and are expected to be for 2011. 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. 22


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Ownership of Mining Rights All the mining titles of the Beaufor property are held by Richmont Mines. Mineral Royalties All the Beaufor divisions properties are subject to the payment of royalties and financial contractual obligations. Details 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. Beaufor Property (50% of the production) The Beaufor Mines production is subject to the payment of royalties to Aurizon Mines Ltd: Gold Price (US$/oz)
        Royalties per ounce produced<300
        CAN$0.00300 325
        CAN$17.00325 350
        CAN$18.50350 375
        CAN$20.00375 400
        CAN$22.50400 500
        CAN$24.00>500
        CAN$30.00
 Perron Property (100% of the production) The Perron Property is subject to the payment of royalties to Aurizon Mines Ltd.: Gold Price (US$/oz)
        Royalties per ounce produced<300
        CAN$0.00300 325
        CAN$17.00325 350
        CAN$18.50350 375
        CAN$20.00375 400
        CAN$22.50400 500
        CAN$24.00>500
        CAN$30.00
 Despite the fact that claims 5102441, 5098056 and 5098055 are part of the Perron Block 2 property, they are subject to the same royalty as the claims included in the Perron property. Perron Block 2 (100% of the production on claims 3493171, 3493172 and 3493173) The Perron Block 2 Property is subject to a 2% NSR payable to Northwest Gold Corporation (Northwest). The Northwest NSR is payable when the gold price is higher than US$300 per ounce. 23


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Pascalis (100% of the production) The Pascalis Property is subject to a 25% NPI payable to New Pascalis Mines Limited. Colombière (100% of the production) The Colombière Property is subject to a 2% NSR payable to IAMGOLD Corporation (formerly Cambior Inc.). Environmental Obligations 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 was approved in April 2008 by the Ministry of Natural Resources and Wildlife of Quebec (the MNRW). Location of Mineralized Zones The mineralized zones, including Mineral Reserves, underground infrastructure and the waste pad are located on mining concession 280 PTA of the Beaufor property, mining lease 750 of the Pascalis property and mining lease 858 of the Perron property. Permits To the Companys knowledge, 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 and as an emergency exit. A series of buildings including warehouses, workshops and offices are used. There were 102 employees and 36 independent contractors as of December 31, 2010. Accessibility The mine can be accessed from Highway 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 then going south on the Paré Road to the village of Perron. Climate The average annual precipitation is approximately 914 mm with most incurred 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 50 mm (expressed in mm of water). 24


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The average daily temperature in Val-dOr is 1.2°C, slightly above freezing. The average temperature for July reaches 17.2°C, while in January the temperature falls to 17.2°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 Infrastructure 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 town also hosts an appropriate 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-Quebec. The ore from the Beaufor Mine is hauled by truck to the Camflo Mill located at an approximate distance of 49 Km from the mine site. Waste rock is stored on site. The local manpower is well trained. Since the mining town of Val-dOr is very active, it is usually 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. 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 the Beaufor Mine for reasons of risk of 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 undertook construction work to secure the crown pillar and commercial production resumed at Beaufor Mine jointly with Louvem in January 2002. In March 2010, the Beaufor Mine attained the notable production level of 1,000,000 gold ounces over its mine life. In June 2010, Richmont Mines acquired all of the issued and outstanding shares of Louvem not previously owned by Richmont Mines. As a result of this transaction, Richmont Mines owns a 100% interest in Beaufor Mine and 100% of Louvems properties. 25


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Geological Setting
    Regional geology The mining town of Val-dOr is located in the southeastern of the Abitibi greenstone belt formed of Archean volcanic and sedimentary rocks of the Superior Province. The mining camp of Val-dOr is situated in the Malartic area, which is comprised of 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 N070oand 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 anastomosing corridors of 5 to 30 metres in thickness. The veins at the Beaufor Mine form panels of more than 300 metres 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 (N115 o/65 o-75 o) at 380 metres from the surface and a parallel system of shears (N70 o/sub vertical). 2010 Results During the year ended December 31, 2010, 104,945 tonnes of ore were processed from the Beaufor Mine at an average recovered grade of 6.60 g/t, and realized gold sales of 22,258 ounces at an average price of US$1,253 (CAN$1,290) per ounce. This compared to 101,593 tonnes, an average recovered grade of 6.38 g/t, and realized gold sales of 20,854 ounces at an average price of US$975 (CAN$1,113) in 2009 and tonnage of 115,674, an average recovered grade of 8.85 g/t, and gold sales of 32,908 ounces at an average price of US$886 (CAN$944) in 2008. The cash cost per ounce increased to US$866 (CAN$891) in 2010 compared with US$740 (CAN$845) in 2009, due primarily to higher milling costs and a greater amount of development necessary to access the ore zones. In addition, as a result of the mines limited reserve base at year-end 2009, cash costs include many expenditures that would otherwise be accounted for as deferred development. The cash cost per ounce increased to US$740 (CAN$845) in 2009 compared with US$509 (CAN$543) in 2008, due primarily to lower than expected grades in room and pillar stopes than forecasted in our mining sequences for 2009, which resulted in lower production and higher operating costs. 26


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The following table summarizes the work completed over the last three years. Beaufor Mine 2010
        2009
        2008Tonnes
        104,945
        101,593
        115,674Head grade (g/t)
        6.72
        6.52
        9.00Gold recovery (%)
        98.19
        97.90
        98.31Recovered grade (g/t)
        6.60
        6.38
        8.85Ounces sold
        22,258
        20,854
        32,908Cash cost per ounce (US$)
        866
        740
        509Investment in property, plant and equipment (thousands of CAN$)
        2,462
        1,092
        127Exploration expenses (thousands of CAN$)
        2,584
        3,006
        2,921Deferred development metres
        1,350
        913
        -Diamond drilling (metres)Definition
        21,928
        28,152
        11,439Exploration
        33,449
        32,699
        33,765
 Exploration Proven and Probable Reserves at the Beaufor Mine increased to 68,998 gold ounces at December 31, 2010, from 44,637 gold ounces at December 31, 2009. This reflects the addition of 24,798 ounces of reserves identified through the drilling program on the near-surface W and 367 zones, in conjunction with reserves established within the mines existing underground infrastructure as a result of definition drilling in 2010, offset by 22,258 ounces of gold sales from the mine in 2010. The Company is planning 11,000 metres of definition drilling and 19,000 metres of exploration drilling at the Beaufor Mine in 2011, in an effort to continue to grow its reserve and resource base. The primary focus will be to expand and advance the potential of the near-surface W and 367 zones, located to the west of the mines existing infrastructure, and other previously identified areas. Drilling Most of the drill holes are planned on vertical cross-sections in order to undercut the shear veins at right angles. Drilling programs are sub-divided into two main categories: Exploration drilling using a 40 to 80 metre by 40 to 80 metre grid; 
    Definition drilling based on a 10 to 20 metre by 10 to 20 metre grid. 27


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Drilling operations are performed by a drilling contractor, under the supervision of the geological staff at the Beaufor Mine. Underground drill holes are LTK48 (35.6 mm) and BQTK (40.7 mm) calibre. The core recovery is better than 90%, including the fault zones where the RQD is more than 75%. Detailed description of the drill core is prepared 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 taken at the Beaufor Mine. In definition drill holes, samples are collected between 0.5 metre and 1 metre intervals, and frequently include both vein material and wall rocks, since veins are often less than 1 metre thick. Core recovery 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 metre to 1 metre. The core is split in two using a hydraulic splitting machine. Core recovery is over 90%. 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: 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 gram per sample. Quality Control The laboratorys quality control program, at different steps of the process, includes: Crushing, pulverizing, weighing: daily monitoring; Fire assay: 1 blank, 2 standards and 3 duplicates are inserted in each batch of 84 samples. 28


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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 by the Beaufor Mines geological personnel and stored in a core shack. The samples are collected daily by the laboratory staff and bought to the laboratory directly. Historical production and milling data indicate reliability of the laboratory results. Mineral Reserve Estimates General In 2010, the Mineral Reserve estimates were performed by Jessy Thelland, P.Geo., Mario Blanchette, Eng. And François Chabot, Eng., all employees of Richmont Mines and qualified persons pursuant to Regulation 43-101. Regulation 43-101 is a codified set of rules and guidelines for disclosing information related to mineral properties held by issuers whose securities are publicly traded or issued to the public in Canada. Regulation 43-101 was implemented by the Canadian Securities Administrators (CSA). 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, 2010. However, these parameters are revised on an annual basis in order to take into consideration the experience gathered from the current mining operation. The Mineral Reserves estimate is carried out in accordance with Regulation 43-101. Mineral Reserves are classified according to the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) classification adopted by the CIM Council on August 20, 2000. All standards generally accepted in the mineral industry as well as Regulation 43-101 requirements and CIM regulations for Mineral Reserve estimates have been fully applied in this study. 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 work performed by the Beaufor Mine geology department, from data entry to layout drawings follows strict and established procedures, including crosschecks. Access to all databases is restricted to selected personnel. 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, 2010. 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 2010. 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 economic feasibility. As per Regulation 43-101, only Mineral Resources in the Measured and Indicated categories can be used to establish the estimate of Mineral Reserves. 29


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The budgeted 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 room and pillar and long hole methods: Room and Pillar Geometry: stope width of 8 metres in the plane of the vein with in-stope pillars of 2.5 metres by 2.5 metres; 
    Maximum vein dip: 40°; 
    Ore mining recovery: 80%; 
    Internal dilution: the ore block is designed with a true thickness of 2.4 metres. The drilling intercepts 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; 
    External dilution: a dilution amounting 5% at a grade of 0 g/t Au is added in the determination of the economic Mineral Reserves. Long Hole Geometry: maximum panel length of 40 metres; 
    Minimum dip of vein: 45°; Ore mining recovery: 100% for designed stopes with all pillars between stopes clearly identified during the process of Mineral Reserve estimation; 
    Internal dilution: minimum mining width is 2.4 metres. The drilling intersections are projected to a minimum length of 2.4 metres; 
    External dilution: a dilution rate of 10% for waste at a grade of 0 g/t Au is assumed for primary stopes. Cut-off Grades Cut-off grades have been calculated based on both developed and un-developed workings for the two major mining methods used at Beaufor Mine, which are room and pillars and long hole. The main criteria are as follows: 30


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No profit margin is built into the estimate; Deferred development costs or capital expenditures are not used; 
    Only the price of gold is taken into account in the economic calculation; The price of gold used was CAN$1,000 per ounce applying an exchange rate of CAN$1/US$; 
    Operating costs include fixed costs budgeted for 2011 and variable costs (production and development) based on the results from January to April 2010 for each method. The results of the cut-off grade study by mining methods for both developed and un-developed underground workings are listed in the following table: Mining Methods
        Workings
        Cut-off Grade (g/t)Room and pillar
        Developed
        5.83Room and pillar
        Undeveloped
        6.96Long hole
        Developed
        5.09Long hole
        Undeveloped
        6.22
 Reserve Classification Descriptions with more details about classification of reserves at the Beaufor Mine are set out below. Dilution and mining recovery rates are included in the reserve calculation. Proven Mineral Reserves At the Beaufor Mine, Proven Reserves are based on ore blocks developed from drifts or raises up to a maximum of 8 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 10 metres from drilling data. 31


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Reserve Table In accordance with the Mineral Reserve calculation, as at December 31, 2010, the Mineral Reserves of the Beaufor Mine are estimated as follows: Category of reserves
        Tonnes
        Grade
        Au(metric)
        (g/t Au)
        (oz)Proven
        81,742
        7.53
        19,780Probable
        201,296
        7.60
        49,218Total (Proven + Probable)
        283,038
        7.58
        68,998Before mill recovery of 98.5%
 As of December 31, 2010, the Mineral Reserves at Beaufor Mine are estimated at 68,998 ounces of gold, calculated using a long-term gold price of CAN$1,000 per ounce, for an expected mine life of approximately three years. Mining Operations and Metallurgy The two major underground extraction methods currently used at Beaufor Mine are the room and pillar and long hole methods. The Beaufor Mine ore is trucked to the Camflo Mill located approximately 49 kilometres from the mine site. Camflo Mill Inc., the owner of the Camflo Mill, 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. 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 For the full year 2010, a total of 22,258 ounces of gold were sold at an average price of US$1,253 (CAN$1,290). This compared to gold sales of 20,854 ounces at an average sale price of US$975 (CAN$1,113) in 2009. Cash costs at the Beaufor Mine for the 12 months of 2010, however, increased to US$866 (CAN$891) from US$740 (CAN$845) last year, reflecting higher milling costs, and greater amount of development necessary to access the ore zones. As a result of the mines limited reserve base at year-end 2009, cash costs include many expenditures that would otherwise be accounted for as deferred development. The cash cost per ounce increased to US$740 (CAN$845) in 2009 compared with US$509 (CAN$543) in 2008, due primarily to lower than expected grades in room and pillar stopes than forecasted in our mining sequences for 2009, which resulted in lower production and higher operating costs. 32


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Year ended
        Year ended
        Year endedDecember 31,
        December 31,
        December 31,2010
        
        2009
        
        2008Precious metals revenues (thousands of CAN$)
        
        28 714
        
        23 215
        
        31 075Ounces sold
        
        22,258
        
        20,854
        
        32,908Data per ounce of gold sold
        US$
        CAN$
        US$
        CAN$
        US$
        CAN$Cash cost
        866
        891
        740
        845
        509
        543Depreciation and depletion
        63
        65
        38
        43
        38
        41Total
        929
        956
        778
        888
        547
        584Average price obtained per ounce
        1,253
        1,290
        975
        1,113
        886
        944
  2.
      Francoeur Mine, Arntfield, Quebec, Canada Location The Francoeur property is located 25 km west of Rouyn-Noranda, Abitibi, Beauchastel Township, ranges IV and V, lots 1 to 9. Description of Mining Rights The Francoeur Project consists of 12 mining claims, 3 mining concessions and 4 mining leases totalling approximately 408 ha. Number of
        Area (ha)
        Expiration Date
        Richmont MinesMining Titles
        
        
        Ownership (%)12 mining claims
        118.76
        Claims expire between 05/25/2011 and 02/27/2013
        1003 mining concessions
        230.21
        Mining Concessions 194, 322 and 326 expire on 01/31/2012
        1004 mining leases
        59.36
        Mining Leases expire between 09/07/2015 and 04/16/2020
        10019
        408.3
        
        100
 All of these claims will be renewed before the anniversary date because there are exceeding credits available. For the mining leases, taxes are paid to the government every year to keep them in good standing. For a mining concession, geological work is performed to keep it in good standing or taxes are paid every year. Richmont Mines has an internal procedure and an external control to insure appropriate follow up of regarding claims expiry dates. All the mining claims, mining concessions and mining leases were in good standing in 2010 and are expected to be for 2011. A detailed list and map of locations can be found in the Technical Report for the Francoeur Mine as of May 19, 2010 filed under the Companys profile on the SEDAR web site at www.sedar.com 33


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Ownership of Mining Rights All mining titles on the Francoeur Mine are held by Richmont Mines. Mining Royalties There are no royalties or back-in-rights related to any of the claims, mining leases and mining concessions. Environmental Obligations and Permits A restoration plan has been submitted to the MNRW, pursuant to which financial guaranties have already been submitted for the Francoeur Mine. Infrastructure The Francoeur property includes two vertical shafts with their headframes. The 477-metre shaft No.6 provides access to levels 4 to 11. A covered ore bin, a hoist room, a machine shop, a core shack and a warehouse were regrouped in that same area. The 818-metre Jean-Guy Rivard shaft (No.7) is located 650 metres northeast of the No.6 shaft. The Jean-Guy Rivard shaft was sunk by Richmont, giving access to six (6) additional levels (12 to 17). The headframe also included a service building containing a covered ore bin, the main office and a dry room. A hoist room, an air compressor room, an electric room were grouped in that same area. There are no mill facilities at the mine site, and accordingly, no mine tailings were left in place, except the area of old tailings between shaft No.1 and No.2 in the east part of the property. From 1993 to the end of mining activities in 2001, the ore was sent to Richmont's Camflo Mill in Malartic and the waste material was used or stockpiled at the mine site. Considering this waste only contains 0.4% sulphur, this material has a positive neutralizing potential and is not generating acidic drainage (H2SO4). Richmont is again planning to use the Camflo Mill to treat the ore of the West Zone. Consequently, no mine tailings will be stored on the site. Only a waste stock pile is planned on the mining site. Location of Mineralized Zones The Francoeur No.3 deposit constitutes the main ore zone of the Francoeur Mine which was mined until 2001 down to the 17th level by Richmont Mines. The No.3 deposit is hosted in the metavolcanic rocks of the Blake River Group. Gold mineralization mainly developed in the ductile Francoeur-Wasa shear zone, and is in contact with the southern margin of a gabbro-diorite stock. The mineralized zone extends for at least 1,200 metres down dip from surface to beyond the 17th level. It is a composite ore body consisting of four distinct ore zones, three of which occur within the Francoeur-Wasa shear zone. The "West Zone" is located to the west of the No.3 deposit. It is composed of 2 zones, the main zone (West) and the footwall zone (FW), both located in the Francoeur-Wasa shear zone and dipping northward at about 30 to 40°. Gold-bearing mineralization is closely associated with albite-pyrite alteration. This zone apparently differs from the No.3 ore body by its apparent NW plunge instead of the NE plunge generally observed elsewhere. 34


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Accessibility, Local Resources, Infrastructure, Climate and Physiogeology
    Accessibility The property is easily accessible through Provincial road 117 joining Rouyn-Noranda and the little community of Arntfield. From there, a secondary road (Provencher Avenue North) leads northwest for 3.2 km to the Francoeur No.6 and Jean-Guy Rivard shafts. A number of gravel and bush roads crosscut the property over a few hundred metres in all directions. Local Resources and Infrastructure Rouyn-Noranda is a well established mining community offering a vast amount of commodities. Manpower is well formed and it is possible to find recruits and retain experienced miners. There is availability of skilled administrative personnel, technicians, geologists and mining engineers in the area. Climate The average temperatures are -17.2°C in January and +17.2°C in July based on measurements taken over 30 years in this area. There is an average maximum of 61 cm of snow in December and 101.9 mm of rain in September. Physiogeography The area is located in the coniferous to boreal zone and more precisely in a white birch's resinous domain. The forest cover is composed of 50% leafy and 50% resinous trees with moderate commercial value. The topography is relatively flat (285 metre to 300 metre) with the exception of the northeast corner of the property where outcrops are no more than 30 metres higher than the average level. History
    The Francoeur property was staked for the first time in 1923 following a gold discovery which later became zone No.1. In 1932, Francoeur Gold Mines Ltd. sunk a 45° incline shaft (No.1) of approximately 226 metres with four levels (95, 191, 290 and 488 foot levels) in the footwall of zone No.1. In 1936, zones No.2 and No.3, located at more than 549 metres west of zone No.1, were discovered through drilling along the Francoeur-Wasa shear. Additionally, a 45° incline shaft (No.2) was sunk to a depth of 183 metres with four development levels (132, 221, 311 and 399 foot levels) in the lower footwall of zone No.2. In 1938, a 150 short tons per day concentrator was built on the property, and mining of both No.1 and No.2 deposits began immediately thereafter. In 1939, zone No.8 was discovered approximately 244 metres north of the Francoeur-Wasa shear. This zone was opened as early as 1940 through a cross-cut driven from the second level of zone No.2. On the third level, the drift was extended approximately 914 metres to the west to reach and mine the ore of zone No.3. Between August 1938 and March 1947, Francoeur Gold Mines Ltd. produced 94,303 ounces of gold from 520,363 tonnes of ore with a recovered grade of 5.6 g/t of gold. 35


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In July 1964, Francoeur Gold Mines Ltd. was acquired by Wright-Hargreaves Mines Ltd. (Wasamac Division). In 1965, after further drilling, the Wasamac No.2 vertical shaft (now called shaft No.6) was sunk by Wright-Hargreaves Mines Ltd. to a depth of 477 metres to mine the No.3 zone from the 4th to the 11th level. Mining operations started in May 1968 and ended in March 1971 for a total gold production of 69,227 ounces from 385,292 tonnes grading 5.6 g/t of gold. The ore was milled at the Wasamac No.1 mine concentrator located 6 km to the east. During 1973 and 1974, the property was optioned to Kerr Addison Mines Ltd. and Noranda Exploration Company Ltd. They drilled five (5) holes along the Francoeur-Wasa shear zone with little success (GM 29431, GM 30512). Finally, exploration work, including three deep holes (FR-82-1, 2 and 17), was carried out from 1980 to 1984 by Long Lac Exploration Ltd. (GM 40041, GM 41362). In October 1985, Ressources Minières Rouyn ("RMR", now Richmont Mines) signed an option agreement with Lac Minerals for the acquisition of a 50% interest on the Francoeur property. An assessment of the property was commissioned in order to evaluate the remaining resources left in place by Wright-Hargreaves. Karpoff (1986) evaluated that approximately 416,402 tonnes grading 7.54 g/t Au were still accessible by the Wasamac shaft No.2 (now shaft No.6). In the spring of 1986, RMR started the dewatering and the rehabilitation of the underground infrastructures. In 1986 and 1987, a total of 27,799 metre of surface diamond drilling in 75 holes was carried out on zones No.1, No.2, No.8, and below the 11th level of zone No.3. At the same time, surface facilities were installed and underground diamond drilling confirmed the previously reported in situ reserves. The surface diamond drilling program delineated more than 1 million tonnes of possible reserves under the 11th level of zone No.3. During the spring of 1988, RMR extracted a 23,111 tonne bulk sample grading 6.8 g/t Au from the No.3 deposit. The ore was successfully processed at Lac Minerals Ltd.'s mill located in Malartic, Quebec and mining operations from the No.6 shaft started the same year. Considering the shallow dip of the No.3 zone (42°N), it was then evaluated that it would be more profitable to sink a new shaft 650 metres north of the No.6 shaft thereby giving access to the resources found under the lowest level (11th). This is why the Jean-Guy Rivard (No.7) shaft was sunk in May 1989 to a final depth of 818 metres. In June 1991, RMR's name was changed to Richmont Mines Inc. On October 1st, 1991, development work was completed and commercial production began at a rate of 400 tons per day. From 1992 to 1994, production was increased from 500 tons to 800 tons per day. In June 1992, Richmont acquired Lac Minerals' 50% share of the Francoeur and Wasamac properties. In 1993, Richmont bought the Camflo Mill and began processing Francoeur's ore. The ore was previously processed at East Malartic Mill (Quebec) and Deak resources at Virginiatown, (Ontario). 36


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The exploration program conducted at the Francoeur property in 1997 was successful in discovering zone No.7, which is different, in terms of dipping, from the No.3 deposit. This zone was dipping south (70-75°) while the main gold-bearing structure was dipping north (40-45°). Following the discovery of zone No.7, a major development program was undertaken in 1998. Rehabilitation work was done in shaft No.6 and access drifting and infill drilling commenced on levels 4, 6 and 7. In 1999, development work on levels 4, 6 and 7 and related sublevels were completed. Commercial production of zone No.7 resumed at the beginning of February 2000. From 1991 to 2001, the Francoeur mine produced 1,701,892 tonnes of ore at a grade of 6.31 g/t (345,436 ounces of gold). In 2001, 2002 and 2003, Richmont conducted exploration work in the west part of the mine. Given the low gold price, the mine was closed and site restoration began. Richmont acquired the adjacent Norex property in February 2002. Following the closure of the mine, minimal exploration work was conducted to keep the mining concessions and leases in good standing and only four exploration holes were drilled from surface between 2005 and 2007. The target was an auriferous shear subsidiary to the Francoeur-Wasa shear zone. As a result of the higher gold price over the last few years, Richmont decided to proceed with an exploration program. At the end of 2009, 8 out of the mine's 17 levels had been dewatered, and the surface infrastructure had been fully re-commissioned. The Company has begun drift excavation and underground mine preparation work on this property when dewatering of the mine was completed at the end of the second quarter of 2010. As of December 31, 2010, 1,239 metres of underground development drilling was completed. On May 19, 2010, the Company filed an amended Technical Report for the Francoeur Gold Project on SEDAR, that estimates Probable Reserves of 615,664 tonnes grading 6.91 g/t Au that can support production of approximately 136,000 ounces of gold (before recovery) over an initial 4-year period. Geological Setting
    Regional Geology The property is located in the Rouyn-Noranda area, a typical sector of the Archean aged Abitibi greenstone belt located in the eastern part of the Superior Province. The Superior Province is the largest exposed Archean craton in the world that hosts several world class gold deposits. It has yielded nearly 300 million ounces of gold from hundreds of deposits since the beginning of the twentieth century. Project Geology The Francoeur Deposit includes the Francoeur No.1, No.2 and No.3 deposits. They occur along the Francoeur-Wasa shear zone and, from east to west, together with the Arntfield No.1, No.2, and No.3 deposits, the Wasamac Mine and the Wingate deposit. Despite the showing of local differences, all of these deposits are very similar to one another in both geological aspects and types of mineralization. The Francoeur No.3 is the largest one of them all. 37


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Mineralization The ore zones of the Francoeur deposits are generally made up of distinct lenticular and tabular bodies up to 1 metre in thickness, and form buff or beige coloured bands, called BB bands. All the BB bands are mainly composed of carbonate, albite, pyrite and minor amounts of quartz and rutile, with trace amounts of sericite and gold. There is no evidence of stratigraphic control on the gold deposition in the Francoeur mine. Instead, the gold emplacement apparently developed in the shear zone and is partially related to albitite dikes. A similar lack of stratigraphic control was noted for deposits adjacent to the Cadillac Break in the Noranda district of Quebec. The nature of the contacts of gold ore bodies with enclosing mylonitic schist is quite variable. There are two types of basic contacts, one of which is faulted, while the other may be sharp or gradational. The BB bands display a wide variety of textures ranging from a foliated micro-breccia, to more common fine grained and very well laminated rock. They contain on average 20 to 40 g/t Au and the grade can reach 50 g/t Au locally. The gold is commonly in its native form and is very fine-grained. Gold grains are usually associated with small pyrite crystals, but a proportion is also disseminated in the finely recrystallized carbonate-albite matrix. Exploration A considerable amount of exploration and development work was carried out on the Francoeur property since the discovery of the first gold-bearing veins in the 1920's. Successive underground developments have allowed the discovery of additional reserves along the Francoeur-Wasa shear when mining activities were conducted in the No.3 ore body. This is particularly true for Richmont who carried out major underground exploration programs along extensions of known mining blocks to sustain the long term viability of the mine. Historical drilling A portion of the geotechnical information from surface and underground holes drilled on the property since 1929 is available on Sigeom's web site (www.mrn.gouv.qc.ca/mines). Paper copies of diamond drill logs and assay results for both surface and underground holes drilled on the Francoeur property are stored at the Camflo Mill in Malartic, Quebec, since the mine was closed in 2003. Following the closure of the mine, only four exploration holes have been drilled from surface between 2005 and 2007. The target was an auriferous shear subsidiary to the Francoeur-Wasa shear zone. An exploration drilling program was completed in 2009 with approximately 7,500 metres of drilling. Most Recent Underground Diamond Drilling Program Completed The West Zone is located on the extension of the No.3 deposit. Richmont Mines has been the Francoeur mine's operator for over 10 years. A new underground definition drilling campaign is now underway. As of December 31, 2010, a total of 1,663 metres was completed. 38


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Methodology Generally, most of the boreholes at the Francoeur deposit were set-up on transversal sections allowing them to intersect mineralized zones at a right angle. Off-section holes were drilled when underground openings were not available. Exploration programs were generally split into two categories: 60 metre x 60 metre spaced exploration holes;20 metre x 20 metre spaced definition holes. For the West ore body, because exploration boreholes were set-up in the footwall of the mineralized zones, they crosscut them at a very acute angle. For example, borehole R-882B started at a dip of -46° and finished 697.08 metres deeper at a dip of 0°. The Main West Zone, which dips 42° north, was intersected over 9.90 m along the core (from 547.80 to 557.70 metres and represents, in fact, a horizontal width of 2.64 metres or a true thickness of 1.70 metres). Sampling , Assays and Quality control 
    SamplingThe rock sampling methods used underground consisted of core drilling and rock blasting. Borehole assay results were used to determine the grade of mining blocks. Muck samples were taken from blasted ore in wagons transporting gold-bearing mineralization to the ore pass. These samples were used in the grade reconciliations and in calculations of reserves. Grades from development work and active stopes were compiled on a monthly basis and transferred to sections and plan views. Grade values were assigned to that part of development work carried out during the current month. Specific procedures had to be followed during the sampling process as each sample for every 12 tons of ore has to be representative of the broken rock. Two sampling methods were applied at the Francoeur Mine: (1)
      Core sampling: sample lengths of exploration holes with varying geological parameters such as, for example, the amount of sulphides on both walls of a vein. The core was split in half with a diamond saw blade leaving a remaining sample as a reference for any subsequent detailed studies. Rejects were stored three months at the assay lab and, after that period of time, they could be shipped to the client if requested. Presently, core sampling from definition holes are analyzed entirely.(2)
      Muck sampling: several sampling procedures were applied in the past at the Francoeur mine. The most widely used method was the sampling of trams, comprised of the following procedures: Collect two handfuls of muck of every size per 4-ton tram (4 tons) or three handfuls per 5-ton tram, avoiding grabbing fine material;The collected material should be randomly taken and be representative of the whole tram; 39


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Samples should be collected at the ore pass;One sample bag should weigh a minimum of six pounds and represent the muck from four (4) wagons or sixteen (16) to twenty (20) tons; andThere is a tag number for each bag and the sampling book should contain the following information: date of sampling, level, stope identification, number of sampled wagons and sampler initials. Assays Techni-Lab of Ste-Germaine-de-Boulé was the only assay laboratory used by Richmont over the years with respect to the Francoeur mine. Techni-Lab follows several procedures when batches of samples are received. The procedure for sample analysis is briefly described as follows: a form is filled and bags of pulp are numbered accordingly. A set of 24 crucibles, including a blank, a duplicate and a standard, is prepared. The crucibles are filled with 115 grams. of flux and a teaspoon of flour. A portion of the pulp is weighted (15 or 30 grams) and added to the flux in the crucible. The content of each crucible is then homogenized. A 30 or 50 gram pulp sample is taken for analysis;Lead collection of the sample with a flux to obtain a lead button;Cupellation of the lead button to free the precious metal bead;Dissolution of the bead in "Aqua Regia";Measurement of the gold content by Atomic Absorption Spectrometry (AAS); andIf the gold content is higher than 10 000 ppb, a second 30 or 50 gram pulp sample is taken following lead collection and cupellation but the measurement of the gold content is by gravimetry instead of AAS. Quality control Current in-house quality controls procedures followed by Techni-Lab S.G.B. Abitibi Inc. are as follows: Daily checks of crushers, pulverisers and precision scales;Blanks: assay results must be lower than the detection limit. If not, this value will be subtracted from the results of the assayed samples. If the value is too high, the whole batch of samples will be re-assayed; andDuplicates: the acceptable value of a duplicate depends on the detection limit of the assaying method and the average value of the ratio between the duplicate and the sample: 40


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Dupl./Sample Ratio
        Acceptable gap0 to 20 ppb
        50%21 to 100 ppb
        25%101 to 500 ppb
        15%501 ppb and more
        10%0 to 0.20 g/t
        50%0.21 to 1 g/t
        20%1.01 g/t and more
        10%
 Certified Standard: the acceptable value of a certified standard is dependent on the detection limit of the assaying method and the real value assigned to the standard: Value of Standard
        Acceptable gap200 to 1,000 ppb
        10%1,001 ppb and more
        5%0.80 to 2 g/t
        10%2 g/t and more
        5%
 Mineral Reserve Estimates In 2010, Mineral Reserve estimates were performed by Daniel Adam, P.Geo., Ph.D., Exploration Manager, Christian Pichette, Eng.,M.Sc., and Raynald Vincent, Eng.,B.Sc.A.,M.G.P., all employees of the Company and all of whom are qualified persons under Regulation 43-101. The Mineral Reserve estimates were carried out in accordance with Regulation 43-101. Mineral Reserves were classified according to the CIMclassification and adopted by the CIM Council on December 11, 2005. All standards generally accepted in the mineral industry as well as Regulation 43-101 recommendations and CIM regulations for Mineral Reserve estimates have been fully complied with. Mining methods Several mining methods were used in the past at the Francoeur Mine. The room-and-pillars, long-hole and shrinkage-stoping methods were respectively used in 60%, 20% and 20% of the stopes mined. Apart from the geometry and dip of the zones, the selection of the proper mining method is based on both the geotechnical classification of the mineralized zones and the quality of the wall-rock. Other selection criteria also used are: productivity, dilution factor, available mining equipment and amount of mining reserves. Generally speaking, the room-and-pillar method is considered when the rock quality determination ("RQD") is lower than 25% and for gold-bearing structures with a maximum dip of 40°. Long-hole or shrinkage-stoping methods can be envisioned when the RQD is higher than 25% and when gold-bearing structures have a minimum dip of 45°. Historically, the rate of recovery of the room-and-pillar method was 85% with an external dilution of 15% at a grade of 0.68 g/t (0.02 oz/short ton). The minimum thickness used for the reserves calculations was 1.68 metres. These parameters were used to establish the probable reserves of the West Zone. 41


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The long-hole method was used when the ore body was dipping at more than 45°. At this critical dip, the scraping of the blasted ore was required before doing any progression in the stope. As soon as the dip of the ore body is 50° and higher, the blasted ore falls downward due to gravity to the lower level without any scraping manoeuvres. The historical rate of recovery of the long-hole method at the Francoeur Mine is 95%. Pillars of various dimensions have been left in the stopes allowing a better stability of the hanging-wall and a minimum dilution (±15%). Mineral Reserve Estimates General The dilution factor and the expected ore recovery according to the mining method used are based on Richmont's 10-year experience in mining the Francoeur deposit. Reserve Table Mineral Reserves are estimated at 615,664 tonnes in the probable category grading 6.91 g/t Au for a total of 136,749 ounces. This reserves inventory includes a dilution of 15% grading 0.02 oz/short ton (0.686 g/t Au) and a mining of recovery of 85%. Considering that there is neither access in the mineralized zone nor any tight drillings, none of the reserves were classified in the proven category. Probable reserves of the Main, Footwall and North Zones Reserves > 5.15 g/t Au
        Reserves 4.0-5.15 g/t Au
        Total ReservesZone
        Tonnes
        Au
        **Ounces**
        Tonnes
        Au
        **Ounces**
        Tonnes
        Au
        **Ounces**(Metric)
        (g/t)
        
        (Metric)
        (g/t)
        
        (Metric)
        (g/t)Main
        368,357
        6.80
        80,580
        77,132
        3.98
        9,869
        445,490
        6.32
        90,449FW
        139,320
        9.09
        40,698
        15,512
        3.64
        1,816
        154,831
        8.54
        42,513North
        14,260
        7.94
        3 641
        1,083
        4.17
        145
        15,343
        7.68
        3,786TOTAL
        521,937
        7.44
        124,919
        93,727
        3.93
        11,830
        615,664
        6.91
        136,749
 42


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3.
      Island Gold Mine Location and Property Description The Island Gold Mine is located approximately 85 km northeast of Wawa, Ontario, Canada, in the Sault Ste. Marie Mining Division. Dubreuilville is approximately 15 km northwest of the Island Gold Mine. The Island Gold property consists of 137 patented, leased and staked claims totalling 4,684 ha. Property
        Number
        Area
        Expiration dateof claims
        (ha)Kremzar
        20
        381
        Patented Claim: taxes are paid every year2 Leased claims: 02/28/2022 to 06/30/2030Lochalsh
        31
        368
        Patented Claim: taxes are paid every yearClaims: 02/06/2012 to 03/26/2012Goudreau
        65
        1,003
        Patented Claims: taxes are paid every year1 claim: 08/20/2012Island Gold
        21
        2,932
        Claims: 03/05/2011 to 10/25/2014
 The claims are expected to be renewed by applying excess credits available before the anniversary date. Taxes are paid annually to the government to keep patented claims and mining leases in good standing. Richmont Mines has an internal procedure to ensure monitoring of the claims expiry dates. All of these mining claims, mining leases and patented leases were in good standing in 2010 and are expected to be for 2011. 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. With the acquisition of Patricia Mining, Richmont Mines added two new groups of claims to its portfolio in Ontario: A 75% interest in the Edwards property, a group of 39 claims covering an area of approximately 694 hectares. This property is located to the east of the Island Gold property (the other 25% interest is held in trust by the Company on behalf of Red Pine Exploration). These claims expire between April 5, 2011 and August 29, 2013.
        Richmont Mines intends to renew all of these claims, as the location of this property is strategic, namely on the strike of the Goudreau Lake shear zone, between the Island Gold and Cline Edwards Mines.The Ego property, which is a group of 3 claims covering an area of approximately 73 hectares, and is located west of the Island Gold property. These claims expire on June 5, 2011. Richmont Mines will continue to carry out work on this property. Summary of Agreements Richmont Mines entered into an agreement with Patricia Mining on August 28, 2003. Under the agreement, Richmont Mines completed a private placement investment 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 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 the 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. 43


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On December 16, 2008, Richmont Mines acquired all of the common shares of Patricia Mining that it did not already own pursuant to a plan of arrangement under the Business Corporations Act(Ontario). As a result of this transaction, Richmont Mines owns a 100% interest in Island Gold Mine. Ownership of Mining Rights All mining titles on the Island Gold project were jointly held by Richmont Mines (55%) and Patricia Mining (45%). Since the acquisition of Patricia Mining on December 16, 2008, Richmont holds 100% of all mining titles relating to the Island Gold property. Following the acquisition, the mining rights owned by Patricia (45%) were transferred to Richmont Mines in February and March 2009. Mining Royalties All Island Gold properties held by Richmont Mines are subject to the payment of royalties and financial contractual obligations. Details can be found in the Technical Report for the Island Gold Project as of May 15, 2007 under the Companys profile on the SEDAR web site at www.sedar.com. The Kremzar Property is subject to a 4% NSR in favour of Essar Steel Algoma Inc. (Essar) (formerly Algoma). The Essar NSR will become payable at such time as the aggregate amount of NSRs received by the Company and Teck Resources Ltd. (Teck) (formerly Aur Resources Inc.) equals the aggregate preproduction costs. The Kremzar Property is also subject to a 3% NSR payable to Teck, which is payable until such time as the Essar NSR becomes payable. In the event the Essar NSR becomes payable and is reduced below 4%, Teck will be entitled to receive a NSR equal to 50% of the amount by which the Essar royalty is reduced, payable on the same terms as the Essar NSR. The Lochalsh Property is subject to a 3% NSR payable to Teck. The Goudreau Property is subject to a 15% NPI royalty payable to Essar. Environmental Obligations and Permits The permit to operate the Kremzar Mill, located on the Island Gold Mine property, was amended in September 2008 to include water treatment to clarify the effluent of the primary pond. The treatment is done by adding a coagulant and a flocculant. The new permit number is 0734-7HYHVH. The Lochalsh closure plan was approved on April 30, 2007. As of December 31, 2010, an amount of CAN$184 is in place to cover the closure costs. 44


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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 also approved. A payment of CAN$10 cash was made by Patricia Mining, and there was a collateral mortgage of CAN$578 granted using the Kremzar Mill as security. Following the acquisition of Patricia Mining and a review of the closure plan, Richmont Mines has provided the MNDM with a letter of credit of CAN$798 to cover the closure plan costs. Since Richmont Mines has satisfied all MNDMs obligations, the mortgage on the Kremzar Mill has been released and the $10 cash recovered by the Company. There are no environmental issues on the property at this time. InfrastructureThe 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 850 tonnes per day), the Kremzar ramp and portal, the Lochalsh ramp and portal, the mine access road, and the hydro lines. An office, a core logging and storage facility, and a mine dry are also located on the Kremzar Mine site. Location of Mineralized Zones The mineralized zones are located on mining leases 991853, 991854 and 991852 and patented claim 2075 of the Lochalsh property, and the ramp and waste pad are on patented claims 1776 and 1710 of the Goudreau property. The reserves of Lochalsh are localized on mining leases 825288 and 825287 of the Lochalsh property. Accessibility Access to the Island Gold Mine is via an all-weather road from Highway 519, just west of Dubreuilville, Ontario. This village is located approximately 35 km east of the junction between Highways 17 and 519. It takes approximately one (1) hour to drive from Wawa, Ontario to the mine site. 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 Algoma Power Inc. (formerly Great Lakes Power Corporation). Richmont Mines also offers living accommodations and flexible schedules to its employees. Training is offered in order to maintain a local qualified workforce. 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 throughout the year. Annual precipitation is normally 669 mm of rain and 278 cm of snow. 45


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Winter winds are from the northwest and north, and during the summer south westerly to westerly winds prevail. The climate does not affect the mining operation, which extends all year long. Physiogeology 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. Exploration History In 1983, Canamax Resources Inc. (Canamax) and Algoma (now Essar Steel Algoma Inc.) 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 (2) 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. 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 at a cost of $3.0 million. A total of 125 metres of exploration 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 were 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 were performed on the Island Zone and 10,602 metres of drilling 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. On December 16, 2008, Richmont Mines acquired all of the outstanding shares of Patricia Mining and now owns a 100% interest in the Island Gold Mine. 46


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Geological Setting Regional Geology The Island Gold property is part of the Michipicoten greenstone belt which is part of the Wawa sub-province and Superior province of Archean age. The property is stratigraphically positioned in the upper portion of the Wawa Assemblage, composed by intermediate to felsic volcanic rocks capped by pyrite-bearing iron formations. Island Gold Project Geology The Island Gold property covers part of the interface between the Catfish assemblage, composed of mafic rocks, and the Wawa assemblage, which consists 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 Goudreau Lake Deformation Zone (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 metres wide by several hundred metres long, with dips ranging from -70° to -90°, that host the gold mineralization. Moderate to high strain intensity is 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 1 centimetre to 1.5 meters wide. Finely disseminated gold occurs in clusters up to 3 mm in diameter. At the Island Gold deposit, 5 zones referred to as E1, E, D1, D, and C, are defined and characterized by the presence of alteration halos ranging from 0.5 metres to over 8 metres in thickness, and are comprised of 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. 2010 Results For the year ended December 31, 2010, 251,237 tonnes of ore were processed at the Island Gold Mine at an average recovered grade of 5.68 g/t, and 45,865 ounces of gold were sold at an average price of US$1,238 (CAN$1,275) per ounce. This compared to 211,773 tonnes of ore at an average recovered grade of 5.71 g/t, and gold sales of 38,879 ounces at an average price of US$967 (CAN$1,104) in 2009, and 161,320 tonnes at a recovered grade of 7.33 g/t, and gold sales of 38,037 ounces at an average price of US$867 (CAN$924) per ounce in 2008. While the recovered grade was essentially flat year-over-year in 2010, due primarily to lower than expected grades in long-hole stopes in the first half of the year, tonnage rose 19% as a result of improved productivity at the mine and the expanded mill capacity. In 2010, cash costs per ounce at Island Gold were US$780 (CAN$803) versus US$736 (CAN$841) in 2009, a 5% decrease in Canadian dollar terms, reflecting improvement in tonnage and gold recovery rate. 2009 cash costs at Island Gold were higher than US$659 (CAN$703) in 2008, primarily a reflection of higher dilution, particularly in the first half of 2009, and a greater amount of development ore being processed, which lowered the average recovered grade in the year. 47


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Island Gold Mine1 2010
        2009
        2008Tonnes
        251,237
        211,773
        161,320Head grade (g/t)
        5.95
        6.04
        7.65Gold recovery (%)
        95.49
        94.52
        95.83Recovered Grade (g/t)
        5.68
        5.71
        7.33Ounces sold
        45,865
        38,879
        38,037Cash cost per ounce (US$)
        780
        736
        659Investment in property, plant and equipment (thousands of CAN$)
        4,650
        4,318
        3,079Exploration expenses (thousands of CAN$)
        4,561
        3,136
        2,293Deferred development metres
        2,478
        1,576
        605Diamond drilling (metres)Definition
        12,110
        13,604
        14,764Exploration
        54,438
        18,936
        1,901
  1
      Prior to its acquisition of Patricia Mining in December 2008, which held a 45% interest in the Island Gold Project, Richmont Mines reported 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 held a 55% stake in the unincorporated joint venture, and as its share of the earnings and/or losses differed from the percentage that it owned, the Company was therefore considered the primary beneficiary of the VIE. Exploration In 2010, Richmont Mines continued its underground exploration program via drilling and drifting. The excavations were done in waste rock to continue the exploration access drifts towards the Extension-2 sector of the E1E zone, the Goudreau and the Lochalsh zones. This development also permitted exploration diamond drilling in the Extension-2 sector of the E1E zone, the Lochalsh and the Goudreau zones. During 2010, underground drilling at the Island Gold Mine represented 12,110 metres of definition drilling and 24,423 metres of exploration drilling. These metres were exploration holes in the Lochalsh, Extension-1, Goudreau and Extension-2 zones. Drilling confirmed the presence and continuity of the targeted zones. The delineation drilling into the Extension-1 sector of the E1E and the Lochalsh sector permitted the conversion of Probable Reserves into Proven Reserves. The exploration drilling in the Extension-2 sector of the E1E resulted in the addition of Probable Reserves. A surface diamond drilling campaign was implemented in conjunction with the underground drilling during 2010. The goal of this campaign was to primarily test the eastern, western and depth extensions of the known zones in the vicinity of Island Gold Mine. 48


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The 2010 surface exploration drill program was completed in December 2010. The program consisted of 30,015 metres. The drilling on the projected eastern, western and depth extensions of the mine structure horizon was successful in identifying the continuance of similar alteration, mineralization and shearing over one kilometre east of the Island Gold Deposit under Goudreau Lake. Proven and Probable Reserves at the Island Gold Mine were estimated at 818,066 tonnes of ore at a grade of 6.13 g/t, for 161,197 ounces of gold at December 31, 2010, compared with 927,143 tonnes of ore at a grade of 8.86 g/t, for 264,085 ounces of gold at December 31, 2009. The decline in the reserve base in 2010 was mainly attributable to three factors: (1) 12 months of production at the mine, (2) results from definition drilling in 2010 that lowered Probable Reserve estimates in the Lochalsh Zone, and (3) reconciliation calculations between actual production and reserve estimates, due to lower than anticipated amounts of gold being recovered from several blocks as a result of more variable gold distribution in the alteration zone. While exploration efforts in 2010 did not increase this mines reserve base, drilling in 2010 did garner favourable results at depth, between -400 and -900 metres of elevation, which confirmed the extension of the Island Gold mineralized zones at depth over a lateral distance of more than 1 km. Drilling In 2010, approximately 36,533 metres were drilled from underground and 30,015 metres from the surface. 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 metres by 15 metres, targeting alteration assemblages in the E1E 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 or NQ 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 most of the drill holes drilled in the 2010 program and the RQD for the zones is excellent ( 90%). The interpretation and development of each section was completed after receipt of the drill holes assays and section plots. This interpretation served to complete the reserve estimates. Sampling The drill hole sampling approach is defined to coincide with lithological contacts, and 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 kg to 2 kg for a zone of 1.5 metre vertically by 0.3 metre 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. 49


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Assays Swastika Laboratories (2008) Ltd of Swastika, Ontario, was used to perform fire assay, gravimetric and specific gravity analyses for the underground drilling and development program in 2010. A number of underground muck and chip samples were sent to the Wesdome assay lab in Wawa. Swastika laboratories are accredited ISO 9001-2000, and hold a Certificate of Laboratory Proficiency (PTP-MAL). 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 on May 25, 2007 under the Companys profile on the SEDAR web site at www.sedar.comThe 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 grams 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 grams 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 grams of representative material are subjected to the fire assay and to gravimetric finish. 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 weighed, homogenized and assayed in duplicate using one assay tonne (30 grams) portions. The +100 Mesh fraction (approximately 20 grams) is weighed 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 In 2007, during the course of the geological confirmation program, an evaluation of Quality Assurance/Quality Control (QA/QC) data was done to address the three 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 was run with each sample batch of samples. In addition, a replicate assay was run on every 10th sample to be used for checking the reproducibility of the assays. 50


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The results of the 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. In 2010, a QA/QC program was still in place with the addition of certified standards and in-house blank material to the regular samples submitted to the laboratory. The laboratory has its own QA/QC program with the addition of analytical blank standards and certified reference standards to each batch of assays. Security of Samples There is no formal program established at the Island Gold Mine relating to the shipment of samples. In 2005, the core logging facility and core storage area were established on the Kremzar Mine and milling site. A trailer was installed onsite and fit out as a core logging facility. A separate room was installed for core sawing and sample packing. The core is stored outdoors in covered racks or as separate cross-piles. There is a gate on the mine access road and there are personnel working onsite at all times. Individual sample bags are sealed. The samples are placed in large rice fiber bags, which are placed on pallets. Shipping of samples is done by pick-up by Island Gold staff. Once in Swastika, the samples are collected by Swastika Laboratories staff and brought to the laboratory. The underground channel samples are shipped to the River Gold laboratory in Wawa by Island Gold staff. Mineral Reserve Estimates In 2010, Mineral Reserve estimates were performed by Michel Plasse, P.Geo., and Daniel Vachon, Eng., employees of the Company, and reviewed by Daniel Adam, P.Geo., Ph.D., Exploration Manager and also an employee of the Company, who are qualified persons under Regulation 43-101. Factors and parameters used in the determination of the Mineral Reserve estimates are based on the knowledge of the Island Gold Mine as of December 31, 2010. The Mineral Reserve estimates were carried out in accordance with Regulation 43-101 recommendations and regulations. Mineral Reserves are classified according to the CIM classification adopted by the CIM Council on December 11, 2005. All standards generally accepted in the mineral mining industry as well as Regulation 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 The Reserve estimates were calculated using the following two distinct methods: (1) the polygonal method was used for the Island sector and for the extremities of the mineralized eastern and western zones if ore development was incomplete and (2) bloc modelling using ordinary krieging was used in the Lochalsh, Extension-1 and Extension-2 sectors.
    Regardless of the methods used, composites were established by the geological department for each drill hole and underground development face. The diamond drill hole composites were determined following an interpretation of vertical cross-sections and horizontal plans while the development composites were interpreted using the face mapping and assay results of each development face. Once individual composites were determined, each one was tagged in the database according to their individual zone name. Individual pierce points were generated on longitudinal sections for each zone. These longitudinal sections are a representation of an average plane through each mineralized zone. 51


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For the polygonal method, construction of the polygons is completed on longitudinal sections. An area of influence of 20 metres was determined for the development composite and the diamond drill holes. A 10 metre influence was used on the lateral extremities of the development composite to limit their influence. When all polygons are generated, a combination of the development and drill hole pierce points is created. After the ore block limits are determined and the grade and tonnes of each reserve block are calculated, specific dilution and ore recovery are factored into the final reserve estimate. 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 3.5 g/t Au fixed with a gold price at CAN$1,000 per ounce with an exchange rate of CAN$1/US$;Grade capping at 75 g/t Au for all zones;A minimum true thickness of 2.0 metres based on the mining method (longitudinal long hole);An average rock density of 2.82 t/m3 is defined;Ore mining recovery: 95% for designed stopes - pillars between stopes have been excluded;External dilution: a dilution rate of 10% to 25% for waste at a grade of 0.5 g/t Au is assumed for stopes (% varies in function of the stope width). A dilution rate of 30% is assumed for development;Excluded mill recovery of approximately 95%. The database and the parameters used to estimate the Mineral Reserves are based on the results from 2010, the forecast for 2011 and information available as at December 31, 2010. The technical parameters were reviewed by Michel Plasse, P.Geo. and Daniel Adam, P.Geo., Ph.D., two employees of the Company. Thus, both the dilution and the ore-recovery factors by mining methods used in the reserve estimate are based on mining methods. All these factors and parameters will be updated on an annual basis in order to account for changes in mining operations. The conversion of Mineral Resources to Reserves is based on economical feasibility. As per Regulation 43-101, only Mineral Resources in the measured and indicated categories can be used to establish the estimate of Mineral Reserves. 52


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Reserve Classification More detailed descriptions regarding classification of Mineral Reserves at the Island Gold Mine are set out below. Proven Mineral Reserves Ore development was completed above, below or on both levels of the ore block. If only one level was developed, a minimum drill spacing of 20 metres was necessary to confirm the vein continuity. An economic feasibility was estimated by the engineering department of the Island Gold Mine to validate the block as reserves. Probable Mineral Reserves No development was done above or below. Since the information from the ore development was lacking, a maximum drill hole spacing of 20 metres center to center was necessary to validate the vein continuity inside the ore block. Economic feasibility was estimated by the engineering department of the Island Gold Mine to validate the block as reserves. Dilution and mining recovery rates are included in the reserve calculation. Reserve Table As of December 31, 2010, the Mineral Reserves of the Island Gold Mine are estimated at: Categories of reserves
        Tonnes
        Grade
        Au1(metric)
        (g/t Au)
        (oz)Proven
        354,698
        6.48
        73,848Probable
        463,368
        5.86
        87,349Total (Proven + Probable)
        818,066
        6.13
        161,197
 1.
      Before mill recovery of 95% As of December 31, 2010, the Mineral Reserves at Island Gold were 161,197 ounces of gold, calculated using a long-term gold price of CAN$1,000 per ounce and an expected mine life of approximately three years. Mining Operations and Metallurgy The extraction method is by longitudinal long hole with a maximum panel length fixed by a hydraulic radius factor of 4.5. The Island Gold ore is 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 CIP circuit at the Kremzar mill is 95.5%. For the 12 months ended December 31, 2010, 45,865 ounces of gold were sold at an average price of US$1,238 (CAN$1,275) per ounce. This compared to gold sales of 38,879 ounces at an average price of US$967 (CAN$1,104) per ounce in 2009 and gold sales of 38,037 ounces at an average price of US$867 (CAN$924) in 2008. In 2010, cash costs per ounce at Island Gold were US$780 (CAN$803) versus US$736 (CAN$841) in 2009, a 5% decrease in Canadian dollar terms, reflecting improvement in tonnage and gold recovery rate. 2009 cash costs at Island Gold were higher than US$659 (CAN$703) in 2008, primarily a reflection of higher dilution, particularly in the first half of 2009, and a greater amount of development ore being processed, which lowered the average recovered grade in the year. 53


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Year ended
        Year ended
        Year endedDecember 31,
        December 31,
        December 31,2010
        
        2009
        
        2008Precious metals revenues (thousands of CAN$)
        
        58,468
        
        42,935
        
        35,163Ounces sold
        
        45,865
        
        38,879
        
        38,037Data per ounce of gold sold
        US$
        CAN$
        US$
        CAN$
        US$
        CAN$Cash cost
        780
        803
        736
        841
        659
        703Depreciation and depletion
        124
        128
        91
        104
        94
        100Total
        904
        931
        827
        945
        753
        803Average price obtained per ounce
        1,238
        1,275
        967
        1,104
        867
        924
  A.
      Exploration Projects and Other Properties General Richmont Mines owns or holds interests in many mining properties at different stages of exploration. Wasamac, Quebec, Canada Location and Access The Wasamac property is located approximately 15 km southwest of Rouyn-Noranda, Province of Quebec, Canada, and less than 10 km east of the Companys Francoeur Mine. The property can be reached from Rouyn-Noranda via 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 (3) mining concessions (CM 349, CM 364, and CM 370) and one (1) claim which represents a total area of 757.65 hectares in the Beauchastel Township. Richmont Mines owns 100% of the mining concessions relating to the Wasamac property. 54


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2010 Work and Results In May 2010, the Company began a 10,000 metre drilling program on its Wasamac property. Drill results from the initial eight completed holes drilled over 4,311 metres identified several promising intercepts that corroborated this plan, namely 3.59 g/t Au over 12.5 metres, 6.46 g/t Au over 9.33 metres, 4.62 g/t Au over 10.56 metres, and 3.44 g/t Au over 8.38 metres. As a result, the size of the drilling campaign was expanded to 15,000 metres, and a third drill was added on the site to expedite the extended program. Results from a subsequent nine holes over 6,491 metres similarly revealed favourable results, including 6.14 g/t Au over 6.47 metres, 3.12 g/t Au over 14.04 metres, and 3.17 g/t Au over 7.75 metres, and also confirmed that the targeted Wasamac Shear Zone had a strike length of more than 2 km. Following these results, Richmont Mines extended the drill campaign by an additional 5,000 metres, bringing the 2010 program to 20,000 metres. Although the limited area tested below the -850 metre elevation has not yet yielded significant results, drilling has confirmed a strong system of mineralization between the -200 and -800 metre elevations that remains open at depth in several areas. On February 17, 2011, the Company announced a major 35,000 metre drilling program for 2011, the completion of a scoping study by the end of 2011 and a 43-101 compliant Technical Report was filed on SEDAR on April 1st, 2011 at www.sedar.com. Monique, Quebec, Canada Location and Access The Monique property is located 25 km east of Val-dOr, in the province of Quebec, Canada. The property is located approximately 10 km east of the Beaufor Mine and 50 km from the Companys Camflo Mill. The property can be reached from Rouyn-Noranda via Highway 117 to the town of Val-dOr, and then by a secondary road that leads directly to the property.Description of the Property and agreements
  The Monique property consists of 18 mining claims claim which represents a total area of 539 hectares. Following the acquisition of Louvem Mines in June 2010, the Company now owns a 81% interest in the property. In order to have greater flexibility over the future development of this asset, Richmont Mines signed an option agreement with SOQUEM to acquire its 19% interest of the Monique property on December 21, 2010. Upon signing the agreement, Richmont Mines paid SOQUEM $350,000, and undertook to complete $400,000 of exploration work on the Monique property on or before February 28, 2011, of which approximately $289,000 had been spent by December 31, 2010. On March 4, 2011, a work report was submitted to SOQUEM. On April 8, 2011, SOQUEM transferred its 19% interest to Richmont Mines. Terms of the agreement also stipulated that Richmont Mines, upon acquiring SOQUEMs interest, will grant a 0.38% NSR royalty to SOQUEM in the event that the property reaches commercial production. Similarly, Richmont Mines agreed to assume 100% of royalty obligations (versus 81% previously) that exist on 8 out of the propertys 18 claims, once Richmont Mines has successfully earned 100% ownership of the property. These royalties are equal to 5% NPI. 55


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2010 Work and Results In September 2010, Richmont Mines announced plans for a 5,500 metre surface exploration drilling program on its Monique property. The goal of the campaign, involving 35 holes ranging between 80 and 215 metres in length, was to complete infill drilling on two previously identified gold zones on the property: the G Zone and J Zone, with the objective of evaluating the potential for a small open pit operation. Condemnation drilling was begun in November 2010, while definition drilling of the G and J Zones was delayed until February 2011 to allow the surface to freeze in the area where work was planned. The Company expects preliminary results from the 5,500 metre drilling program during the second quarter of 2011. Cripple Creek, Ontario, Canada Location and Access The Cripple Creek property is situated 5 km to the southwest of the Timmins West deposit, Denton Township, near Timmins, in Ontario, Canada. The property can be reached from Rouyn-Noranda (Quebec) via Highway 117 North, then Highway 11 North, heading in the direction of Cochrane (Ontario), and subsequently Route 101 West toward the town of Timmins, Ontario. The property is located approximately 25 km west to the town of Timmins, and then by a secondary road that leads to the property. Description of the Property The Cripple Creek property consists of 27 mining claims which represent a total area of 694.08 hectares. 2010 Work and Results Richmont Mines began a drilling program at the Cripple Creek Gold Project in February 2010. The Companys first phase of drilling in 2010 included 4,532 metres over 11 holes. Drilling targeted the lateral extension of Zone 16 to the west, and the depth extension of the Mahoney Zone, two of three notable zones uncovered by previous owners of the property during the 1980s and 1990s, as well as two new exploration targets (Sediments Zone and Pond Zone) within the property. Preliminary results from the drilling campaign identified two interesting intercepts in Zone 16, namely 73.54 g/t Au over a width of 7 metres, and 22.76 g/t Au over 0.5 metres. Drilling on the Mahoney Zone similarly uncovered a promising intercept of 12.31 g/t Au over 0.8 metres. Subsequent results from the second phase of drilling yielded several interesting intercepts, including 3.79 g/t Au over 16.35 metres, a result which confirmed that the alteration zone containing the intercept of 73.54 g/t Au over 7 metres broadens near surface. Additional interesting results included 4.55 g/t Au over 7.1 metres, 3.57 g/t Au over 5.6 metres, 26.34 g/t Au over 0.55 metres, and 15.81 g/t Au over 0.4 metres. While much exploration work remains to be done on this property, the Company obtained additional geological insight from the second phase of the 2010 drilling campaign, which encompassed 6 holes over 2,991 metres. Most importantly, drilling reaffirmed the gold potential of the sector, and also enabled for better understanding of the mineralization. Results from the campaign also confirmed the continuity of the main mineralized zone to a vertical depth of 650 metres and that the alteration pipe of Zone 16 extends at depth. Furthermore, drilling revealed that two types of mineralized zones are present. The first, containing disseminated pyrite, has a northern dip of approximately 65° and is found at the contact points of silicified mafic volcanics and ultramafic volcanics. The second system, formed by milky quartz veins containing iron carbonate and mineralized with gold, appears to be sub-horizontal, and cross-cuts other geological formations. Interpretation of this new information makes establishing true width of the mineralized gold zones difficult when they consist of the two types of mineralization. 56


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In view of intensive winter drilling programs on the Monique and Wasamac properties and due to limited availability of drills and geological staff, Richmont management has decided to defer the planned 3,500 metre winter 2011 exploration drilling campaign on its Cripple Creek property. The timing of the next drilling program will be evaluated during the course of 2011. The objective of the program will be to confirm the new interpretation of Zone 16 provided by results obtained to date, to better target mineralized zones, and to test the extension of the Mahoney Zone at depth. TABLE OF RESERVESDecember 31, 2010
        December 31, 2009Tonnes
        Grade
        Ounces
        Tonnes
        Grade
        Ounces(metric)
        (g/t Au)
        contained
        (metric)
        (g/t Au)
        containedIsland Gold MineProven Reserves1
        354,698
        6.48
        73,848
        387,182
        8.46
        105,333Probable Reserves1
        463,368
        5.86
        87,349
        539,961
        9.14
        158,752Beaufor MineProven Reserves1
        81,742
        7.53
        19,780
        47,033
        6.63
        10,021Probable Reserves1
        201,296
        7.60
        49,218
        118,728
        9.07
        34,616GOLD PROJECTSFrancoeur MineProbable Reserves2
        615,664
        6.91
        136,749
        615,664
        6.91
        136,749TOTAL GOLDProven and Probable Reserves
        1,716,768
        6.65
        366,944
        1,708,568
        8.11
        445,471
  1
      In 2010, based on a price of US$1,000/oz and an exchange rate of 1.00 (in 2009, a price of US$850/oz and an exchange rate of 1.00 was used).2
      Reserves were calculated based on a price of US$800/oz and an exchange rate of 1.00 for both 2010 and 2009 57


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Regulation 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 Regulation 43-101, and their names are set out in the table below. These reserves estimations were reviewed by Mr. Daniel Adam, Ph.D., P.Geo., Exploration Manager, an employee of Richmont Mines Inc. Mines
        Qualified Persons
        TitlesBeaufor Mine
        Jessy Thelland, P. Geo.
        Senior Geologist, Beaufor MineMario Blanchette, Eng.
        Chief Engineer, Beaufor MineFrançois Chabot, Eng.
        Mine Manager, Beaufor MineIsland Gold Mine
        Michel Plasse, P.Geo.
        Chief Geologist, Island Gold MineDaniel Vachon, Eng.
        Senior Mine Engineer, Island Gold MineFrancoeur Mine
        Raynald Vincent
        Senior Geologist, Corporate divisionEng.,B.Sc.A.,M.G.P.Christian Pichette, Eng.,M.Sc.A.
        VP, operations, Corporate divisionDaniel Adam, P. Geo.,Ph.D.
        Exploration Manager, Corporate division
 On the next page you will find a map of the Companys properties. 58


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59


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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, without limitation, 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 affects 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 per ounce (London PM fix) in U.S. dollars over the past five years and as at April 21, 2011: (US$)
        Exchangerate1
        (CAN$)2006
        604
        1.13
        6832007
        695
        1.07
        7442008
        872
        1.07
        9332009
        972
        1.14
        1,1082010
        1,225
        1.03
        1,262As at April 21, 2011
        1,504
        0.95
        1,429
 1Source: Bank of Canada 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 required to be previously approved by the Companys Board of Directors. See ITEM 11 Quantitative and Qualitative Disclosures About Market Risk herein. 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, 2010, Richmont Mines had not entered into any gold derivatives contracts. Governmental Regulation (Environment) Richmont Mines principal operations 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 with respect to activities related to natural resources and the protection of the environment. 60


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Environmental protection legislation applicable to the Canadian mining industry mandates high standards for the reduction or elimination of emissions, deposits, and 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 Provincial legislation in Quebec and Ontario in mining matters contemplates the acquisition and ownership of mining titles, safety standards, royalties and mining taxes. The Mining Act(Quebec) and the Mining Act(Ontario) provides for the rehabilitation and restoration of lands affected by mining activities. In Ontario, approval for any plan for the rehabilitation and restoration of land affected by a companys operations is given by the Ministry of Northern Development and Mines (MNDM), while in Quebec such approval must be obtained from the MRNW. Companies must comply with the plan and provide a financial guarantee to that effect. In Quebec, when a company 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, a local public consultation must also be held. The MNRW and the MNDM may require or impose additional conditions or obligations before giving their approval to the rehabilitation and restoration plan. Both Ministries may review the financial guarantee if they are of the opinion that the guarantee is insufficient and may require additional guarantees. The Ministries may enjoin a company that 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 company does not comply with such requirements, the MNRW and the MNDM may have the rehabilitation and restoration work executed by a third party, at the companys cost. Richmont Mines does not foresee any specific difficulty in meeting the requirements under the Mining Act(Quebec) and the Mining Act(Ontario). Richmont Mines 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 Environmentwith respect to its mining operations at the Francoeur Mine, at the Beaufor Mine, at the Island Gold Mine and to those of its subsidiary, Camflo Mill Inc. C.
      Organization Structure See Exhibit 8.1 to this Annual Report. 61


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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, 2008, 2009 and 2010 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, 2010 compared to year ended December 31, 2009 (all dollar amounts are in thousands of Canadian dollars unless otherwise stated except for share and per ounce data). Overview Gold Prices The gold market remained very strong in 2010 as the average price rose to approximately US$1,225 per ounce from an average price of US$972 in 2009, and US$872 in 2008. Gold started 2010 on a strong foot, with the annual low of US$1,058 occurring in the beginning of February 2010, a level that was 9% above the 2009 average price per ounce of US$972. Gold continued to climb progressively throughout the year, reaching a high of US$1,421 in the month of November 2010 and ended the year with the highest month average price of US$1,391 in December 2010. The main factors that are expected to continue to have a positive influence on the future price of gold include: Increased demand for gold ETF;Non-hedging and less aggressive hedging policies of producers;Demand levels that exceed the industrys annual production; 62


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A lack of confidence in the worlds equity markets;Ongoing geopolitical instability. Production Richmont currently produces gold at the Island Gold Mine in Ontario and at the Beaufor Mine in Quebec. As of December 31, 2010, the Island Gold Mine had Proven and Probable Reserves of 818,066 tonnes of ore at a grade of 6.13 g/t, for 161,197 ounces of gold. The Beaufor Mine had Proven and Probable Reserves of 283,038 tonnes at a grade of 7.58 g/t, for 68,998 ounces of gold. Island Gold Mine made good progress in 2010. Following the capacity expansion at the mill at the end of third quarter of 2010, when a 6 foot by 8 foot ball mill was replaced with a larger capacity 9 foot by 11 foot ball mill, average production levels reached 715 tonnes per day in the last quarter of the year, in spite of the mill being shut down for 5 days in December for planned maintenance, and metallurgical recovery rates increased to 96.51% in the fourth quarter of 2010 versus 94.98% for the first nine months of the year. Recovered grades improved notably in the fourth quarter to 6.49 g/t Au from 5.24 g/t Au in the year ago period, as adjustments to our mine plan began to take root. However, recovered grades were essentially unchanged at 5.68 g/t Au in 2010, versus 5.71 g/t Au in 2009, due primarily to lower than expected grades in long-hole stopes in the first half of the year. The Beaufor Mine, which has been in commercial production since 1996, generated good results in 2010, with tonnage levels and recovered grades both up 3% year-over-year. Cash costs at this mine, however, increased to US$866 in 2010 from US$740 in 2009, due primarily to higher milling costs and lower recovered grades in the first nine months of the year as a result of the greater amount of development necessary to access the ore zones in this timeframe. Investments Richmont invested $4.7 million in capital expenditures at the Island Gold Mine in 2010, a reflection of ongoing development costs, refurbishing and acquisition of equipment. The Company spent an additional $2.5 million in capital expenditures at the Beaufor Mine in 2010, up from $1.1 million in 2009, with the year-over-year increase largely attributable to the cost associated with the excavation of a new safety exit from the mines underground operations. Capital expenditures at the Francoeur Mine totaled $9.1 million in 2010, up from $2.0 million in 2009, reflecting higher development costs associated with transitioning this mine into commercial production by mid-2011. Dewatering of the mines 17 levels was completed at the end of June 2010, and underground development work to reach the targeted West Zone began shortly thereafter. As of the end of 2010, a total of 1,239 metres of development had been completed. Surface infrastructure has been re-commissioned, installation of additional underground electrical infrastructure required for commercial production is being done in conjunction with the development work, and definition drilling began in November 2010. Specifically, a total of 1,663 metres of definition drilling were completed over November and December 2010. An additional $0.5 million was invested at the Camflo Mill and other corporate installations in 2010, bringing the Companys total investment in property, plant and equipment to $16.8 million for the year. In 2009, capital expenditure totaled $8.0 million, above the 2008 level of $5.2 million, primarily as a result of costs incurred at the Francoeur Mine for the re-commissioning of surface infrastructure and dewatering of the underground installations. 63


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Summary of operational and financial results Net earnings in 2010 were $9.0 million, or $0.31 per share, compared with net earnings of $0.3 million, or $0.01 per share in 2009. The cash balance was $40.0 million at December 31, 2010, an increase of $18.9 million, compared with $21.1 million at December 31, 2009. At December 31, 2010, Richmont had working capital of $43.9 million compared with $24.9 million at December 31, 2009. Changes to accounting policies Business combinations, consolidated financial statements and non-controlling interests During the second quarter of 2010, the Company decided to adopt early section 1582, Business Combinations (CICA Handbook), which replaces section 1581 of the same name, and sections 1601, Consolidated Financial Statements and 1602, Non-Controlling Interests, which together replace section 1600, Consolidated Financial Statements. These new sections harmonize significant aspects of Canadian accounting standards with the International Financial Reporting Standards (IFRS) that will be mandated for entities with fiscal years beginning on or after January 1, 2011.These sections are applied for business combinations that occurred on or after January 1, 2010 except for Section 1602 Non-Controlling Interests which is applied retrospectively. Section 1582 requires that all business acquisitions be measured at the fair value of the acquired entity at the acquisition date even if the business combination is achieved in stages. The section also establishes new guidance on the measurement of consideration given and the recognition and measurement of assets acquired and liabilities assumed in a business combination. Furthermore, under this new guidance, acquisition costs, which were previously included as a component of the consideration given, and any negative goodwill resulting from the allocation of the purchase price, which was allocated as a reduction of non-current assets acquired under the previous standard, will be recorded in earnings in the current period. Sections 1601 and 1602 dealing with consolidated financial statements require an entity to measure non-controlling interests upon acquisition either at fair value or at the non-controlling interests proportionate share of the acquirers identifiable net assets. In addition, in the case where one entity controls another entity, changes in a parents ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The new sections also require non-controlling interests to be presented as a separate component of shareholders equity. Application of the sections had an impact on the accounting of the acquisition of the non-controlling interests. Presentation of the non-controlling interests was also modified. 64


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Future Accounting PronouncementsInternational Financial Reporting Standards In February 2008, the Accounting Standards Board (AcSB) announced that generally accepted accounting principles in Canada (GAAP) are to converge with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and that public companies will be required to present their financial statements, with comparative data, under these standards for fiscal years beginning on or after January 1, 2011. As a result, the Company will be required to report under IFRS for its 2011 fiscal year starting January 1, 2011 for interim and annual financial statements. In addition, 2010 comparative data will need to be reprocessed so that it may be presented according to the same accounting rules. IFRS uses a conceptual framework similar to Canadian GAAP, but there are significant differences in recognition, measurement and disclosure requirements. An IFRS conversion plan has been developed. The conversion is progressing according to plan, and the Company foresees that it will be completed in time for the production of the quarterly reports of 2011, the first financial statements drawn up according to IFRS, as well as for the annual report for the financial period ending December 31, 2011. Staff with appropriate qualifications and experience have been assigned to the project. Moreover, these individuals regularly attend thorough training sessions so that they may follow the changes to IFRS, which is in constant evolution. This team conducts technical research, provides issue identification and formulates recommendations to management, who then transmit the information to the audit committee. The Company has completed phase 1, diagnosis, which included a thorough examination of the differences between the Canadian GAAP and the IFRS, as well as a study of possible options to be adopted. The consequences of first time adoption of the IFRS will be detailed initially, followed by the expected resulting implications on subsequent financial statements. The items and comments below should not be regarded as a complete list of changes that will result from the transition to IFRS. It is intended to highlight the areas that the Company believes to be most significant. Additionally, the present IFRS may undergo modifications until December 31, 2011, following recommendations made by the IASB, the organization responsible for continuous updates of the IFRS. The Company actively monitors the IASBs schedule of projects, giving consideration to any proposed changes, where applicable, in its assessment of differences between IFRS and Canadian GAAP. First time adoption of IFRS IFRS 1 First-time adoption of International Financial Reporting Standards is a financial reporting standard that provides the framework for the transition to IFRS. The general principle under IFRS 1 is retroactive application, such that the opening balance sheet for the comparative year financial statements is to be restated as though the Company had always applied IFRS, with the net impact shown as an adjustment to opening retained earnings. However, IFRS 1 contains certain mandatory exceptions and permits certain optional exemptions from full retroactive application. The mandatory exceptions include among others, a revision of accounting estimates previously made by the Company. Past accounting estimates cannot be revised as a result of information obtained a posteriori during the application of the IFRS. With regards to the optional exemptions, the Company has decided to apply certain exemptions, hereafter described. 65


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The diagnosis completed at the initial stage of its planned conversion to the IFRS, as well as the choices carried out via IFRS 1, have allowed the Company to finish phase 2 of the plan, which is to determine the impact of the differences between Canadian GAAP and IFRS at the transition date. Consequently, through this analysis, the Company proceeded to create its opening balance sheet as of January 1, 2010. The differences between Canadian GAAP and IFRS that have been identified as significant to the Company are explained below, including, where possible, the quantitative effect on the financial information as of January 1, 2010. Business combinations The retrospective basis of IFRS 3 Business combinations would require the restatement of all business combinations that occurred prior to the transition date. However, IFRS 1 provides the option to apply this standard prospectively from the transition date or to choose a date from which the business combinations will be restated. The Company elected to retrospectively apply IFRS 3 to business combinations that occurred after January 1, 2008. Two business combinations occurred after this date. Considering that the Company has adopted an early application of IFRS 3 for one of these business combinations, only one business combination has been restated. The IFRS adjustments below relate to this business combination. Here are the main modifications as well as the consequences that have arisen. Measurement of purchase price CANADIAN GAAP Shares issued as consideration are measured at their market price a few days before and after the date the parties reached an agreement on the purchase price and the proposed transaction was announced. IFRS Shares issued as consideration are measured at their market value on the acquisition closing date. As a result, equity increased by $225 relative to the remeasurement of the shares issued as consideration for the acquisition, less issue costs of $80. Consequently, the same amount has been registered as an increase to the deficit, which is included in Shareholders equity. Increase in an interest CANADIAN GAAP The fair value of the consideration paid is recognized as an asset. IFRS When the results of the acquired entity are already consolidated, changes in a parent companys ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. It is thus necessary to cut off the increase of value registered on property, plant and equipment at the acquisition, net of the depreciation recorded to date. Consequently, property, plant and equipment were reduced by $3,288 less depreciation of $297, with the same amount registered as an increase to the deficit, included in Shareholders equity. Stock-based compensation IFRS - IFRS 1 encourages, but does not require the application of IFRS 2 Shared-based Payment to equity instruments that were granted on or before November 7, 2002. A first-time adopter is also encouraged, but not required, to apply IFRS 2 to equity instruments that were granted after November 7, 2002 and vested before the date of transition or on January 1, 2005, whichever is later. The Company has elected to apply IFRS 2 only to equity instruments that were granted before the date of transition but that were not vested at this time. The main resulting modifications, and their consequences, are below: 66


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Recognition of expense CANADIAN GAAP For grants of share-based awards with graded vesting, the total fair value of the award is recognized on a straight-line basis over the employment period necessary to vest the award. IFRS Each tranche in an award with graded vesting is considered a separate grant with a different vesting date and fair value. Each grant is accounted for on that basis. As a result, the Company adjusted its expense for share-based awards to reflect this difference in recognition. Forfeitures CANADIAN GAAP Forfeitures of awards are recognized as they occur. IFRS An estimate is required of the number of awards expected to vest, which is revised if subsequent information indicates that actual forfeitures are likely to differ from the estimate. Consequently, the Company has increased its deficit by $93 corresponding to the increase of the stock-based compensation expenses which were recorded before the transition date resulting in an increase of the contributed surplus by an equivalent amount. Thus, the effect on the Shareholders equity is nil. Asset retirement obligations The Company has elected to apply the exemption from full retrospective application of asset retirement obligations as allowed under IFRS 1. This will enable it to avoid restating property, plant and equipment, depreciation and depletion of property, plant and equipment as well as accretion expenses for all previous years, and instead to make the adjustment to Shareholders equity as at January 1, 2010. As such, the Company has remeasured the provisions as at January 1, 2010 under IAS 37 Provisions, Contingent Liabilities and Contingent Assets,and estimated the amount that will be included in the cost of the related asset by discounting the liability to the date at which the liability first arose. The Company did this using the best estimate of the historical risk-adjusted discount rates. The main resulting modifications, and their consequences, are below: Discount rate CANADIAN GAAP The provision for asset retirement obligations is not adjusted for changes in the discount rate. IFRS The provision for asset retirement obligations must be adjusted for changes in the discount rate. The evaluation of the liability as at January 1, 2010 resulted in a reduction of $82 of the asset retirement obligations and a net reduction of $60 of the corresponding asset. Consequently, the Company has reduced its deficit by $22. 67


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Presentation of the periodic unwinding CANADIAN GAAP The periodic unwinding of the discount is classified in the statement of earnings as an operating item, not as an interest expense. IFRSThe periodic unwinding of the discount is recognized in the statement of earnings as a finance cost. Incidences on the subsequent financial statements The differences between the Canadian GAAP and the IFRS seen previously will affect the 2011 financial statements and the comparable 2010 financial statements, the latter of which will be converted according to IFRS. At the present time, we cannot determine the quantitative impact that the adoption of these new rules will have on these financial statements. Here are other important elements to consider with respect to recognition, measurement, presentation and disclosure of financial information. These elements should not be considered as an exhaustive list of changes that will result from the transition to IFRS, but rather as a brief summary of the accounting differences that management currently believes to be most significant. Presentation of financial statements Under IAS 1 Presentation of Financial Statements, expenses must be classified by their nature or by their function in the statement of earnings. The Company elected to present the statement of earnings by function. For example, upon the adoption of IFRS, depreciation and depletion expenses will be allocated to function rather than being showed as separate line in the statement of earnings as currently permitted under Canadian GAAP. Moreover, the IAS 1 prohibits the offsetting of income and expenses. Consequently, the income generated from silver sales that were previously accounted for as a reduction of operating costs henceforth will have to be presented as income. Exploration and project evaluation The Company expects to retain its policy, in force before the transition of not capitalizing expenditures relating to exploration and project evaluation. The capitalization of expenditures begins when management and the Board of Directors decide to bring a project into commercial production. This decision is made when the findings of a feasibility study demonstrate the advantages and viability of said project. Consequently, the Company does not anticipate any changes regarding the recording of exploration and project evaluation expenditures. Property, Plant & Equipment International Accounting Standard IAS 16 Property, Plant & Equipment and Canadian GAAP contain the same basic principles, however there are some differences. IFRS require that significant parts of an asset be depreciated separately and that depreciation commences when the asset is available for use. Based on our latest analysis, this requirement should not have a material impact. IFRS also permit property, plant and equipment to be measured using the fair value model or the historical cost model. The Company is not planning on adopting the fair value measurement model for its property, plant and equipment. The Company will continue to measure its property, plant and equipment at amortized cost. 68


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Impairment of assets Under Canadian GAAP, the impairment test for assets or asset groups is a two-step process. The first step involves comparing undiscounted future cash flows of an asset or asset group to the carrying value. If the undiscounted cash flows are below its carrying value, the second step is required whereby an impairment charge is calculated as the difference between the asset or asset group discounted future cash flows, and its carrying amount. Impairments under IAS 36 Impairment of assets only require a one-step impairment test. Using this test, the carrying value of an asset or asset group (referred to as a Cash Generating Unit) is compared to its recoverable amount, which is the higher of fair value less costs to sell, and value-in-use, which involves discounted future cash flows. Also, unlike Canadian GAAP, IFRS require impairment charges to be reversed when circumstances indicate that the impairment no longer exists. In the short term, the Company does not believe this will impact its financial results. Activities in progress A model of IFRS financial statements has been developed. The Company is completing the related notes. Overall, a lot of effort will be put on the presentation of financial statements, as IFRS requires more disclosure. The Company is also assessing the impact of the adoption of the IFRS on information technology and data systems. Although new reports will likely be required to determine new information required for reporting, presentation and disclosure under IFRS, we currently do not expect the transition to IFRS to require significant changes to our information technology systems and reports. We also expect that our systems will be adequate for generating the comparative fiscal 2010 information, required in accordance with IFRS. For all the identified accounting changes, the Company also plans to assess impact on the design and effectiveness of its controls. According to a preliminary examination of environmental controls, the Company does not foresee important changes to its internal controls. Similarly, no impact has been identified on commercial activities to date. These changes will come into effect in phase 3 of the plan, that is, during implementation of the conversion. The changes identified in phase 2 will be implemented and tests will be carried out to ensure that differences, should there be any, will be resolved. Subsequently, the Company will be able to develop its first interim financial statements and accompanying notes for the quarter ending March 31, 2011. Revenue Precious metal revenue Total annual precious metal revenue rose 32% in 2010 to $87.2 million from $66.2 million in 2009, driven by a 16% increase in the average gold sales price realized in Canadian dollars and a 14% increase in the number of ounces of gold sold. For the full year, 68,123 ounces of gold were sold at an average price of US$1,243 (CAN$1,280) per ounce, versus gold sales of 59,733 ounces in 2009 at an average price of US$969 (CAN$1,107) per ounce. The number of ounces of gold sold from the Island Gold Mine increased 18% over 2009 levels, as 45,865 ounces of gold were sold at an average price of US$1,238 (CAN$1,275) per ounce in 2010, compared with 38,879 ounces of gold sold at an average price of US$967 (CAN$1,104) per ounce in 2009. The Beaufor Mine sold 22,258 ounces of gold at an average price of US$1,253 (CAN$1,290) per ounce in 2010, a notable improvement over gold sales of 20,854 ounces in 2009 at an average price of US$975 (CAN$1,113) per ounce. 69


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Other revenue Other revenue totaled $3.6 million in 2010, down 37% compared with 2009 results, primarily reflecting lower custom milling revenue at the Camflo Mill. Expenses Operating costs Including royalties, operating costs increased 13% year-over-year in 2010 to $56.6 million, reflecting a 19% increase in processed tonnage from the Island Gold Mine and a 3% increase in processed tonnage from the Beaufor Mine. The average cash cost of production was US$808 (CAN$832) per ounce in 2010, versus US$737 (CAN$842) per ounce in 2009, a $10 per ounce cost reduction in the Companys reporting currency, Canadian dollars. Royalties The amount of royalties paid out in 2010 increased to $2.1 million in 2010 from $1.6 million in 2009, with the increase primarily attributable to higher production levels and the higher average gold price. The Company pays a 3% NSR royalty on gold production at the Island Gold Mine, and royalties of $30 per ounce on 50% of the ounces produced from the Beaufor Mine. Custom milling- In 2010, Richmont processed 82,939 tonnes of custom milling ore at the Camflo Mill, half of the number of tonnes of custom milling ore processed in 2009. Administration Administrative expenses in 2010 were 24% higher than in 2009, primarily reflecting increased stock-based compensation, which is a non-cash expense, a one-time expenses related to the reorganization of the Board of Directors and higher Board remuneration expense as a result of the addition of new members to the Companys Board of Directors in the first quarter of 2010. Exploration and project evaluation As in previous years, Richmont Mines continued its investments related to exploration and project evaluation. 70


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Investments for exploration and project evaluation (in thousands of $)
        2010
        
        2009$
        
        $Exploration costs - MinesIsland Gold Mine
        4,561
        
        3,136Beaufor Mine
        2,584
        
        3,006Francoeur Mine
        151
        
        1,812Wasamac property
        1,712
        
        82Cripple Creek property
        838
        
        23Monique property
        289
        
        2Other properties
        104
        
        47Project evaluation
        443
        
        30510,682
        
        8,413Exploration tax credits
        (3,465
        )
        (1,347
        )7,217
        
        7,066
 Accretion expense of asset retirement obligations The 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. This charge was $0.29 million in 2010, compared with $0.24 million in 2009. Loss (gain) on disposal of long term assets The loss (gain) on disposal of long term assets includes the following items: (in thousands of $)
        2010
        
        2009$
        
        $Corporate building
        (496
        )
        -Valentine Lake property
        -
        
        (650
        )Mining equipment
        7
        
        56(489
        )
        (594
        )
 On January 4, 2010, the Company sold a corporate building with a net book value of $34 for a cash consideration of $530. On February 11, 2009, the Company entered into an agreement with Mountain Lake Resources Inc. (Mountain Lake) in which it granted Mountain Lake an option to purchase Richmonts 70% interest in the Valentine Lake Property located in Central Newfoundland. On December 31, 2010, Mountain Lake owns a 30% interest in the Property. Mountain Lake, as an option fee, has issued, in April 2009, 2,500,000 common shares to the Company for a fair value of $650, or $0.26 per share. 71


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Mining and income taxes (in thousands of $)
        2010
        
        2009$
        
        $Current taxes
        2,174
        
        1,585Future taxes
        1,517
        
        (110
        )3,691
        
        1,475
 Mining and income tax expense for the year 2010 totaled $3.7 million or 29.4% based on pre-tax income of $12.6 million, and reflected federal and provincial taxes and future mining and income taxes applicable for the year. A $0.5 million credit of mining duties from the previous year and a charge of $0.2 million relating to part XII.6 of the tax return of a subsidiary is included in this expense. 2009 mining and income tax expense totaled $1.5 million, based on pre-tax earnings of $1.8 million. The Company recorded a $1.2 million tax charge in order to benefit from an exploration credit of the same amount. This credit was applied against exploration expenses. The mining and income taxes also include a $0.1 million reduction of future mining taxes due to reductions in liabilities for future mining taxes. Net earnings Net earnings in 2010 were $9.0 million, or $0.31 per share, compared with net earnings of $0.3 million, or $0.01 per share in 2009, reflecting a 16% increase in the selling price per ounce in Canadian dollars, and a 14% increase in ounces of gold sold. Somewhat mitigating the effect of these improvements were higher depreciation and depletion expenses combined with higher mining and income taxes and higher operating costs, which stemmed from a 14% increase in the number of tonnes processed during the year at the Island Gold and Beaufor mines. Balance sheet Assets The total assets of Richmont Mines increased from $85.2 million as at December 31, 2009 to $117.6 million at the end of 2010. At December 31, 2010, Richmont had working capital of $43.9 million compared with $24.9 million at December 31, 2009. The $19 million increase reflected a $18.9 million increase in cash and cash equivalents, a $0.6 million increase in shares of publicly-traded companies, a $0.7 million increase in accounts receivable and a $2.3 million increase in credit and taxes receivable, offset by a $2.1 million increase in accounts payables and accrued charges and an increase of $1.4 million in mining and income taxes payable. 72


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Liabilities The amount of liabilities of the Company was $20.8 million as at December 31, 2010, compared with $15.3 million at December 31, 2009, and is composed of short-term liabilities, asset retirement obligations 0and future mining and income taxes. Richmont Mines has no long-term debt. Asset retirement obligations Richmont Mines must evaluate on a periodic basis the assumptions used in the calculation of the asset retirement obligations related to eventual closure of its mining sites. At the end of the fiscal year ended December 31, 2010, the Company had the following financial legal obligations: Total amount
        Anticipatedof the estimated
        cash flow
        Credit-adjustedcash flow
        payment schedule
        risk-free rate$
        
        %Beaufor Mine
        689
        2013
        4.0 and 5.5Island Gold Mine
        1,355
        2015
        4.0 and 5.5Camflo Mill
        3,998
        2016
        5.5Francoeur Mine
        634
        2016
        4.0 and 5.56,676
 Future mining and income 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. Shareholders equity Shareholders equity totaled $96.9 million as at December 31, 2010, compared with $70.0 million in 2009. At December 31, 2010, Richmont Mines had 31,230,063 shares outstanding and 2,311,000 options granted under its stock option plan compared with 26,103,656 shares outstanding and 2,480,000 options at December 31, 2009. Commitments and contingencies The Company is subject to royalty payments on 50% of the Beaufor Mines production, at a 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 which are detailed under Item 4. INFORMATION ON THE COMPANY  Business Overview  Mineral Royalties. The Company is committed, under a lease expiring in November 2014, to pay a sum of $249 in total for an office space totaling approximately 1500 square feet. Minimum lease payments for the next four years amount to $64 in 2011, 2012 and 2013 and to $57 in 2014. 73


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Critical accounting estimates The preparation of financial statements requires the use of estimates and the formulation of assumptions that have a significant impact on revenue 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 thereby affecting operating results. Mineral Reserves The main parameters used to determine the Mineral Reserves of Beaufor Mine and Island Gold Mine are the following: 2010
        
        2009Gold (US$/ounce)
        1,000
        
        850Exchange rate (US$/CAN$)
        1.00
        
        1.00Gold (CAN$/ounce)
        1,000
        
        850
 The Mineral Reserves of the Francoeur Mine were prepared in May 2010 using a gold price of US$800 and an exchange rate of 1.00. Property, plant and equipment The costs related to the development of a mining property are capitalized at the time when the property shows potential of profitability and reserves have been established. When commercial production begins capitalized development costs and construction costs are amortized over the Mineral Reserves of the deposit. The Mineral Reserves are estimated by professional geologists and engineers according to industry standards and the estimated prices of metals, operating costs and technical parameters. The annual tests for depreciation are carried-out by using the same parameters and the estimated residual value of the equipment. Changes to any key assumption estimate may result in a considerable reduction of Mineral Reserves, which could have a negative impact on the book value of these properties, plants and equipment. The assumption used in the asset valuation process was a price of CAN$1,300 per ounce of gold in 2011, CAN$1,250 in 2012, CAN$1,150 in 2013, and CAN$1,000 in 2014 and 2015. These prices are used in order to estimate future revenues and are based on an average price forecast obtained from 32 mining industry analysts. Depreciation and Depletion The Company uses the units-of-production method for the depreciation and depletion of property, plant and equipment at mine sites based on Proven and Probable Reserves. Any significant changes in the reserves could impact the amount of annual depreciation and depletion. Asset retirement obligations The future costs of the restoration of a mining site are estimated according to the projected cost of labour, the known environmental impact and the effectiveness of measures to repair and restore the site. The time frame for making the expenditures is subject to changes related to the continuity of operations and to the discovery of new reserves. 74


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Option-based compensation The Company grants stock options as part of its compensation program. The prevalent Black-Scholes model is used to evaluate the cost of these options. This model requires management to make a number of estimates. Future mining and income taxes The 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 of a change in tax rates on future tax assets and liabilities is recognized in the statement of earnings in the year in which the revised tax rate comes into effect. Reconciliation of total cash cost per ounce to production costs: (in thousand $ other than exchange rate data)
        2010
        
        2009Operating costs per consolidated statementsof earnings (CAN$)
        54,565
        
        48,751Royalties per consolidated statementsof earnings (CAN$)
        2,075
        
        1,563Cash costs (CAN$)
        56,640
        
        50,314Ounces of gold sold
        68,123
        
        59,733Total cash cost in CAN$/per ounce
        832
        
        842Average exchange rate (US$/CAN$)
        1.0299
        
        1.1420Total cash cost in US$/per ounce
        808
        
        737
 75


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Year ended December 31, 2009 compared to year ended December 31, 2008 (all dollar amounts are in thousands of Canadian dollars unless otherwise stated except per share and per ounce data) Overview Gold Prices and US Dollar Exchange Rates The gold market remained very strong in 2009 as the average price rose to approximately US$972 per ounce from an average price of US$872 in 2008. The annual low of US$810 for 2009 occurred in January, a level that was below the 2008 average price per ounce of US$872. Gold prices climbed progressively throughout the year, reaching a high of US$1,212 in the month of December 2009. The US dollar lost strength against the Canadian dollar throughout 2009 as the effects of the global economic crisis continued to have repercussions on the US economy. The US dollar started the year relatively strong, rising to CAN$1.2723 by the end of February. However beginning in March, the US dollar began a downward trend, and fell to CAN$1.0510 at the end of December 2009. Nonetheless, on an annualised basis, the value of the US dollar increased to an average of CAN$1.1420 in 2009 from an average of CAN$1.0660 in 2008. Production Richmont currently produces gold at the Island Gold Mine in Ontario and at the Beaufor Mine in Quebec. As of December 31, 2009, the Island Gold Mine had Proven and Probable Reserves of 927,143 tonnes of ore at a grade of 8.86 g/t, for 264,085 ounces of gold. The Beaufor Mine had Proven and Probable Reserves of 165,761 tonnes at 8.38 g/t, for 44,637 ounces of gold. Island Gold continued to make progress in 2009, its second full year of commercial operation, with annual production levels reaching an average of 610 tonnes per day. However, recovered grades were lower than expected at this mine in 2009. While higher than expected dilution was a contributing factor, the mine also processed significantly more low-grade development ore than budgeted. This had the negative effect of lowering average recovered grades, but conversely also enabled the mine to retrieve gold ounces not included in the reserve base. In addition, the mill was shut down for scheduled maintenance in the fourth quarter of 2009, thereby increasing the ore stockpile to 16,700 tonnes at the end of the year. The Beaufor Mine, which has been in commercial production since 1996, saw production levels decline in 2009, primarily a reflection of lower than forecasted grades in room and pillar stopes. Drilling efforts in 2010 will focus on several areas of interest on the Beaufor property, including one promising area that was identified through a surface drilling exploration program completed in the first quarter of 2010. Richmont remains committed to evaluating all possibilities for this property. Investments In 2009, the Company invested $4.3 million in capital expenditures at the Island Gold Mine, reflecting ongoing development costs, refurbishing and acquisition of equipment. The Company invested $1.1 million in mine development and equipment at the Beaufor Mine, and an additional $2.0 million at the Francoeur Mine in the re-commissioning of surface infrastructure and ongoing dewatering of the mine. An additional $0.6 million was invested at the Camflo Mill and other corporate installations. 76


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In 2008, the Company invested $3.1 million in plant and equipment at Island Gold Mine to advance production at the mine to current levels. The majority of the other investment in property, plant and equipment was invested at the Camflo Mill and in equipment used at the Golden Wonder project. Summary of operational and financial results During 2009, the Company had net earnings of $0.3 million or $0.01 per share, compared with a net profit of $1.6 million or $0.07 per share, in 2008. The Companys mining operations generated cash flows of $3.0 million in 2009 compared with $12.1 million in 2008. At December 31, 2009, Richmont had working capital of $24.9 million compared with $26.8 million at December 31, 2008. The $1.9 million decrease reflects a $4.9 million decrease in cash and cash equivalents, a $1.3 million increase in income taxes and tax credit receivable, a $0.6 million increase in the number of shares of publicly-traded companies held after receipt of common shares of Mountain Lake Resources Inc., and to a $1.4 million increase in ore inventories. Changes in accounting policies Mining exploration costs In March 2009, the Canadian Institute of Chartered Accountants (CICA) issued Emerging Issues Abstract EIC-174, Mining exploration costs. This new abstract provides additional guidance for mining exploration enterprises when an impairment test is required. The adoption of EIC-174 did not have a significant impact on the Companys consolidated financial statements nor on its comparative data. Financial instruments disclosures During 2009, in accordance with the applicable transitional provisions, the Company adopted revised section 3862 of the CICA Handbook, Financial Instruments-Disclosures. This section was amended to enhance disclosures about fair value measurements and the liquidity risk of financial instruments. All financial instruments recognized at fair value on the Consolidated Balance Sheet must be classified in three fair value hierarchy levels, which are as follows: Level 1:
        valuation based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities;Level 2:
        valuation techniques based on inputs other than quoted prices in active markets that are either directly or indirectly observable;Level 3:
        valuation techniques with significant unobservable market inputs.
 The results of the application of these new standards are included in note 17, and their application did not have a significant impact on the Companys consolidated financial statements. 77


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Financial instruments  recognition and measurement On January 1, 2009, in accordance with the applicable transitional provisions, the Company adopted revised section 3855 of the CICA Handbook, Financial Instruments  Recognition and measurement. The revised standard changes the categories into which debt instruments are required or permitted to be classified and eliminates the distinction between debt securities and other debt instruments. The adoption of this standard did not have any impact on the financial statements of the Company. Revenue Precious metal revenue Revenue for fiscal 2009 was $71.9 million, up slightly from last years $70.6 million. Net income for the year was $0.34 million, or $0.01 per share, below last years $1.6 million, or $0.07 per share. Total annual precious metal revenue was flat at $66.2 million in 2009 compared with 2008, as the higher average gold sales price realized in Canadian dollars offset the decline in the number of gold ounces sold in the year. More precisely, 59,733 ounces of gold were sold in 2009 at an average price of US$969 (CAN$1,107) per ounce, versus gold sales of 70,945 ounces in 2008 at an average price of US$876 (CAN$934) per ounce. Other revenue- Other revenue totaled $5.7 million in 2009, up 32% compared with 2008 results, reflecting higher custom milling revenue at the Camflo Mill offset by lower interest revenue. In 2009, Richmont processed 165,788 tonnes of custom milling ore at the Camflo Mill, more than the double of the number of tonnes of custom milling ore processed in 2008. Other revenue of $4.4 million in 2008 increased $1.0 million year-over-year, a result of higher custom milling revenue at the Camflo Mill and a foreign exchange gain. Expenses Operating costs Operating costs, including royalties, increased 13% year-over-year in 2009 to $50.3 million, as the cost of processing a higher level of tonnage from Island Gold more than offset the lower cost level associated with a decrease in the tonnage processed from Beaufor. A total of 313,366 tonnes of ore were processed in 2009, up 13% over the 276,994 tonnes in 2008. On a segmented basis, operating costs for Island Gold increased 22% to $32.7 million in 2009, while operating costs at Beaufor declined slightly year-over-year to $17.6 million. The average cash cost of production increased to US$737 (CAN$842) per ounce in 2009, from US$590 (CAN$629) per ounce in 2008, primarily a reflection of the lower recovered grades at both operating mines. Royalties The amount of royalties paid out in 2009 declined slightly to $1.56 million, from $1.59 million in 2008. The Company pays a 3% NSR royalty on gold production at the Island Gold Mine, and royalties of $30.00 per ounce on 50% of the ounces produced at the Beaufor Mine. Custom milling- In 2009, Richmont processed 165,788 tonnes of custom milling ore at the Camflo Mill, more than the double of the number of tonnes of custom milling ore processed in 2008. Revenues from custom milling are presented under the caption Other revenues in the consolidated financial statements of the Company included in this Annual Report. Administration In 2009, administrative expenses levels were essentially unchanged from 2008. A decrease in stock-based compensation, which is a non-cash expense, was offset by a slight increase in other administration expenses. Of the 490,000 options granted in 2009, 150,000 options were renewals of expired options to a director, 165,000 options were granted to a new director and to new employees, and the balance of 175,000 options were new options issuanced to officers and one employee. 78


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Exploration and project evaluation As in previous years, Richmont Mines continued its investments related to exploration and project evaluation. These expenses decreased from $10.5 million in 2008 to $7.1 million in 2009, as detailed in the table below. Investments for exploration and project evaluation (in thousands of $)
        2009
        
        2008$
        
        $Exploration costs - MinesIsland Gold Mine
        3,136
        
        2,293Beaufor Mine
        3,006
        
        2,921Francoeur/Wasamac properties
        1,938
        
        184Golden Wonder property
        -
        
        4,202Valentine Lake property
        -
        
        347Other properties
        28
        
        20Project evaluation
        305
        
        3738,413
        
        10,340Exploration tax credits
        (1,347
        )
        (643
        )Reversal of exploration tax creditsrecorded in 2007
        -
        
        8507,066
        
        10,547
 Accretion expense of asset retirement obligations This charge was $0.24 million in 2009, compared with $0.18 million in 2008. The 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. Depreciation and depletion The amounts related to depreciation and depletion totaled $5.7 million in 2009, representing a slight increase from 2008. The increase is attributable primarily to the decrease in the Beaufor and Island Gold properties Mineral Reserves, and the decrease in gold sales, which were 59,733 ounces in 2009, compared with 70,945 ounces in 2008. Loss on disposal of mining assets The disposal of mining assets of the Valentine Lake Property contributed to the majority of the gain of $0.6 million in 2009. On February 11, 2009, the Company entered into an agreement with Mountain Lake Resources Inc. (Mountain Lake) in which it granted Mountain Lake an option to purchase Richmonts 70% interest in the Valentine Lake Property located in Central Newfoundland. Mountain Lake currently owns a 30% interest in the Property. Mountain Lake, as an option fee, issued, in April 2009, 2,500,000 of its common shares to the Company for a fair value of $650 or $0.26 per share. 79


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Mining and income taxes 2009 mining and income tax expense totaled $1.5 million, based on pre-tax earnings of $1.8 million. The Company recorded a $1.2 million tax charge in order to benefit from an exploration credit of the same amount. This credit was applied against exploration expenses. The mining and income taxes also include a $0.1 million reduction of future mining taxes due to reductions in liabilities for future mining taxes. For fiscal 2008, mining and income tax expenses included a credit of $1.2 million as a result of a reclassification of exploration tax credits from previous years. When the Company filed its 2007 income tax declarations, the Company reduced its current taxes by using carried forward fiscal expenses instead of using exploration tax credits, as it was planned and recorded on December 31, 2007. This change in fiscal planning increased exploration expenses by $0.85 million, and also increased investment in property, plant and equipment by $0.35 million. The mining and income taxes also include a mining duties expense of $0.2 million from the previous year, and exploration tax credits of $0.6 million recorded against exploration expenses instead of mining and income taxes. The future income tax credit of $0.4 million was mainly due to a reduction in liabilities for future mining taxes. Net earnings Net earnings in 2009 were $0.3 million, or $0.01 per share, compared with net earnings of $1.6 million, or $0.07 per share in 2008, as a 19% increase in the selling price per ounce in Canadian dollars mitigated a 16% decrease in ounces of gold sold. Conversely, lower exploration and project evaluation costs combined with decreased minority interest did not offset higher mining and income taxes and operating costs, which stemmed from a combination of a 13% increase in the number of tonnes being processed and lower recovered grades at both operating mines. Balance sheet Assets The total assets of Richmont Mines increased from $82.9 million as at December 31, 2008, to $85.2 million at the end of 2009. At December 31, 2009, Richmont had working capital of $24.9 million compared with $26.8 million at December 31, 2008. The $1.9 million decrease reflects a $4.9 million decrease in cash and cash equivalents, a $1.3 million increase in mining and income taxes and exploration tax credit receivable, a $0.6 million increase in the number of shares of publicly-traded companies held after reception of common shares of Mountain Lake Resources Inc., and to a $1.4 million increase in ore inventories. 80


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Liabilities The amount of liabilities of the Company was $15.3 million as at December 31, 2009, compared with $13.8 million at December 31, 2008, and is composed of short-term liabilities, asset retirement obligations and future mining and income taxes. Richmont Mines has no long-term debt. Asset retirement obligations Richmont Mines must evaluate on a periodic basis the assumptions used in the calculation of the asset retirement obligations related to eventual closure of its mining sites. At the end of the fiscal year ended December 31, 2009, the Company had the following financial obligations: Total amountof the estimated
        Cash flow
        Credit-adjustedcash flow
        payment schedule
        risk-free rate$
        
        %Beaufor Mine
        604
        2012
        4.0 and 5.5Island Gold Mine
        1,190
        2015
        4.0 and 5.5Camflo Mill
        4,080
        2016
        5.5Francoeur property
        636
        2016
        4.0 and 5.56,510
 Future mining and income 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. Non-refundable provincial tax credits of $4.8 million and non-refundable federal tax credits of $3.3 million, 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. At December 31, 2009, the Company has net operating federal and Ontario and Quebec loss carry forwards of approximately $7.0 million, compared with $8.4 million as at December 31, 2008, which expire at various dates through 2029. Shareholders equity Shareholders equity totaled $70.0 million as at December 31, 2009, compared with $69.0 million as at December 31, 2008. At December 31, 2009, Richmont Mines had 26,103,656 shares outstanding and 2,480,000 options granted under its stock-purchase plan compared with 26,113,156 shares outstanding and 2,308,000 options granted at December 31, 2008. 81


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Commitments and contingencies The Company is subject to pay royalties on 50% of the Beaufor Mines production, at a 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 which are detailed under Item 4. INFORMATION ON THE COMPANY  Business Overview  Mineral Royalties. On February 11, 2009, the Company entered into an agreement with Mountain Lake Resources Inc. (Mountain Lake) which granted Mountain Lake an option to purchase Richmonts 70% interest in the Valentine Lake Property located in Central Newfoundland. Mountain Lake currently owns a 30% interest in the Property. In April 2009, Mountain Lake, as an option fee, issued, 2,500,000 common shares of Mountain Lake to Richmont for a fair value of $0.65 million, or $0.26 per share. Mountain Lake may exercise the option over a five-year period by making option payments to Richmont for an additional $3.0 million and by incurring $1.0 million in exploration and development expenditures on the Property within that timeframe. The option payments may be in cash, or 50% in cash and 50% in Mountain Lake common shares, at the sole election of Mountain Lake. The option payments can be made in instalments by the second, third, and fourth years of the five-year period. During the option period, $0.5 million of the exploration and development expenditures must be incurred by the end of the second year and the remaining $0.5 million must be incurred by the end of the fifth year. The Company is committed, under a lease expiring in November 2014, to pay a sum of $0.3 million for office space. Minimum lease payments for the next five years amount to $0.06 million annually. Critical accounting estimates The preparation of financial statements requires the use of estimates and the formulation of assumptions that have a significant impact on revenue 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 thereby affecting operating results. Mineral Reserves The main parameters used to determine the Mineral Reserves of Beaufor Mine and Island Gold Mine are the following: 2009
        
        2008Gold (US$/ounce)
        850
        
        785Exchange rate (US$/CAN$)
        1.00
        
        1.00Gold (CAN$/ounce)
        850
        
        785
 The Mineral Reserves of the Francoeur Mine were prepared in May 2010 using a gold price of US$800 and an exchange rate of 1.00. 82


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Property, plant and equipment The costs related to the development of a mining property are capitalized at the time when the property shows potential of profitability and reserves have been established. When commercial production begins, capitalized development costs and construction costs are amortized over the Mineral Reserves of the deposit. The Mineral Reserves are estimated by professional geologists and engineers according to industry standards and the estimated future prices of metals, operating costs and technical parameters. The annual tests for depreciation are carried-out by using the same parameters and the estimated residual value of the equipment. Changes to any key assumption estimate may result in a considerable reduction of Mineral Reserves, which could have a negative impact on the book value of these properties, plants and equipment. For 2010, the assumption used in the asset valuation process was a price of CAN$1,000 per ounce of gold. For 2011 to 2014, a price of CAN$876 per ounce of gold was used in order to estimate future revenue. This cost is based on a December 2009 survey of mining companies carried out by an accounting firm. Depreciation and Depletion The Company uses the units-of-production method for the depreciation and depletion of property, plant and equipment at mine sites based on Proven and Probable Reserves. Any significant changes in the reserves could impact the amount of annual depreciation and depletion. Asset retirement obligations The future costs of the restoration of a mining site are estimated according to the projected cost of labour, the known environmental impact and the effectiveness of measures to repair and restore the site. The time frame for making the expenditures is subject to changes related to the continuity of operations and to the discovery of new reserves. Option-based compensation The Company grants stock options as part of its compensation program. The prevalent Black-Scholes model is used to evaluate the cost of these options. This model requires management to make a number of estimates. Future mining and income taxes The 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 of a change in tax rates on future tax assets and liabilities is recognized in the statement of earnings in the year in which the revised tax rate comes into effect. 83


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Reconciliation of total cash cost per ounce to production costs (in thousand $ other than exchange rate data)
        2009
        
        2008Operating costs per consolidated statements of earnings (CAN$)
        48,751
        
        42,998Royalties per consolidated statements of earnings (CAN$)
        1,563
        
        1,591Cash costs (CAN$)
        50,314
        
        44,589Ounces of gold sold
        59,733
        
        70,945Total cash cost in CAN$/per ounce
        842
        
        629Average exchange rate (US$/CAN$)
        1.1420
        
        1.0660Total cash cost in US$/per ounce
        737
        
        590
  B.
        Liquidity and Capital Resources (all dollar amounts are in thousands of Canadian dollars, unless otherwise stated)
 At December 31, 2010, Richmont had working capital of $43.9 million compared with $24.9 million at December 31, 2009. The $19 million increase reflected a $18.9 million increase in cash and cash equivalents, a $0.6 million increase in shares of publicly-traded companies, a $0.7 million increase in accounts receivable and a $2.3 million increase in credit and taxes receivable, offset by a $2.1 million increase in accounts payables and accrued charges and an increase of $1.4 million in mining and income taxes payable. As at December 31, 2010, the Company has $106 in deposits restricted with Quebecs government, $184 in deposits restricted with Ontarios government and a credit facility is available to the Company in the amount of $3 millions for the issuance of letters of credit as guarantees for the settlement of asset retirement obligations. The credit facility has a fixed fee of 0.85% (0.85% in 2009). The following table provides the allocation of deposits restricted and letters of credit issued as at December 31, 2010: 2010
        
        Date of$
        
        renewalDeposits restrictedIsland Gold Mine (Lochalsh property)
        184Beaufor Mine
        52Francoeur Mine
        54290Letters of creditCamflo Mill
        1,332
        
        July 20, 2011Island Gold Mine (Kremzar property)
        797
        
        July 26, 20112,130
 84


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Cash flow from operating activities Cash flow from operations increased from $2,967 in 2009 to an amount of $18,499 in 2010. Cash flow used in investing activities Richmont invested $4.7 million in capital expenditures at the Island Gold Mine in 2010, a reflection of ongoing development costs, refurbishing and acquisition of equipment. The Company spent an additional $2.5 million in capital expenditures at the Beaufor Mine in 2010, up from $1.1 million in 2009, with the year-over-year increase largely attributable to the cost associated with the excavation of a new safety exit from the mines underground operations. Capital expenditures at the Francoeur Mine totaled $9.1 million in 2010, up from $2.0 million in 2009, reflecting higher development costs associated with transitioning this mine into commercial production by mid-2011. Dewatering of the mines 17 levels was completed at the end of June 2010, and underground development work to reach the targeted West Zone began shortly thereafter. As of the end of 2010, a total of 1,239 metres of underground development had been completed. Surface infrastructure has been re-commissioned, installation of additional underground electrical infrastructure required for commercial production is being done in conjunction with the development work, and definition drilling began in November 2010. An additional $0.5 million was invested at the Camflo Mill and other corporate installations in 2010, bringing the Companys total investment in property, plant and equipment to $16.8 million for the year. In 2009, capital expenditure totaled $8.0 million, above the 2008 level of $5.2 million, primarily as a result of costs incurred at the Francoeur Mine for the re-commissioning of surface infrastructure and dewatering of the underground installations. (in thousands of $)
        2010
        
        2009$
        
        $Francoeur Mine
        9,144
        
        1,976Island Gold Mine
        4,650
        
        4,318Beaufor Mine
        2,462
        
        1,092Other
        518
        
        62616,774
        
        8,012
 Cash flow from financing activities The Company issued 401,000 common shares during 2010 and 34,000 common shares during 2009 following the exercise of stock options and received cash proceeds in the amount of $1.5 million and $82, respectively. In 2008, the Company issued 9,000 common shares following the exercise of stock options, for a total cash consideration of $25. Under its normal course issuer bid programs which expired on December 4, 2009, Richmont Mines bought back 43,500 common shares during 2009 and 296,200 common shares in 2008, for a total amount of $0.1 million and $0.8 million, respectively. The shares were cancelled immediately after their repurchase. The Company had 31.2 million shares outstanding as of December 31, 2010. 85


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In May 2010, the Company filed a $25 million short form base shelf prospectus that covers a 25-month period. Consequently, Richmont Mines may elect to offer and issue common shares of the Company, warrants, subscription receipts, or any combination of such securities up to an aggregate initial offering price of $25 million over this timeframe. On June 17th, 2010, the Company completed an equity financing of 3,300,000 common shares at a price of $5.00 per common share, for gross proceeds of $16,500. The net proceeds of the offering has been used for development work at Richmonts projects, primarily the Francoeur Mine in Quebec, for potential acquisitions and for general corporate purposes. Also, on June 30, 2010, the Company issued 1,425,407 common shares at a price of $4.69 each, following Richmonts successful acquisition of the outstanding 30% of the issued and outstanding shares of Louvem Mines Inc. that it did not previously own. Richmont Mines main investment allocation for 2011 will be for its Francoeur Mine, and the Company expects to fund this investment with existing cash and cash equivalents and with cash flow from operations. Capital disclosures Richmonts cash and cash equivalents balance was $40 million at December 31, 2010 and $21 million at December 31, 2009. The Company invests its cash and cash equivalents in high-quality securities issued by government agencies, financial institutions and major corporations, and limits its amount of credit exposure by diversifying its holdings. The Companys objectives when managing its capital are to safeguard the Companys ability to continue as a going concern in order to support ongoing exploration programs and the development of its mining assets, to provide sufficient working capital to meet its ongoing obligations and to pursue potential investments. The Companys working capital is sufficient for its present requirements. The Companys profitability may vary significantly as a result of many factors, including, the price of gold, Canadian dollar/United States dollar exchange rate, fluctuations in commodity prices and unforeseen variations from expected grade, tonnage levels and production costs at its operating mines. The Company has no material commitments for either capital expenditures or its exploration program. As disclosed above, Richmont Mines main investment allocation for 2011 will be of approximately $8.6 million for its Francoeur Mine, and the Company expects to fund this investment with existing cash and cash equivalents and with cash flow from operations. The Companys budget can be modified and its investments adjusted depending on available funds and operating and exploration results. The exploration and development of new mineral deposits is subject to numerous risks, discussed in greater detail on page 1. Richmont Mines has no long term debt and no hedging contracts. In order to finance additional exploration activities or to maintain or increase its liquidity and capital resources, the Company may decide to issue new shares or to issue new debt. 86


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Research and Development, Patents and Licenses, etc. None. Trend Information See discussions in Parts A and B of Item 5 Operating Results and Financial Review and Prospects. Off-Balance Sheet Arrangements The Company does not have any off-balance-sheet arrangements. Tabular Disclosure of Contractual Obligations As of December 31, 2010, 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 $)Less than
        
        
        More thanContractual obligations
        Total
        1 year
        1-3 years
        3-5 years
        5 yearsAsset retirement obligations
        $6,366
        -
        $664
        $1,227
        $4,475
 As of December 31, 2010, the Company had no long-term debt obligations, capital lease obligations, operating lease obligations or purchase obligations. 87


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ITEM 6.
        DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
  A.
        Directors and Senior Management
 The names, offices, principal occupations, length of service and share ownership of the directors and senior management of the Company are as follows: Number of
        **Number**
        Totalshares
        of
        ownership asowned
        options
        at April 21,Name and
        Office held
        
        
        on April
        held on
        2011Municipality of
        with the
        Principal
        Director or
        21, 2011
        April 21,
        **(%)**1Residence
        Company
        Occupation
        Officer since
        
        2011H. Greg Chamandy
        Executive
        Businessman 2
        May 14, 2009
        5,013,254 3
        105,000
        16.22Westmount (QC)
        Chairman ofCanada
        the BoardDenis Arcand 4
        Vice-
        Businessman 5
        Sept. 28, 1995
        36,348
        80,000
        0.37Brossard (QC)
        Chairman ofCanada
        the BoardMartin Rivard 9
        President,
        President and
        Oct. 1, 2005
        1,035,000 7
        324,000
        4.31Rouyn-Noranda
        Chief
        Chief Executive(QC)
        Executive
        Officer ofCanada
        Officer and
        Richmont Mines 6DirectorRéjean Houle 8,9
        Director
        Ambassador,
        Jan. 27, 1989
        52,500
        67,500
        0.38La Salle (QC)
        
        Canadien HockeyCanada
        
        Club Inc.Raynald Vézina,
        Director
        Mining
        Oct. 30, 2006
        20,500
        60,000
        0.26Eng. 4,10
        
        ConsultantCharlesbourg (QC)CanadaElaine Ellingham,
        Director
        President of
        February 4, 2010
        -
        80,000
        0.25P.Geo.,M.Sc. 10,11
        
        EllinghamToronto (ONT)
        
        Consulting Ltd.CanadaSamuel Minzberg
        Director
        Partner, Davies
        February 4, 2010
        -
        80,000
        0.25B.C.L., LL.B. 12
        
        Ward Phillips &Westmount (QC)
        
        Vineberg LLPCanada
 88


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Number
        Number
        Totalof shares
        of options
        ownership asName and
        Office held
        
        
        owned on
        held on
        at April 21,Municipality of
        with the
        Principal
        Director or
        April 21,
        **April 21,**
        2011Residence
        Company
        Occupation
        Officer since
        2011
        2011
        (%)1Michael Pesner, CA13
        Director
        President,
        Nov. 1, 2010
        -
        76,000
        0.24Montreal (QC)
        
        HermitageCanada
        
        Canada FinanceInc.Jean-Pierre Ouellet
        Director
        Venture partner,
        February 4,
        -
        80,000
        0.25L.L.L. B.C.L.8,14
        
        St. Lawrence
        2010Outremont (QC)
        
        Capital LP andCanada
        
        Directors ofCompaniesChristian Pichette,
        Vice-
        Vice President,
        October 6,
        37,800
        158,000
        0.62Eng. M.Sc.
        President,
        Operations of
        2005Brossard (QC)
        Operations
        Richmont MinesCanadaNicole Veilleux, CA
        Director,
        Director,
        March 1, 2006
        7,500
        111,000
        0.38Rouyn-Noranda (QC) Finance
        
        Finance ofCanada
        
        Richmont MinesSidney Horn, MBA,
        Corporate
        Lawyer,
        December 15,
        -
        80,000
        0.25B.C.L., LL.B 15
        Secretary
        Stikeman Elliott
        2009Outremont (QC)CanadaSandra Cauchon
        Assistant
        Lawyer of
        February 24,
        500
        8,000
        0.02Lawyer
        Corporate
        Richmont Mines
        2009Rouyn-Noranda (QC) SecretaryCanada
 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. As at April 21, 2011, there was 31,555,563 issued and outstanding common shares of the Company.2
      Since 2004, Mr. Chamandy has been Chairman of the Board of Directors of Liquid Nutrition Inc., a company which specializes in the sale of natural drinks and products. He has been Chairman of the Board of Directors of Oxbridge Bank and Trust SCC since 2005.3
      Of this number, 4,020,854 and 32,000 common shares are held respectively by Oxbridge Bank & Trust SCC, an entity ultimately controlled by Mr. Chamandy, and Ms. Chantal Condoroussis, Mr. Chamandys spouse.4
      Member of the Audit Committee5
      Mr. Arcand is a Fellow of the Investment Dealers Association of Canada, having begun his career as a sales representative with Nesbitt Thomson in 1966. From 1972 to 1988, he held various positions with the investment dealer Bell Gouinlock Ltd., most notably being responsible for its Montréal office as Director and Vice-President. He was also responsible for its corporate finance department.6
      Mr. Rivard is also Chairman of the Board of Directors of MISA, an organization of private, public and parapublic enterprises, whose goal is to insure the ongoing vitality of the Quebec mining industry.7
      Of which number, 1,000,000 common shares are held by Les Entreprises Trémoy Ltée, Mr. Rivard being director, officer and holder of 50 % of the voting shares thereof.8
      Member of the Human Resources and Compensation Committee9
      Member of the Environmental, Health and Safety Committee10
      Member of the Governance and Ethics Committee11
      Chairman of the Environmental, Health and Safety Committee 89


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12
      Chairman of the Human Resources and Compensation Committee13
      Chairman of the Audit Committee14
      Chairman of the Governance and Ethics Committee15
      Sidney Horn replaced Sandra Cauchon as Corporate Secretary of the Company on December 15, 2009.16
      There is no family relationship between the persons named in this table. The Company does not have any other committees 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 Ms. Nicole Veilleux who, prior to March 2006, was Controller of Richmont Mines and Sandra Cauchon who, prior September 2008, was a lawyer in a private Law Firm. Certain directors also serve on the Boards of Directors of other reporting issuers. The following table presents, for each director, the other reporting issuers for which they serve as directors. Director
        Other Reporting IssuersElaine Ellingham
        Hudson River Minerals Ltd.Samuel Minzberg
        HSBC Bank Canada and Reitmans (Canada) LimitedJean-Pierre Ouellet
        GBO Inc.Michael Pesner
        Quest Rare Minerals Ltd., Prestige Telecom Inc., Mint Technology Corp.,Sand Technology Inc., Bitumen Capital Inc.
 Each director shall, unless he resigns or his office becomes vacant for any reason, hold office 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 6,203,402 common shares of Richmont Mines, which represents 19.66% of the 31,555,563 common shares issued and outstanding of Richmont Mines as at April 21, 2011. B.
        Compensation (all the amounts are in Canadian dollars)
 Compensation of Senior Officers During the financial year ended December 31, 2010 the three Named Executive Officers of the Company (as hereinafter defined) were paid aggregate cash remuneration of $1,231,758. The following information sets forth the remuneration paid for the financial year ended December 31, 2010 by the Company and its subsidiaries to the Companys President and Chief Executive Officer, Director, Finance and other executive officers (collectively, the Named Executive Officers). Except for the Companys Share Option plan described below, the Company does not offer a long term incentive plan. 90


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Summary Compensation Table of the Named Executive OfficersName and
        Fiscal
        Salary
        Share-
        Option-based
        Non-equity
        Pension
        All other
        Totalprincipal position
        year
        ($)
        based
        awards
        incentive plan
        value
        compensation
        compensationawards
        ($)2
        compensation
        ($)
        **($)**(3)
        ($)($)
        
        ($)Annual
        Longincentive
        termplans
        incentive(Bonus)
        plansMartin Rivard(1)President and Chief
        2010
        296,948
        n/a
        118,257
        120,000
        n/a
        n/a
        33,628
        568,833Executive OfficerChristian PichetteVice-President,
        2010
        254,698
        n/a
        79,642
        55,000
        n/a
        n/a
        61,188
        450,528OperationsNicole Veilleux
        2010
        134,820
        n/a
        38,614
        30,000
        n/a
        n/a
        8,963
        212,397Director, Finance
 Notes:1)
        The President and Chief Executive Officer did not receive remuneration in his capacity as a director of the Company in 2010.2)
        During 2010, the Company granted a total of 98,000 options to the above-mentioned executive officers on December 09, 2010.The fair value of the options granted annually is determined by multiplying the number of options granted by their value under the Black & Scholes model. This value corresponds to the fair accounting value established in accordance with generally accepted accounting principles and according to the following assumptions:
  2010Risk-free rate:
        2.2%Expected option life:
        4yearsVolatility:
        62%Expected dividends yield:
        0%
  3)
        The heading Other Compensation includes:a) the amount that was paid to each of the senior management designed to be equivalent to the amount that would normally be paid in the form of a retirement savings plan.b) as each of the members of management mentioned above exercised options on one or several occasions in 2010, the heading other compensation similarly includes the amount of taxable benefit associated with the exercising of options. More specifically:Martin Rivard exercised 25,000 options on November 9, 2010 at an exercise price of $4.36, which represented a taxable benefit of $21,750;Christian Pichette exercised 25,000 options on September 13, 2010 at an exercise price of $4.97, 25,000 options on October 1, 2010 at an exercise price of $4.97, and 50,000 options on December 8, 2010 at an exercise price of $4.36, which resulted in a total taxable benefit of $51,000;Nicole Veilleux exercised 3,000 options on November 9, 2010 at an exercise price of $4.04, representing a taxable benefit of $3,570.
 Directors compensation (other than the Executive Chairman of the Board) During a meeting held in February 2010, the members of the Board of Directors determined the annual compensation granted to the members of the Board for the fiscal year ended December 31, 2010. During this meeting, it was decided that the members of the Board (with the exception of the Executive Chairman of the Board) would be paid a sum of $20,000 in annual compensation for the 2010 year, that an additional sum of $12,000 would be paid to each of the Chairmen of the Board sub-committees, and that meeting attendance fees would no longer be given to Board members. 91


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In addition, the new directors (Jean-Pierre Ouellet, Samuel Minzberg, A. Michel Lavigne and Elaine Ellingham) received 50 000 stock options, which are exercisable in annual tranches of 20% as of February 4th, 2010, in accordance with the terms of the stock options plan of the Company. Mr. Pesner also received 50 000 stock options, which are exercisable in annual tranches of 20% as of November 9, 2010. It was similarly decided that a part of the annual compensation of the members of the Board of Directors (with the exception of the Executive Chairman of the Board) would be paid in the form of stock options, thereby providing additional motivation for Board members to increase value for shareholders. Each member of the Board (with the exception of the Executive Chairman of the Board) was therefore granted the equivalent of $60,000 in stock options. These options are exercisable in annual tranches of one third (1/3) beginning February 4, 2011, or November 9, 2011 in the case of Mr. Pesner. The level of the annual compensation of the members of the Board of Directors (with the exception of the Executive Chairman of the Board) is based on the Human Resources and Compensation Committees analysis regarding compensation levels of directors of mining companies that are similar to Richmont. Executive Chairman of the Board compensation On February 4, 2010, the Board of Directors authorized the Human Resources and Compensation Committee to retain the services of an independent compensation consultant that would be charged with providing analysis and recommendations for the Executive Chairman of the Boards compensation package. To this end, Towers Watson was given the mandate by the Human Resources and Compensation Committee to complete this task. The analysis reflected that a competitive compensation package was essential for Richmont to attract and retain the services of experienced officers and directors. Based on the recommendations from Towers Watson, the Executive Chairman of the Boards annual compensation was established at $235,000 in 2010. In addition, the Executive Chairman would be eligible to receive an annual bonus equivalent up to 50% of his base compensation, based on the successful achievement of predefined objectives for 2010. As 80% of these objectives were realized, the Executive Chairman of the Board was awarded an additional sum of $94,000 in 2010. On an aggregate basis, the Companys eight Board members therefore received total compensation of $1,586,303 during the 2010 fiscal year, as detailed in the table below. Please note that this table does not include the compensation granted to the Chief Executive Officer, who is also a director of the Board. For more details about the Chief Executive Officers compensation, please consult the section Compensation of Senior Officers. 92


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Director Compensation Table for the financial year ended on December 31, 2010 Name
        Fiscal
        Fees Earned
        Share-
        Option-
        Non-Equity
        Pension
        All other
        TotalYear
        ($)
        based
        based
        Incentive Plan
        Value
        **Compensation**
        ($)Awards
        Awards(1)
        **Compensation**
        
        ($)($)
        ($)
        (bonus)($)H. Greg Chamandy,
        2010
        235,000
        n/a
        56,250
        94,000
        n/a
        n/a
        385,250Executive Chairman ofthe BoardDenis Arcand
        2010
        20,000
        n/a
        56,250
        n/a
        n/a
        n/a
        76,250Vice-Chairman of theBoardRéjean Houle
        2010
        20,000
        n/a
        56,250
        n/a
        n/a
        n/a
        76,250DirectorRaynald Vézina
        2010
        20,000
        n/a
        56,250
        n/a
        n/a
        39,770(2)
        116,020DirectorSamuel Minzberg
        2010
        32,000
        n/a
        156,900
        n/a
        n/a
        n/a
        188,900DirectorElaine Ellingham
        2010
        20,000
        n/a
        156,900
        n/a
        n/a
        n/a
        176,900DirectorJean-Pierre Ouellet
        2010
        32,000
        n/a
        156,900
        n/a
        n/a
        n/a
        188,900DirectorMichael Pesner (3)
        2010
        5,333
        n/a
        181,298
        n/a
        n/a
        n/a
        186,631DirectorA. Michel Lavigne(4)
        2010
        25,202
        n/a
        156,900
        n/a
        n/a
        9,100(5)
        191,202Director
 Notes:1)
        The fair value of the options granted annually is determined by multiplying the number of options granted by their value under the Black & Scholes model. This value corresponds to the fair accounting value established in accordance with generally accepted accounting principles and according to the following assumptions:
 2010Risk free-rate:
        2.2%Expected Option life:
        4 yearsVolatility:
        62%Expected dividends yield:
        0%
 2)
        This amount represents the taxable benefit that resulted from the exercising of options. More precisely:On September 13, 2010, Mr. Vézina exercised 9,000 options at a price of $2.95, and 5,000 options at a price of $1.80, which generated a total taxable benefit of $39,770.3)
        Mr. Pesner commenced his position on November 1, 2010. The amounts presented are those that were earned between November 1, 2010 and December 31, 2010.4)
        Please note that Mr. A. Michel Lavigne resigned from his position as director and Chairman of the Audit Committee on October 4, 2010, and that the amounts presented are those earned between February 4, 2010 and October 4, 2010.5)
        This amount represents the taxable benefit attributed to Mr. Lavigne, who exercised 10,000 options on November 25, 2010 at a price of $4.19, which generated a taxable benefit of $9,100. This was in accordance with the Companys option plan, as it occurred within 60 days of his resignation.
 93


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The Company has not set aside or accrued any amounts to provide pension, retirement or similar benefits to the directors or executive officers. C.
      Board Practices The directors serve as directors of the Company from their election until the next Annual and Special General Meeting that will be held on May 13, 2011 or until a successor is duly elected. DirectorsName
        Elected or **Appointed Director**H. Greg Chamandy
        May 2009Denis Arcand
        September 1995Martin Rivard
        October 2005Réjean Houle
        January 1989Raynald Vézina
        October 2006Elaine Ellingham
        February 2010Samuel Minzberg
        February 2010Jean-Pierre Ouellet
        February 2010Michael Pesner
        November 2010
 Employment Contracts The Company has entered into employment contracts with the Named Executive Officers: Martin Rivard, as President and Chief Executive Officer, Christian Pichette, as Vice-President, Operations, and Nicole Veilleux, as Director, Finance. The contracts provide that, in the event of termination initiated by the Company without serious cause, namely an act of fraud, theft, criminal negligence or other criminal offence or statutory violation, causing material harm to the Company, or initiated by a Named Executive Officer with cause (no cause is necessary in the case of the President and Chief Executive Officer), or if the contract is not renewed and the employment is terminated at the expiry of the initial term, the Named Executive Officer will be entitled to receive an amount equal to two years (in the case of the President and Chief Executive Officer, three years) of total compensation (total compensation is defined as all the components which have monetary value and, without limiting the scope of the foregoing, any salary, bonuses, RRSP (Registered Retirement Savings Plan) contributions and automobile allowances), based on the annual average of total compensation for the two full financial years preceding the termination date, and the continuation of other benefits over this same period. Notwithstanding the foregoing, in the case of the Vice-President, Operations, if the termination occurs after the renewal of his contract, including the expiry of the renewal period, he instead will be entitled to an amount equal to one year of total compensation and the continuation of other benefits for that same period, while the Director, Finance for her part will be entitled to one month of compensation by year of service, notwithstanding such year of service is completed or not. In the case of the President and Chief Executive Officer, if the termination occurs at the expiry of the renewal period, he instead will be entitled to an amount equal to two years of total compensation. Moreover, and notwithstanding the provisions contained in the share option plan and the conditions of the share options held by the Named Executive Officers, all the share options held by each of the Named Executive Officers will become vested on the termination date. Also, the share options thus vested on the termination date will be exercisable on the earliest of the following two dates: (i) on the dates initially stipulated; or (ii) two years after the termination date (in the case of the President and Chief Executive Officer, three years). 94


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The estimated amount that could be paid by the Company in these given circumstances, assuming that the termination occurred on the last working day of the last financial year of the Company and that this date falls during the initial term of the contract of employment of the Named Executive Officer, is $1,308,323 for the President and Chief Executive Officer, $784,614 for the Vice-President Operations and $403,779 of the Director, Finance. These amounts include the option allocations valued according to the closing price of the Companys stock on that date, which was $5.11. Change of Control Agreements The Company has also entered into an agreement with the Executive Chairman of the Board and with each of the Named Executive Officers in case of a change of control. For the Named Executive Officers: In the event that, during a three-year period after the date of a change of control, the employment contract of a Named Executive Officer were to be terminated by his resignation for valid cause or by the severing by the Company of the employment relationship binding him to the Company for cause other than serious cause or his permanent incapacity, then the Company shall pay him, in addition to the payment of any amount owed to him as unpaid salary and vacation accumulated but not yet taken on the termination date, within 30 days of the termination date, a lump sum equivalent to twice (in the case of the President and Chief Executive Officer, three times) his total annual compensation (total compensation is defined as all the components which have monetary value and, without limiting the scope of the foregoing, any salary, bonuses (applicable for the period, regardless of whether they are calculated at that time), benefits, automobile allowances and insurance), based on the average annual amount of total compensation for the two full calendar years preceding the termination date, minus applicable deductions. Also, all the share options held by the Named Executive Officer will become vested on the termination date and thereupon may be exercised. Moreover, and notwithstanding the provisions contained in the share option plan and the conditions of the share options held by the Named Executive Officers, the maturity dates of the options thus exercisable will be those initially stipulated, but without exceeding three years after the termination date. The change of control agreements will end upon the termination of the Named Executive Officer within the Company before the occurrence of a change of control. The estimated amount that could be paid by the Company in these given circumstances, assuming that a change of control occurred on the last business day of the last financial year of the Company, is $1,308,323 for the President and Chief Executive Officer, $784,614 for the Vice-President Operations and $403,779 of the Director, Finance. These amounts include the option allocations valued according to the closing price of the Companys stock on that date, which was $5.11. In the event that following termination of employment, amounts are payable to a Named Executive Officer pursuant to an employment contract and a change of control agreement, the Company would only have to pay the greater of the two amounts. 95


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For the Executive Chairman of the Board (the Executive):a) In case of a change of control In the event that the Executives appointment as Chairman of the Board is terminated by the Company (including, without limitation, if the Executive does not stand for election or is not elected a director of the Company) or the Executive resigns from his position as Executive Chairman of the Board, either (1) at the time of, or within twelve (12) months following, the occurrence of a transaction or event constituting a Change of Control, or (2) within 6 months prior to the occurrence of a transaction or event constituting a Change of Control, in each case (if applicable) whether or not the Executive remains non-executive Chairman of the Board or a director of the Company, the Executive will be entitled to the payments and benefits set out hereafter: (a) his annual base salary accrued and unpaid up to and including the date of termination; (b) any annual bonus plan payment to which the Executive may be entitled as of the date of termination; (c) a severance payment equal to 1 time the Executives annual base salary. The estimated amount that could be paid by the Company in these given circumstances, assuming that a change of control occurred on the last business day of the last financial year of the Company, is $352,500 for the Executive Chairman of the Board. 
    b) In case of a termination other of a change of control 
    In the event of the termination of the Executives appointment as Executive Chairman of the Board other of a change of control, either by the Company or by the Executives resignation from his position as the Executive Chairman of the Board, (in each case, if applicable, whether or not the Executive remains non-executive Chairman of the Board or a director of the Company), the Executive will be entitled to receive the following compensation: (a) his annual base salary accrued and unpaid up to and including the date of termination; (b) any annual bonus plan payment to which the Executive may be entitled as of the date of termination. The estimated amount that could be paid by the Company in these given circumstances, assuming that a termination (other of a change of control) occurred on the last business day of the last financial year of the Company, is $117,500 for the Executive Chairman of the Board. In all of the cases noted above, a change of control occurs when: (i) another party acquires, directly or indirectly, alone or with any person acting in concert with him, more than 33 1/3% of the outstanding voting securities of the Company, (ii) after a takeover bid, a public offer of exchange, a merger, an arrangement, another form of business combination, a sale of assets of the Company or a contested election, or any combination of these transactions, the persons who are directors of the Company immediately prior to these transactions cease, after these transactions, to represent the majority of the directors on the Board , or on the Board of Directors of any parent company or successor of the Company, or (iii) the shareholders of another entity hold more than 33 1/3% of the outstanding voting securities of the entity resulting from a merger, arrangement or other form of business combination with the other entity. Human Resources and Compensation Committee The Board has a Human Resources and Compensation Committee composed entirely of independent directors. The Committee meets at least once a year to make recommendations to the Board on the remuneration of executive officers and directors. The Committee takes into consideration the responsibilities and workload of executive officers in formulating its recommendations and favors giving key personnel competitive compensation in order to keep them with the Company. 96


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The Human Resources and Compensation Committee of the Company is composed of Mr. Samuel Minzberg, Mr. Jean-Pierre Ouellet and Mr. Réjean Houle. The compensation of the Executive Chairman of the Board, the President and Chief Executive Officer and the other executive officers is determined by the Board of Directors following recommendations by the Committee. As the Board of Directors establishes the salaries of executive officers, it should be noted that the Executive Chairman of the Board and the Chief Executive Officer abstain from the discussion and the ensuing decision concerning their total compensation arrangements. Governance and Ethics Committee The Board has a Governance and Ethics Committee, which meets at least once a year, is composed entirely of independent directors, namely Jean-Pierre Ouellet, Raynald Vézina and Elaine Ellingham. The Governance and Ethics Committees mandate is to evaluate every aspect of the Companys governance practices. In particular, the Committee examines the effectiveness of the Companys governance practices at regular intervals, and reviews the role and the mandate of the Board and its committees. The Board does not have a nominating committee to identify new candidates for Board nomination, however the Governance and Ethics Committee exercises all of the functions of a Nominating Committee. The Governance and Ethics Committee makes recommendations to the Board regarding selection criteria for directors, and periodically reviews the criteria the Board has adopted, as the case may be. Audit Committee The Audit Committee is a standing committee of the Board of Directors whose primary function is to carry out a detailed and thorough review of audit matters, to be responsible for the oversight of the work of any accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit or review services for the Company (including resolution of disagreements between management and the auditor regarding financial reporting), to consider and approve related party transactions and to offer the Companys auditors, shareholders and employees a direct link to the non-executive directors. This Committee will assist the Board in fulfilling its oversight responsibilities by reviewing the financial information which will be provided to the shareholders and others, the internal control structure, the audit process, and adherence to applicable laws and regulations. In carrying out its duties, the Committee will apply reasonable materiality standards to all matters under review. The audit committee is composed of Messrs Michael Pesner, Chairman of the Audit Committee, Raynald Vézina and Denis Arcand. All members of the audit committee are independent and financially literate as defined in National Instrument 52-110 Audit Committees(NI 52-110). Mr. Pesner is a Chartered Accountant and President of Hermitage Canada Finance Inc., a company that specializes in financial advisory services. Previously, Mr. Pesner was a Senior Partner in Financial Advisory Services at the Montreal offices of KMPG, prior to which he was National Executive, Corporate Recovery Partner at KMPG predecessor firm Thorne Ernst & Whinney. Mr. Pesner also serves on the Board of Directors of the public companies Prestige Telecom Inc., Quest Rare Minerals Ltd., Bitumen Capital Inc., Mint Technology Corporation, and Sand Technology Inc, and the privately-held companies Speedware Inc. and Above Security Inc. 97


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Mr. Arcand received his Bachelor of Commerce from the HEC in Montréal. He is also a Fellow of the Investment Dealers Association of Canada, having begun his career as a sales representative with Nesbitt Thomson in 1966. From 1972 to 1988, he held various positions with the investment dealer Bell Gouinlock Ltd., most notably being responsible for its Montréal office as Director and Vice-President. He was also responsible for its corporate finance department. Under his leadership many industrial and particularly mining company financings were completed, resulting in Bell Gouinlock, which merged with Pemberton Securities Ltd, becoming the leader in mining financing in Quebec. Mr. Vézina obtained a Bachelor of Mining Engineering from Université Laval in 1970. He has 40 years of experience in mining operations and project development in Canada. During those years, he worked in various management positions for Cambior Inc., Falconbridge Ltd. and Placer Dome Inc. Environmental, Health and Safety Committee On December 8, 2010, the Board of Directors created the Environmental, Health and Safety Committee, composed of a majority of independent directors, namely Elaine Ellingham, Chairman of the Environmental, Health and Safety Committee, Réjean Houle and Martin Rivard. The Committee is responsible for evaluating whether the Companys current environmental, health and safety practices are appropriate, for ensuring that these practices are standardized across all of the Companys divisions, and for making recommendations when appropriate. The Chairman of the Environmental, Health and Safety Committee is responsible for providing the Board of Directors with an account of the committee. D.
      Employees The number of employees of the Company as of December 31, 2010, 2009 and 2008, was 407, 343 and 312 respectively. The distribution of the employees was the following: Category of Activity or
        
        December 31,Geographical Location
        2010
        2009
        2008Head Office
        15
        16
        19Beaufor
        102
        98
        99Island Gold
        185
        184
        163Exploration
        11
        8
        5Camflo
        20
        25
        26Francoeur
        74
        12
        -Total
        407
        343
        312
 98


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E.
      Share Ownership See Item 6 A Directors and Senior Management above for the number of shares of the Companys common shares held by directors and executive officers of the Company. Information regarding the outstanding stock options held by directors and senior management of the Company as of December 31, 2010, is set forth below. Stock Options Outstanding to Named Executive Officers and Directors as at December 31,2010UnexercisedOptions at Year-Unexercised
        Endunderlying
        (#)
        Exercise price ofsecurities
        Exercisable/
        share options
        Share optionsName
        (unit)
        Unexercisable
        ($)
        expiry dateMartin Rivard
        25,000
        
        4.36
        Jan. 30, 2011President and Chief
        50,000
        
        2.83
        Dec. 13, 2011Executive Officer
        50,000
        224,800 / 124,200
        2.88
        August 7, 201250,000
        
        3.15
        Dec. 13, 201250,000
        
        1.80
        Dec. 11, 201375,000
        
        3.55
        Dec. 10, 201449,000
        
        5.09
        Dec. 8, 2015TOTAL
        349,000Christian Pichette
        50,000
        
        2.83
        Dec. 13, 2011Vice-President, Operations
        25,000
        
        2.83
        July 10, 201350,000
        121,600 / 86,400
        1.80
        Dec. 11, 201350,000
        
        3.55
        Dec. 10, 201433,000
        
        5.09
        Dec. 8, 2015TOTAL
        208,000Nicole Veilleux
        12,000
        
        4.04
        August 3, 2011Director, Finance
        15,000
        
        2.74
        Jan. 7, 201225,000
        67,200 / 50,800
        2.83
        July 10, 201325,000
        
        1.80
        Dec. 11, 201325,000
        
        3.55
        Dec. 10, 201416,000
        
        5.09
        Dec. 8, 2015TOTAL
        118,000H. Greg Chamandy
        75,000
        30,000 / 75,000
        4.12
        May 13, 2014Executive Chairman of the Board
        30,000
        
        4.19
        Feb. 3, 2015TOTAL
        105,000Denis Arcand
        25,000
        
        2.74
        Jan. 7, 2012Vice-Chairman of the Board
        25,000
        35,000 / 45,000
        1.80
        Dec. 11, 201330,000
        
        4.19
        Feb. 3, 2015TOTAL
        80,000
 99


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UnexercisedOptions at Year-Unexercised
        Endunderlying
        (#)
        Exercise price ofsecurities
        Exercisable/
        share options
        Share optionsName
        (unit)
        Unexercisable
        ($)
        expiry dateRéjean Houle
        25,000
        
        2.74
        Jan. 7, 2012Director
        25,000
        35,000 / 45,000
        1.80
        Dec. 11, 201330,000
        
        4.19
        Feb.3, 2015TOTAL
        80,000Raynald Vézina
        41,000
        
        2.95
        Oct. 30, 2011Director
        15,000
        46,000 / 40,000
        1.80
        Dec. 11, 201330,000
        
        4.19
        Feb.3, 2015TOTAL
        86,000Elaine Ellingham
        50,000
        10,000 / 70,000
        4.19
        Feb.3, 2015Director
        30,000
        
        4.19
        Feb.3, 2015TOTAL
        80,000Jean-Pierre Ouellet
        50,000
        10,000 / 70,000
        4.19
        Feb.3, 2015Director
        30,000
        
        4.19
        Feb.3, 2015TOTAL
        80,000Samuel Minzberg
        50,000
        10,000 / 70,000
        4.19
        Feb.3, 2015Director
        30,000
        
        4.19
        Feb.3, 2015TOTAL
        80,000Michael Pesner
        50,000
        10,000 / 66,000
        5.31
        Nov. 8, 2015Director
        26,000
        
        5.31
        Nov. 8, 2015TOTAL
        76,000
 100


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Description of the Share Option Plan The Company has only one equity-based compensation plan, a share option plan, for the benefit of the Companys and its affiliates officers, directors, employees and service providers (the Plan). On May 14, 2009, the shareholders approved an amendment to the Plan that increased the number of common shares in respect of which options may be granted under the Plan from 4,444,400 to 5,245,000, an increase of 800,600 shares. The number of shares issued to an insider and to persons related to an insider, during any one year period, under all equity-based compensation arrangements of the Company, cannot be greater than 5% of the shares issued and outstanding. In addition, the number of shares that may be issued to insiders, at any time, under all equity-based compensation arrangements of the Company, cannot be greater than 10% of the shares issued and outstanding. Moreover, the number of shares issued to insiders during any one year period, under all equity-based compensation arrangements of the Company, cannot be greater than 10% of the shares issued and outstanding. Finally, shares under option that have expired or have been cancelled before they were exercised may be subject to a new option under the Plan. The number of shares reserved for issuance to an option holder cannot be greater than 5% of the shares issued and outstanding. It is important to note that options cannot be assigned or transferred. However, the personal representative of the option holder may, as long as he respects the terms of the Plan, exercise the options during the exercise period. Furthermore, the Company does not offer financial aid to the option holder at the exercise of the options. The Plan is managed by the Board of Directors which establishes the terms of the option grants, including the exercise price, provided however, that the exercise price is not lower than the market price, as determined by the closing asked price of a share on the Toronto Stock Exchange (TSX) on the trading day immediately preceding the date of grant. The options granted under the Plan are vested or become subject to exercise according to the terms established by the Board of Directors at the time of grant. In addition, the options can no longer be exercised and expire at a date set by the Board of Directors, which can be no later than 10 years from the date of grant. If the expiry date falls during a blackout period (during any period when the Companys policies do not permit an option holder to exercise an option) or within ten business days following the last day of the blackout period, then the expiry date will be the last day of this ten business day period. Following the death, termination without cause, resignation or early retirement of an option holder, the options that remain unexercised must be exercised within 60 days in the case of the termination without cause, resignation or early retirement, or within six months in the case of the death of an option holder. The Board of Directors has the discretionary power to modify these terms and periods, provided that options cannot expire later than 10 years from the date on which they were granted. When certain corporate events occur, such as a merger, winding-up, dissolution or acquisition of the Company, the Board of Directors may accelerate the vesting of the options so that all options may be exercised during a period of 30 days after the option holders have been so advised, and after this 30 day period all unexercised options will expire. The Board may, at any time and from time to time, amend, suspend or terminate the Plan, in whole or in part, or amend any term of any issued and outstanding Option (including, without limitation, the price at which shares may be purchased under the Plan, and the vesting and the expiry date of an outstanding Option) provided that no such amendment, suspension or termination may be made without: 101


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obtaining approval of the shareholders of the Company, unless such approvals are 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; andin 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. Shareholder approval is not required with respect to the following amendments, in as much as the amendment is in accordance with applicable regulatory requirements: 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 grant 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;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; andchanging 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. 102


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ITEM 7.
        MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
  A.
      Major Shareholders As of April 21, 2011, to the knowledge of the directors and executive officers of the Company, Oxbridge Bank & Trust SCC (Oxbridge), an entity ultimately controlled by H. Greg Chamandy, a member of the Board of the Company and Chairman of the Board, is the only shareholder, directly or indirectly, beneficially owning or control over more than 5% of the outstanding common shares of the Company. Oxbridge, with its affiliates, beneficially owns or controls directly or indirectly 5,013,254 common shares and 105,000 common share options, representing approximately 16.22% of the outstanding common shares of the Company (excluding common shares underlying outstanding options).See item 6.E Directors, Senior Management and Employees  Share Ownership above. Mr. Chamandy and Oxbridge became a shareholder of the Company in 2009. Mr. Chamandy or Oxbridge does not have any different voting rights compared with the Companys other shareholders. As of March 31, 2011, a total of 7,220,673 shares of the Companys common stock, representing 23.01 % of the issued and outstanding shares of the Companys common stock, was held by a total of 113 U.S. record holders. The Company is not directly or indirectly owned or controlled by another corporation or by any foreign government or by any other natural 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 A Related Party Transaction is any transaction 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. Throughout the year 2010, and until the date of this Annual Report, certain Related Party Transactions occurred with the Company, as described below: 103


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Oxbridge Bank & Trust SCC On May 12, 2009, Oxbridge announced that it had acquired common shares of the Company and that, together with its joint actors, it owned and controlled an aggregate of approximately 10% of the issued and outstanding common shares of the Company. On November 24, 2009, Oxbridge amended its public disclosure related to the Company, and announced that it had acquired common shares from a private investor and that, subject to the completion of such acquisition, Oxbridge, together with its joint actors, would own and control common shares and options to purchase common shares representing an aggregate amount of approximately 19.49% of the issued and outstanding common shares (excluding common shares underlying outstanding options). Oxbridge also indicated that it intended to engage in discussions with the Board and management of the Company, as well as other shareholders, regarding the Company, its prospects and potential means for enhancing shareholder value, including potential changes in the business, strategy or Board composition of the Company. On November 25, 2009, in a letter duly authorized by the Board of Directors of Oxbridge and delivered to Denis Arcand, Chairman of the Board, and to the other members of the Board, Mr. Chamandy outlined certain proposals from Oxbridge (the Oxbridge Proposals) including the addition of Elaine Ellingham, A. Michel Lavigne, Samuel Minzberg and Jean-Pierre Ouellet (the Proposed Directors) to the Board, all with a view to maximizing the Companys potential value for all of its shareholders. On November 30, 2009, Oxbridge announced the completion of the acquisition of common shares announced on November 24, 2009. Based on the Oxbridge Proposals and the Boards own independent review of the Proposed Director's qualifications, credentials, expertise, and experience, the directors determined that there existed no impediment, legally or from a corporate governance perspective, to the Proposed Directors acting as directors of the Company or holding their proposed positions on the Board committees, for reasons of conflict of interests or otherwise, and that the Proposed Directors, together with the current directors, have the qualifications, credentials, expertise and experience to implement the execution of the contemplated strategic plan for the Companys future growth. Accordingly, on December 15, 2009, the Board unanimously determined that it is in the best interests of the Company and all its stakeholders to call a meeting of the shareholders of the Company for the purposes of electing the Proposed Directors. In addition, Mr. Chamandy was appointed Chairman of the Board and Mr. Arcand was appointed Vice-Chairman of the Board. Finally, the Board approved and the Company executed a mutual undertaking whereby (A) Mr. Chamandy and Oxbridge, in their capacity as shareholders of the Company, have undertaken to vote, and to cause to be voted, all shares of the Company that they, or any person with whom they are acting jointly or in connection with the Company, control directly or indirectly, in favour of the election of Messrs. Denis Arcand, Martin Rivard, Réjean Houle and Raynald Vézina, the current directors of the Company, as directors of the Company at all meetings of the shareholders of the Company to be held prior to December 31, 2011, at which directors are to be elected; and (B) the Company has undertaken (i) to cause the Proposed Directors (or any replacement) to be included as nominees proposed by the Company to its shareholders for election at the meeting; (ii) to ensure that the Proposed Directors and one additional individual (the Additional Director) to be identified by Mr. Chamandy, duly authorized by Oxbridge, before the next annual meeting of the shareholders of the Company (or any replacement), be included as nominees proposed by the Company to its shareholders for election to the Board of Directors at all meetings of the shareholders of the Company at which directors are to be elected prior to December 31, 2010; and (iii) to use its commercially reasonable efforts to cause the election of such Proposed Directors at such meetings in each case, provided that (x) there exists no impediment, legal or from a corporate governance perspective, to such replacement person or Additional Director, as the case may be, acting as a director of the Company, for reasons of conflict of interest or otherwise, and (y) such replacement person or Additional Director, as the case may be, has the qualifications, credentials, expertise and experience to oversee the execution of the Companys strategic plan for future growth together with the current directors, in each case as determined by the Board of Directors of the Company. 104


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Davies, Ward, Phillips & Vineberg (in thousands of $) On February 4, 2010, Director Samuel Minzberg, was elected a Director of the company by a majority of shareholders during a special meeting held for that purpose. Mr. Minzberg is a senior partner at the law firm Davies Ward Phillips & Vineberg LLP (Davies) and is a member of the firms management committee. In 2010, the Company paid fees to the firm Davies, Ward Phillips & Vineberg LLP in the amount of approximately CAN$14 (including taxes) for professional services rendered, mainly in connection with the acquisition of Patricia Mining by the Company and legal tax advices. Stikeman, Elliott (in thousands of $) On December 15, 2009, Sidney Horn was named as Corporate Secretary of the company. 
  Mr. Horn is a senior partner at the law firm Stikeman, Elliott LLP (Stikeman). In 2010, the Company paid fees to the firm Stikeman in the amount of approximately CAN$626 (including taxes) for professional services rendered, mainly in connection with the acquisition of Louvem Mines, the completion of an overnight marketed public offering of 3,300,000 common shares of Richmont and for general corporate purposes. Oxbridge Aviation (in thousands of $) On May 14, 2009, Mr. H. Greg Chamandy was appointed as Director of the Company and subsequently Executive Chairman of the Board. Oxbridge Aviation is owned by Mr. H. Greg Chamandy. In 2010, the Company paid fees to Oxbridge Aviation in the amount of approximately CAN$3 for a meeting of the Board of Directors in Rouyn-Noranda (Quebec). Condominium On January 4, 2010, the Company sold a corporate building with a net book value of CAN$34 for a cash consideration of CAN$530 to Mrs. Loraine Rivard, widow of Mr. Jean-Guy Rivard, former President of the Board of Directors of Richmont Mines who passed away unexpectedly on March 28, 2009, and mother of Mr. Martin Rivard, the current President and CEO of Richmont Mines and Director of the Company. 105


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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 Auditor dated February 18, 2011 on Internal Control over financial reporting and on the Consolidated Balance Sheets as at December 31, 2010 and 2009, Consolidated Statements of Earnings, Comprehensive Income, Retained Earnings, Accumulated other Comprehensive Income and Cash Flows for each of the years in the three-year period ended December 31, 2010. 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 2010. 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 The Company has reported two significant changes in 2010. On June 1, 2010, the Company announced that it had commenced an underwritten public offering of common shares of the Company (the "Common Shares"). On June 2, 2010, the Company announced that it would issue up to 3,000,000 Common Shares in connection with the above-mentioned underwritten public offering at a price of CAN$5.00 per Common Share. On June 17, 2010, the Company announced that it had completed an overnight marketed public offering of 3,300,000 common shares of Richmont (the Common Shares) at a price of CAN$5.00 per Common Share for aggregate gross proceeds of CAN$16.5 million. The 3,300,000 Common Shares issued by the Company include 300,000 Common Shares issued upon the exercise in part by the underwriters of an over-allotment option. 106


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ITEM 9.
        THE OFFER AND LISTING
 The Companys common stock is traded on the TSX under the symbol RIC and on the NYSE Amex also under the symbol RIC. Toronto Stock Exchange Set forth below are the high and low sell prices on the TSX 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, 2006
        $5.40
        $2.40December 31, 2007
        $4.00
        $2.56December 31, 2008
        $4.20
        $1.21December 31, 2009
        $4.93
        $2.04December 31, 2010
        $5.71
        $3.78
 Last Two Full Years 
    Toronto Stock Exchange 
    Common Stock Trading Activity - Price -Canadian DollarsQuarter Ended
        High
        LowMarch 31, 2009
        $4.85
        $2.04June 30, 2009
        $4.93
        $3.29September 30, 2009
        $4.01
        $2.80December 31, 2009
        $4.05
        $2.85March 31, 2010
        $5.08
        $3.78June 30, 2010
        $5.46
        $3.99September 30, 2010
        $5.60
        $4.12December 31, 2010
        $5.71
        $4.60
 107


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Last Six Months 
    Toronto Stock Exchange 
    Common Stock Trading Activity - Price -Canadian DollarsMonth Ended
        High
        LowOctober 31, 2010
        $5.38
        $4.60November 30, 2010
        $5.71
        $4.61December 31, 2010
        $5.40
        $4.75January 31, 2011
        $5.11
        $4.29February 28, 2011
        $5.50
        $4.28March 31, 2011
        $6.54
        $5.22
 American Stock Exchange and NYSE Amex The Companys common stock was listed for trading on the American Stock exchange effective on March 6, 1997. In 2008, the American Stock exchange was bought by NYSE Alternext and became NYSE Amex in the beginning of 2009. Set forth below are the high and low sell prices on the American Stock Exchange until December 2007 and NYSE Amex thereafter for actual trades of shares of the Companys Common Stock for the periods indicated. Last Five Full Years 
    American Stock Exchange / 
    NYSE Amex 
    Common Stock Trading Activity **- Price -****US Dollars**Year Ended
        High
        LowDecember 31, 2006
        $4.75
        $2.18December 31, 2007
        $4.07
        $2.19December 31, 2008
        $4.18
        $0.95December 31, 2009
        $4.36
        $1.60December 31, 2010
        $5.72
        $3.50
 108


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Last Two Full Years 
    American Stock Exchange / 
    NYSE Amex 
    Common Stock Trading Activity **- Price -****US Dollars**Quarter Ended
        High
        LowMarch 31, 2009
        $3.84
        $1.60June 30, 2009
        $4.36
        $2.86September 30, 2009
        $3.64
        $2.57December 31, 2009
        $3.98
        $2.65March 31, 2010
        $5.25
        $3.50June 30, 2010
        $5.19
        $3.94September 30, 2010
        $5.48
        $3.90December 31, 2010
        $5.72
        $4.45
 Last Six Months 
    NYSE Amex 
    Common Stock Trading Activity - Price -US DollarsMonth Ended
        High
        LowOctober 31, 2010
        $5.35
        $4.45November 30, 2010
        $5.72
        $4.55December 31, 2010
        $5.39
        $4.66January 31, 2011
        $5.19
        $4.28February 28, 2011
        $5.66
        $4.32March 31, 2011
        $6.72
        $5.30
  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 by another amendment filed with the Government of Quebec on June 20, 1991, the Company changed its name to Richmont Mines Inc., now governed by the Business Corporations Act(Quebec) (the Business Corporations Act) which replaced the Companies Act(Quebec) on February 14, 2011. The Articles of the Company are registered by the Government of Quebec in register S02473, folio 10. 109


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The Company has no specific objects or purposes set forth in its Articles or By-Laws. Amendments to Articles On February 14, 2011, the Companies Act(Quebec) was replaced by the new Business Corporations Act(Quebec) (the Business Corporations Act). The new Business Corporations Act provides that a corporation may hold shareholder meetings at a place outside of the Province of Quebec if the Articles so allow. The Board of Directors believes that it would be beneficial both to the Company and its shareholders to give the Board flexibility to permit shareholder meetings to be held outside of the Province of Quebec. The new Business Corporations Act further provides that if the Articles so allow, the directors of a corporation that is a reporting issuer may appoint one or more additional directors to hold office for a term expiring not later than the close of the annual shareholders meeting following their appointment, provided that the total number of directors so appointed may not exceed one third of the number of directors elected at the annual shareholders meeting preceding their appointment. The Board believes that it would be beneficial to the Company and its shareholders to give the Board flexibility to add directors who possess expertise and knowledge relevant to the Companys operations from time to time between two annual shareholder meetings. Pursuant to its Articles, the business of the Company is managed by a Board of Directors composed of a maximum of eleven directors. Accordingly, the Board of Directors, at its meeting held on March 28, 2011, adopted a resolution to amend the Articles approving the foregoing proposed amendments subject to the receipt of the approval of shareholders. In accordance with the Business Corporations Act, the proposed amendments to the Articles will be submitted for approval by the shareholders at the Annual and Special General Meeting of shareholders scheduled to be held on May 13, 2011 (the Meeting). An affirmative vote of not less than two-thirds (T) of the votes cast, in person or by proxy, is required at the Meeting. Amendment to By-Laws If the shareholders vote in favour of the proposed amendments to the Articles of the Company, the Companys By-laws will also need to be appropriately modified to permit the Board of Directors to appoint one or more directors. In accordance with the Business Corporations Act, this amendment will also be submitted to the shareholders for approval and ratification at the Meeting. A simple majority of the votes cast, in person or by proxy, will constitute approval of this matter. Directors  110


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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;(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 duly authorized, validly issued, 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, as and when declared by the Board of Directors. There are no preferences, conversion rights, pre-emptive rights, subscription rights, or restrictions on transfer 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 and the payment of the expenses of the liquidation on a pro-rata basis. There are no redemption or sinking fund provisions applicable to the common shares or any liability to further capital calls by the Company. 111


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Under Quebec law (i) the Articles 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 By-Laws 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. 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 ICA) discussed below. 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. 112


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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. C.
      Material Contracts Acquisition of Louvem Mines Inc. On May 18, 2010, Richmont reached an agreement with Louvem Mines Inc.s (Louvem) shareholders regarding the Companys proposed acquisition of the 30% of the issued and outstanding shares of Louvem that it did not previously own. Under terms of the transaction, 9222-0383 Quebec Inc., a wholly-owned subsidiary of Richmont, and Louvem merged on June 30, 2010, and formed a new company of the same name, namely Louvem Mines Inc. (New Louvem). On the date of the merger, New Louvem shareholders, other than Richmont, received one Richmont common share for each 5.4 New Louvem shares held. As a result, Richmont issued a total of 1,425,407 common shares at a price of $4.69, which was the closing price on the date of issue. Valentine Lake Property By October 31, 2007, Richmont Mines acquired a 70% interest in the Valentine Lake property. On February 5, 2009, Mountain Lake Resources Inc. (Mountain Lake) and Richmont Mines entered into an agreement granting Mountain Lake the option to purchase Richmont Mines 70% interest in the property in accordance with the terms and conditions of the agreement. In accordance with the terms set out in the agreement, Mountain Lake paid Richmont Mines an option fee of 2,500,000 of its common shares in April 2009, incurred an amount of CAN$1 million of exploration and development expenditures on the property, and paid Richmont Mines a sum of CAN$3 million in cash on January 24, 2011 to satisfy all cash option payments set out in the agreement. With all conditions met, Richmont Mines has proceeded with the transfer of its 70% interest in the property to Mountain Lake. Amended and Restated Shareholders Rights Plan Introduction On March 28, 2011, the Company amended and restated the existing shareholder rights plan which is set to terminate in accordance with its terms in 2012 (the Amended and Restated Rights Plan). The Amended and Restated Rights Plan is currently effective, but is subject to confirmation by the shareholders of the Company at the meeting. Shareholders will be asked to consider a resolution (the Rights Plan Resolution) approving, ratifying and confirming the Amended and Restated Rights Plan and all rights issued pursuant to the Amended and Restated Rights Plan (the Rights). A simple majority of the votes cast, in person or by proxy, will constitute approval of this Resolution. 113


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Background A shareholder rights plan was adopted by the Companys shareholders in 2002 and, in accordance with the terms set out at that time, the plan required ratification at the Companys annual meetings in 2005, 2008 and 2011, and would expire in April 2012. In lieu of shareholders ratifying the plan in 2011 for one year only (the plan expires in 2012), the Board of Directors thought it appropriate to bring the shareholder rights plan up to date. Consequently a new shareholder rights plan, which will expire in 2021, will be submitted for shareholder approval at the Meeting. The primary objective of a rights plan is (a) to prevent creeping acquisition of control or an acquisition of control through a partial bid; (b) to provide adequate time to the Board of Directors and shareholders to properly consider and evaluate any unsolicited takeover bid without undue pressure; (c) to provide the Board of Directors and shareholders adequate time to value of all of the assets of the Company and for the Company to undertake a value recognition program if necessary to demonstrate the value of one or more assets; (d) to provide the Board of Directors of the Company adequate time to explore and develop alternatives for maximizing shareholder value if an unsolicited takeover bid is made for the Company and to possibly allow competing bids to emerge; and (e) to provide every shareholder of the Company an equal opportunity to participate in such a bid and to ensure the equal treatment of all shareholders of the Company under such bid. The Amended and Restated Rights Plan encourages a potential acquiror to proceed either by way of a Permitted Bid (as defined in the Amended and Restated Rights Plan), which requires the takeover bid to satisfy certain minimum standards designed to promote fairness, or with the concurrence of the Board of Directors. The Amended and Restated Rights Plan is not intended to prevent takeover bids that treat shareholders of the Company fairly and has not been adopted in response to any proposal to acquire control of the Company. On the effective Date, one Right (as defined in the Amended and Restated Rights Plan) was issued and attached to each common share of the Company then outstanding, and one Right will be issued and attached to each common share of the Company subsequently issued. In choosing to implement a rights plan, the Board of Directors considered the legislative framework in Canada governing takeover bids. Under provincial securities legislation, a takeover bid means an offer to acquire voting or equity shares of a corporation, where the shares subject to the offer to acquire, together with shares already owned by the bidder and any person or company acting jointly or in concert with the bidder, aggregate 20% or more of the outstanding shares of a corporation, but does not include an offer to acquire if the offer to acquire is a step in an amalgamation, merger, reorganization or arrangement that requires approval in a vote of security holders. The Board of Directors has reviewed the Amended and Restated Rights Plan for conformity with current practices of Canadian companies with respect to shareholder protection rights plan. The Company believes that the Amended and Restated Rights Plan preserves the fair treatment of shareholders, is consistent with current best Canadian corporate practice and addresses institutional investor guidelines. The Amended and Restated Rights Plan contains substantially the same terms and conditions as the 2008 Rights Plan and has been updated to meet current best Canadian corporate practices. 114


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The existing legislative framework for takeover bids in Canada continues to raise the following concerns for shareholders of the Company: Time Canadian securities laws permit a takeover bid to expire 35 days (21 days in the Province of Quebec) after it is initiated. The Board of Directors of the Company is of the view that this is not sufficient time to permit shareholders to consider a takeover bid and make a reasoned and unhurried decision as well as permit directors to evaluate a takeover bid, explore, develop and pursue alternatives which it believes are preferable to the takeover bid or which could maximize shareholder value, and make reasoned recommendations to the shareholders.Pressure to Tender- A shareholder may feel compelled to tender to a takeover bid which the shareholder considers to be inadequate out of concern that in failing to do so, the shareholder may be left with illiquid or minority discounted common shares.
        This is particularly so in the case of a partial takeover bid for less than all of the common shares, where the bidder wishes to obtain a control position but does not wish to acquire all of the common shares. The Amended and Restated Rights Plan provides the shareholder with a tender approval mechanism which is intended to ensure that the shareholder can separate the decision to tender from the approval or disapproval of a particular takeover bid.Unequal Treatment: Full Value- While existing Canadian securities legislation has substantially addressed many concerns in this regard, there remains the possibility that control of the Company may be acquired pursuant to a private agreement in which one or a small group of shareholders dispose of common shares at a premium to market price which premium is not shared with the other shareholders or through a partial bid that may be oppressive to the shareholders of the Company. In addition, a person may slowly accumulate common shares through stock exchange acquisitions which may result, over time, in an acquisition of control without payment of fair value for control or a fair sharing of a control premium among all shareholders. Summary The following is a summary of the principal terms of the Amended and Restated Rights Plan for the Company which is qualified in its entirety by reference to the text of the Amended and Restated Rights Plan. A shareholder or any other interested party may obtain a copy of the Amended and Restated Rights Plan by contacting the Assistant Corporate Secretary, 161 Avenue Principale, Rouyn-Noranda, Quebec, J9X 4P6; telephone (819) 797-2465; fax (819) 797-0166, by consulting the Web site EDGAR at www.sec.gov/edgaror by consulting the Companys Web Site at www.richmont-mines.com. In the opinion of the Board of Directors, the terms of the Amended and Restated Rights Plan conform to the terms of plans now in place in many other Canadian public companies. Effective Date The effective date of the Amended and Restated Rights Plan is March 28, 2011 (the Effective Date). 115


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Term If the Amended and Restated Rights Plan is approved at the Meeting, it will then be in effect until the end of the annual meeting of shareholders of the Company to be held in 2014 unless the Amended and Restated Rights Plan is reconfirmed at that meeting by the shareholders. If the Amended and Restated Rights Plan is so reconfirmed, it will then need to be reconfirmed at every third annual meeting. If it is not reconfirmed it will terminate. Even if reconfirmed by the shareholders, it expires ten years after the Effective Date, at which time a new plan can be adopted. Issue of Rights On the Effective Date, one Right was issued and attached to each common share outstanding of the Company and will be issued and attached to each common share of the Company subsequently issued. Rights Exercise Privilege The Rights will separate from the common shares and will be exercisable 10 trading days (the Separation Time) after a person has acquired, or commenced a takeover bid to acquire, 20% or more of the common shares, other than by an acquisition pursuant to a takeover bid permitted by the Amended and Restated Rights Plan (a Permitted Bid). The acquisition by any person (an Acquiring Person) of 20% of the common shares, other than by way of a Permitted Bid, is referred to as a Flip-in Event. Any Rights held by an Acquiring Person will become void upon the occurrence of a Flip-in Event. Ten trading days after the occurrence of the Flip-in Event, each Right (other than those held by an Acquiring Person) will permit the purchase by holders of Rights, other than an Acquiring Person, of common shares at a 50% discount to their market price. The issue of the Rights is not initially dilutive. Upon a Flip-in Event occurring and the Rights separating from the common shares, reported earnings per share of the Company on a fully diluted or non-diluted basis may be affected. Holders of Rights not exercising their Rights upon the occurrence of a Flip-in Event may suffer substantial dilution. Certificates and Transferability Prior to the Separation Time, the Rights are evidenced by a legend imprinted on certificates for the common shares and are not transferable separately from the common shares. From and after the Separation Time, the Rights will be evidenced by Rights certificates which will be transferable and traded separately from the common shares. Permitted Bid Requirements The requirements for a Permitted Bid include the following: the takeover bid must be made by way of a takeover bid circular;the takeover bid must be made to all shareholders of the Company as registered on the books of the Company, other than the offeror; 116


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the takeover bid must be outstanding for a minimum period of 60 days and common shares tendered pursuant to the takeover bid may not be taken up prior to the expiry of the 60 day period and only if at such time more than 50% of the common shares of the Company held by shareholders, other than the bidder, its affiliates and persons acting jointly or in concert and certain other persons (the Independent Shareholders), have been tendered to the takeover bid and not withdrawn; andif more than 50% of the common shares held by Independent Shareholders are tendered to the takeover bid within the 60 day period, the bidder must make a public announcement of that fact and the takeover bid must remain open for deposits of common shares for not less than ten (10) business days from the date of such public announcement. The Amended and Restated Rights Plan allows for a competing Permitted Bid (a Competing Permitted Bid) to be made while a Permitted Bid is in existence. A Competing Permitted Bid must satisfy all the requirements of a Permitted Bid except that it may expire on the same date as the Permitted Bid, subject to the requirement that it be outstanding for a minimum period of thirty-five (35) days. Waiver The Board of Directors, acting in good faith, may, prior to the occurrence of a Flip-in Event, waive the application of the Amended and Restated Rights Plan to a particular Flip-in Event (an Exempt Acquisition) where the takeover bid is made by a takeover bid circular to all holders of common shares of the Company. When the Board of Directors exercises the waiver power for one takeover bid, the waiver will also apply to any other takeover bid for the Company made by a takeover bid circular to all holders of common shares prior to the expiry of any other bid for which the Amended and Restated Rights Plan has been waived. Additionally, the Board of Directors, acting in good faith, may waive the application of the Amended and Restated Rights Plan for any Flip-in Event by written notice delivered to the Rights Agent (as such term is defined in the Amended and Restated Rights Plan). Redemption The Board of Directors with the approval of a majority of the votes cast by shareholders (or holders of Rights if the Separation Time has occurred) voting in person or by proxy at a meeting duly called for that purpose may redeem the Rights at $0.000001 per share. Rights will be deemed to have been redeemed by the Board of Directors following completion of a Permitted Bid, Competing Permitted Bid or Exempt Acquisition. Amendment Prior to the Meeting Time, the Board of Directors may make any changes to the Amended and Restated Rights Plan which the Board of Directors acting in good faith may deem necessary or desirable without the approval of any holders of Rights or common shares. After the Meeting, the Board of Directors may amend the Amended and Restated Rights Plan with the approval of a majority vote of the votes cast by shareholders (or the holders of Rights if the Separation time has occurred) voting in person and by proxy at a meeting duly called for that purpose. The Board of Directors without such approval may correct clerical or typographical errors and, subject to approval at the next meeting of the shareholders (or holders of Rights, as the case may be) may make amendments to the Amended and Restated Rights Plan to maintain its validity due to changes in applicable legislation. 117


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Board of Directors The Amended and Restated Rights Plan will not detract from or lessen the duty of the Board of Directors to act honestly and in good faith with a view to the best interests of the Company. The Board of Directors, when a Permitted Bid is made, will continue to have the duty and power to take such actions and make such recommendations to shareholders as are considered appropriate. Exemptions for Investment Advisors Investment advisors (for fully managed accounts), trust companies (acting in their capacities as trustees and administrators), statutory bodies whose business includes the management of funds and administrators of registered pension plans acquiring 20% or more of the common shares of the Company are exempted from triggering a Flip-in Event, provided that they are not making, or are not part of a group making, a takeover bid. Approval of the Directors The directors of the Company have unanimously approved and adopted the Amended and Restated Rights Plan. In adopting the Amended and Restated Rights Plan, the directors concluded, for the reasons discussed above, that it was in the best interests of the Company and the shareholders to do so. The directors will unanimously recommend that shareholders ratify, confirm and approve the Amended and Restated Rights Plan by voting for the Rights Plan Resolution at the Meeting. The directors believe that the Amended and Restated Rights Plan preserves the fair treatment of shareholders of the Company, is consistent with Canadians corporate practice and addresses institutional investor guidelines. Shareholder Approval The Amended and Restated Rights Plan is subject to confirmation and approval by the affirmative vote of a majority of the votes cast by shareholders of the Company at the Meeting, failing which the Amended and Restated Rights Plan will terminate, all outstanding Rights (as defined in the Summary) will be null and void and the Company will no longer have any form of shareholder rights plan. 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 is 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. 118


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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. 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 shares If a non-resident were to dispose of common shares 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 shares 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 shares is not derived principally from real property situated in Canada. Dividends 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. 119


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If a non-resident holder disposes of common shares to the Company (unless the Company acquired the common shares 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. Capital Gains A non-resident of Canada is not subject to tax under the Income Tax Act(Canada) in respect 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 another 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 non-resident holder did not deal at arms length, or the nonresident 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 United States federal income tax consequences of the acquisition, ownership and disposition of common shares of the Company by a United States Holder (as defined below) that holds the common shares as a capital asset. The discussion does not cover all aspects of United States 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 United States 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 organizations, dealers in securities or currencies, persons that hold the common shares as part of straddles, hedging transactions or conversion transactions for United States federal income tax purposes or persons whose functional currency is not the United States dollar). As used herein, the term United States Holder means a beneficial owner of the Companys common shares that is (i) a citizen or resident of the United States for United States 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 United States 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 United States persons have the authority to control all substantial decisions of the trust. 120


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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. United States Holders receiving dividend distributions (including constructive dividends) with respect to common shares of the Company are required to include in gross income for United States 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 United States 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 United States Holders United States federal income tax liability or, alternatively, may be deducted in computing the United States Holders United States 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 United States 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 United States Holder that is an individual, estate or trust. There are currently no preferential tax rates for long-term capital gains for a United States Holder that is a corporation. The Company does not maintain calculations of its earnings and profits in accordance with United States Federal income tax accounting principles. For taxable years beginning before January 1, 2013, dividends paid by foreign qualified corporations to non-corporate taxpayers will be taxed at the same rate as long-term 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 United States which the United States 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. For tax years beginning after 2012, dividends paid to U.S. citizens and residents with modified adjusted gross income above $125,000 ($250,000 for joint returns) also will be subject to a 3.8% Medicare contribution tax. 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 United States 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 United States Holder generally will not be required to recognize foreign currency gain or loss with respect to the dividend income. A United States Holder may have foreign currency gain or loss if it does not convert the amount of such dividend into U.S. dollars on the date of its receipt. 121


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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 United States Holders that are eligible for benefits under the Treaty generally is reduced to a maximum rate of 15% (except for certain corporate holders). For United States federal income tax purposes, United States 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 United States federal income tax purposes by a United States Holder with respect to the payment of dividends may be greater than the amount of cash actually received (or receivable) by the United States Holder from the Company with respect to the payment. Foreign Tax Credit Subject to certain limitations, a United States 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 United States Holder, to either a deduction or a tax credit for such foreign tax paid or withheld. United States 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 United States Holder can obtain a refund from the Canadian taxing authorities. The limitation in foreign taxes eligible for credit is calculated separately with respect to specific classes of income. The rules governing foreign tax credits are complex and, therefore, United States Holders should consult their tax advisor regarding the availability of foreign tax credits in their particular circumstances. United States Holders that are accrual basis taxpayers must translate Canadian taxes into United States dollars at a rate equal to the average exchange rate for the taxable year in which the taxes accrue, while all United States Holders must translate taxable dividend income into U.S. dollars at the spot rate on the date received. This difference in exchange rates may reduce the U.S. dollar value of the credits for Canadian taxes relative to the United States Holders United States federal income tax liability attributable to a dividend. Disposition of common shares of the Company A United States 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 United States Holder, which will be a short-term or long-term capital gain or loss depending upon the holding period of the United States 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 United States 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 United States 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 from the loss year to be offset against capital gains until the earlier of five years or the exhaustion of the net capital loss. 122


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As with dividends, for tax years beginning after 2012, capital gains of U.S. citizens and residents with modified adjusted gross income above $125,000 ($250,000 for joint returns) will be subject to a 3.8% Medicare contribution tax. Backup Withholding and Information Reporting Payments of dividends or other proceeds with respect to common shares of the Company by a United States paying agent or other United States intermediary will be reported to the IRS and to the United States Holder as may be required under applicable regulations. Backup withholding at a rate of 28 per cent may apply to these payments if the United States 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 United States federal income tax returns. Certain United States Holders (including, among others, corporations) are not subject to backup withholding. United States 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 161, avenue Principale, Rouyn-Noranda, Quebec, J9X 4P6. 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 and Foreign Currency Risk Disclosure See Item 4.B Information on the Company - Gold Marketing and Sales above. 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. 123


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The Companys financial results are sensitive to movements in the price of gold, and the US$/CAN$ exchange rate, as the Company mostly generates revenue in US dollars and generally incurs expenses in Canadian dollars. The following table describes, for demonstration purposes only, the financial impact that changes in certain variables would generally have had on the Companys 2010 net earnings. SENSITIVITY ANALYSISVariable
        Change
        Impact on net earnings(in thousands of CAN$)Price of gold (CAN$)
        +/- CAN$50 per ounce
        +/- 2,317Exchange rate (US$/CAN$)
        +/- US$/CAN$ 0.10
        +/- 5,825
 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, 2010, 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 SECURITYHOLDERS AND USE OF PROCEEDS
 There have been no material modifications to the rights of security holders. See Item 7 ADDITIONAL INFORMATION  C. Material Contracts for a description of the Companys Amended and Restated Shareholders Rights Plan. 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, Director, Finance, 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.
 124


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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. The Companys internal control system was designed to provide reasonable assurance to the Companys management and Board of Directors regarding the reliability of financial reporting and the preparation of published financial statements in accordance with Canadian 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, 2010. 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, 2010, the Companys 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, 2010 has been audited by Raymond Chabot Grant Thornton 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)
        Attestation Report of the Registered Public Accounting Firm. The attestation report of Raymond Chabot Grant Thornton LLP, an independent registered public accounting firm, regarding the Companys internal control over financial reporting is included under Item 17.
 d)
        Changes in Internal Control Over Financial Reporting. Management regularly reviews its system of internal control over financial reporting and makes 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.
 125


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ITEM 16.A.
        AUDIT COMMITTEE FINANCIAL EXPERT
 The Companys Board of Directors has determined that Michael Pesner, chairman of the Audit Committee, 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 NYSE Amex. 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., 161, Avenue Principale, Rouyn-Noranda, Quebec, JPX 4P6, Canada, Attention: Assistant Corporate 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 chairman 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 financial years by the Companys principal independent accounting firm. Audit Fees The aggregate fees billed by the external auditors for audit services for each of the last two financial years are the following: 2010
        2009Audit services*
        $187,000
        $146,000
 * Includes the audit of the internal controls and financial reporting as required by the Sarbanes-Oxley legislation. Audit Related Fees The aggregate fees billed for each of the last two financial years for certification services and related services provided by the external auditors which are reasonably related to the performance of the audit or review of the Companys financial statements are described in the following table: **Nature of services**
      2010
      2009Special work
      **$78,000**
      $24,525 126


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Taxation Fees The aggregate fees billed for each of the last two financial years for the professional services provided by the external auditors with regards to tax compliance, tax advice and tax planning are described in the following table: Nature of services
        2010
        2009Review quarterly estimate
        $4,800
        $6,945Planning and tax advice
        $17,950
        $20,700
 All Other Fees The aggregate fees billed for each of the last two financial years for the products and services provided by the external auditors, other than the services previously stated, are described in the following table: Nature of services
        2010
        2009Other consultations
        $1,650
        $23,139Other expenses
        $9,916
        $5,696
 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
 The Company had no share repurchase program in effect in 2010. ITEM 16.F.
        CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT
 Not applicable. ITEM 16.G.
        CORPORATE GOVERNANCE
 NYSE Amex Corporate Governance Matters The Companys common shares are listed on NYSE Amex. Section 110 of the NYSE Amex Company Guide permits the NYSE Amex to consider the laws, customs and practices of the foreign issuers country of domicile in relaxing certain NYSE Amex listing criteria, and to grant exemptions from NYSE Amex listing criteria based on these considerations. A company seeking relief under these provisions is required to provide written certification from independent local counsel that the non-complying practice is not prohibited by home country law. A description of the significant ways in which the Companys governance practices differ from those followed by domestic companies pursuant to NYSE Amex standards is as follows: 127


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[   ]
      *Shareholder Meeting Quorum Requirement*: The NYSE Amex recommended minimum quorum requirement for a shareholder meeting is one-third of the outstanding common shares. In addition, a corporation listed on NYSE Amex is required to state its quorum requirement in its By-Laws. The Companys quorum requirement as set forth in its ByLaws is two shareholders with at least 10% of the issued and outstanding common shares entitled to vote at a meeting of shareholders whether present in person or represented by proxy.[   ]
      *Proxy Delivery Requirement*: NYSE Amex requires the solicitation of proxies and delivery of proxy statements for all shareholder meetings, and requires that these proxies shall be solicited pursuant to a proxy statement that conforms to SEC proxy rules. The Company is a foreign private issuer as defined in Rule 3b-4 under the Exchange Act and Rule 405 under the Securities Act and the equity securities of the Company are accordingly exempt from the proxy rules set forth in Sections 14(a), 14(b), 14(c) and 14(f) of the Exchange Act. The Company solicits proxies in accordance with applicable rules and regulations in Canada.[   ]
      *Shareholder Approval Requirement:*The Company will follow the Canadian securities regulatory authorities and Toronto Stock Exchange rules for shareholder approval of new issuances of its common shares. Following such securities and exchange rules, shareholder approval is required for certain issuances of shares that: (i) materially affect control of the Company; or (ii) provide consideration to insiders in aggregate of 10% or greater of the market capitalization of the listed issuer and have not been negotiated at arms length. Shareholder approval is also required, pursuant to Toronto Stock Exchange rules, in the case of most private placements: (x) for an aggregate number of listed securities issuable greater than 25% of the number of securities of the listed issuer which are outstanding, on a non-diluted basis, prior to the date of closing of the transaction if the price per security is less than the market price; or (y) that during any six month period are to insiders for listed securities or options, rights or other entitlements to listed securities greater than 10% of the number of securities of the listed issuer which are outstanding, on a non-diluted basis, prior to the date of the closing of the first private placement to an insider during the six month period.
        The Company believes that foregoing are consistent with the laws, customs and practices in Canada. In addition, the Company may from time-to-time seek relief from NYSE Amex corporate governance requirements on specific transactions under Section 110 of the NYSE Amex Company Guide by providing written certification from independent local counsel that the non-complying practice is not prohibited by the Companys home country law. 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 Auditor on such consolidated financial statements is included herein immediately preceding such audited consolidated financial statements. 128


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Audited Consolidated Financial Statements Report of the Independent Auditor dated February 18, 2011 on Internal Control over financial reporting and on the Consolidated Balance Sheets as at December 31, 2010 and 2009, Consolidated Statements of Earnings, Comprehensive Income, Retained Earnings, Accumulated other Comprehensive Income and Cash Flows for each of the years in the three-year period ended December 31, 2010, and the related notes including a summary of significant accounting policies. ITEM 18.
        CONSOLIDATED FINANCIAL STATEMENTS
 The Company has elected to provide consolidated financial statements pursuant to Item 17 of Form 20-F. 129


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ITEM 19.
        EXHIBITS
  Exhibit No.
        Exhibit1.1
        Articles of the Company, including all amendments thereto(1)1.2
        By-Laws of the Company, including all amendments thereto(1)2.1
        Shareholder Rights Plan(2)5.6
        Letter Agreement dated February 5, 2009 between the Company and Mountain Lake Resources Inc. (3)5.7
        Addendum dated March 9, 2009 to the Letter Agreement dated February 5,2009 between the Company and Mountain Lake Resources Inc. (3)8.1
        List of Subsidiaries 10.1
        Acquisition Agreement and Amalgamation Agreement (Acquisition of Louvem Mines Inc.) (4)10.2
        Amended and Restated Shareholders Rights Plan (4)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 Act*of 2002, 18 U.S.C. Section 1350 15.1
        Audit Committee Charter (3)
  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, 2008 filed with the Securities and Exchange Commission on May 6, 2009.(4)
      The Acquisition and Amalgamation Agreements were filed on EDGAR on May 28, 2010 and the Amended and Restated Shareholders Rights Plan was filed on EDGAR on April 14, 2011. These documents are incorporated by reference in this Annual Report. 130


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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.RegistrantDated: May 4, 2011
      By:
      (/s/) Nicole VeilleuxNicole VeilleuxDirector, Finance


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Consolidated Financial Statements of RICHMONT MINES INC. Years ended December 31, 2010, 2009 and 2008


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INDEPENDENT AUDITORS REPORT
 To the Shareholders of
    Richmont Mines Inc. We have completed integrated audits of Richmont Mines Inc.s 2010, 2009 and 2008 consolidated financial statements and of its internal control over financial reporting as of December 31, 2010. Our opinions, based on our audits, are presented below. Report on the consolidated financial statements We have audited the accompanying consolidated financial statements of Richmont Mines Inc., which comprise the consolidated balance sheets as at December 31, 2010 and 2009 and the consolidated statements of earnings, comprehensive income, retained earnings, accumulated other comprehensive income and cash flows for each of the years in the three-year period ended December 31, 2010, and the related notes including a summary of significant accounting policies. Managements responsibility for the consolidated financial statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian generally accepted accounting principles and for such internal control as management determines necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. 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 consolidated financial statements are free of material misstatement. Canadian generally accepted auditing standards require that we comply with ethical requirements. An audit involves performing procedures to obtain audit evidence, on a test basis, about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risks assessments, the auditor considers internal control relevant to the Companys preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting principles and policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our opinion on the consolidated financial statements. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Richmont Mines Inc. as at December 31, 2010 and 2009 and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2010 in accordance with Canadian generally accepted accounting principles. Report on internal control over financial reporting We have also audited Richmont Mines Inc. internal control over financial reporting as of December 31, 2010, based on the criteria established in Internal ControlIntegrated Frameworkissued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. 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s report on Internal Control over Financial Reporting.


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INDEPENDENT AUDITORS REPORT Our responsibility is to express an opinion on the Companys internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting 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. An audit of internal control over financial reporting includes 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 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 audit opinion on the Companys internal control over financial reporting. 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, 2010, based on the criteria established in Internal ControlIntegrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Chartered Accountants
    Montreal (Canada), February 18, 2011 1Chartered accountant auditor permit no. 22865


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RICHMONT MINES INC.Consolidated Financial StatementsYears ended December 31, 2010, 2009 and 2008 Consolidated Financial Statements Consolidated Statements of Earnings
        1Consolidated Statements of Comprehensive Income and Deficit
        2Consolidated Balance Sheets
        3Consolidated Statements of Cash Flow
        4Notes to Consolidated Financial Statements
        5


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CONSOLIDATED STATEMENTS OF EARNINGSYears ended December 31 (in thousands of Canadian dollars) 2010
        
        2009
        
        2008$
        
        $
        
        $REVENUEPrecious metals
        87,182
        
        66,151
        
        66,237Other (note 4)
        3,599
        
        5,733
        
        4,35490,781
        
        71,884
        
        70,591EXPENSESOperating costs
        54,565
        
        48,751
        
        42,998Royalties
        2,075
        
        1,563
        
        1,591Custom milling
        1,863
        
        3,708
        
        1,785Administration
        4,571
        
        3,681
        
        3,665Exploration and project evaluation (note 5)
        7,217
        
        7,066
        
        10,547Accretion expense - asset retirement obligations (note 6)
        287
        
        240
        
        182Depreciation, depletion and write-off
        8,118
        
        5,696
        
        5,687Loss (gain) on disposal of long term assets (note 7)
        (489)
        
        (594)
        
        29EARNINGS BEFORE OTHER ITEMS
        12,574
        
        1,773
        
        4,107MINING AND INCOME TAXES (note 8)
        3,691
        
        1,475
        
        437NET EARNINGS
        8,883
        
        298
        
        3,670NET EARNINGS (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTERESTS
        (128)
        
        (38)
        
        2,035NET EARNINGS ATTRIBUTABLE TO RICHMONT MINES SHAREHOLDERS
        9,011
        
        336
        
        1,635NET EARNINGS PER SHARE basic and diluted
        0.31
        
        0.01
        
        0.07WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (thousands)
        28,687
        
        26,108
        
        24,047DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (thousands)
        29,016
        
        26,215
        
        24,047
 The accompanying notes are an integral part of the consolidated financial statements. 1


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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND DEFICITYears ended December 31 (in thousands of Canadian dollars)
  2010
        
        2009
        
        2008$
        
        $
        
        $COMPREHENSIVE INCOMENet earnings
        8,883
        
        298
        
        3,670Comprehensive income, net of income taxes:Change in unrealized gain (loss) on available-for-sale investments
        1,071
        
        169
        
        (599)Realized losses (gains) on sale of available-for-sale investments included in net earnings
        (210)
        
        23
        
        11861
        
        192
        
        (588)Comprehensive income
        9,744
        
        490
        
        3,082Comprehensive income attributable to:Richmont Mines shareholders
        9,872
        
        528
        
        1,047Non-controlling interests
        (128)
        
        (38)
        
        2,0359,744
        
        490
        
        3,082RETAINED EARNINGSDEFICIT, BEGINNING OF YEAR
        (2,789)
        
        (3,096)
        
        (4,647)Net earnings attributable to Richmont Mines shareholders
        9,011
        
        336
        
        1,635Excess of acquisition cost over the non-controlling interests (note 3)
        (5,125)
        
        -
        
        -Redemption of shares (note 11)
        -
        
        (29)
        
        (84)RETAINED EARNINGS (DEFICIT), END OF YEAR
        1,097
        
        (2,789)
        
        (3,096)ACCUMULATED OTHER COMPREHENSIVE INCOMEBALANCE, BEGINNING OF YEAR
        (44)
        
        (236)
        
        352Changes in other comprehensive income for the year attributable to Richmont Mines shareholders
        861
        
        192
        
        (588)BALANCE, END OF YEAR
        817
        
        (44)
        
        (236)RETAINED EARNINGS (DEFICIT) AND ACCUMULATED OTHER COMPREHENSIVE INCOME, END OF YEAR
        1,914
        
        (2,833)
        
        (3,332)
 The accompanying notes are an integral part of the consolidated financial statements. 2


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CONSOLIDATED BALANCE SHEETSDecember 31 (in thousands of Canadian dollars)  2010
        
        2009$
        
        $ASSETSCURRENT ASSETSCash and cash equivalents
        40,030
        
        21,139Shares of publicly-traded companies
        1,311
        
        741Accounts receivable
        1,892
        
        1,213Mining and income taxes receivable
        1,745
        
        1,500Exploration tax credits receivable
        3,474
        
        1,348Inventories (note 9)
        7,364
        
        7,36055,816
        
        33,301DEPOSITS RESTRICTED (note 6)
        290
        
        106PROPERTY, PLANT AND EQUIPMENT (note 10)
        61,540
        
        51,823117,646
        
        85,230LIABILITIESCURRENT LIABILITIESAccounts payable and accrued charges
        9,262
        
        7,130Mining and income taxes payable
        2,674
        
        1,23511,936
        
        8,365ASSET RETIREMENT OBLIGATIONS (note 6)
        6,366
        
        5,928FUTURE MINING AND INCOME TAXES (note 8)
        2,493
        
        97620,795
        
        15,269SHAREHOLDERS EQUITYCapital stock (note 11)
        88,598
        
        64,675Contributed surplus (note 12)
        6,339
        
        6,133Retained earnings (deficit)
        1,097
        
        (2,789)Accumulated other comprehensive income (loss)
        817
        
        (44)Non-controlling interests (note 3)
        -
        
        1,98696,851
        
        69,961117,646
        
        85,230Commitments and subsequent events (note 15)
 The accompanying notes are an integral part of the consolidated financial statements. On behalf of the Board: /s/ Martin Rivard
      /s/ Michael PesnerMartin Rivard
      Michael PesnerDirector
      Director 3


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CONSOLIDATED STATEMENTS OF CASH FLOWYears ended December 31 (in thousands of Canadian dollars)
  2010
        
        2009
        
        2008$
        
        $
        
        $CASH FLOW FROM OPERATING ACTIVITIESNet earnings
        8,883
        
        298
        
        3,670Adjustments for:Depreciation, depletion and write-off
        8,118
        
        5,696
        
        5,687Stock-based compensation
        803
        
        484
        
        526Accretion expense - asset retirement obligations
        287
        
        240
        
        182Loss (gain) on disposal of long term assets
        (489)
        
        (594)
        
        29Loss (gain) on disposal of shares of publicly-traded companies
        (210)
        
        23
        
        11Future mining and income taxes
        1,517
        
        (110)
        
        (359)18,909
        
        6,037
        
        9,746Net change in non-cash working capital items (note 13)
        (410)
        
        (3,070)
        
        2,37118,499
        
        2,967
        
        12,117CASH FLOW USED IN INVESTING ACTIVITIESRestricted cash and deposits
        (184)
        
        10
        
        -Disposal of shares of publicly-traded companies
        501
        
        199
        
        689Property, plant and equipment - Francoeur Mine
        (9,144)
        
        (1,976)
        
        -Property, plant and equipment - Island Gold Mine
        (4,650)
        
        (4,318)
        
        (3,079)Property, plant and equipment - Beaufor Mine
        (2,462)
        
        (1,092)
        
        (127)Other property, plant and equipment
        (518)
        
        (626)
        
        (1,987)Disposal of long term assets
        533
        
        9
        
        91Redemption of non-controlling interests
        (325)
        
        -
        
        -Acquisition of Patricia Mining Corp.
        -
        
        -
        
        (6,984)Cash received from an advance to a minority partner
        -
        
        -
        
        750(16,249)
        
        (7,794)
        
        (10,647)CASH FLOW FROM (USED IN) FINANCING ACTIVITIESIssue of common shares
        17,981
        
        82
        
        25Common share issue costs
        (1,340)
        
        -
        
        -Redemption of common shares
        -
        
        (137)
        
        (768)Repayment of the long-term debt
        -
        
        -
        
        (1,950)Distribution to a minority partner
        -
        
        -
        
        (47)16,641
        
        (55)
        
        (2,740)Net increase (decrease) in cash and cash equivalents
        18,891
        
        (4,882)
        
        (1,270)Cash and cash equivalents, beginning of year
        21,139
        
        26,021
        
        27,291Cash and cash equivalents, end of year (note 18 d))
        40,030
        
        21,139
        
        26,021
 The accompanying notes are an integral part of the consolidated financial statements. 4


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (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 policies
          The consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles. As described in note 20, 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. The significant accounting policies followed by the Company are as follows:
  a)
        Basis of consolidation
          These consolidated financial statements reflect the accounts of the Company and of its subsidiaries: Camflo Mill Inc. (100%) and Louvem Mines Inc. (70% and 100% since June 30, 2010).
          All inter-company transactions have been eliminated.
          The Companys 55% interest in the Island Gold Mine is consolidated until December 15, 2008 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. On December 16, 2008, the Company became full owner at 100% of the Island Gold Mine.
  b)
        Revenue recognition
          Precious metals revenue, based on spot metal prices, is recorded on delivery when rights and obligations related to ownership are transferred to the purchaser and reasonable assurance regarding collectibility of the consideration exists. Milling revenue is recorded when the service of ore processing is rendered and reasonable assurance regarding collectibility of the consideration exists.c)
        Financial assets and liabilities
          All financial assets and liabilities are initially estimated and recorded at fair value. Subsequently, all financial instruments are classified in 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 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 either through a sale or when a permanent decline in value is recognized. Gains and losses arising from the revaluation of held-for-trading financial assets and liabilities are included in consolidated statement of earnings.
          Cash is classified as assets held-for-trading. Shares of publicly-traded companies are classified as available-for-sale financial assets, accounts receivable and term deposits are classified as loans and receivables, and accounts payable and accrued charges are classified as other financial liabilities.
  d)
        Cash and cash equivalents
          Cash and cash equivalents comprise cash, term deposits, discount notes and bankers acceptances with original maturity dates of less than 3 months.e)
        Shares of publicly-traded companies
          Shares of publicly-traded companies include investments in shares of publicly-traded companies and are recorded at fair value.f)
        Inventories
          Supply, ore and precious metals inventories are valued at the lower of cost and net realizable value. The cost of inventories is determined using the weighted average cost formula. The cost of inventories is recognized as an operating cost expense in consolidated statement of earnings.
  5


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (in thousands of Canadian dollars)
  g)
        Exploration properties
          The 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.h)
        Property, plant and equipment
          Property, 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 obligation. 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 depleted in accordance with the number of ounces sold on cost basis less residual values. The depletion rate is calculated according to the units-of-production method, using Proven and Probable Reserves. The estimated period of depletion is from 2 to 5 years according to the reserves of each production site. Depreciation of corporate assets is calculated using the straight-line method based on their anticipated useful lives which vary from 2 to 20 years. During the fiscal year, the Company revised the estimated useful life of its corporate office from 10 to 20 years. This revised estimation was recognized prospectively and, consequently, the annual depreciation and depletion cost is reduced by $49.
          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, an impairment loss is recorded in the results of operations to adjust the asset at its fair value. The fair value is based on the present value of the estimated future cash flows.
          Net estimated undiscounted future cash flows from each mine and properties under development 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.i)
        Future mining and income taxes
          The Company accounts for mining and income taxes using the asset and liability method. Under this method, future tax assets and liabilities are recognized for the 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 enacted or substantively enacted rates expected to be applied in the years in which these 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 records a valuation allowance against future tax assets if according to the available information, it is more likely than not that some or all of future tax assets will not be realized.
          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 resulting from this renunciation are recorded, at the time of the renunciation with a corresponding reduction of capital stock.j)
        Environmental costs
          The 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.
 6


---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (in thousands of Canadian dollars)
  k)
     Asset retirement obligations
Total estimated cash flows required to settle the obligations arising from environmentally acceptable closure plans are discounted using a credit-adjusted risk-free interest rate and are recorded as a liability with a corresponding increase to property, plant and equipment and, thereafter, depleted 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 flows required to settle these obligations.l)
     Foreign currency translation
Transactions included in 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 for the year.m)
     Exploration tax credits
Exploration tax credits are recorded as a reduction of exploration expenses or as a reduction of property, plant and equipment.n)
     Net earnings (loss) per share
Basic net 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 they were exercised or converted 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.o)
     Guarantees
A 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 in the interest rate, foreign exchange rate, stock price, commodity price, 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 note 6 c).p)
     Stock-based compensation
The 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.q)
     Pension plan
The 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.r)
     Use of estimates
The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the recorded amounts of assets and liabilities, disclosure of contingent assets and liabilities and the recorded 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 valuation of their residual value and 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.
 7


---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (in thousands of Canadian dollars)
  2.
     2010 Accounting changes
Business combinations, consolidated financial statements and non-controlling interestsDuring the second quarter of 2010, the Company decided to early adopt section 1582, Business Combinations, which replaces section 1581 of the same name, and sections 1601, Consolidated Financial Statements and 1602, Non-Controlling Interests, which together replace section 1600, Consolidated Financial Statements. These new sections harmonize significant aspects of Canadian accounting standards with the International Financial Reporting Standards (IFRS) that will be mandated for entities with fiscal years beginning on or after January 1, 2011. These sections are applied for business combinations that occurred on or after January 1, 2010 except for Section 1602 Non-Controlling Interests which is applied retrospectively.
Section 1582 requires that all business acquisitions be measured at the fair value of the acquired entity at the acquisition date even if the business combination is achieved in stages. The section also establishes new guidance on the measurement of consideration given and the recognition and measurement of assets acquired and liabilities assumed in a business combination. Furthermore, under this new guidance, acquisition costs, which were previously included as a component of the consideration given, and any negative goodwill resulting from the allocation of the purchase price, which was allocated as a reduction of non-current assets acquired under the previous standard, will be recorded in earnings in the current period.
Sections 1601 and 1602 dealing with consolidated financial statements require an entity to measure non-controlling interests upon acquisition either at fair value or at the non-controlling interests proportionate share of the acquirers identifiable net assets. In addition, in the case where one entity controls another entity, changes in a parents ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The new sections also require non-controlling interests to be presented as a separate component of shareholders equity. Application of the sections had an impact on the accounting of the acquisition of the non-controlling interests (note 3). Presentation of the non-controlling interests was also modified.3.
     Redemption of the non-controlling interests of a subsidiary
On May 18, 2010, Richmont reached an agreement with Louvem Mines Inc.s (Louvem) shareholders regarding the Companys proposed acquisition of the 30% of the issued and outstanding shares of Louvem that it did not previously own. Under terms of the transaction, 9222-0383 Quebec Inc., a wholly-owned subsidiary of Richmont, and Louvem merged on June 30, 2010, and formed a new company of the same name, namely Louvem Mines Inc. (New Louvem). On the date of the merger, New Louvem shareholders, other than Richmont, received one Richmont common share for each 5.4 New Louvem shares held. As a result, Richmont issued a total of 1,425,407 common shares at a price of $4.69, which was the closing price on the date of issue (this represents a total value of $6,685). In addition, Richmond paid a cash amount of $74 to shareholders with fractional share counts and incurred transaction- related fees of $251.
An adjustment of $5,125 was recorded in the Consolidated Statement of Retained Earnings, which represents the difference between the $7,010 total cost of the acquisition of the non-controlling interests (including transaction related fees) and its book value of $1,885.4.
     Other revenue
Other revenue includes interest income on cash, variation on fair value on cash equivalents of $177 ($135 in 2009 and $661 in 2008), gain and loss on disposal of shares of publicly-traded companies, foreign exchange gain ($9 in 2009 and $859 in 2008) and revenue from custom milling.
 8


---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (in thousands of Canadian dollars)
  5.
     Exploration and project evaluation
  2010
     
     2009
     
     2008$
     
     $
     
     $Island Gold Mine
     4,561
     
     3,136
     
     2,293Beaufor Mine
     2,584
     
     3,006
     
     2,921Francoeur Mine
     151
     
     1,812
     
     109Wasamac property
     1,712
     
     82
     
     64Cripple Creek property
     838
     
     23
     
     18Monique property
     289
     
     2
     
     1Golden Wonder and Valentine Lake properties
     -
     
     -
     
     4,549Other properties
     104
     
     47
     
     12Project evaluation
     443
     
     305
     
     37310,682
     
     8,413
     
     10,340Exploration tax credits
     (3,465
     )
     (1,347
     )
     (643
     )Reversal of exploration tax credits recorded in 2007 a)
     -
     
     -
     
     8507,217
     
     7,066
     
     10,547
  a)
     In June 2008, when the Company filed its 2007 income tax returns, the Company reduced its current taxes by using carried forward fiscal expenses instead of using exploration tax credit, as it planned and recorded in 2007. 6.
     Asset retirement obligations
 The 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. 9


---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (in thousands of Canadian dollars)
  a)
     Information used in the calculation of obligations
The following table sets forth the assumptions used in the calculation of the asset retirement obligations for the years ended December 31, 2010 and 2009:
  Total amount
     
     Anticipatedof the estimated
     
     cash flow
     
     Credit-adjustedcash flow
     
     payment schedule
     
     risk-free rate$
     
     
     
     %2010Beaufor Mine
     689
     
     2013
     
     4.0 and 5.5Island Gold Mine
     1,355
     
     2015
     
     4.0 and 5.5Camflo Mill
     3,998
     
     2016
     
     5.5Francoeur Mine
     634
     
     2016
     
     4.0 and 5.56,6762009Beaufor Mine
     604
     
     2012
     
     4.0 and 5.5Island Gold Mine
     1,190
     
     2015
     
     4.0 and 5.5Camflo Mill
     4,080
     
     2016
     
     5.5Francoeur Mine
     636
     
     2016
     
     4.0 and 5.56,510
 In 2009, cash payment schedules were revised from 2012 to 2016 for the Camflo Mill and the Francoeur Mine and from 2013 to 2015 for the Island Gold Mine. b)
     Changes in obligationsThe following table sets forth the movement of the asset retirement obligations for the years ended December 31, 2010, 2009 and 2008:
  2010
     
     2009
     
     2008$
     
     $
     
     $Balance, beginning of year
     5,928
     
     4,664
     
     3,358Accretion expense
     287
     
     240
     
     182Changes to estimated cash flow and payment schedules
  151
  
  1,024
  
  1,164Changes in liability related to the acquisition of Patricia Mining Corp.
  -
  
  -
  
  (40
  )Balance, end of year
     6,366
     
     5,928
     
     4,664
 10


---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (in thousands of Canadian dollars)
  c)
     Deposits restricted and letters of credit
As at December 31, 2010, the Company has $106 in deposits restricted with Quebecs government, $184 in deposits restricted with Ontarios government and a credit facility is available to the Company in the amount of $3,000 for the issuance of letters of credit as guarantees for the settlement of asset retirement obligations. The credit facility has a fixed fee of 0.85% (0.85% in 2009). The following table provides the allocation of deposits restricted and letters of credit issued as at December 31, 2010:
  2010
     
     Date of$
     
     renewalDeposits restrictedIsland Gold Mine (Lochalsh property)
     184Beaufor Mine
     52Francoeur Mine
     54290Letters of creditCamflo Mill
     1,332
     
     January 20, 2011Island Gold Mine (Kremzar property)
     797
     
     January 26, 20112,129
 As at December 31, 2009, the Company had guaranteed the restoration of its mining sites by $106 in deposits restricted with Quebecs government and by the pledge of letters of credit amounting to $2,106. 7.
     Loss (gain) on disposal of long term assetsThe loss (gain) on disposal of long term assets includes the following items:
  2010
     
     2009
     
     2008$
     
     $
     
     $Corporate building a)
     (496
     )
     -
     
     -Valentine Lake property b)
     -
     
     (650
     )
     -Mining equipment
     7
     
     56
     
     29(489
     )
     (594
     )
     29
  a)
     On January 4, 2010, the Company sold a corporate building with a net book value of $34 for a cash consideration of $530.b)
     On February 11, 2009, the Company entered into an agreement with Mountain Lake Resources Inc. (Mountain Lake) in which it granted Mountain Lake an option to purchase Richmonts 70% interest in the Valentine Lake Property located in Central Newfoundland. On December 31, 2010, Mountain Lake owns a 30% interest in the Property (note15). Mountain Lake, as an option fee, has issued, in April 2009, 2,500,000 common shares to the Company for a fair value of $650, or $0.26 per share. 11


---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (in thousands of Canadian dollars)
  8.
     Mining and income taxes
The income tax expense attributable to earnings differs from the amounts computed by applying the combined federal and provincial income tax rate of 30.56% (32.41% in 2009 and 32.23% in 2008) to earnings before mining and income taxes as a result of the following:
  2010
     
     2009
     
     2008$
     
     $
     
     $Earnings before mining and income taxes
     12,574
     
     1,773
     
     4,107Tax expense at combined statutory rate
     3,842
     
     575
     
     1,324Increase (decrease) in mining and income taxes resulting from:Resource allowance deduction
     (426
     )
     (193
     )
     (204
     )Deductible mining taxes
     (317
     )
     5
     
     (601
     )Part XII.6 tax
     176
     
     -
     
     -Change in the valuation allowance
     (609
     )
     (3,483
     )
     (931
     )Impact of the change in tax rates
     (407
     )
     669
     
     98Prior years future income taxes adjustment
     (8
     )
     3,395
     
     123Non deductible expenses
     256
     
     41
     
     195Other
     124
     
     182
     
     (483
     )Income taxes
     2,631
     
     1,191
     
     (479
     )Mining tax
     1,060
     
     284
     
     916Total mining and income tax expense
     3,691
     
     1,475
     
     437
 Mining and income tax expense consist of: 2010
     
     2009
     
     2008$
     
     $
     
     $Current taxes
     2,174
     
     1,585
     
     796Future taxes
     1,517
     
     (110
     )
     (359
     )3,691
     
     1,475
     
     437
 12


---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (in thousands of Canadian dollars)
  The tax effect of temporary differences, that give rise to significant portions of the future tax assets and future tax liabilities at December 31, 2010 and 2009, are presented below: 2010
     
     2009$
     
     $Long-term future tax asset:Property, plant and equipment
     3,562
     
     2,399Asset retirement obligations
     2,035
     
     1,870Harmonization of Ontarios fiscal credits
     447
     
     582Share issue costs
     298
     
     94Losses carried forward
     383
     
     1,955Deductible future mining taxes
     532
     
     215Future tax asset
     7,257
     
     7,115Less valuation allowance
     (6,348
     )
     (6,589
     )909
     
     526Long-term future tax liability:Property, plant and equipment
     (2,743
     )
     (1,222
     )Exploration credit
     (547
     )
     (280
     )Shares of publicly-traded companies
     (112
     )
     -(3,402
     )
     (1,502
     )Net long-term future tax liability
     (2,493
     )
     (976
     )As presented on consolidated balance sheets:Future mining and income tax asset
     -
     
     -Future mining and income tax liability
     (2,493
     )
     (976
     )(2,493
     )
     (976
     )
 Non-refundable provincial tax credits of $3,399 and non-refundable federal tax credits of $2,400, 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. At December 31, 2010, the Company has net operating Quebec losses carry forwards of approximately $7,146 which expire at various dates through 2025. 9.
     Inventories
  2010
     
     2009$
     
     $Precious metals
     903
     
     1,859Ore
     4,003
     
     3,146Supplies
     2,458
     
     2,3557,364
     
     7,360
 During the year, no write-down of inventories was recorded as an expense ($71 in 2009). There was no reversal of write-down in 2010 and 2009. 13


---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (in thousands of Canadian dollars)
  10.
     Property, plant and equipment
  Mining sites under production
     
     Corporate office
     
     **Mine under**
     TotaldevelopmentMining properties a)
     
     Development costs
     
     Buildings
     
     Equipment
     
     Asset retirement obligations
     
     Total
     
     Buildings and leasehold improvements
     
     Equipment and rolling stock
     
     Total$
     
     $
     
     $
     
     $
     
     $
     
     $
     
     $
     
     $
     
     $
     
     $
     
     $Gross carryingamountBalance atJanuary 1, 2010
     1,564
     
     45,767
     
     6,588
     
     14,079
     
     3,435
     
     71,433
     
     1,476
     
     560
     
     2,036
     
     2,442
     
     75,911Acquisitions
     350
     
     4,482
     
     826
     
     2,157
     
     -
     
     7,815
     
     -
     
     28
     
     28
     
     9,858
     
     17,701Disposals andwrite-off
     (103
     )
     -
     
     -
     
     (339
     )
     -
     
     (442
     )
     (311
     )
     -
     
     (311
     )
     -
     
     (753
     )Transfers
     -
     
     -
     
     -
     
     (44
     )
     -
     
     (44
     )
     -
     
     (9
     )
     (9
     )
     41
     
     (12
     )Revised costs
     -
     
     -
     
     -
     
     -
     
     151
     
     151
     
     -
     
     -
     
     -
     
     -
     
     151Balance atDecember 31,2010
     1,811
     
     50,249
     
     7,414
     
     15,853
     
     3,586
     
     78,913
     
     1,165
     
     579
     
     1,744
     
     12,341
     
     92,998Depreciation anddepletionBalance atJanuary 1, 2010
     888
     
     13,632
     
     2,571
     
     4,841
     
     1,068
     
     23,000
     
     648
     
     413
     
     1,061
     
     27
     
     24,088Depreciation anddepletion
     28
     
     5,175
     
     547
     
     1,534
     
     322
     
     7,606
     
     42
     
     46
     
     88
     
     -
     
     7,694Disposals andwrite-off
     -
     
     -
     
     -
     
     (35
     )
     -
     
     (35
     )
     (277
     )
     -
     
     (277
     )
     -
     
     (312
     )Transfers
     -
     
     -
     
     -
     
     (12
     )
     -
     
     (12
     )
     -
     
     -
     
     -
     
     -
     
     (12
     )Balance atDecember 31,2010
     916
     
     18,807
     
     3,118
     
     6,328
     
     1,390
     
     30,559
     
     413
     
     459
     
     872
     
     27
     
     31,458Carrying amountat December 31,2010
     895
     
     31,442
     
     4,296
     
     9,525
     
     2,196
     
     48,354
     
     752
     
     120
     
     872
     
     12,314
     
     61,540
  14


---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (in thousands of Canadian dollars)
  Mining sites under production
     
     
     
     Corporate office
     **Mine under**
     TotaldevelopmentMining properties a)
     
     Development costs
     
     Buildings
     
     Equipment
     
     Asset retirement obligations
     
     **Total**
     
     Buildings and leasehold improvements
     
     Equipment and rolling stock
     
     **Total**$
     
     $
     
     $
     
     $
     
     $
     
     $
     
     $
     
     $
     
     $
     
     $
     
     $Gross carryingamountBalance atJanuary 1, 2009
     1,564
     
     42,859
     
     5,955
     
     12,518
     
     2,493
     
     65,389
     
     1,476
     
     736
     
     2,212
     
     -
     
     67,601Acquisitions
     -
     
     3,724
     
     633
     
     1,942
     
     -
     
     6,299
     
     -
     
     40
     
     40
     
     2,239
     
     8,578Disposals andwrite-off
     -
     
     (816
     )
     -
     
     (115
     )
     (82
     )
     (1,013
     )
     -
     
     (176
     )
     (176
     )
     -
     
     (1,189
     )Transfers
     -
     
     -
     
     -
     
     (266
     )
     -
     
     (266
     )
     -
     
     (40
     )
     (40
     )
     203
     
     (103
     )Revised costs
     -
     
     -
     
     -
     
     -
     
     1,024
     
     1,024
     
     -
     
     -
     
     -
     
     -
     
     1,024Balance atDecembre 31,2009
     1,564
     
     45,767
     
     6,588
     
     14,079
     
     3,435
     
     71,433
     
     1,476
     
     560
     
     2,036
     
     2,442
     
     75,911Depreciationand depletionBalance atJanuary 1, 2009
     860
     
     10,936
     
     2,131
     
     3,959
     
     651
     
     18,537
     
     550
     
     475
     
     1,025
     
     -
     
     19,562Depreciation anddepletion
     28
     
     3,512
     
     440
     
     1,021
     
     499
     
     5,500
     
     98
     
     71
     
     169
     
     27
     
     5,696Disposals andwrite-off
     -
     
     (816
     )
     -
     
     (36
     )
     (82
     )
     (934
     )
     
     
     (133
     )
     (133
     )
     -
     
     (1,067
     )Transfers
     -
     
     -
     
     -
     
     (103
     )
     -
     
     (103
     )
     -
     
     -
     
     -
     
     -
     
     (103
     )Balance atDecember 31,2009
     888
     
     13,632
     
     2,571
     
     4,841
     
     1,068
     
     23,000
     
     648
     
     413
     
     1,061
     
     27
     
     24,088Carryingamount atDecember 31,2009
     676
     
     32,135
     
     4,017
     
     9,238
     
     2,367
     
     48,433
     
     828
     
     147
     
     975
     
     2,415
     
     51,823
  a)
     On February 11, 2009, the Company entered into an agreement with Mountain Lake Resources Inc. (Mountain Lake) in which it granted Mountain Lake an option to purchase Richmonts 70% interest in the Valentine Lake Property located in Central Newfoundland. On December 31, 2010, Mountain Lake owns a 30% interest in the Property. Mountain Lake may exercise the option over a five-year period by making option payments to Richmont for an additional $3,000 and by incurring $1,000 in exploration and development expenditures on the Property within that timeframe. The option payments may be in cash, or 50% in cash and 50% in Mountain Lake common shares, at the sole election of Mountain Lake. The option payments can be made in instalments by the second, third, and fourth years of the five-year period. Moreover, $500 of the exploration and development expenditures must be incurred by the end of the second year and the remaining $500 must be incurred by the end of the fifth year. On January 25, 2011, Mountain Lake exercised its option (note 15). During the year ended December 31, 2010, the Beaufor Mines average depletion rate was 65 dollars per ounce sold ($43 in 2009 and $41 in 2008), the Island Gold Mines average depletion rate was 128 dollars per ounce sold ($104 in 2009 and $100 in 2008). Camflo Mill has an average depletion rate of 0.92 dollars per processed tonnes for the year ended December 31, 2010 ($2.14 in 2009 and $1.25 in 2008). 15


---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (in thousands of Canadian dollars)
  11.
     Capital stockAuthorized: Unlimited number of common shares with no par value
  Number
     
     2010
     
     Number
     
     2009
     
     Number
     
     2008of shares
     
     Amount
     
     of shares
     
     Amount
     
     of shares
     
     Amount(thousands)
     
     $
     
     (thousands)
     
     $
     
     (thousands)
     
     $Issued and paid:Common sharesBalance, beginning of year
     26,104
     
     64,675
     
     26,113
     
     64,672
     
     24,053
     
     61,016Issue of shares for cash a)Common
     3,300
     
     16,500
     
     -
     
     -
     
     -
     
     -Exercise of stock options
     401
     
     2,078
     
     34
     
     111
     
     9
     
     34Issue of shares in exchange for non-controlling interests a)
     1,425
     
     6,685
     
     -
     
     -
     
     -
     
     -Issue of shares related to Patricia Minings acquisition
     -
     
     -
     
     -
     
     -
     
     2,347
     
     4,375Common shares issue costs a)
     -
     
     (1,340
     )
     -
     
     -
     
     -
     
     -Redemption of shares b)
     -
     
     -
     
     (43
     )
     (108
     )
     (296
     )
     (753
     )Balance, end of year
     31,230
     
     88,598
     
     26,104
     
     64,675
     
     26,113
     
     64,672
  a)
     Issue of shares
In 2010, the Company issued 401,000 common shares (34,000 in 2009 and 9,000 in 2008) following the exercise of stock options and received cash proceeds in the amount of $1,481 ($82 in 2009 and $25 in 2008). Contributed surplus was reduced by $597 ($29 in 2009 and $9 in 2008) which represents the fair value of the exercised stock options.
In June 2010, the Company issued, through a public offering, 3,300,000 common shares at $5.00 each, for gross proceeds of $16,500. An amount of $1,340 has been incurred relating to the issuance of common shares, creating a non recorded future tax asset of $368.
On June 30, 2010, the Company issued 1,425,407 common shares at a price of $4.69 each, which is the closing price on the date of issue, as a result of the acquisition of the non-controlling interests of a subsidiary (note 3). Consequently, an amount of $6,685 was recorded to capital stock.b)
     Redemption of shares
In December 2008, the Company had made a normal course issuer bid to purchase its outstanding common shares. The Company could purchase between December 5, 2008 and December 4, 2009, up to 1,188,000 common shares, representing approximately 5% of the 23,776,653 common shares of the Company issued and outstanding on November 21, 2008.
In 2009, the Company redeemed and cancelled 43,500 common shares (296,200 in 2008) for $137 in cash ($768 in 2008). This transaction increased the deficit by $29 ($84 in 2008) and increased the contributed surplus by $0 ($69 in 2008).
 16


---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (in thousands of Canadian dollars)
  c)
     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, 2007 and 2009, the Company may grant options for up to 5,245,000 common shares. The exercise price of each option is the market price of the Companys stock on the previous day of the grant and the maximum term of the options granted is 10 years. 20% of the options are vested on the grant date and vest cumulatively thereafter on every anniversary date over a total length of four years. However, on February 4, 2010, the Board of Directors decided to grant its members remuneration that is partly based on share options, that are vested in thirds one year after the grant date and then vest cumulatively thereafter on every anniversary date over a total length of three years.
A summary of the status, in 2010 and 2009, of the Companys Stock Option Purchase Plan, and changes during the years then ended, is presented below:
  2010
     
     2009Weighted
     
     WeightedNumber
     average
     Number
     averageof options
     exercise price
     of options
     exercise price(thousands)
     $
     (thousands)
     $Options outstanding, beginning of year
     2,480
     3.53
     2,308
     3.84Granted
     846
     4.52
     490
     3.18Exercised
     (401)
     3.69
     (34)
     2.42Cancelled
     (109)
     3.97
     (91)
     4.01Expired
     (505)
     5.27
     (193)
     6.34Options outstanding, end of year
     2,311
     3.46
     2,480
     3.53Exercisable options, end of year
     1,098
     3.11
     1,529
     3.90
 The following table summarizes information about the Stock Option Purchase Plan at December 31, 2010: Options outstanding at December 31, 2010
     Exercisable options atDecember 31, 2010Exercise
     Number
     Weighted average
     Weighted average
     Number
     Weighted averageprice
     of options
     remaining contractual
     exercise price
     of options
     exercise price(thousands)
     life (years)
     $
     (thousands)
     $$1.80 to $2.07
     411
     3.0
     1.91
     203
     1.89$2.74 to $4.04
     1,014
     2.1
     3.17
     720
     3.11$4.12 to $5.41
     886
     3.6
     4.51
     175
     4.512,311
     2.8
     3.46
     1,098
     3.11
 During 2010, the Company granted 846,000 stock options (490,000 in 2009 and 445,000 in 2008) 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 $2.10 ($1.45 in 2009 and $0.76 in 2008). The compensation costs were calculated using the Black-Scholes option pricing model with the following assumptions: 2010
     2009
     2008Risk-free interest rate
     2.2%
     2.3%
     3.2%Expected life
     4 years
     4 years
     4 yearsExpected volatility
     62%
     56%
     39%Expected dividend yield
     0.0%
     0.0%
     0.0%
 In 2010, the stock-based compensation costs charged to earnings amount to $803 ($484 in 2009 and $526 in 2008). The contributed surplus was increased by the same amounts. 17


---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (in thousands of Canadian dollars)
  12.
     Contributed surplus
  2010
     
     2009$
     
     $Balance, beginning of year
     6,133
     
     5,678Stock-based compensation
     803
     
     484Options exercised
     (597
     )
     (29
     )Balance, end of year
     6,339
     
     6,133
  13.
     Consolidated statements of cash flow
  2010
     
     2009
     
     2008$
     
     $
     
     $Change in non-cash working capital itemsAccounts receivable
     (679
     )
     (227
     )
     151Mining and income taxes receivable (payable)
     1,194
     
     (368
     )
     250Exploration tax credits receivable
     (2,126
     )
     (716
     )
     935Inventories
     (4
     )
     (1,348
     )
     (126
     )Accounts payable and accrued charges
     1,205
     
     (411
     )
     1,161(410
     )
     (3,070
     )
     2,371Supplemental informationCash received (paid) during the year:Interests
     220
     
     175
     
     1,188Mining and income taxes
     364
     
     (1,391
     )
     (372
     )Items not affecting cash and cash equivalents:Property, plant and equipment increase as a result of the revision of the estimated payment schedule and the estimated cash flow of the asset retirement obligations
     151
     
     1,024
     
     1,164Common shares of public company received as consideration from disposal of mining assets (note 7)
     -
     
     650
     
     -Issue of shares in exchange for non-controlling interests
     6,685
     
     -
     
     4,375Distribution presented as a reduction of the advance to a minority partner
     -
     
     -
     
     904Distribution presented as a reduction of contribution from a minority partner
     -
     
     -
     
     90Distribution presented as a reduction of accounts receivable
     -
     
     -
     
     129Accounts payable and accrued charges related to development projects and other property, plant and equipment
     1,691
     
     764
     
     255
  14.
     Pension plan
The Company contributes a percentage of its Canadian payroll expense to a defined contribution plan. The expense in 2010 was $520 ($464 in 2009 and $357 in 2008).
 18


---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (in thousands of Canadian dollars)
  15.
        Commitments and subsequent events
 On January 24, 2011, the Company received $3,000 for the sale of its 70% interest in the Valentine Lake property located in Central Newfoundland. In accordance with a letter agreement, Mountain Lake Resources Inc. paid the Company an option fee of 2,500,000 of its common shares in April 2009, has incurred an amount of $1,000 of exploration and development expenditures on the property, and paid a sum of $3,000 in cash, as agreed to by the parties, which will give rise to a gain on the disposal of mining assets, in January 2011, for the same amount. By virtue of an agreement to acquire 19% of the Monique property currently owned by SOQUEM, the Company undertook to complete $400 of exploration work on the property on or before February 28, 2011. As at December 31, 2010, $289 of exploration work had been completed. Once the acquisition has been completed, the Company will own 100% of the Monique property. The 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. The Company is committed, under a lease expiring in November 2014, to pay a sum of $249 for a space. Minimum lease payments for the next four years amount to $64 in 2011, 2012 and 2013 and to $57 in 2014. 16.
        Contingency
 A fully owned subsidiary, acquired in December 2008, is currently being subject to a tax review concerning a December 2006 financing done through the issuance of flow-through common shares. Patricia Mining Corp., now no longer in operations, entered into agreements with subscribers which required it to incur $1,990 of Canadian Exploration Expenses by December 31, 2007. According to governmental authorities, an amount of $1,511 of exploration expenses was not incurred by that date. The Company disagrees and intends to challenge this position. At this time, it is not possible to determine if there are any negative tax consequences for investors, or if there are any related amounts to be paid by the Company. In addition, the Company is involved in a normal course litigation. Management is of the opinion that the basis of this litigation is unfounded and, consequently, no provision has been accounted for in the financial statements in this respect. 17.
        Capital disclosures
 The Companys objectives when managing its capital are to safeguard the Companys ability to continue as a going concern in order to support ongoing exploration programs and the development of its mining assets, to provide sufficient working capital to meet its ongoing obligations and to pursue potential investments. The Company defines its capital as its shareholders equity. The Company manages its capital structure and makes adjustments to it in accordance with the aforementioned objectives, as well as in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust its capital structure, the Company may purchase some of its shares for cancellation pursuant to normal course issuer bids, issue new shares, issue new debt, acquire or dispose of assets or adjust the amount of cash and cash equivalents and shares of publicly-traded companies. The Company is not subject to externally imposed capital requirements. The Companys management of capital remained unchanged since the previous year. 19


---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (in thousands of Canadian dollars)
  18.
        Financial instruments and risk management
  a)
        Fair value of financial instruments
 The Company has classified its cash as assets held-for-trading, its shares of publicly-traded companies as available-for-sale financial assets, its term deposits and accounts receivable as loans and receivables, and its accounts payable and accrued charges as other financial liabilities as defined by the CICA Handbook Section 3855, Financial Instruments  Recognition and Measurement. The following table presents the carrying amounts and fair values of each financial instruments category: December 31, 2010
        
        December 31, 2009Book
        
        Fair
        
        Book
        
        Fairvalue
        
        value
        
        value
        
        value$
        
        $
        
        $
        
        $Held-for-trading financial assetsCash a)
        
        28,470
        
        28,470
        
        10,253
        
        10,253Available-for-sale financial assetsShares of publicly-traded companies b)
        
        1,311
        
        1,311
        
        741
        
        741Loans and receivablesAccounts receivable a)
        
        116
        
        116
        
        194
        
        194Term deposits a)
        
        11,560
        
        11,560
        
        10,886
        
        10,88611,676
        
        11,676
        
        11,080
        
        11,080Other financial liabilitiesAccounts payable and accrued charges a)
        
        9,143
        
        9,143
        
        7,078
        
        7,078
  a)
      The Company owns and assumes financial assets and liabilities such as cash, accounts receivable, term deposits, 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 settled in the short term.b)
      The fair value of shares of publicly-traded companies is the bid price. The variation on fair value of cash equivalents is $177 ($135 in 2009 and $661 in 2008) and interest income from the advance to a minority partner was $245 in 2008. b)
        Fair value hierarchy
 Financial instruments recognized at fair value on the Consolidated Balance Sheet must be classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurement, the fair value hierarchy levels are as follow: Level 1:
        quoted prices (unadjusted) observed in active markets for identical assets or liabilities;Level 2:
        valuation techniques based on inputs other than quoted prices included in level 1, that are either directly or indirectly observable;Level 3:
        valuation techniques with significant unobservable market inputs.
 The fair value measurements of shares of publicly-traded companies have been classified at level one from the fair value hierarchy. This valuation is based on bid price of the stock. 20


---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (in thousands of Canadian dollars)
  c)
        Market risk
 The 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 Company is also exposed to share price fluctuations of the shares that it holds in shares of publicly-traded companies and to fluctuations of interest rates for its cash and cash equivalents. The risks and the management of those risks were unchanged compared to previous years. The Board of Directors approves all policies concerning the use of derivative financial instruments and gold sales contracts. The Company does not hold any financial instrument or derivative financial instrument for trading or speculative purposes. Foreign exchange risk The 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 2010, 2009 and 2008, the Company did not enter into any forward exchange contracts. At December 31, 2010 and 2009, assets and liabilities denominated in US dollars are not significant. Commodity price risk For 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. The risk related to fluctuation of gold price is unchanged from the previous years. In 2010, 2009 and 2008, the Company did not enter into any hedging contracts for its gold production. Interest rate risk The cash and cash equivalents carry interest and therefore, the Company is exposed to a variation of their interest rate at their renewal. Based on the exposures as at December 31, 2010, and assuming that all other variables remain constant, an increase or decrease of 25 basis point of the interest rate would result in an increase or decrease of $97 in net earnings. d)
        Credit risk
 Financial instruments that expose the Company to market risk and to a credit risk consist of cash and cash equivalents and accounts receivable. 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. At December 31, 2010, the Companys cash and term deposits are held through three financial institutions (at December 31, 2009 and 2008, two financial institutions). The following table presents the composition of cash and cash equivalents: 2010
        
        2009
        
        2008$
        
        $
        
        $Cash a)
        
        28,470
        
        10,253
        
        7,722Cash equivalentsTerm deposits, 1.05% to 1.20% (0.90% in 2009), maturing in January, February and March 2011
        
        11,560
        
        10,886
        
        -Discount notes, 1.55% to 2.48%
        
        -
        
        -
        
        16,487Bankers acceptances, 3.10%
        
        -
        
        -
        
        1,81240,030
        
        21,139
        
        26,021
  a)
      In 2010, 73% of cash is invested with effective rates varying from 1.20% to 1.50%, and 22% at effective rates varying from 0.50% to 0.75%. (In 2009, 49% of cash was invested with effective rates varying from 0.75% to 0.95%). 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. The credit risk and its management are the same as those of the previous years. 21


---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (in thousands of Canadian dollars)
  e)
        Liquidity risk
 The objective of management with respect to liquidity risk is to hold enough cash and cash equivalents in order to ensure that the Company has the necessary funds to meet its obligations. Accounts payable and accrued charges are due in the next financial year. 19.
        Segmented information
 The Company operates gold mines at different sites in Quebec and Ontario. These operating 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. 2010
        
        
        
        
        
        Exploration,corporateQuebec
        
        Ontario
        
        and others
        
        Total$
        
        $
        
        $
        
        $Revenue
        
        31,820
        
        58,543
        
        418
        
        90,781Mine operating costs and others
        
        22,135
        
        36,867
        
        4,359
        
        63,361Exploration and project evaluation
        
        2,699
        
        4,561
        
        (43
        )
        7,217Depreciation, depletion and write-off
        
        1,620
        
        6,190
        
        308
        
        8,118Loss (gain) on disposal of long term assets
        
        -
        
        7
        
        (496
        )
        (489
        )Earnings (loss) before other items
        
        5,366
        
        10,918
        
        (3,710
        )
        12,574Acquisition of property, plant and equipment
        
        11,698
        
        4,650
        
        426
        
        16,774Current assets
        
        4,295
        
        7,260
        
        44,261
        
        55,816Deposits restricted
        
        106
        
        184
        
        -
        
        290Property, plant and equipment
        
        19,078
        
        40,318
        
        2,144
        
        61,540Total assets
        
        23,479
        
        47,762
        
        46,405
        
        117,646
  2009
        
        
        
        
        
        Exploration,corporateQuebec
        
        Ontario
        
        and others
        
        Total$
        
        $
        
        $
        
        $Revenue
        
        28,764
        
        42,938
        
        182
        
        71,884Mine operating costs and others
        
        21,824
        
        32,739
        
        3,380
        
        57,943Exploration and project evaluation
        
        4,626
        
        3,136
        
        (696
        )
        7,066Depreciation and depletion
        
        1,454
        
        4,034
        
        208
        
        5,696Loss (gain) on disposal of long term assets
        
        2
        
        12
        
        (608
        )
        (594
        )Earnings (loss) before other items
        
        858
        
        3,017
        
        (2,102
        )
        1,773Acquisition of property, plant and equipment
        
        3,358
        
        4,318
        
        336
        
        8,012Current assets
        
        8,606
        
        6,517
        
        18,178
        
        33,301Deposits restricted
        
        106
        
        -
        
        -
        
        106Property, plant and equipment
        
        8,299
        
        41,475
        
        2,049
        
        51,823Total assets
        
        17,011
        
        47,992
        
        20,227
        
        85,230
 22


---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (in thousands of Canadian dollars)
  2008
        
        
        
        
        
        Exploration,corporateQuebec
        
        Ontario
        
        and others
        
        Total$
        
        $
        
        $
        
        $Revenue
        
        33,452
        
        35,183
        
        1,956
        
        70,591Mine operating costs and others
        
        20,327
        
        26,771
        
        3,123
        
        50,221Exploration and project evaluation
        
        2,821
        
        2,293
        
        5,433
        
        10,547Depreciation and depletion
        
        1,589
        
        3,794
        
        304
        
        5,687Loss (gain) on disposal of long term assets
        
        8
        
        23
        
        (2
        )
        29Earnings (loss) before other items
        
        8,707
        
        2,302
        
        (6,902
        )
        4,107Acquisition of property, plant and equipment
        
        576
        
        3,079
        
        1,538
        
        5,193Current assets
        
        10,260
        
        4,067
        
        20,515
        
        34,842Property, plant and equipment
        
        5,137
        
        40,644
        
        2,258
        
        48,039Total assets
        
        15,397
        
        44,711
        
        22,773
        
        82,881
 In 2010, 71% of precious metals have been sold through US brokers (92% in 2009 and 41% in 2008). 23


---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (in thousands of Canadian dollars)
  20.
        Effect of applying United States generally accepted accounting principles
 These 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, property, plant and equipment, accumulated other comprehensive income, shareholders equity and on consolidated statements of cash flow would have been as follows: 2010
        
        2009
        
        2008$
        
        $
        
        $Net earnings attributable to Richmont Mines shareholders, reported under Canadian GAAP
        
        9,011
        
        336
        
        1,635Add (deduct):Difference in accounting related to investments a)
        
        94
        
        (4
        )
        (1
        )Difference in accounting related to stock-based compensation b)
        
        80
        
        48
        
        58Exploration and development costs related to mining properties c)
        
        (8,163
        )
        (902
        )
        393Depreciation and depletion d)
        
        2,281
        
        2,101
        
        2,712Non-controlling interests e)
        
        -
        
        -
        
        (1,221
        )Net earnings reported under US GAAP
        
        3,303
        
        1,579
        
        3,576Net earnings per share reported under US GAAPBasic and diluted
        
        0.11
        
        0.06
        
        0.15****
        **Property, plant and equipment reported under** **Canadian GAAP**
        
        61,540
        
        51,823
        
        48,039Exploration and development costs related to mining properties c)
        
        (39,931
        )
        (31,768
        )
        (30,865
        )Company acquisition
        
        9,645
        
        9,645
        
        9,645Cumulative depreciation and depletion d)
        
        5,662
        
        3,381
        
        1,280Property, plant and equipment reported under US GAAP
        
        36,916
        
        33,081
        
        28,099****
        **Accumulated other comprehensive income** **under Canadian GAAP**
        
        817
        
        (44
        )
        (236
        )Difference in accounting related to investments a)
        
        -
        
        94
        
        90Accumulated other comprehensive income under US GAAP
        
        817
        
        50
        
        (146
        )Shareholders equity reported under Canadian GAAP
        
        96,851
        
        69,961
        
        69,042Difference in accounting related to exploration costs c)
        
        (39,931
        )
        (31,768
        )
        (30,865
        )Depreciation and depletion d)
        
        5,662
        
        3,381
        
        1,280Difference in accounting related to share of non-controlling interests e)
        
        9,645
        
        9,645
        
        9,645Difference in accounting related to investments a)
        
        -
        
        94
        
        90Shareholders equity reported under US GAAP
        
        72,227
        
        51,313
        
        49,192
 24


---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (in thousands of Canadian dollars)
  2010
        
        2009
        
        2008$
        
        $
        
        $Cash flow from operating activities under Canadian GAAP
        
        18,499
        
        2,967
        
        12,117Exploration and development costs related to mining properties c)
        
        (8,163
        )
        (902
        )
        393****
        **Cash flow from operating activities** **under US GAAP**
        
        10,336
        
        2,065
        
        12,510****
        **Cash flow used in investing activities** **under Canadian GAAP**
        
        (16,249
        )
        (7,794
        )
        (10,647
        )Exploration and development costs related to mining properties c)
        
        8,163
        
        902
        
        (393
        )Cash flow used in investing activities under US GAAP
        
        (8,086
        )
        (6,892
        )
        (11,040
        )
  a)
      Shares of publicly-traded companies 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-115. Following the adoption of Section 3855 of the CICA Handbook, on January 1, 2007, the Company classified the shares of publicly-traded companies acquired in 2007 and 2008 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 different 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.e)
      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 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. The adoption of these SFAS had no material impact on the consolidated financial statements of the Company. 25


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2010, 2009 and 2008 (in thousands of Canadian dollars)
 In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles, which identifies the sources of accounting principles and provides entities with a framework for selecting the principles used in preparation of financial statements that are presented in conformity with GAAP. SFAS No. 162 will become effective 60 days following the SECs approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. The adoption of SFAS No. 162 had no material impact on the consolidated financial statements of the Company. In March 2008, the FASB issued SFAS No. 161 Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (SFAS No. 161), to enhance the current disclosure framework in SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. SFAS No. 161 amends and expands the disclosures required by SFAS No. 133 so that they provide an enhanced understanding of i) how and why an entity uses derivative instruments, ii) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations, and iii) how derivative instruments affect an entitys financial position, financial performance, and cash flows. The adoption of SFAS No. 161 had no material impact on the consolidated financial statements of the Company. In June 2009, the FASB issued SFAS No. 165 Subsequent Events which establishes standards for accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The adoption of SFAS No. 165 had no material impact on the consolidated financial statements of the Company. In June 2009, the FASB issued ASU 2009-01, Amendments based on Statement of Financial Accounting Standards No. 168The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, to codify in ASC 105, Generally Accepted Accounting Principles, FASB Statement 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, which was issued to establish the Codification as the sole source of authoritative U.S. GAAP recognized by the FASB, excluding SEC guidance, to be applied by nongovernmental entities. The guidance in ASC 105 is effective for financial statements issued for interim and annual periods ending after September 15, 2009 and does not modify existing U.S. GAAP. In August 2009, the FASB amended guidance in FASB Accounting Standards CodificationTM (ASC) 820, Fair Value Measurements and Disclosures, to clarify how entities should estimate the fair value of liabilities. The amendments provide clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following valuation techniques: (1) a valuation technique that uses (a) the quoted price of the identical liability when traded as an asset or (b) quoted prices for similar liabilities or similar liabilities when traded as assets and / or (2) another valuation technique that is consistent with fair value principles such as an income or market approach. The amendments also clarify that when estimating the fair value of a liability, a reporting entity is not required to consider the existence of transfer restrictions on that liability. The adoption had no material impact on the consolidated financial statements of the Company. In January 2010, the FASB updated guidance in FASB Accounting Standards CodificationTM (ASC) 820, Fair Value Measurements and Disclosures, to require additional disclosures related to possible transfers between level 1 and level 2 and more disclosures about the valuation techniques made for elements of level 3. The adoption had no material impact on the consolidated financial statements of the Company. 21.
        Comparative figures
 Certain comparative figures provided for fiscal years 2009 and 2008 have been reclassified to conform with the presentation adopted for the fiscal year ended December 31, 2010. 26


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EXHIBIT 8.1List of Subsidiaries Name
        Country of Incorporation
        Proportion of OwnershipLouvem Mines Inc.
        Canada
        100%Camflo Mill Inc.
        Canada
        100%Patricia Mining Corp.
        Canada
        100%


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EXHIBIT 12.1 CERTIFICATION I, Martin Rivard, certify that: 1. I have reviewed this annual report on Form 20-F of Richmont Mines Inc. (the Company); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; 4. The Companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: (a)
      Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;(b)
      Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;(c)
      Evaluated the effectiveness of the Companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)
      Disclosed in this report any change in the Companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting. 5. The Companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Companys auditors and the audit committee of Companys Board of Directors (or persons performing the equivalent functions); (a)
      All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Companys ability to record, process, summarize and report financial information; and(b)
      Any fraud, whether or not material, that involves management or other employees who have a significant role in the Companys internal control over financial reporting. Date: May 4, 2011(/s/) Martin RivardMartin RivardPresident and Chief Executive Officer


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CERTIFICATION I, Nicole Veilleux, certify that: 1. I have reviewed this annual report on Form 20-F of Richmont Mines Inc. (the Company); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; 4. The Companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: (a)
      Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;(b)
      Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;(c)
      Evaluated the effectiveness of the Companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)
      Disclosed in this report any change in the Companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting. 5. The Companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Companys auditors and the audit committee of Companys Board of Directors (or persons performing the equivalent functions); (a)
      All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Companys ability to record, process, summarize and report financial information; and(b)
      Any fraud, whether or not material, that involves management or other employees who have a significant role in the Companys internal control over financial reporting. Date: May 4, 2011(/s/) Nicole VeilleuxNicole VeilleuxDirector, Finance


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EXHIBIT 13.1Certification of Periodic Financial Report 
    Pursuant to Section 906 
    of the 
    Sarbanes-Oxley Act of 2002, 
    18 U.S.C. Section 1350 In connection with the Annual Report of Richmont Mines Inc. (the Company) on Form 20-F for the period ending December 31, 2010 as filed with Securities and Exchange Commission on the date hereof (the Report), I, Martin Rivard, President and Chief Executive Officer of the Company hereby certify that the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: May 4, 2011 (/s/) Martin RivardMartin RivardPresident and Chief Executive Officer
 A signed original of this written statement required by Section 906 or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. This Certification is being furnished pursuant to Rule 15(d) and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (15 U.S.C. §78r), or otherwise subject to the liability of that Section. This Certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.


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Certification of Periodic Financial Report 
    Pursuant to Section 906 
    of the 
    Sarbanes-Oxley Act of 2002, 
    18 U.S.C. Section 1350 In connection with the Annual Report of Richmont Mines Inc. (the Company) on Form 20-F for the period ending December 31, 2010 as filed with Securities and Exchange Commission on the date hereof (the Report), I, Nicole Veilleux, Director, Finance of the Company hereby certify that the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: May 4, 2011 (/s/) Nicole VeilleuxNicole VeilleuxDirector, Finance
 A signed original of this written statement required by Section 906 or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. This Certification is being furnished pursuant to Rule 15(d) and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (15 U.S.C. §78r), or otherwise subject to the liability of that Section. This Certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.


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