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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, 2009 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, 2009: 26,103,656. 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 CONTENTSPAGEITEM 1.
     IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND **ADVISERS**
     **1**ITEM 2.
     OFFER STATISTICS AND EXPECTED TIMETABLE
     1ITEM 3.
     KEY INFORMATION
     2ITEM 4.
     INFORMATION ON THE COMPANY
     14ITEM 4A.
     UNRESOLVED STAFF COMMENTS
     49ITEM 5.
     OPERATING AND FINANCIAL REVIEW AND PROSPECTS
     49ITEM 6.
     DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
     73ITEM 7.
     MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
     86ITEM 8.
     FINANCIAL INFORMATION
     89ITEM 9.
     THE OFFER AND LISTING
     89ITEM 10.
     ADDITIONAL INFORMATION
     92ITEM 11.
     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT **MARKET RISK**
     **100**ITEM 12.
     DESCRIPTION OF SECURITIES OTHER THAN EQUITY **SECURITIES**
     **101**ITEM 13.
     DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
     101ITEM 14.
     MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY **HOLDERS AND USE OF PROCEEDS**
     **101**ITEM 15.
     CONTROLS AND PROCEDURES
     101ITEM 16.A.
     AUDIT COMMITTEE FINANCIAL EXPERT
     102ITEM 16.B.
     CODE OF ETHICS
     102ITEM 16.C.
     PRINCIPAL ACCOUNTANT FEES AND SERVICES
     103ITEM 16.D.
     EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
     104ITEM 16.E.
     PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
     104ITEM 16.F.
     CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT
     105ITEM 16.G.
     CORPORATE GOVERNANCE
     105ITEM 17.
     CONSOLIDATED FINANCIAL STATEMENTS
     106ITEM 18.
     CONSOLIDATED FINANCIAL STATEMENTS
     106ITEM 19.
     EXHIBITS
     107


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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. Important factors that could cause actual results to differ materially from the Companys expectations are disclosed under Risk Factors and elsewhere in this Annual Report including, without limitation, in conjunction with the forward-looking statements included in this Annual Report. Note to Investors Concerning Certain Measures of Performance Throughout this document, the Company uses performance indicators that are not defined according to Canadian generally accepted accounting principles (GAAP), such as the total cash cost of production per ounce sold for each of the Company's properties, excluding the rates of depreciation per ounce. These performance indicators are widely used in the mining industry. Nonetheless, they are in no way a standard prescribed by Canadian GAAP. The Company believes that some investors use these indicators, in addition to the financial information prepared in accordance with Canadian GAAP, to evaluate the Company's performance and its ability to generate cash. Consequently, this information must be considered supplementary and should not under any circumstances be regarded as a substitute for the performance indicators prepared in accordance with Canadian GAAP. ITEM 1.
     IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
  Not applicable. ITEM 2.
     OFFER STATISTICS AND EXPECTED TIMETABLE
  Not applicable. 1


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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. and Patricia Mining Corporation (Patricia Mining), its majority-owned subsidiary, Louvem Mines Inc. (Louvem), and its 100% interest in the Island Gold Mine, Richmont Mines, Richmont or the Company) set forth below has been derived from the consolidated financial statements of the Company which have been audited by Raymond Chabot Grant Thornton LLP, Chartered Accountants, as indicated in their Independent Registered Public Accounting Firms report as at December 31, 2009, 2008 and 2007 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, 2009, except where a different date is specified. The Company has not declared or paid any dividends on its capital stock during the past five years. 2


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Selected Financial Data(Canadian GAAP)(in thousands of Canadian dollars except per share and share data)2009
     
     2008
     
     2007
     
     2006
     
     2005Total revenues
     
     71,884
     
     70,591
     
     38,071
     
     32,889
     
     21,353Net earnings (loss)
     
     336
     
     1,635
     
     6,671
     
     3,194
     
     (27,480
     )Net earnings (loss) per shareBasic
     $
     0.01
     $
     0.07
     $
     0.28
     $
     0.14
     $
     (1.54
     )Diluted
     $
     0.01
     $
     0.07
     $
     0.28
     $
     0.14
     $
     (1.54
     )Total assets
     
     85,230
     
     82,881
     
     85,976
     
     78,498
     
     54,226Long-term debt
     
     -
     
     -
     
     -
     
     -
     
     -Working capital
     
     24,936
     
     26,753
     
     33,970
     
     21,171
     
     21,877Shareholders equityTotal
     
     67,975
     
     67,018
     
     61,813
     
     54,690
     
     40,464Capital stock
     
     64,675
     
     64,672
     
     61,016
     
     61,340
     
     50,600Number of outstanding common shares at year end (000s)
     
     26,104
     
     26,113
     
     24,053
     
     24,180
     
     20,994
 3


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Selected Financial Data(U.S. GAAP Reconciliation)(in thousands of Canadian dollars except per share and share data)2009
     
     2008
     
     2007
     
     2006
     
     
     2005(restated)Net income (loss)
     
     1,579
     
     3,576
     
     6,235
     
     (11,064
     )
     
     (31,042
     )Net earnings (loss) per shareBasic
     $
     0.06
     $
     0.15
     $
     0.26
     $
     (0.48
     )
     $
     (1.74
     )Diluted
     $
     0.06
     $
     0.15
     $
     0.26
     $
     (0.48
     )
     $
     (1.74
     )Weighted average number of common shares outstanding (000s)
     
     26,108
     
     24,047
     
     24,159
     
     22,904
     
     
     17,838Shareholders equity
     
     49,327
     
     47,168
     
     40,077
     
     33,270
     
     
     30,001Total assets
     
     56,843
     
     62,941
     
     53,286
     
     46,242
     
     
     42,968
  Restatement During 2006, the Company reviewed the classification of its East Amphi and Island Gold mining projects. These projects, which were improperly considered as development stage, were reclassified as exploration stage and the capitalized costs related to these projects were charged to earnings under United States GAAP. Accordingly, the Company increased its net loss by $3,585,656 in 2005 compared to the previously published results. The net loss per share was increased by $0.20 in 2005. Shareholders equity as at January 1, 2005 was decreased by $6,238,184. Exchange Rates The Government of Canada permits a floating exchange rate to determine the value of the Canadian dollar against the U.S. dollar. Set forth below are the average rates of exchange for the Canadian dollar and the U.S. dollar for each of the past five fiscal years, and the range of high and low rates for each of the past six calendar months. For purposes of these tables, the rate of exchange 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. 4


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U.S. Dollar/Canadian Dollar Exchange Rates Year endedDecember 31
     Average2005
     1.212006
     1.132007
     1.072008
     1.072009
     1.14
  The following table sets forth the high and low exchange rate for the past six months. As of April 27, 2010, the exchange rate was 1.0173. U.S. Dollar/Canadian Dollar Exchange Rates Month
     High
     LowNovember 2009
     1.0427
     1.0830December 2009
     1.0366
     1.0748January 2010
     1.0225
     1.0695February 2010
     1.0371
     1.0772March 2010
     1.0062
     1.0560April 1stto April 27th, 2010
     0.9948
     1.0205
  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: Risks Associated with the Mining Industry Speculative Nature of the Mining Industry The gold mining industry is highly speculative in nature. There is no assurance that Richmont Mines mineral development and exploration activities will be successful. Success in increasing reserves is a result of a number of factors, including the Companys level of geological and technical expertise, the geological composition of land available for exploration and other factors. Once gold mineralization is discovered, it may take several years to identify, delineate and evaluate resources, during which time the economic feasibility of production may change. Substantial expenditures are required to establish proven and probable reserves through drilling, to determine the optimal metallurgical process to extract the metals from the ore and, in the case of new properties, to construct mining and processing facilities. As a result of these uncertainties, no assurance can be given that the Companys exploration programs will result in the expansion or replacement of current reserves with new reserves. 5


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Mining Risks Because it holds interests in several mines, the Company is subject to risks and hazards inherent to the mining industry, including: fluctuations in commodity prices;costs of constructing and operating a mine as well as processing and refining facilities in a specific environment;availability of economical sources of energy and an adequate supply of water;adequate access to the site, including competing land uses and unanticipated transportation costs, delays and repair costs resulting from equipment failure;data on which engineering assumptions are made;changes in the regulatory environment (including regulations relating to prices, royalties, duties, taxes, restrictions on production, quotas on exportation of minerals, as well as the costs of protection of the environment and agricultural lands);industrial accidents and labor actions or unrest;unusual or unexpected geological or geotechnical formations;unanticipated ground or water conditions;slope failure,rock bursts, cave-ins,failure of pitwalls or dams and fire;environmental hazards, including discharge of pollutants or hazardous chemicals;unanticipated grade and tonnage of ore to be mined and processed;unusual or unexpected adverse operating conditions;hazards involved in the drilling and mining of ore;availability of qualified workforce;natural phenomena and acts of God, such as inclement weather conditions, floods, earthquakes and other phenomena. The occurrence of any of these factors could materially and adversely affect a project and as a result materially and adversely affect the Companys business, financial condition, results of operations and cash flow. These occurrences could result in damage to, or destruction of, mineral properties or production facilities, personal injury or death, environmental damage, delays in mining, monetary losses and possible legal liability. These factors may cause a mineral deposit that has been mined profitably in the past to become unprofitable. Also, it is not unusual in new mining operations to experience unexpected problems during the start-up phase, and delays can often occur in the commencement of production. No assurance can be given that current exploration programs will result in any commercial mining operation. The processing of ore may subject Richmont Mines to liability under environmental legislation resulting from a failure to maintain dams around tailing disposal areas. Richmont Mines may become subject to liability for pollution, cave-ins or other hazards against which it cannot insure, due to political or other reasons, or against which it may elect not to insure because of high premium costs or for other reasons. This can result in delayed production, increase in production costs or liability. Paying compensation for obligations resulting from such liability may be very costly and could have an adverse effect on the Companys financial position. 6


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Failure to Achieve Production Estimates The ore reserves presented in this Annual Report are in large part estimates, and no assurance can be given that the anticipated tonnages and grades will be achieved or that the indicated level of recovery will be realized. There are numerous uncertainties inherent in estimating proven and probable reserves including many factors beyond the Companys control. The estimation of reserves is a complex and subjective process and the accuracy of any such estimate is a function of the quantity and quality of available data and of the assumptions made and 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. 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 failure to achieve its production estimates could have a material and adverse effect on any or all of the Companys future cash flows, results of operation and financial condition. The Companys annual production estimates are developed based on, among other things, mining experience, reserve estimates, assumptions regarding ground conditions and physical characteristics of ores (such as hardness and presence or absence of certain metallurgical characteristics) and estimated rates and costs of production. Actual production may vary from estimates for a variety of reasons, including risks and hazards of the types discussed above. Additional Reserves for Gold Production Because mines have limited lives based on the production of proven and probable reserves, the Company must continually perform exploration and development to replace and expand its reserves as they are depleted. The Companys ability to maintain or increase its annual production of gold will be dependent in significant part on its ability to bring certain projects into production and to expand existing operations. There are a number of uncertainties inherent in any exploration program relating to, amongst other things, the location of economic mineral reserves, the development of appropriate metallurgical processes, the receipt of necessary governmental permits and the construction of mining and processing facilities and the appropriate financing thereof. Accordingly, no assurance can be given that the Companys exploration programs will yield new mineral reserves to replace mined reserves and to expand current mineral reserves. 7


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Exploration and Development Risks The exploration process generally begins with the identification and appraisal of mineral prospects. Exploration and development projects have no operating history upon which to base estimates of future operating costs and capital requirements. Mining projects frequently require a number of years and significant expenditures during the mine development phase before production is possible. Development projects are subject to the completion of successful feasibility studies and environmental assessments, issuance of necessary governmental permits and receipt of adequate financing. The economic feasibility of development projects is based on many factors such as: estimation of reserves;anticipated metallurgical recoveries;environmental considerations and permitting;future gold prices; 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. While the discovery of an ore body may result in substantial rewards, few properties which are explored are ultimately developed into producing mines. A mine must generate sufficient revenues to offset operating and development costs such as the costs required to establish reserves by drilling, to develop metallurgical processes, to construct facilities and to extract and process metals from the ore. Once in production, it is impossible to determine whether current exploration and development programs at any given mine will result in the establishment of new reserves. Fluctuations in Gold Prices and Currencies (see Information on the Company  Gold Marketing and Sales) The profitability of the Company is directly related to the market price of gold. Gold prices fluctuate considerably and are affected by numerous factors beyond the Companys control, such as industrial and jewellery demand, inflation and expectations with respect to the rate of inflation, the strength of the U.S. dollar and of other currencies, interest rates, gold sales by central banks, forward sales by producers, production and cost levels, changes in investment trends and international monetary systems and the effect of changes in the supply and demand for gold on public and private markets. The gold market is characterized by significant above-ground reserves which can dramatically affect the price should a portion of these reserves be brought to market. Gold price is sometimes subject to rapid short-term changes because of speculative activities. If gold prices were to decline significantly or for an extended period of time, the Company might be unable to continue its operations, develop its properties or fulfill its obligations under its agreements with its partners or under its permits and licenses. As a result, the Company might lose its interest in, or be forced to sell, some of its properties. 8


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The following table sets out the annual average gold price (London PM fix) in U.S. and CAN dollars over the past five years: (US$)
     Exchange rate
     (CAN$)2005
     444
     1.21
     5372006
     604
     1.13
     6832007
     695
     1.07
     7442008
     872
     1.07
     9332009
     972
     1.14
     1,108
  When calculating its Mineral Reserve estimates, the estimated price of gold used by the Company was CAN$800 per ounce in 2009 for its Francoeur Project and CAN$850 per ounce in 2009 for its other mines. In the event of a sustained, significant drop in gold price, the Company may be required to re-evaluate its assets, resulting in reduced estimates of reserves and in material write-downs of the Companys investment in mining properties and increased amortization, reclamation and closure charges. Furthermore, since gold price is established in U.S. dollars, a significant increase in the value of the Canadian dollar relative to the U.S. dollar coupled with stable or declining gold prices could adversely affect Richmont Mines results with respect to gold revenues. Richmont Mines has no gold hedging contracts and no U.S. dollar exchange contracts. However, the Company may engage in hedging activities in the future. Hedging activities are intended to protect a company from the fluctuations of the price of gold and to minimize the effect of declines in gold prices on results of operations for a period of time. Although hedging activities may protect a company against low gold prices, they may also limit the price that can be realized on gold that is subject to forward sales and call options where the market price of gold exceeds the gold price in a forward sale or call option contract. Also, the Company may in the future, if it considers it advisable, enter into hedging arrangements with a view to reducing some risks associated with foreign exchange exposure. However, there is no assurance that such hedging strategies will be successful or that foreign exchange fluctuations will not materially adversely affect the Company's financial performance and results of operations. Competition The mining industry is intensely competitive and the Company is in competition with other mining companies for the acquisition of interests in precious and other metal or mineral mining properties. In the pursuit of such acquisition opportunities, the Company competes with other Canadian and foreign companies that may have substantially greater financial and other resources. As a result of this competition, the Company may be unable to maintain or acquire attractive mining properties on acceptable terms, or at all. Although the Company has acquired many such assets in the past, there can be no assurance that its acquisition efforts will succeed in the future. Title to Properties While the Company has verified title to its properties according to customary industry standards for the stage of development of such properties, the procedures undertaken do not guarantee the Companys title. Properties may be subject to prior registered and unregistered agreements, transfers or aboriginal land claims, and title may be affected by undetected defects. In addition, transfers of title to certain properties of the Company are in the process of being completed. There may be valid challenges to the title of the Companys properties which, if successful, could impair development and/or operations. 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. 9


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Laws and Regulations The Companys mining operations and exploration activities are subject to various laws and regulations governing the environment, agricultural zoning, prospecting, development, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, mine safety and other matters. The Canadian mining industry is subject to federal and provincial environmental protection legislation. This legislation sets high standards on the mining industry in order to reduce or eliminate the effects of waste generated by extraction and processing operations and subsequently emitted into the air or water. Consequently, drilling, refining, extracting and milling are all subject to the restrictions imposed by such legislation. In addition, the construction and commercial operation of a mine typically entail compliance with applicable environmental legislation and review processes, as well as the obtaining of permits, particularly for the use of the land, permits for the use of water, and similar authorizations from various governmental bodies. Compliance with such laws and regulations increases the costs of planning, designing, drilling, developing, constructing, operating and closing mines and other facilities. No assurance can be given that additional significant costs and liabilities will not be incurred to comply with current and future requirements. All of the Companys operations are subject to reclamation, site restoration and closure requirements. Costs related to ongoing site restoration programs are expensed when incurred. The Company calculates its estimates of the ultimate reclamation liability based on current laws and regulations and the expected future costs to be incurred in reclaiming, restoring and closing its operating mine sites. It is possible that the Companys estimates of its ultimate reclamation liability could change as a result of possible changes in laws and regulations and changes in cost estimates. Failure to comply with applicable laws and regulations may result in enforcement actions thereunder, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may become subject to civil or criminal fines or penalties for violations of applicable laws or regulations. The Company believes that it is in material compliance with all current laws and regulations material to its activities. However, new or expanded environmental regulations, if adopted, or more stringent enforcement of existing laws and regulations, could affect the Companys projects or otherwise have a material adverse effect on its operations. As a result, expenditures on any and all projects, actual production quantities and rates and cash operating costs, among other things, may be materially and adversely affected and may differ materially from anticipated expenditures, production quantities and rates, and costs, and estimated production dates may be delayed materially, in each case. Any such event would materially and adversely affect the Companys business, financial condition, results of operations and cash flow. 10


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Insurance The Company carries insurance against property damage and comprehensive general liability insurance for all operations. It is also insured against gold and silver bullion thefts and losses of goods in transit. Such insurance, however, contains exclusions and limitations on coverage. No assurance can be provided that such insurance will continue to be available, will be at economically acceptably premiums or will be adequate to cover any liability. In some cases, risk coverage is not available or considered too expensive relative to the perceived risk. Risks not insured against include mine cave-ins, mine flooding or other comparable hazards. Furthermore, there are risks attributable to most types of environmental pollution against which the Company cannot insure or against which it has elected not to insure. Requirement of Additional Financing The continuing development of the Companys properties will depend upon the Companys ability to obtain financing through the joint venturing of projects, debt financing, and equity financing or other means. No assurance can be given that the Company will be successful in obtaining the required financing on acceptable terms, if at all. Permits and Licenses Mineral exploration and mining activities may only be conducted by entities that 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 or, if they are issued, that they will be renewed, or that the Company will be in a position to comply with all conditions that are imposed. Nearly all mining projects require government approval. No assurance can be given that these approvals will be granted to the Company in a timely manner, or at all. Joint Ventures No assurance can be given that the Companys joint venture partners will not veto the Companys business plans, with regard to a specific joint venture, and prevent the Company from achieving its objectives. 11


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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. Dependence on Personnel The Companys ability to manage growth effectively will require the Company to continue to implement and improve the Companys management systems and to recruit and train new employees. Although the Company has done so in the past, no assurance can be given that it will be successful in attracting and retraining skilled and experienced personnel. Risks Inherent in Acquisitions The Company is actively pursuing the acquisition of advanced exploration, development and production assets consistent with its acquisition and growth strategy. From time to time, the Company may also acquire securities of or other interests in companies with respect to which the Company may enter into acquisition or other transactions. Acquisition transactions involve inherent risks, including, 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 on the Companys financial condition. While the Company continues to seek acquisition opportunities consistent with its acquisition and growth strategy, no assurance can be given that it will be able to identify additional suitable acquisition candidates available for sale at reasonable prices, to consummate any acquisition, or to integrate any acquired business into its operations successfully. Acquisitions may involve a number of special risks, circumstances or legal liabilities, some or all of which could have a material adverse effect on the Companys business, results of operations and financial condition. 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. 12


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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. No assurance can be given that any potential transaction will be successfully completed, and, if completed, that the business acquired will be successfully integrated into the Companys operations. If the Company fails to manage its acquisition and growth strategy successfully it could have a material adverse effect on its business, results of operations and financial condition. Risks related to the Companys common shares Fluctuation in share price The market price of the Companys common shares may fluctuate due to a variety of factors relating to the Companys business, including the announcement of expanded exploration, development and production activities by Richmont Mines and its competitors, gold price volatility, exchange rate fluctuations, consolidations, dispositions, acquisitions and financings, changes or restatements in the amount of the Companys mineral reserves, fluctuations in the Companys operating results, sales of the Companys common shares in the marketplace, failure to meet analysts expectations, changes in quarterly revenue or earnings estimates made by the investment community, speculation in the press or investment community about Richmont Mines strategic position, results of operations, business or significant transactions and general conditions in the mining industry or the worldwide economy. No assurance can be given that the market price of the Companys common shares will not continue to experience significant fluctuations in the future, including fluctuations that are unrelated to the Companys performance. Sales of common shares Sales of substantial amounts of the Companys common shares, or the availability of the Companys common shares 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. Equity financing The Company may require additional funds to fund its capital expenditures programs and potential acquisitions. If the Company raises additional funding by issuing additional equity securities, such financing may substantially dilute the interests of its existing shareholders. Existing agreements provide for additional issuances of common shares The Company may issue additional common shares in the future pursuant to existing agreements. 13


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Dividend policy The Company has not declared or paid any dividends on its common shares since its incorporation. Richmont Mines has no current plans to pay dividends on its common shares. Its present policy is to retain earnings to finance its capital expenditures program. The Board of Directors assesses its dividend policy on a yearly basis. In the future, the Board of Directors may declare dividends according to its assessment of the financial position of the Company, taking into account its financing requirements for future growth and other factors that the Board of Directors may deem relevant in the circumstances. ITEM 4.
     INFORMATION ON THE COMPANY
  A.
     History and Development of the Company
  General The legal and commercial name of the Company is Richmont Mines Inc. The Company is a corporation domiciled in Quebec, Canada. The Company was incorporated pursuant to Part 1A of the Companies Act(Quebec) on February 12, 1981 (File number 1843-2286) under the name Ressources Minières Rouyn Inc. By Article of Amendment filed February 10, 1987 the Company added the English version Rouyn Mining Resources Inc. and by another amendment filed with the Government of Quebec on June 20, 1991, the Company changed its name to Richmont Mines Inc. The Articles of Incorporation of the Company are registered by the Government of Quebec in register S02473, folio 10. The Company has no specific objects or purposes set forth in its Articles of Incorporation or ByLaws. 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 the acquisition, exploration, operation, financing, and development of mineral properties. Richmont Mines began its exploration activities in northwestern Quebec in the spring of 1984. During the following years, it acquired a portfolio of properties with gold-bearing potential with a view to development and commercial operation. 14


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Three-year History In 2007, the Company sold its East Amphi property in Quebec for a cash consideration of $2,450,000 and 1,109,000 common shares of Exploration Osisko Ltd. valued at $6,086,000. The Company retains a net smelter return royalty of 2% on a specified portion of the future production of the East Amphi property and a similar royalty on future production of up to 300,000 ounces of gold on another portion of the property. The Company currently produces gold from its Beaufor Mine and Island Gold Mine, its material properties. On December 16 2008, Richmont Mines acquired Patricia Mining by way of a plan of arrangement. As a result of this acquisition, Richmont Mines increased its ownership interest in the Island Gold Mine, which had been the subject of a joint venture between Richmont Mines and Patricia Mining and has been in commercial production since October 1, 2007, from 55% to 100%. On November 5, 2007, Richmont Mines announced that it entered into an agreement with LKA International Inc. (LKA), which granted the Company an option to earn a 50% joint-venture interest in LKAs Golden Wonder property located near Lake City, Colorado. On October 23, 2008, Richmont Mines announced that results obtained to date had failed to confirm the continuity of an economically viable ore zone. In light of these results, Richmont Mines informed LKA of the termination of its option to proceed with the joint venture agreement. By October 31, 2007, Richmont Mines had acquired a 70% interest in the Valentine Lake property located in Central Newfoundland, 55 km south of the town of Buchans. On February 5, 2009 Mountain Lake Resources Inc. (Mountain Lake) and Richmont Mines entered into an agreement (the Valentine Lake Agreement) pursuant to which the Company granted Mountain Lake the option to purchase Richmont Mines 70% interest in the property. Mountain Lake agreed to pay an option fee to Richmont Mines of 2,500,000 common shares of Mountain Lake at a deemed value of $650,000, or $0.26 per share, and may exercise the purchase option within a five-year period by making option payments to Richmont Mines totaling an additional $3,000,000, and by incurring $1,000,000 in exploration and development expenditures at Valentine Lake within such timeframe. Until all such conditions to the option exercise are met, Richmont Mines will continue to own a 70% interest in the property. 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 will also re-commission the existing hoist and upgrade related infrastructure. This work is expected to be completed before the end of the second quarter of 2010. Richmont produced more than 345,000 ounces of gold at the Francoeur Mine between 1991 and 2001. The ore from the Francoeur Mine was processed at Richmonts Camflo Mill from 1993 up to the mines closure in 2001, when the prevailing gold price was under US$300 per ounce. A surface exploration drilling program of 7,434 metres was completed during the third quarter of 2009. In August 2009, the Company filed an internal pre-feasibility study 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 136,000 ounces of gold (before recovery) over an initial 4-year period. The Company is the 100% owner of the Francoeur property which covers 408.3 hectares, and consists of 12 mining claims, 3 mining concessions and 4 mining leases. There are no royalties or back-in-rights related to any of the claims, mining leases and mining concessions. Richmont is also the owner of the adjacent Arncoeur and Norex properties, which cover respectively the lateral and down-dip extension of the known gold mineralization. 15


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The Company undertook an important exploration program at the Beaufor Mine in 2009, during which approximately 60,000 metres of drilling, including more than 28,000 metres of definition drilling, was completed. However, this drilling did not result in any significant increase to the mines reserve base. Recent Events Louvem Mines: On March 31, 2010, the Company announced its intention to acquire the remaining 30% public interest in Louvem Mines, Inc. not owned by the Company by way of an amalgamation pursuant to which the Louvem public shareholders will receive one Richmont common share for each 5.4 Louvem common shares they own. The Company has entered into support agreements whereby certain Louvem shareholders holding approximately 54% of the Louvem shares not already owned by the Company have agreed to support the Transaction. For more details, please see the press release entitled Richmont Mines Inc. announces intention to acquire Louvem Mines Inc. issued by the Company on March 31, 2010. Wasamac Property : On April 8, 2010, the Company announced that it will begin a 10,000 metre drilling program in May 2010 on its 100%-owned Wasamac property. Located 15 km west of Rouyn-Noranda, Quebec, in the heart of the Abitibi gold mining district, this property produced 252,923 ounces of gold between 1965 and 1971. For more details, please see the press release entitled Richmont Mines announces a 10,000 metre surface drilling program on its Wasamac Property issued by the Company on April 8, 2010. Cripple Creek Property: On April 12, 2010, the Company announced preliminary assay results from the surface drilling program at the Companys 100%-owned Cripple Creek property, located west of the Timmins Gold Deposit in Ontario. For more details, please see the press release entitled Richmont Mines hits 73.54 g/t Au over 7 metres at its Cripple Creek Property issued by the Company on April 12, 2010. 16


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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 312009
     
     2008
     2007$
     
     $
     $Island Gold Mine
     4,318
     
     3,079
     4,495Beaufor Mine
     1,092
     
     127
     1,060Francoeur Project
     1,976
     
     -
     -Other
     626
     
     1,987
     6168,012
     
     5,193
     6,171
  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 Project 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. 2008 total capital expenditures of $5.2 million were below the 2007 level of $6.2 million, primarily reflecting higher start-up development costs at the Island Gold Mine in 2007. Property Interests The following table outlines Richmont Mines interest in its exploration properties as at December 31, 2009. Property
     Year of acquisition
     Number of Mining titles
     Participation1QuebecFrancoeur
     1992
     19
     100%Monique
     1994
     18
     81% by LouvemWasamac
     1988
     4
     100%Camflo Northwest
     2005
     13
     80%Newfoundland and LabradorValentine Lake
     2003
     539
     70%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.
  17


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Exploration and Project Evaluation Expenditures The following table presents Richmont Mines exploration and project evaluation expenses in 2007, 2008 and 2009 and the budgeted estimated amounts for 2010 (in thousands of CAN$). 2010
     
     2009
     
     2008
     
     2007$ (estimated)
     
     $
     
     $
     
     $QuebecBeaufor Mine
     887
     
     3,006
     
     2,921
     
     1,874East Amphi1
     -
     
     -
     
     -
     
     18Francoeur / WasamacProperties
     1,357
     
     1,938
     
     184
     
     142Monique
     109
     
     2
     
     -
     
     8NewfoundlandValentine Lake
     -
     
     -
     
     347
     
     1,017OntarioIsland Gold
     4,764
     
     3,136
     
     2,293
     
     505Sewell and Cripple Creek
     468
     
     24
     
     20
     
     -USAGolden Wonder2
     -
     
     -
     
     4,202
     
     665Other properties
     109
     
     2
     
     -
     
     135Evaluation of projects
     467
     
     305
     
     373
     
     124Tax credits
     (347
     )
     (1,347
     )
     (643
     )
     (1,200
     )Reclassification of exploration tax credits from 2007
     -
     
     -
     
     850
     
     -7,814
     
     7,066
     
     10,547
     
     3,2881Property sold in 2007.2The joint venture option was terminated in October 2008.
  2010 Trends The Companys strategy is to capitalize on its existing properties through exploration and development, to acquire advanced stage projects in North America where its expertise in narrow vein operations can be applied and to improve production efficiencies. The Companys corporate goal is to become a profitable, intermediate North American developer and producer of gold, operating four to five mines while establishing at least one million ounces of gold reserves. Furthermore, the Company intends to focus on generating improved results in 2010. In addition to delivering on the Companys gold sales target of a minimum of 65,000 ounces from the Beaufor and Island Gold mines, the Companys top priorities in 2010 are to: 1.
     Complete one strategic acquisition;2.
     Reduce operating costs;3.
     Pursue analyst coverage;4.
     Initiate a comprehensive Investor Relations campaign; and5.
     Achieve valuation parity with Companys peer group of junior Canadian gold producers. 18


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B.
     Business Overview
  A.
     Beaufor Mine
  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-Est County, in the Province of Quebec, Canada. Description of Mineral Rights The property, which includes the Mineral Reserves and Resources 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 high economic 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 : 01/31/2011Colombière
     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 10/29/2010 and 10/02/2011Pascalis
     1
     37.5
     Mining Lease BM 750 : 06/02/2016Perron
     11
     222
     Mining Lease BM 858 : 03/11/2023 10 claims expire between 09/10/2010 and 09/16/2011Perron blocks 2, 3 and 4
     7
     199
     Claims expire between 09/06/2010 to 12/15/2010
  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 follow up regarding claims expiry dates. All the mining claims, mining concessions and mining leases were in good standing in 2009 and are expected to be for 2010. 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. 19


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Ownership of Mineral Rights All the mining titles of the Beaufor property are jointly held by Richmont Mines (50%), which is the operator of the property, and by Louvem Mines Inc. (50%). Richmont Mines holds approximately 70% of the common shares of Louvem. Mineral Royalties All the properties jointly held by Richmont Mines and Louvem are subject to the payment of royalties and financial contractual obligations. 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. For Beaufor (only calculated on the 50% of production held by Richmont Mines) a)
     Royalties
  Royalties are payable to Aurizon Mines Ltd. (Aurizon) on the 50% of production held by Richmont Mines. The amount of the royalty is determined by the prevailing price of gold and the quantity of gold produced in accordance with the following formula: Gold Price (US$/oz)
     Royalties by oz of gold produced< 300
     CAN$00.00300  325
     CAN$17.00325  350
     CAN$18.50350  375
     CAN$20.00375  400
     CAN$22.50400  500
     CAN$24.00> 500
     CAN$30.00
  Perron and Perron Block-1 For each ounce produced on the Perron property and in relation with the gold price, the royalty calculation, payable quarterly to Aurizon is made as follows: Gold Price (US$/oz)
     Royalties by oz of gold produced300
     CAN$00.00300  325
     CAN$17.00325  350
     CAN$18.50350  375
     CAN$20.00375  400
     CAN$22.50400  500
     CAN$24.00> 500
     CAN$30.00
  20


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Perron Block-2 (Claims 3493171, 3493172 and 3493173) A Net Smelter Royalty (NSR) of 2% is payable monthly to Northwest Gold Corp. subject to the condition that the average monthly gold price exceeds US$300/oz on production from these claims. NSR is calculated upon the amount of money which the smelter or refinery pays the mining operator for the mineral product and is usually based on a spot, or current, price of the mineral, with deductions for the costs associated with further processing. Pascalis A Net Profit Interest (NPI) of 25% payable to New Pascalis Mines Limited. NPI means a share of net proceeds from production paid solely from the working interest owners share. Colombière A 2% NSR is payable quarterly to IAMGOLD (formerly Cambior Inc.). Environmental Obligations and Permitting Status Over 75% of the development waste material is hoisted from the underground mine to the surface and placed on a waste dump. The waste rock is not acid generating and does not require any particular environmental measures. The rehabilitation plan for the Beaufor Mine 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, offices are used to service a workforce of about 98 employees and approximately 29 independent contractors as of December 31, 2009. Over $1 million was invested to replace the structure of the headframe in 2007. 21


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Access 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). 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 Basic Infrastructures The area is well served by existing infrastructure and human resources. The population of the town of Val-dOr is approximately 32,000 people. The town is accessible from the national road network and commercial flights are available daily at the local airport. The 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-Québec. 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. 22


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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 Mines undertook construction work to secure the crown pillar and commercial production resumed at Beaufor Mine jointly with Louvem in January 2002. Geological Setting Regional geology The mining town of Val-dOr is located in the 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 anatomosing corridors of 5 to 30 m in thickness. The veins at the Beaufor Mine form panels of more than 300 m in length by 350 m in height. The thickness of the veins varies from 5 cm to 5 metres. The zones are limited by the Beaufor fault (N115 o/65 o-75 o) at 380 metres from the surface and a parallel system of shears (N70 o/sub vertical). 2009 Results In 2009, 101,593 tonnes of ore at an average recovered grade of 6.38 g/t were extracted from the Beaufor Mine. This production yielded gold sales of 20,854 ounces, produced at a cash cost of US$740 (CAN$845) per ounce sold. This compared to tonnage of 115,674, an average recovered grade of 8.85 g/t, and gold sales of 32,908 ounces at a cash cost of US$509 (CAN$543) per ounce in 2008, and total tonnage of 97,429, a recovered grade of 8.36 g/t, gold sales of 26,182 ounces at a cash cost of US$468 (CAN$503) per ounce in 2007. The cash cost per ounce increased in 2009 compared with 2008, as grades in the room and pillar stopes at Beaufor were lower than forecasted in the mining sequence, which resulted in lower production and higher operating costs. The cash cost per ounce increased in 2008 compared to 2007, largely due to higher mining and milling costs and increased definition drilling. The following table summarizes the work completed over the last three years. 23


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Beaufor Mine 2009
     2008
     2007Tonnes
     101,593
     115,674
     97,429Head grade (g/t)
     6.52
     9.00
     8.47Gold Recovery (%)
     97.90
     98.31
     98.72Recovered grade (g/t)
     6.38
     8.85
     8.36Ounces sold
     20,854
     32,908
     26,182Cash cost of production per ounce (US$)
     740
     509
     468Investment in property, plant and equipment (thousands of CAN$)
     1,092
     127
     1,060Exploration expenses (thousands of CAN$)
     3,006
     2,921
     1,874Deferred development metres
     913
     -
     -Diamond drilling (metres)Definition
     28,152
     11,439
     3,095Exploration
     32,699
     33,765
     25,157
  Exploration An important exploration program was undertaken at the Beaufor Mine in 2009, during which approximately 60,000 metres were drilled. This program included 28,152 metres of definition drilling and 32,699 metres of exploration drilling. This drilling, combined with development efforts, did not result in the reserve base being maintained at 2008 levels. Reserves stood at 165,761 tonnes at a grade of 8.38 g/t for 44,637 ounces at the end of 2009 compared to 244,063 tonnes at a grade of 8.89 g/t for 69,792 ounces at the end of 2008. 24


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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 2 metre grid. Drilling operations are performed by a drilling contractor, under the supervision of the geological staff at the Beaufor Mine. Underground drill holes are LTK48 (1 13/32") 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 over 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 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 g per sample. 25


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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. 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. When there is doubt such as to the location of a sample, the sampling number or any other anomaly, the data is not used for the resource calculation. Mineral Reserve Estimates General In 2009, the Mineral Reserve estimates were performed by Richard Dubuc, P.Geo. and Jessy Thelland, P.Geo., two employees of Richmont Mines and qualified persons pursuant to National Instrument 43-101. The methodology and procedures for Mineral Reserve estimates have been adopted from a study completed in 2006 by Golder and Associates, an independent firm. The database, factors and parameters used in the determination of the Mineral Reserves are based on the available information at the Beaufor Mine as of December 31, 2009. 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 the National Instrument 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 National Instrument 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, 2009. 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 2009. All these factors and parameters are updated on an annual basis in order to account for changes in the mining operations. 26


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The conversion of Mineral Resources to Reserves is based on economic feasibility. As per National Instrument 43-101, only Mineral Resources in the Measured and Indicated categories can be used to establish the estimate of Mineral Reserves. 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 : stopes width from 6 metres to 10 metres in the plane of the vein with in- stope pillars of 3 metres by 3 metres section or 2 metres long in the plane of the vein;Maximum vein dip : 40°;Ore mining recovery: 80% used in the economic evaluation;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 3 metres. The drilling intersections are projected to a minimum length of 3 metres;External dilution : a dilution rate of 10% for waste at a grade of 0 g/t Au is assumed for primary stopes. 27


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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 : No profit margin is built into the estimate;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$850 per ounce applying an exchange rate of CAN$1/US$;Operating costs include fixed costs budgeted for 2010 and variable costs (production and development) based on the results from January to June 2009 for each method. The results of the cut-off grade study by mining methods for both developed and undeveloped underground workings are listed in the following table: Mining Methods
     Workings
     Cut-off Grade (g/t)Room and pillar
     Developed
     6.26Room and pillar
     Undeveloped
     7.19Long hole
     Developed
     5.26Long hole
     Undeveloped
     6.19
  Reserve Classification Descriptions with more details about classification of reserves at the Beaufor Mine are set out below. 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. Dilution and mining recovery rates are included in the reserve calculation. Reserve Table As of December 31, 2009, the mineral reserves of the Beaufor Mine (before milling recovery of 97.9%) were estimated as follows: 28


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Reserve Category
     Tonnes (metric)
     Grade (g/t Au)
     Au (oz)Proven
     47,033
     6.63
     10,021Probable
     118,728
     9.07
     34,616Total (Proven + Probable)
     165,761
     8.38
     44,637
  As of December 31, 2009, the Mineral Reserves at Beaufor Mine are estimated at 44,637 ounces of gold, calculated using a long-term gold price of CAN$850 per ounce, for an expected mine life of approximately two 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. The historic average rate of recovery of the mill is 98.5% when Beaufor ore is milled. No major operating problem was experienced at this mill nor is anticipated in the near future. Usual maintenance and repairs are done when deemed appropriate. Production Summary In 2009, ore totalling 101,593 tonnes at an average recovered grade of 6.38 g/t was extracted from the Beaufor Mine. This production yielded gold sales of 20,854 ounces, produced at a cash cost of US$740 per ounce, compared to the previous year with 115,674 tonnes of ore at an average recovered grade of 8.85 g/t, produced at a cash cost of US$509 per ounce. The cash cost per ounce increased in 2009 compared to 2008, as grades in the room and pillar stopes at Beaufor were lower than forecasted in the mining sequence, which resulted in lower production and higher operating costs. 29


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Beaufor Mine Year endedDecember 31,2009
     Year ended December 31, 2008
     Year ended December 31, 2007Precious metals revenues (thousands of CAN$)
     
     23,215
     
     31,075
     
     19,504Tonnes processed
     
     101,593
     
     115,674
     
     97,429Head Grade (g/t)
     
     6.52
     
     9.00
     
     8.47Gold recovery (%)
     
     97.90
     
     98.31
     
     98.72Recovered grade (g/t)
     
     6.38
     
     8.85
     
     8.36Ounces sold
     
     20,854
     
     32,908
     
     26,182Data per ounce of gold sold
     US$
     CAN$
     US$
     CAN$
     US$
     CAN$Cash cost
     740
     845
     509
     543
     468
     503Depreciation and depletion
     38
     43
     38
     41
     114
     122Total
     778
     888
     547
     584
     582
     625Average price obtained per ounce
     975
     1,113
     886
     944
     693
     745
  B.
     Island Gold Mine
  Location 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. Description of Mineral Rights The Island Gold property consists of 137 patented, leased and staked claims totalling 4,684 ha. Property
     Number of claims
     Area (ha)
     Expiration dateKremzar
     20
     381
     Patented Claim : taxes are paid every year
2 Leased claims: 02/08/2022 to 06/30/2030Lochalsh
     31
     368
     Patented Claim : taxes are paid every year
Mining Leases : 01/30/2011 to 06/30/2030
Claims : 02/06/2012 to 03/26/2012Goudreau
     65
     1,003
     Patented Claims :taxes are paid every year
1 claim : 08/20/2012Island Gold
     21
     2,932
     Claims : 03/05/2011 to 10/25/2014
  30


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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. In June 2009, 6 mining leases were renewed for a term of 21 years. 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 2009 and are expected to be for 2010. 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 four 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 August 28, 2010 and August 28, 2011. 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 Little Brothers property, which is a group of 4 claims over an area of approximately 573 hectares, is located further east, near 4 patented claims owned by Richmont Mines. These claims expired on February 27th, 2009. After reviewing the relevant data, Richmont Mines decided not to renew these claims.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.A group of 2 claims covering approximately 48 hectares in the Dunne Lake Township, located 300 km to the northeast of Thunder Bay, Ontario. These 2 claims expired on May 24, 2009, at which point Richmont Mines decided not to renew them. Acquisition of Island Gold Interest 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. 31


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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 Mineral 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 payable to Algoma. The Algoma NSR will become payable at such time as the aggregate amount of NSRs received by the Company and Teck Cominco (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 Algoma NSR becomes payable. In the event the Algoma NSR becomes payable and is reduced below 4%, Teck will be entitled to receive a net smelter return equal to 50% of the amount by which the Algoma royalty is reduced, payable on the same terms as the Algoma NSR. The Lochalsh Property is subject to a 3% NSR payable to Teck. The Goudreau Property is subject to a 2% NSR payable to Teck and a 15% NPI royalty payable to Algoma. 32


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Environmental Obligations and Permits The permit to operate the Kremzar Mill at the Island Gold Mine 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. At that time, a financial assurance of $177,523 was put in place to cover the closure costs. The closure plan for the Kremzar property was filed with the Ontario Ministry of Northern Development and Mines (MNDM) in 1998 by Patricia Mining and was also approved. A payment of $10,000 cash was made by Patricia Mining, and there was a collateral mortgage of $577,800 granted using the Kremzar Mill as security. In January 2009, following the acquisition of Patricia Mining, Richmont Mines has provided the MNDM with a letter of credit to cover all closure plan costs. Since Richmont Mines has satisfied all the conditions by the MNDM, the mortgage on the Kremzar Mill has been released. There are no environmental issues on the property at this time. Infrastructure The Island Gold Mine infrastructure includes the primary tailings pond, the secondary settling pond, the Kremzar Mill (a carbon-in-pulp mill with a capacity of 650 tonnes per day), the Kremzar ramp and portal, the Lochalsh ramp and portal, the mine access road, and the hydro lines. An office, a core logging and storage facility, and a mine dry are also located on the Kremzar Mine site. Access Access to the Island Gold Mine is via an all-weather road from Highway 519, just west of Dubreuilville, Ontario. This village is located approximately 35 km east of the junction between Highways 17 and 519. It takes approximately 1 hour to drive from Wawa, Ontario to the mine site. Climate The Island Gold Mine is located within the Lake Superior Regional climatic zone, moderated by the influence of Lake Superior. The average day time temperature is 2°C, ranging from -41°C to 31°C throughout the year. Annual precipitation is normally 669 mm of rain and 278 cm of snow. 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. 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). 33


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Richmont Mines also offers living accommodations and flexible schedules to its employees. Training is offered in order to maintain a local qualified workforce. 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 Steel Inc. (Algoma) formed a joint venture to evaluate the mineral potential of Algoma's 117 patented claims covering the Goudreau iron range. In 1985, drilling by Canamax about 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 and completed a resource estimate at a cost of $3.0 million. A total of 125 drilling drifts, 53 metres of ore sill and 8,137 metres of drilling have been completed. In 2005, Richmont Mines completed 2,111 metres of underground development and 7,903 metres of delimitation drilling. A total of 7,259 tonnes with a content of 6.23 g/t Au from ore development were stockpiled on the surface. In 2006, Richmont Mines continued the exploration program. A total of 3,469 metres of development 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. 34


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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 m 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. 35


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2009 Results The Island Gold Mine produced 211,773 tonnes of ore at an average recovered grade of 5.71 g/t, for 38,879 ounces in 2009, at an average price of US$967 (CAN$ 1,104) per ounce. The cash cost per ounce increased to US$736 (CAN$841) in 2009, from US$659 (CAN$703) in 2008 and US$621 (CAN$668) in 2007, 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. This compared to 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, and total tonnage of 35,202, a recovered grade of 6.45 g/t, and gold sales of 7,302 ounces at an average price of US$726 (CAN$780) per ounce in 2007. The Island Gold Mine began commercial production in October 2007. Island Gold Mine1 2009
     2008
     2007Tonnes
     211,773
     161,320
     35,202Head grade (g/t)
     6.04
     7.65
     6.84Gold Recovery (%)
     94.52
     95.83
     94.36Recovered Grade (g/t)
     5.71
     7.33
     6.45Ounces sold
     38,879
     38,037
     7,302Cash cost per ounce (US$)
     736
     659
     621Investment in property, plant and equipment(thousands of CAN$)
     4,318
     3,079
     4,494Exploration expenses (thousands of CAN$)
     3,136
     2,293
     505Deferred development metres
     1,576
     605
     -Development metres
     -
     -
     4,075Diamond drillingDefinition
     13,604
     14,764
     -Exploration
     18,936
     1,901
     12,940
  1 Prior to Richmonts acquisition of Patricia Mining, which held a 45% interest in the Island Gold Project, in December 2008, 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 is the primary beneficiary of the expected losses and/or receive the majority of the residual returns of the variable interest entity (VIE). Richmont Mines 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 considered the primary beneficiary of the VIE. Exploration In 2009, Richmont Mines continued its underground exploration program via drilling and drifting in order to convert resources to reserve categories and increase the overall resource base. 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. 36


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During 2009, underground drilling at the Island Gold Mine represented 212 drill holes totaling 26,914 metres. Approximately half of these metres were exploration holes in the Lochalsh, 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 permitted the conversion of Probable Reserves into Proven Reserves. The exploration drilling in the Extension-2 sector of the E1E resulted in the conversion of a portion of the resources into Probable Reserves. A surface diamond drilling campaign was implemented in conjunction with the underground drilling during the past year. The goal of this campaign was to primarily test the eastern and western extensions of the known zones in the vicinity of Island Gold Mine. Other potential areas, such as zone 21, were also tested. The 2009 surface exploration drill program was completed in October. The program consisted of 18 holes and totaled 5,626 metres. The drilling on the projected eastern extension 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. Drilling A total of 763 holes totalling 144,124 metres of surface and underground diamond drilling were completed on the property from the early 1980s to December 2007. In 2009, approximately 27,000 metres were drilled from underground and 5,600 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 by 15 metres, targeting alteration assemblages in the E1/E Zone. Drilling operations are performed by a drilling contractor, under the supervision of the geological staff at the Island Gold Mine. Underground drill holes are BQ calibre. Core recovery is 100%. The drill core is logged in detail by experienced and highly skilled staff, following established guidelines for the Island Gold Mine. A rock quality designation (RQD) analysis was completed for most of the drill holes drilled in the 2009 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 to 2 kg for a zone of 1.5 metres vertically by 0.3 to 1.0 metre horizontally. Each face was sampled and the number of assays varied based on the geology and the opening. The drill cores and chip samples are representative and the mineralization style, with the presence of quartz veins and free gold, shows a nugget effect. 37


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Assays Swastika Laboratories Ltd of Swastika, Ontario, was used to perform fire assay, gravimetric and specific gravity analyses for the underground drilling and development program in 2009. 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 g using a Jones riffle;4)
     Remaining rejects are placed in a plastic bag and packed in cartons with sample numbers listed on the outside;5)
     Pulverize the 350 g sample;6)
     Homogenize the pulp, it is then ready for assay;7)
     Samples are then analyzed by fire assay with an absorption atomic or gravimetric finish. A total of 30 g of representative material are subjected to the fire assay and to gravimetric finish. 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 g) portions. The +100 Mesh fraction (approximately 20 g) 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 is run on every 10th sample to be used for checking the reproducibility of the assays. 38


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The results of field and analytical blanks used to monitor for potential contamination during sample processing and assaying indicate that no significant contamination is likely to have occurred during the sampling/assaying programs completed for 2007. In 2009, 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 shipment of the 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 outfitted 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 2009, Mineral Reserve estimates were performed by Michel Plasse, P.Geo., an employee of the Company, and reviewed by Daniel Adam, P.Geo., Exploration Manager and also an employee of the Company, who are qualified persons under National Instrument 43-101. Factors and parameters used in the determination of the Mineral Reserve estimates were based on the knowledge of the Island Gold Mine as of December 31, 2009. The Mineral Reserve estimates were carried out in accordance with National Instrument 43-101 recommendations and regulations. Mineral Reserves are classified according to the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) classification adopted by the CIM Council on December 11, 2005. All standards generally accepted in the mineral mining industry as well as National Instrument 43-101 recommendations and CIM regulations for Mineral Reserve estimates have been fully complied with in the determination of Mineral Reserve estimates included herein. Procedures and Technical Parameters The Reserve estimates were calculated using the following two distinct methods: (1) when ore development was completed above and below the ore block, the grade and tonnage was determined by the solids methods in GEMS software (this method was used only in the Island Gold Mine sector) and (2) if ore development was missing or incomplete, the grade and tonnage of the reserves: were determined by the polygonal method (the polygonal method was used in the Extension-1 and Extension-2 sectors). Regardless of the method used, composites were established by the Companys 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 its 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. 39


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For the polygonal method, construction of the polygons is completed on longitudinal sections. An area of influence of 15 metres was determined for the development composite while the diamond drill holes used a 20 metre influence. 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. When an overlap between the two occurs, the development composites are considered more accurate and are used for the estimation of reserves. 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 estimates. 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 4 g/t Au fixed with a gold price at CAN$850 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/m3is 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 95%. 40


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The database and the parameters used to estimate the Mineral Reserves are based on the results for 2009 and information available as at December 31, 2009. 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 National Instrument 43-101, only Mineral Resources in the measured and indicated categories can be used to establish the estimate of Mineral Reserves. Reserve Classification 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 In accordance with calculations completed by Michel Plasse, P.Geo., an employee of the Company, as of December 31, 2009, the Mineral Reserves of the Island Gold Mine are estimated at: Categories of reserves
     Tonnes
     Grade
     Au1(metric)
     (g/t Au)
     (oz)Proven
     387,182
     8.46
     105,333Probable
     539,961
     9.14
     158,752Total (Proven + Probable)
     927,143
     8.86
     264,0851. Before mill recovery of 95%
  As of December 31, 2009, the Mineral Reserves at Island Gold were 264,085 ounces of gold, calculated using a long-term gold price of CAN$850 per ounce and an expected mine life of approximately five years. 41


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Mining Operations and Metallurgy The extraction method is by longitudinal long hole with a maximum panel length fixed by hydraulic radius factor of 4.5. The Island Gold ore was hauled by truck to the Kremzar mill located at an approximate distance of 0.8 km from the portal of the ramp. The Kremzar mill is a traditional gold recovery mill using a conventional Carbon in Pulp (CIP) process, with circuits for crushing, grinding, gold cyanidation and carbon-in-pulp and two electrowinning (EW) cells. Gold recovery of the Carbon in Pulp circuit at the Kremzar mill is 94.5%. For the year ended December 31, 2009, 211,773 tonnes of ore were processed from the Island Gold Mine at an average recovered grade of 5.71 g/t, and 38,879 ounces of gold were sold at an average price of US$967 (CAN$1,104) per ounce. This compared to 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. Recovered grades at the Island Gold Mine were lower in 2009 versus 2008. While higher than expected dilution, particularly in the first half of the year, was a contributing factor to this discrepancy, Island Gold Mine also processed significantly more low-grade development ore than budgeted. Year ended
     Year ended
     Year endedDecember 31,
     December 31,
     December 31,2009
     
     
     2008
     
     
     2007Precious metals revenues(thousands of CAN$)
     
     $
     42,935
     
     $
     35,163
     
     $
     5,696Tonnes processed
     
     
     211,773
     
     
     161,320
     
     
     35,202Head Grade (g/t)
     
     
     6.04
     
     
     7.65
     
     
     6.84Gold recovery (%)
     
     
     94.52
     
     
     95.83
     
     
     94.36Recovered grade (g/t)
     
     
     5.71
     
     
     7.33
     
     
     6.45Ounces sold
     
     
     38,879
     
     
     38,037
     
     
     7,302Data per ounce of gold sold
     US$
     
     CAN$
     US$
     
     CAN$
     US$
     
     CAN$Cash cost
     736
     
     841
     659
     
     703
     621
     
     668Depreciation and depletion
     91
     
     104
     94
     
     100
     98
     
     105Total
     827
     
     945
     753
     
     803
     719
     
     773Average price obtained per ounce
     967
     
     1,104
     867
     
     924
     726
     
     780
  42


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C.
     Exploration Projects and Other Properties
  General Richmont Mines owns or holds interests in many mining properties at different stages of exploration. However, the Company has determined that none of such properties is significant. Valentine Lake, Newfoundland, Canada Location and Access The Valentine Lake Property is located in Central Newfoundland, 55 km south of the town of Buchans. The property can be accessed by a 75 km long gravel road from Millertown, via the Buchans Highway. Description of the Property The Valentine Lake property consists of four grouped mineral exploration licences covering a total area of 13,475 hectares and a total of 539 claims. Option Agreement In November 2003, Richmont Mines entered into an option agreement with Mountain Lake Resources Inc. (Mountain Lake), under which Mountain Lake was obligated to transfer a 70% interest in the Valentine Lake Property to Richmont Mines if Richmont Mines funded $2.5 million in exploration work on the Valentine Lake Property by October 31, 2007. In 2007, Richmont Mines fulfilled this condition and acquired a 70% interest in the Valentine Lake Property from Mountain Lake. On February 5, 2009, Mountain Lake and Richmont Mines entered into an addendum to the above-described option agreement under which Richmont Mines granted Mountain Lake an option to repurchase Richmont Miness 70% interest in the Valentine Lake Property. In consideration for this option, as an option fee, Mountain Lake issued to Richmont Mines 2,500,000 Mountain Lake common shares having a fair value of $650,000, or $0.26 per share. Mountain Lake may exercise the purchase option over a five-year period by making an aggregate of $3,000,000 of option payments to Richmont Mines, and incurring $1,000,000 in exploration and development expenditures at the Valentine Lake Property within such five-year period. Until all such conditions have been met, Richmont Mines will continue to own a 70% interest in the Valentine Lake Property. On December 23, 2009, Mountain Lake and Marathon PGM Corporation (Marathon) announced an option and joint venture agreement granting Marathon sub-option to earn 50% interest in the Valentine Lake Property. Marathon can earn the 50% interest by assisting Mountain Lake in exercising the Richmont Option, through total option payments of $3,000,000 in instalments over the next three years and incurring a total of $3,000,000 in exploration and development expenditures on the Property over the next three years. Marathon has initiated a surface drilling program in the first quarter of 2010. 43


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Wasamac, Quebec, Canada Location and Access The Wasamac property is located approximately 15 km southwest of Rouyn-Noranda, Province of Quebec. The property can be reached from Rouyn-Noranda via 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 3 mining concessions (CM 349, CM 364, and CM 370) and 1 claim which represents a total area of 759.36 hectares in the Beauchastel Township. Richmont Mines owns 100% of the mining concessions relating to the Wasamac property. 2009 Work and Results In 2009, two drill holes were completed for a total of 513 metres on the Wasamac property. These holes were part of a 3 drill hole campaign that began in 2008. The objective of this campaign was to test geophysical anomalies that could represent conductive horizon with potential economic mineralization. Results were not significant. In 2010, the Company will re-assess all the geological information of the Wasamac gold project. A drilling program is being planned to target the extensions of known zones within the Wasa shear. Francoeur Project, Quebec, Canada Location and Access The Francoeur property is located approximately 25 km southwest of Rouyn-Noranda, Province of Quebec. The property can be reached from Rouyn-Noranda via Highway 117 to the town of Arntfield, and then by a secondary road from the north that crosses the town of Arnfield and leads directly to the property. Description and Infrastructures of the Property The Francoeur property consists of 13 mining claims, including 3 mining concessions and 4 mining leases, covering a total surface area of 363 hectares. These claims are located in Beauchastel Township and are wholly owned by Richmont Mines. The Francoeur mine was in operation from 1938 to 1947, from 1968 to 1971, and again from 1991 to 2001. Two head frames are present on the property, as well as various basic infrastructures. Mineral Reserve estimates The Francoeur Project has total estimated Probable Reserves detailed in the 43-101 compliant technical report, filed on SEDAR on August 5, 2009, and discussed in detail in the press release entitled Richmont Mines Defines Reserves at its Francoeur Gold Project and Plans Production at an Annual Rate of 35,000 Ounces Starting in 2011 issued by the Company on August 7, 2009. 44


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The reserve calculation of the Francoeur Project was based on the Report prepared by Daniel Adam, P.Geo., Ph.D. and Raynald Vincent, P.Geo., employees of Richmont Mines who are qualified persons as defined by the NI 43-101. 2009 Work and Results 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 expects to begin drift excavation and underground mine preparation work on this property once dewatering of the mine has been completed in the second quarter of 2010. TABLE OF RESERVESDecember 31, 2009
     
     December 31, 2008Tonnes
     Grade
     Ounces
     Tonnes
     Grade
     Ounces(metric)
     (g/t Au)
     contained
     (metric)
     (g/t Au)
     containedIsland Gold1Proven reserves2
     387,182
     8.46
     105,333
     308,205
     9.08
     89,925Probable reserves2
     539,961
     9.14
     158,752
     722,982
     8.57
     199,144Beaufor MineProven reserves2
     47,033
     6.63
     10,021
     96,678
     7.17
     22,287Probable reserves2
     118,728
     9.07
     34,616
     147,385
     10.03
     47,505FrancoeurProbable reserves3
     615,664
     6.91
     136,749
     -
     -
     -TOTAL GOLDProven and probablereserves
     1,708,568
     8.11
     445,471
     1,275,250
     8.75
     358,8611  Richmont Mines holds a 100% interest upon its acquisition of Patricia Mining in December 2008.2  In 2009, based on a price of US $850/oz and an exchange rate of 1.00 (in 2008, based on a price of US$785/oz and an exchange rate of 1.00).3  In 2009, based on a price of US $800/oz and an exchange rate of 1.00 .
  National Instrument 43-101  Standards of Disclosure of Mineral Projects Mineral Reserve calculations for the Companys material properties were established by qualified persons as defined under National Instrument 43-101, and their names are set out in the table below. 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
     Richard Dubuc, P.Geo.
     Chief Geologist, Beaufor MineJessy Thelland, P.Geo
     Geologist, Beaufor MineIsland Gold Mine
     Michel Plasse, P.Geo
  Chief Geologist, Island Gold Mine
  On the next page you will find a map of the Companys properties. 45


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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 (London PM fix) in U.S. dollars over the past five years: Exchange(US$)
     rate1
     (CAN$)2005
     444
     1.21
     5372006
     604
     1.13
     6832007
     695
     1.07
     7442008
     872
     1.07
     9332009
     972
     1.14
     1,108Source: 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. 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, 2009, Richmont Mines had not entered into any gold derivatives contracts. Governmental Regulation 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. Richmont Mines is not aware of any further legislation or amendments that may have an impact on its operations. 47


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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 with respect to mining matters covers the acquisition and ownership of mining titles, safety standards, royalties and mining taxes. The Mining Actregulates the rehabilitation and restoration of lands affected by mining activities. In Ontario, approval of any plan for the rehabilitation and restoration of land affected by a companys mining operations must be obtained from the Ministry of Northern Development and Mines (MNDM), while in Quebec such approval must be obtained from the Ministère des Ressources naturelles et de la Faune(the Ministry of Natural Resources and Wildlife, the MRNF). Companies must comply with the approved plan and provide a financial guarantee to support such compliance. 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, a rehabilitation and restoration plan 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 Project, 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. 48


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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, 2007, 2008 and 2009 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, 2009 compared to year ended December 31, 2008 (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 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. 49


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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 Company plans to process this stockpile as it works to achieve higher average mill throughput in 2010. 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 Project 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. 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. 50


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Changes in accounting policiesMining 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 instrument 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. 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. Future Accounting Pronouncements Business combinations, consolidated financial statements and non-controlling interests In January 2009, CICA issued 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. 51


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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. This new section will be applied prospectively and will only impact the Companys consolidated financial statements for future acquisitions concluded in periods subsequent to the date of adoption. Sections 1601 and 1602 dealing with consolidated financial statements require an entity to measure a non-controlling interest upon acquisition either at fair value or at the non-controlling interests proportionate share of the acquirers identifiable net assets. The new sections also require non-controlling interests to be presented as a separate component of shareholders equity. The new standards will apply as of the beginning of the first annual reporting period beginning on or after January 1, 2011, with simultaneous early adoption permitted. The Company is currently assessing the impact of these new sections on its consolidated financial statements. International accounting standards In February 2008, the Accounting Standards Board (AcSB) announced that generally accepted accounting principles in Canada (GAAP) are to converge with IFRS 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. IFRS uses a conceptual framework similar to Canadian GAAP, but there are significant differences in recognition, measurement and disclosure requirements. The Company has developed an IFRS conversion plan. The conversion project is progressing according to plan, and the Company foresees that it will be completed by the anticipated date of turnover to IFRS on January 1, 2011. Staff with the appropriate qualifications and experience have been assigned to the project. Moreover, these persons regularly attend thorough training sessions in order to follow the changes brought forth to IFRS in constant evolution. This team conducts technical research, provides issue identification and formulates recommendations to management who will then transmit the information to the audit committee. The Company has completed phase 1 of the conversion plan, diagnosis, which included a thorough examination of the differences between Canadian GAAP and IFRS, as well as a study of possible options to be adopted. The differences between Canadian GAAP and IFRS that have been identified as significant to the Company are explained below. The list 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 those areas the Company believes to be most significant. On the other hand, the present IFRS may undergo modifications, following recommendations made by the International Accounting Standards Board (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. As a result of certain proposed changes to IFRS, together with the current stage of the Companys IFRS project, at this time the Company cannot reasonably quantify the full impact that adopting IFRS will have on the Companys financial position and future results. 52


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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 is not expected to have a material impact on the Companys financial results. 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. Impairment of Assets Impairments under IAS 36 Impairment of Assets are based on discounted cash flows. Under Canadian GAAP, if an assets estimated undiscounted future cash flows are below its carrying amount, a write-down is required and is determined as the amount by which the carrying amount exceeds the discounted cash flows. There is no undiscounted test under IFRS. This may result in more frequent write-downs where carrying values of assets were previously supported under Canadian GAAP on an undiscounted cash flow basis, but could not be supported on a discounted cash flow basis. In addition, under IAS 36 a favourable change in circumstance that resulted in impairment of an asset, other than goodwill, would trigger the need to recalculate the amount of impairment, with any reversal being recognized in income to the extent the asset had previously been impaired. Under Canadian GAAP, impairments are not reversed. Based on our latest analysis, this requirement is not expected to have a material impact on the Companys financial results. Provisions IAS 37 Provisions, Contingent Liabilities and Contingent Assets requires a provision to be recognized when: (i) there is a present obligation as a result of a past transaction or event, (ii) it is probable that an outflow of resources will be required to settle the obligation, and (iii) a reliable estimate can be made of the obligation. Probable in this context means more likely than not. Under Canadian GAAP, the criterion for recognition in the financial statements is likely which is a higher threshold than probable. However, the Company does not believe this will impact its financial results. Other differences exist in relation to the measurement of provisions. IFRS require that changes to timing, cash flow estimates and discount rates be applied prospectively. Under Canadian GAAP, changes to discount rates in the case of asset retirement obligations apply only to the additional increase to liability and not to the entire liability. The Company is currently assessing the impact of this difference to its asset retirement obligations. 53


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Share-Based Payments IFRS 2 "Share-based Payment" requires that stock options that may be sequentially acquired, be measured and recognized for each distinct instalment of equity acquisition. The Company's policy consisted of determining a single value for all options granted, regardless of equity acquisitions, and of recognizing in a linear manner the entire grant, as permitted under GAAP. Moreover, IFRS 2 requires that expected forfeitures be accounted for in the recognition of compensation cost, whereas currently, forfeitures are recognized when they occur. The Company is currently assessing the impact of this difference on its financial results. Retrospective Application Most of the adjustments required upon conversion to IFRS will be made retrospectively, relative to the opening balance of retained earnings in the first comparative balance sheet. However, IFRS 1 "First-time adoption of International Financial Reporting Standards" provides a certain number of optional exemptions to general requirements for entities adopting IFRS for the first time. Here are the exemptions that impact the Company and decisions made regarding their application: Under IFRS 3, recognition of business combinations differs in certain aspects from GAAP.  For example, under IFRS 3, acquisition costs must be removed from the acquisition price, resulting in future values that differ from those under GAAP. An exemption under IFRS 1 makes it possible to avoid restatement of business combinations that took place prior to the date of turnover to IFRS. The Company has decided not to restate business combinations that took place prior to January 1, 2008. Under IFRS 1, it is possible to restate the amount recorded for share options only for those options still in effect at the date of turnover. However, the Company has decided to restate all stock options issued. As mentioned above, IAS 37 requires a different assessment of asset retirement obligations. As permitted under IFRS 1, the Company has decided not to retroactively restate liabilities relating to dismantling, which will enable it to avoid restating amortization of property, plant and equipment, as well as accretion expenses for all previous years, and instead to make the adjustment as at January 1, 2010, if needed, directly in equity. IFRS 1 permits the reclassification of a financial instrument previously classified as an available-for-sale financial asset as a held-for-trading financial asset. The Company has decided not to modify the previously established classification. The Company is presently working on the implementation of phase 2 of its conversion plan, which is to determine the impact of the differences between GAAP and IFRS. This step will determine the repercussions of the transition, so that solutions to address differences identified in phase 1 can be designed and developed. As a starting point, the Company will extend its opening balance sheet as of January 1, 2010. Subsequently, a model of IFRS financial statements, including notes, will be developed, and the Company will assess the impact of the adoption of the IFRS on information technology and data systems. Based on analyses conducted to date, the accounting system will be extended to allow the production of multiple financial statements compliant with GAAP and IFRS, in order to facilitate the requirement, in 2010, of presenting financial information under GAAP and also providing financial information under IFRS. Other foreseen changes to the information system include the ability to enter new data, to create and to delete accounts, changes to the current systems that relate to certain calculations and other revisions to the accounting software in order to meet IFRS requirements concerning recognition and presentation of information. For all the identified accounting changes, the Company will also assess the design impact and the effectiveness of its internal accounting controls. According to a preliminary examination of accounting controls, the Company does not foresee material changes to its internal controls. 54


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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 are resolved before the turnover date. Subsequently, the Company will be able to develop its first IFRS compliant interim financial statements and accompanying notes for the quarter ending March 31, 2011. 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. In 2007, total revenue was $38.1 million and net income was $6.7 million, or $0.28 per share, which included an $8.1 million gain stemming from the disposal of mining assets. A total of 46,193 ounces of gold were sold in 2007, at an average price of US$699 (CAN$751) per ounce. Other revenue Other revenue totalled $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% net smelter return (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. The lower royalty payments of $0.6 million in 2007 versus $1.59 million in 2008, reflect the fact that production at Island Gold began only in October 2007. 55


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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. 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 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
     -
     
     347Camflo Northwest property
     -
     
     -Other properties
     28
     
     20Project evaluation
     305
     
     3738,413
     
     10,340Exploration tax credits
     (1,347
     )
     (643
     )Reversal of exploration tax credits recorded 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. 56


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Depreciation and depletion The amounts related to depreciation and depletion totalled $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. Mining and income taxes 2009 mining and income tax expense totalled $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. 57


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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 income taxes and 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. Liabilities The amount of liabilities of the Company was $17.2 million as at December 31, 2009, compared with $15.9 million at December 31, 2008, and is composed of short-term liabilities, asset retirement obligations, the minority interest and future mining and income taxes. Richmont Mines has no long-term debt. Asset retirement obligations Richmont Mines must evaluate on a periodic basis the assumptions used in the calculation of the asset retirement obligations related to eventual closure of its mining sites. At the end of the fiscal year ended December 31, 2009, the Company had the following financial legal obligations: Total amount of the estimated cash flow
     Cash flow payment schedule
     Credit-adjusted risk-free rate$
     
     %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. 58


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At December 31, 2009, the Company has net operating federal and Ontario, Quebec losses carry forwards of approximately $7.0 million, and $8.4 million respectively, which expire at various dates through 2029. Shareholders equity Shareholders equity totalled $68.0 million as at December 31, 2009, compared with $67 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. 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. 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. 59


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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 Project were prepared in August 2009 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 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. 60


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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)
     2009
     2008
     2007Operating costs per consolidated statements of earnings (CAN$)
     48,751
     42,998
     24,199Royalties per consolidated statements  of earnings (CAN$)
     1,563
     1,591
     565Cash costs (CAN$)
     50,314
     44,589
     24,764Ounces of gold sold
     59,733
     70,945
     46,193Total cash cost in CAN$/per ounce
     842
     629
     536Average exchange rate (US$/CAN$)
     1.1420
     1.0660
     1.0748Total cash cost in US$/per ounce
     737
     590
     499
  Year ended December 31, 2008 compared to year ended December 31, 2007 (all dollar amounts are in thousands of Canadian dollars unless otherwise stated except per share and per ounce data) Overview Gold Prices and Currency The gold market remained strong in 2008 as the average price rose to approximately US$872 per ounce from an average price of approximately US$695 in 2007. The price per ounce at the beginning of 2008 was approximately US$833 per ounce and the closing price at December 31, 2008 was approximately US$882 per ounce. In the month of March 2008, gold rose to over US$1,000 per ounce, but by October the global economic crisis had contributed to a drop in the price to approximately US$712 per ounce. Production Richmont achieved significant revenue and income growth in 2008 as a result of higher gold sales at a higher average selling price per ounce. In 2008, Richmont sold 70,945 ounces of gold at an average price of US$876 (CAN$934) per ounce, for revenue of $66,237. The Company produced 73,577 ounces of gold at an average cash cost per ounce of US$590 (CAN$629). Net earnings were $1,635, or $0.07 per share. These revenue compare favourably with 2007 when the Company sold 46,193 ounces of gold at an average price of US$699 (CAN$751) per ounce and produced 45,304 ounces of gold at an average cash cost per ounce of US$499 (CAN$536). Net earnings in 2007 totalled $6,671, or $0.28 per share, including a gain of $8,066 on the sale of mining assets. 61


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Richmont produces gold at the Island Gold Mine in Ontario and at the Beaufor Mine in Quebec. As at December 31, 2008, the Island Gold Mine had proven and probable reserves of 1,031,187 tonnes of ore at a grade of 8.72 g/t, for 289,069 ounces of gold. As at December 31, 2008, the Beaufor Mine had proven and probable reserves of 244,063 tonnes of ore at 8.89 g/t, for 69,792 ounces of gold. As at December 31, 2008, total proven and probable reserves at both operations were 358,861 ounces of gold. Richmont Mines has a 100% equity interest in the Island Gold Mine since the acquisition of Patricia Mining in December 2008. Commercial production at the Island Gold Mine began on October 1, 2007. Approximately 16,665 metres of diamond drilling in 90 drill holes were completed in 2008. From this drilling, about third of the holes were drilled in the Island Gold extension, between two diabase dykes (East of 15 200 E). The drilling in this extension has enabled the Company to add about 190,000 tonnes of Probable Mineral Reserves. The Beaufor Mine, which has been in commercial production since 1996, had strong performance in 2008 despite the fact that the cash cost per ounce increased during 2008 compared with 2007, due primarily to increased definition drilling and higher mining and milling costs. Investments In 2008, the Company invested $3,079 in plant and equipment at Island Gold Mine to advance production at the mine. 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. In 2007, the Company invested $21,270 at Island Gold Mine mainly in development costs. This investment was reduced by the application of $16,775 in proceeds from precious metal sales during development activities. At the Beaufor Mine, the Company invested $1,060, mainly to replace the headframe structure. Summary of operational and financial results During 2008, the Company had a net profit of $1,635 or $0.07 per share, compared with a net profit of $6,671 or $0.28 per share, in 2007. The Companys mining operations generated cash flows of $12,117 in 2008 compared with $5,999 in 2007. The Company had no long-term debt and possessed working capital of $26,753 as at December 31, 2008 compared with no long-term debt and $33,970 of working capital as at December 31, 2007. The $7,217 decrease is attributed to a $2,975 decrease in cash and cash equivalents and short-term investments related to the Companys acquisition of Patricia Mining in December 2008, a $1,061 increase in mining and income taxes payable mainly due to federal and mining taxes of $1,207 applicable to the Companys subsidiary, Louvem Mines Inc., along with higher accounts payable and accrued charges of $1,907. In addition, last years accounts receivable balance included an amount of $1,500 that was reimbursable from Patricia Mining, its minority partner until the recent acquisition. The Company believes that it would have access to other sources of financing if additional capital became necessary to finance its operations. 62


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Changes in accounting policies Inventories On January 1, 2008, in accordance with the applicable transitional dispositions, the Company adopted the CICA Handbook Sections 3031, Inventories, which replaces Section 3030 carrying the same title and harmonizes the Canadian standards related to inventories with IFRS. Section 3031 provides changes to the measurement and more extensive guidance on the determination of cost, including allocation of overhead; it reduces the number of methods available to determine cost; it requires impairment testing; and it expands the disclosure requirements to increase transparency. The adoption of this standard did not have a significant impact on the Companys consolidated financial statements and on comparative data. Capital disclosures On January 1, 2008, in accordance with the applicable transitional dispositions, the Company adopted Section 1535 of the CICA Handbook, Capital disclosures. This section establishes standards for disclosing information about an entitys capital and how it is managed: i) qualitative information about the Companys objectives, policies and processes for managing capital, ii) quantitative data about what the Company regards as capital, iii) the fact that the Company has complied with any external capital requirements, and iv) if it has not complied, the consequences of such non-compliance. As a result of the adoption of this standard, note 16 to the Companys financial statements included in this Annual Report has been added to the Companys consolidated financial statements. The adoption of this standard did not have a significant impact on the consolidated financial statements and on comparative data. Financial instruments  disclosures and presentation On January 1, 2008, in accordance with the applicable transitional provisions, the Company adopted two new CICA Handbook sections: Section 3862, Financial instruments  disclosures and Section 3863, Financial instruments  presentation. Together, these two sections replace Handbook Section 3861, Financial instruments  disclosures and presentation. These Sections require additional disclosure, particularly regarding the documentation of risks to which the Company is exposed and how the Company manages those risks. The results of the application of these new standards are included in note 17 to the Companys financial statements and their application did not have a significant impact on the Companys consolidated financial statements. Future accounting changes (Canadian GAAP) International Financial Reporting Standards The Canadian Accounting Standards Board confirmed, in February 2008, that the use of IFRS would be required for Canadian publicly accountable enterprises for fiscal years beginning on or after January 1, 2011. IFRS uses a conceptual framework similar to Canadian GAAP, but there are significant differences in recognition, measurement and disclosures. 63


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The Company commenced its IFRS conversion project in 2008. The project consists of four phases: diagnosis, design and planning, solution development and implementation. The plan addresses the impact of IFRS on accounting policies and implementation decisions, infrastructure, business activities and control activities. As at December 31, 2008, the Company was finalising the first phase of its IFRS conversion, consisting of a preliminary study of its existing financial information and identifying the main sectors where IFRS might have an impact. Throughout fiscal year 2009, in its MD&A and quarterly reports, the Company have been reporting on the progress of its IFRS implementation plan. See section Future accounting Pronouncements for more details. Revenue Precious metal revenue Precious metals revenue in 2008 totaled $66,237 compared to $34,691 in 2007, constituting a $31,546 increase, which was primarily due to higher gold sales at a higher average selling price per ounce. During 2008, the Company sold 70,945 ounces of gold at an average price of US$876 (CAN$934) per ounce compared with 46,193 ounces of gold in 2007 at an average price of US$699 (CAN$751) per ounce. The Island Gold Mine, which began commercial production at the beginning of the fourth quarter of 2007, sold 38,037 ounces of gold at an average price of US$867 (CAN$924) per ounce in 2008, while in 2007, 7,302 ounces of gold were sold at an average price of US$726 (CAN$780). The Beaufor Mine sold 32,908 ounces of gold at an average price of US$ 886 (CAN$944) per ounce in 2008, while in 2007, 26,182 ounces of gold were sold at an average price of US$693 (CAN$745) per ounce. The East Amphi Mine, which was sold in June 2007, sold 12,709 ounces of gold at US$695 (CAN$747) in 2007. Other revenue Other revenue of $4,354 in 2008, up $974 when compared with 2007, was the result of higher custom milling revenue at the Camflo Mill and a foreign exchange gain. In 2008, Richmont processed 74,703 tonnes of custom milling ore at the Camflo Mill compared with 46,193 tonnes processed in 2007. Expenses Operating costs Operating costs in 2008 were $44,589, $19,825 above operating costs of $24,764 in 2007. Operating costs increased $21,854 at Island Gold as Richmont advanced the mine, which opened in October 2007, to current production levels. At Beaufor, costs increased $4,695 as a result of increased production. During the year, a total of 276,994 tonnes of ore from Island Gold and Beaufor mines were milled compared with a total of 260,820 tonnes of ore from the Island Gold, Beaufor and East Amphi mines in 2007. The cash cost of production per ounce increased to an average of US$590 (CAN$629) in 2008 from US$499 (CAN$536) in 2007 due to increased definition drilling and higher mining and milling costs. Royalties The amount of royalties paid out in 2008 increased to $1,591 compared with $565 in 2007 due to a 3% net smelter return (NSR) royalty payable on gold production at the Island Gold Mine. The increase was also attributable to higher gold production at the Beaufor Mine, for which the Company has paid royalties of $30.00 per ounce to a third party on 50% of the ounces produced since November 2006. Prior to 2006, the royalty was $12.50 per ounce. No royalties were payable on the ounces of gold produced at the East Amphi Mine. 64


---

Custom milling- In 2008, ore totalling 74,703 tonnes was milled by the Company, compared with 46,317 tonnes in 2007. Activities related to custom milling represented expenses of $1,785 in 2008, compared with $1,023 in 2007. 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 Administrative expenses were $3,665 in 2008 compared with $3,315 in 2007, representing a 11% increase due to increased costs related to a recording of a provision for future closure costs, which were somewhat offset by a decline in stock-based compensation, which is a non-cash expense. Of the 445,000 options granted in 2008, 55,000 options represent renewals of expired options to directors and employees, 165,000 options represent the granting of options to new employees or to employees who were promoted and the balance of 225,000 options represents new issuance for directors and officers. The weighted-average fair value calculated according to the BlackScholes model of evaluation at the date on which each option was granted was $0.76 compared with $1.06 in 2007. Exploration and project evaluation As in previous years, Richmont Mines continued its investments related to exploration and project evaluation. These expenses increased from $3,288 in 2007 to $10,547 in 2008. The increase is attributable to an increase in actual exploration and project evaluation expenditures, as detailed in the table below. Investments for exploration and project evaluation 2008
     
     2007$
     
     $Exploration costs - MinesIsland Gold Mine
     2,293
     
     505Beaufor Mine
     2,921
     
     1,874East Amphi Mine
     -
     
     -5,214
     
     2,379Exploration costs - Other propertiesValentine Lake property
     347
     
     1,017Golden Wonder property
     4,202
     
     665Francoeur/Wasamac properties
     184
     
     142Camflo Northwest property
     -
     
     112Other properties
     20
     
     49Project evaluation
     373
     
     12410,340
     
     4,488Exploration tax credits
     (643
     )
     (1,200
     )Reclassification of exploration tax credits from previous years
     850
     
     -10,547
     
     3,288
  65


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Accretion expense of asset retirement obligations This charge was $182 in 2008, compared with $178 in 2007, As the Companys production and exploration activities are subject to a variety of laws and federal and provincial regulations governing the protection of the environment, the Company has reported the asset retirement obligations for the mining sites on the basis of managements best estimate of the future costs. These estimates may be subject to changes if the laws and regulations are changed or if new circumstances arise. Depreciation and depletion The amounts related to depreciation and depletion totalled $5,687 in 2008, compared with $5,628 in 2007. The increase is attributable primarily to the increase in gold sales, which were 70,945 ounces in 2008, compared with 46,193 ounces in 2007 and by the increase in the Beaufor and Island Gold properties Mineral Reserves, which were determined at the end of 2007. Loss on disposal of mining assets No major disposal held in 2008. In 2007, the disposal of mining assets of the East Amphi property contributed to the majority of the gain of $8,066. Mining and income taxes For the year 2008, mining and income tax expense included a credit of $1,200 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 was planned and recorded on December 31, 2007. This change in fiscal planning increased the exploration expenses by $850 and the investment in property, plant and equipment by $350. The mining and income taxes also include a mining duties expense of $175 from the previous year and exploration tax credits of $643 recorded against exploration expenses instead of mining and income taxes. The future income tax credit of $359 was mainly due to a reduction in liabilities for future mining taxes. In 2007, current income taxes of $1,640 were comprised of federal and provincial taxes and mining taxes applicable to the year 2007 in the amount of $1,891, offset by $251 in adjustments for previous years not previously recorded. The tax expense calculated at the combined stationary rate was impacted by a reduction in the valuation allowance. The future income tax credit of $334 was mainly due to a reduction in liabilities for future mining taxes. Unrecorded available tax credits of $350 was used during the year and applied against property, plant and equipment while $1,200 was applied against exploration expenses. Details on taxes are found in note 8 of the Companys consolidated financial statements included in this Annual Report. Minority interest Minority interest expense totalled $2,035 in 2008, compared with a recovery of $36 in 2007. This amount represents the share of earnings or losses due to the minority shareholders of Louvem, in which Richmont Mines owns a 70% interest, and the share of the earnings or losses from the Island Gold Mine that belongs to Patricia Mining Corp., a partner in this project until its acquisition by Richmont Mines on October 15, 2008. 66


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Net earnings Net earnings in 2008 were $1,635, or $0.07 per share, compared with net earnings of $6,671, or $0.28 per share, in 2007, which included a $8,066 gain on the sale of mining assets. A 54% increase in the number of ounces sold at a 24% higher selling price in Canadian dollars was partially offset by 17% increase in the cash cost in Canadian dollars per ounce sold and by higher exploration and project evaluation costs, as the Company focused its exploration efforts on the Island Gold and Beaufor mines. Balance sheet Assets The total assets of Richmont Mines decreased from $85,976 as at December 31, 2007, to $82,881 at the end of 2008. The decrease is due to the decrease in the cash and cash equivalents, short-term investments and accounts receivable along with the cancellation of the advance to a minority partner followed by its acquisition. At December 31, 2008, Richmont had working capital of $26,753 compared with $33,970 at December 31, 2007. The $7,217 decrease is attributed to a $2,975 decrease in cash and cash equivalents and short-term investments related to the Companys acquisition of Patricia Mining Corp. in December 2008, a $1,061 increase in mining and income taxes payable mainly due to federal and mining taxes of $1,207 applicable to the Companys subsidiary, Louvem Mines Inc., along with higher accounts payable and accrued charges of $1,907. In addition, last years accounts receivable balance included an amount of $1,500 that was reimbursable from Patricia Mining, its minority partner until the recent acquisition. Liabilities The amount of liabilities of the Company was $15,863 as at December 31, 2008, compared with $24,163 at December 31, 2007, and is composed of short-term liabilities, asset retirement obligations, the minority interest and future mining and income taxes. Richmont Mines has no long-term debt. 67


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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, 2008, the Company had the following financial legal obligations: Total amountof the estimated cash flow $
  Cash flow payment schedule
  Credit-adjusted risk-free rate %Beaufor Mine
     391
     2012
     5.5Camflo Mill
     3,121
     2012
     5.5Island Gold Mine
     945
     2013
     5.5Francoeur property
     193
     2012
     5.54,650
  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 $4,583 and non-refundable federal tax credits of $3,207, 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, 2008, the Company has net operating federal, Quebec and Ontario loss carry forwards of approximately $3,797, $3,606 and $1,878 respectively, which expire at various dates through 2028. Shareholders equity Shareholders equity totalled $67,018 as at December 31, 2008, compared with $61,813 as at December 31, 2007. At December 31, 2008, Richmont Mines had 26,113,156 shares outstanding and 2,308,000 options granted under its stock-purchase plan compared with 24,053,353 shares outstanding and 2,023,000 options granted at December 31, 2007. Commitments and contingencies The Company is subject to royalty payments on 50% of the production of the Beaufor Mine at the rate of $30 per ounce produced, a 3% royalty per ounce produced at the Island Gold Mine, and also on other properties, if they enter into commercial production which are detailed under Item 4. INFORMATION ON THE COMPANY  Business Overview  Mineral Royalties. 68


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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 revenues and expenses as well as on the amounts of assets and liabilities. The following factors represent the estimates that management considers the most significant and for which the actual amounts may differ considerably and affect operating results. Mineral reserves The main parameters used to determine the mineral reserves are the following: 2008
     2007Gold (US$/ounce)
     785
     650Exchange rate (US$/CAN$)
     1.00
     1.00Gold (CAN$/ounce)
     785
     650
  Property, plant and equipment The costs related to the development of a mining property are recorded at the time when the property shows potential for development. When commercial production begins, these 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 estimate of assumption may result in a considerable reduction of mineral reserves, which could have a negative impact on the book value of these properties. For 2009 and 2010, the assumption used in the asset valuation process was a price of CAN$900 per ounce of gold. For 2011, 2012 and 2013, a price of CAN$815 per ounce of gold was used in order to estimate future revenue. Depreciation The Company uses the units-of-production method for the depreciation 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. 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. 69


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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 differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using current tax rates or tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The impact on future tax assets and liabilities of a change in tax rates is recognized in the statement of earnings in the year in which the revised tax rate comes into effect. Total cash cost Total cash cost per ounce is not a recognized measure under Canadian GAAP and this data may not be comparable to data presented by other gold producers. The Company believes that this generally accepted industry measure is a realistic indication of operating performance and is useful in allowing year over year comparisons. As illustrated in the table below, total cash cost per ounce is calculated by adding operating costs and royalties as shown in the Companys Consolidated Statements of Earnings and then dividing by the number of ounces of gold sold. The cash costs obtained from this calculation in Canadian dollars are converted into US dollars. Total cash cost per ounce in US dollars is intended to provide investors with information about the cash generating capabilities of the Companys mining operations. Management uses this measure to monitor the performance of the Companys mining operations. Since market prices for gold are quoted on a per ounce basis, using this per ounce measure allows management to assess the mines cash generating capabilities at various gold prices. Management is aware that this per ounce measure of performance is affected by fluctuations of the exchange rates. Reconciliation of total cash cost per ounce to production costs: (in thousand $)
     2008
     2007Operating costs per consolidated statements of earnings (CAN$)
     42,998
     24,199Royalties per consolidated statements of earnings (CAN$)
     1,591
     565Cash costs (CAN$)
     44,589
     24,764Ounces of gold sold
     70,945
     46,193Total cash cost in CAN$/per ounce
     629
     536Average exchange rate (US$/CAN$)
     1.0660
     1.0748Total cash cost in US$/per ounce
     590
     499
  70


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A.
     Liquidity and Capital Resources (all dollar amounts are in thousands of Canadian dollars)
  At December 31, 2009, Richmont had working capital of $24,936 compared with $26,753 at December 31, 2008. The $1,817 decrease reflects a $4,882 decrease in cash and cash equivalents, a $1,262 increase in income taxes and tax credit receivable, a $620 increase in the number of shares of publicly-traded companies held after reception of common shares of Mountain Lake Resources Inc., and to a $1,300 increase in ore inventories. As at December 31, 2009, the Company had $106 in deposits restricted with Quebecs government and a credit facility is available to the Company in the amount of $3,000 for the issuance of letters of credit as guarantees for the settlement of asset retirement obligations. The credit facility has a fixed fee of 0.85% (0.75% in 2008). The following table provides the allocation of deposits restricted and letters of credit issued as at December 31, 2009: 2009
     Date of$
     renewalDeposits restrictedBeaufor Mine
     52Francoeur Property
     54106Letters of creditCamflo Mill
     1,332
     January 20, 2010Island Gold Mine (Kremzar property)
     590
     January 26, 2010Island Gold Mine (Lochalsh property)
     184
     January 5, 20102,106
  As at December 31, 2008, the Company had guaranteed the restoration of its mining sites by the pledge of letters of credit amounting to $1,539 and the Island Gold property has been pledged to the Ontario Ministry of Northern Development and Mines in the amount of $578. Cash flow from operating activities Cash flow from operations decreased from an earning of $12,117 in 2008 to an amount of $2,967 in 2009. Cash flow used in investing activities In 2009, a total of $4,318 was allocated to the Island Gold Mine, $1,092 for the Beaufor Mine and $1,976 for the Francoeur Project. Cash flow used in investing activities decreased from $10,647 in 2008 to an amount of $7,794 mainly due to the acquisition of Patricia Mining Corp. in 2008 for $6,984 and increase investment in Francoeur Project. Cash flow from financing activities The Company issued 34,000 common shares during 2009 and 9,000 common shares during 2008 in connection with the exercise of options, for a total cash consideration of $82 and $25, respectively. In 2007, the Company issued 102,000 common shares in connection with the exercise of options, for a total cash consideration of $183. 71


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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 and 229,000 in 2007) for $137 in cash ($768 in 2008 and $658 in 2007). This transaction increased the deficit by $29 ($84 in 2008 and $77 in 2007) and increased the contributed surplus by $0 ($69 in 2008 and $0 in 2007). B.
     Research and Development, Patents and Licenses, etc.
  None. C.
     Trend Information
  See discussions in Parts A and B of Item 5 Operating Results and Financial Review and Prospects. D.
     Off-Balance Sheet Arrangements
  The Company does not have any off-balance-sheet arrangements. E.
     Tabular Disclosure of Contractual Obligations
  As of December 31, 2009, 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
     $6,510
     -
     $604
     $1,190
     $4,716
  As of December 31, 2009, the Company had no long-term debt obligations, capital lease obligations, operating lease obligations or purchase obligations. In 2009, cash payment schedules with respect to the Companys asset retirement obligations for the above described asset retirement obligations were revised from 2012 to 2016 for the Camflo Mill and Francoeur property and from 2013 to 2015 for the Island Gold Mine. Payment schedule with respect to the Companys asset retirement obligations for the Beaufor Mine is 2012. 72


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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: Name and
Municipality ofResidence
     
     Office held
with theCompany
     
     PrincipalOccupation
     
     Director
or Officersince
     
     Number of
shares owned
on April27,20101
     
     Number of
options held on
April 27, 2010H. Greg Chamandy 
Westmount (QC) 
Canada
     
     Chairman of the Board
     
     Businessman 2
     
     May 14, 2009
     
     5,013,254 3
     
     105,000Denis Arcand 4 
Brossard (QC)
Canada
     
     Vice- Chairman of the Board
     
     Businessman 5
     
     Sept. 28, 1995
     
     36,348
     
     130,000Martin Rivard Rouyn-Noranda 
(QC)
Canada
     
     President, Chief Executive Officer and Director
     
     President and Chief Executive Officer of Richmont Mines6
     
     Oct. 1, 2005
     
     1,030,000 7
     
     375,000Réjean Houle 8 
Montréal (QC)
Canada
     
     Director
     
     Ambassador, Canadien Hockey Club Inc.
     
     Jan. 27, 1989
     
     39,000
     
     130,000Raynald Vézina, Eng. 4,9
Québec (QC)
Canada
     
     Director
     
     Mining Consultant 10
     
     Oct. 30, 2006
     
     5,000
     
     100,000Elaine Ellingham, Eng 9 
Toronto (ONT) 
Canada
     
     Director
     
     President of Ellingham Consulting Ltd.
     
     February 4, 2010
     
     -
     
     80,000Sam Minzberg 11 
Westmount (QC) 
Canada
     
     Director
     
     Partner, Davies Ward Phillips & Vineberg LLP
     
     February 4, 2010
     
     -
     
     80,000
  73


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Name and
Municipality ofResidence
     
     Office held
with theCompany
     
     PrincipalOccupation
     
     Director
or Officersince
     
     Number of
shares owned
on April27,20101
     
     Number of
options held onApril 27, 2010Jean-Pierre Ouellet8,13 
Outremont (QC) 
Canada
     
     Director
     
     Venture partner, St. Lawrence Capital LP and company director
     
     February 4, 2010
     
     -
     
     80,000Christian Pichette 
Brossard (QC) 
Canada
     
     Vice President, Operations
     
     Vice President, Operations of Richmont Mines
     
     October 6, 2005
     
     4,500
     
     275,000Nicole Veilleux, CA 
Rouyn-Noranda (QC) 
Canada
     
     Financial Director
     
     Financial Director of Richmont Mines
     
     March 1, 2006
     
     5,000
     
     115,000Sidney Horn 14 
Outremont (QC) 
Canada
     
     Corporate Secretary
     
     Lawyer, Stikeman Elliott
     
     December 15, 2009
     
     -
     
     80,000Sandra Cauchon 
Rouyn-Noranda 
(QC) 
Canada
     
     Assistant Corporate Secretary
     
     Lawyer of Richmont Mines
     
     February 24, 2009
     
     500
     
     12,000
  1
     As the Company has no direct knowledge of the number of shares controlled by the above-mentioned directors and officers, the information was provided by each of them.2
     Since 2004, Mr. Chamandy has been Co-Chairman of the Board of Directors of Liquid Nutrition Inc., a company which specializes in the sale of natural drinks and products. M. Chamandy is also the Chairman of the Board of Directors and Founder of Oxbridge Private Wealth Management Inc., a mutual fund corporation that plans to begin its operations in June of 2009. 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 President & Chief Executive Officer and a member of the Board of Directors of Louvem and a member of the Board of Directors of MISA, a group of private companies and public and parapublic organizations whose goal is to insure the vitality and durability 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 Compensation Committee9
     Member of the Corporate Governance and Ethics Committee10
     Mr. Vézina is also Chairman of the Board of Directors of MISA.11
     Chairman of the Compensation Committee12
     Chairman of the Audit Committee13
     Chairman of the Corporate Governance and Ethics Committee14
     Sidney Horn replaced Sandra Cauchon as Corporate Secretary of the Company on December 15, 2009.
  74


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The Company does not have any other committee other than those mentioned above. The above-mentioned individuals have held their principal occupation as indicated opposite their respective names during the last five years, except for Mr. Martin Rivard who, prior to October 2005, was Executive Vice-President of Richmont Mines; Mr. Christian Pichette who, prior to September 2005, was General Manager of Niobec Mine, Cambior Inc., Ms. Nicole Veilleux who, prior to March 2006, was Controller of Richmont Mines and Michel Lavigne who, prior to May 2005, was President of Raymond Chabot Grant Thornton LLP. 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 IssuersMartin Rivard
     Louvem Mines Inc.Elaine Ellingham
     Prelim Capital Inc. and Continental Nickel LimitedA. Michel Lavigne
     Primary Energy Recycling Corporation and TVA Group Inc.Samuel Minzberg
     HSBC Bank (Canada) and Reitmans (Canada) LimitedJean-Pierre Ouellet
     GBO 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 6,133,602 common shares of Richmont Mines, which represents 23.5% of all the shares issued and outstanding of Richmont Mines Inc. Furthermore, no directors or officers own any shares of Louvem Mines Inc. B.
     Compensation
  Compensation of senior officers During the financial year ended December 31, 2009 the Named Executive Officers of the Company (as hereinafter defined) were paid an aggregate cash remuneration of $1,196,123. The following information sets forth the remuneration paid for the financial year ended December 31, 2009 by the Company and its subsidiaries to the Companys President and Chief Executive Officer, Director of Finance and other executive officers (collectively, the Named Executive Officers). The Company does not offer a long term incentive plan. 75


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Executive Officer Compensation Table For the Fiscal Year Ended on December 31, 2009 Name and
principal position
     
     Salary
($)
     
     Option-based
awards($)2
     
     Annual
incentive plans
(Bonus)
     
     All other
compensation
($)(3)
     
     Total
compensation
($)Martin Rivard(1) 
President and Chief 
Executive Officer
     
     219,231
     
     126,450
     
     60,000
     
     8,769
     
     414,450Christian Pichette 
Vice-President, 
Operations
     
     244,615
     
     84,300
     
     50,000
     
     9,785
     
     388,700Nicole Veilleux 
Director, Finance
     
     129,231
     
     42,150
     
     12,500
     
     5,169
     
     189,050
  Notes:1)
     The President and Chief Executive Officer did not receive remuneration in his capacity as a director of the Company.2)
     During 2009, the Company granted a total of 252,900 options to the named Executive Officers on two separate occasions, namely January 15, 2009 and December 11, 2009. 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:
 2009Risk-free rate:
     2.3%Expected option life:
     4 yearsVolatility:
     56%Expected dividends yield:
     0%
 3)
     The category « Other remuneration » refers to a sum paid to each executive officer that is equivalent to contributions that would normally be made to a retirement fund. Please see the section Other remuneration.
  Compensation of Directors On December 10, 2009, the Companys Compensation Committee adopted an amendment to the remuneration plan of directors who are not officers of the Company or its affiliates, or who do not receive compensation in respect thereto. Under the amended remuneration plan, an annual retainer of $12,500 was paid to each Board member for the year 2009, with the exception of Mr. Denis Arcand, who as Chairman of the Board of Directors from April 2009 until mid-December 2009, was paid an annual retainer of $40,000. In addition, every Board member received a sum of $750 for each Board and/or committee meeting that they attended during 2009 compared with $500 per meeting in 2008. The annual retainer for directors and attendance fees for board and committee meetings were increased in 2009 and were based on the Compensation Committees analysis of amounts paid to directors of comparable mining companies. As President of the Compensation Committee and President of the Corporate Governance Committee, Mr. Greg Chamandy and Mr. Réjean Houle, respectively, each received an additional sum of $2,500 in 2009. Mr. Denis Arcand, as President of the Audit Committee, similarly received additional remuneration in 2009, in the amount of $5,000. In aggregate, Board members received total remuneration of approximately $289,908 during the 2009 fiscal year.Following his appointment to the Board of Directors on May 14, 2009, Mr. H. Greg Chamandy was also granted a total of 75,000 options to purchase company common stock at an exercise price of $4.12, per share expiring May 13, 2014. 76


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Director Compensation Table for the financial year ended on December 31, 2009 Name
     Fees Earned($)
     Option-based
awards(1)
($)
     All other
Compensation
($)
     Total
($)H. Greg Chamandy
Chairman of the Board (2)
     24,667
     140,400
     n/a
     165,067Denis Arcand
Vice-Chairman of the Board (3)
     60,913
     0
     
     60,913Réjean Houle
Director
     29,426
     0
     n/a
     29,426Raynald Vézina
Director
     27,702
     0
     6,800 4
     34,502Jean-Guy Rivard, former
Chairman of the Board (5)
     72,442
     131,400
     n/a
     203,842
  Note: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:
 Risk free-rate :
     2.3%Expected Option life :
     4 yearsVolatility :
     56%Expected dividends yield :
     0%
 2)
     Mr. H. Greg Chamandy was elected to the Board of Directors on May 14, 2009, and was elected Chairman of the Board of Directors on December 15, 2009.3)
     Mr. Denis Arcand was Chairman of the Board of Directors from April 7, 2009 until December 15, 2009.4)
     This amount is the taxable benefit attributed to Mr. Vézina following his March 4, 2009 exercise of 5,000 options.5)
     Mr. Jean-Guy Rivard was Chairman of the Board of Directors until his death on March 28, 2009. The Company has not set aside or accrued any amounts to provide pension, retirement or similar benefits to the directors or executive officers. 77


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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, 2010 or until a successor is duly elected. Directors Name
     Elected orAppointed DirectorH. Greg Chamandy
     May 2009Denis Arcand
     September 1995Martin Rivard
     October 2005Réjean Houle
     January 1989Raynald Vézina
     October 2006Elaine Ellingham
     February 2010A. Michel Lavigne
     February 2010Samuel Minzberg
     February 2010Jean-Pierre Ouellet
     February 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. 78


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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). 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 $1,053,174 for the President and Chief Executive Officer, $736,710 for the Vice-President Operations and $345,502 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 $3.92. Change of Control Agreements The Company has also entered into an agreement with each of the Named Executive Officers in case of a change of control. 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. 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. 79


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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 $1,053,174 for the President and Chief Executive Officer, $736,710 for the Vice-President Operations and $345,502 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 $3.92. 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. Compensation Committee The Board has a Compensation Committee composed entirely of independent directors. The Compensation 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. The Committee favors giving key personnel competitive compensation in order to keep them with the Company. The Compensation Committee of the Company is composed of Mr. Sam Minzberg, Mr. Jean-Pierre Ouellet and Mr. Réjean Houle. The compensation of the 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 Chief Executive Officer will abstain from the discussion and the ensuing decision concerning the his 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. 80


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Audit Committee In addition to the Compensation Committee and the Governance and Ethics Committee, the Board has one other committee, the 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 Michel Lavigne, President 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. Lavigne has served on the Board of the Caisse de dépôt et placement du Québec (CDPQ) since 2005 and is Chairman of its Audit Committee. He is also Chairman of the Board of Primary Energy Recycling Corporation and serves on the Boards of Canada Post, Quebecor Media Inc. and TVA Group Inc. He is a member of the Investment Committees of Propulsion Ventures Funds and ID Capital Funds. Until 2005, Mr. Lavigne was partner, President and Chief Executive Officer of the accounting firm Raymond Chabot Grant Thornton, Chairman of the Board of Grant Thornton Canada and a member of the Board of Governors of Grant Thornton International. 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 30 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. 81


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D.
     Employees
  The number of employees of the Company as of December 31, 2009, 2008 and 2007, was 343, 312 and 262 respectively. The distribution of the employees was the following: Category of Activity or
     December 31,Geographical Location
     2009
     2008
     2007Head Office
     16
     19
     14Beaufor
     98
     99
     91Island Gold
     184
     163
     132Exploration
     8
     5
     22Camflo
     25
     163
     132Francoeur
     12
     -
     -Total
     343
     312
  262
  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 April 27, 2010, is set forth below. Stock Options OutstandingName
     Unexercised
underlying
securities
(unit)
     Unexercised
Options at Year-
End
(#)
Exercisable/
Unexercisable
     Exercise price of
share options
($)
     Share options
expiry dateMartin Rivard
     50,000
     
     5.30
     July 7, 2010President and Chief Executive
     50,000
     
     4.36
     Jan. 30, 2011Officer
     50,000
     235,000 / 140,000
     2.83
     Dec. 13, 201150,000
     
     2.88
     August 7, 201250,000
     
     3.15
     Dec. 13, 201250,000
     
     1.80
     Dec. 11, 201375,000
     
     3.55
     Dec. 10, 2014TOTAL
     375,000Christian Pichette
     50,000
     
     4.97
     Oct. 5, 2010Vice-President, Operations
     50,000
     
     4.36
     Jan. 30, 201150,000
     180,000 / 95,000
     2.83
     Dec. 13, 201125,000
     
     2.83
     July 10, 201350,000
     
     1.80
     Dec. 11, 201350,000
     
     3.55
     Dec. 10, 2014TOTAL
     275,000Nicole Veilleux
     10,000
     
     5.30
     July 7, 2010Financial Director
     15,000
     
     4.04
     August 3, 201115,000
     59,000 / 56,000
     2.74
     Jan. 7, 2012
  82


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Name
     Unexercised
underlying
securities
(unit)
     Unexercised
Options at Year-
End
(#)
Exercisable/
Unexercisable
     Exercise price of
share options
($)
     Share options
expiry date25,000
     
     2.83
     July 10, 201325,000
     
     1.80
     Dec. 11, 201325,000
     
     3.55
     Dec. 10, 2014TOTAL
     115,000H. Greg Chamandy
     75,000
     15,000 / 90,000
     4.12
     May 13, 2014Chairman of the Board
     30,000
     
     4.19
     Feb. 3, 2015TOTAL
     105,000Denis Arcand
     50,000
     
     5.30
     June 29, 2010Vice-Chairman of the Board
     25,000
     90,000 / 40,000
     2.74
     Jan. 7, 201225,000
     
     1.80
     Dec. 11, 201330,000
     
     4.19
     Feb. 3, 2015TOTAL
     130,000Réjean Houle
     50,000
     
     5.30
     June 29, 2010Director
     25,000
     90,000 / 40,000
     2.74
     Jan. 7, 201225,000
     
     1.80
     Dec. 11, 201330,000
     
     4.19
     Feb.3, 2015TOTAL
     130,000Raynald Vézina
     50,000
     
     2.95
     Oct. 30, 2011Director
     20,000
     48,000 / 52,000
     1.80
     Dec. 11, 201330,000
     
     4.19
     Feb.3, 2015TOTAL
     100,000Elaine Ellingham
     50,000
     10,000 / 70,000
     4.19
     Feb.3, 2015Director
     30,000
     
     4.19
     Feb.3, 2015TOTAL
     80,000A. Michel Lavigne
     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
     80,000
  Note:1.
     Mr. Jean-Guy Rivard, who was Chairman of the Board of Directors until his death on March 28, 2009, received 150,000 options on January 15, 2009. On May 5, 2009, the conditions of the options which were held by Mr. Jean-Guy Rivard were amended to allow Mr. Rivard's estate to exercise these options at a later date than six months after his death (i.e., up to the maturity dates originally stipulated). See "Share Description of the Share Option Plan". 83


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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 who establish 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 TSX on the trading day immediately preceding the date of grant. The Board of Directors draws on the average closing price of a common share sold as part of a board lot on the TSX and NYSE Amex on the trading day immediately preceding the date of issuance on which a board lot of common shares was sold on these exchanges to determine the exercise price. In the absence of such a closing price, the exercise price cannot be lower than the average daily asked price on the TSX and the NYSE Amex on the trading day 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. 84


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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: o
     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;o
     obtaining any required approval of any applicable regulatory authority or stock exchange; ando
     in the case of issued and outstanding options, obtaining the consent or, subject to regulatory approval, the deemed consent of the concerned option holder in the event that the amendment materially prejudices the option holders rights. Shareholder approval is not required with respect to the following amendments, in as much as the amendment is in accordance with applicable regulatory requirements: o
     changing the eligibility for, and limitations on, participation in the Plan;o
     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;o
     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;o
     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;o
     correcting or rectifying any ambiguity, defective provision, error or omission in the Plan; ando
     changing the provisions relating to the administration of the Plan; unless any amendment made to the Plan would reduce the exercise price of an issued and outstanding option, lead to a significant or unreasonable dilution of the outstanding shares or provide additional material benefits to insiders, in which case approval of the shareholders of the Company must be obtained. In addition, if an amendment would reduce the exercise price of any outstanding option held by an insider or would extend the expiry date of options held by insiders beyond the exercise periods contemplated under the Plan or provided on the relevant option certificate, approval of the shareholders of the Company, other than the relevant insiders, must be obtained. 85


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ITEM 7.
     MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
  A.
     Major Shareholders
  As of April 27, 2010, 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 19.2% 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, 2010, a total of 5,464,754 shares of the Companys common stock, representing 20,9 % of the issued and outstanding shares of the Companys common stock, was held by a total of 116 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 2009, and until the date of this Annual Report, certain Related Party Transactions occurred with the Company, as described below: 86


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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. 87


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Sale of the condominium owned by the company by Ms. Lorraine Rivard Following the death of Mr. Jean-Guy Rivard, previous Chairman of Richmont Mines Board of Directors, and the primary user of a Montreal condominium (the condominium) owned by the Company since 1996, Richmonts Board of Directors decided that it was appropriate to sell the condominium. The Condominium was purchased by Richmont in 1996 for a price of CAN$ 235,000. Mr. Rivard was receiving a taxable benefit charge for his personal use of the condominium. In October 2009, the Board gave a mandate to Évaluation Immobilière Alain Guy inc., an independent firm, to evaluate the market value of the condominium. On October 8, 2009, Ms. Lorraine Rivard, wife of the late Jean-Guy Rivard and mother of Martin Rivard, Director and President & CEO of the Company, provided a purchase offer to the companys Board of Directors regarding the condominium. On October 27, 2009, to ensure maximum transparency in the condominiums sales process, the Board members requested a second independent evaluation. At that time, the members agreed to establish the condominiums selling price using the average of both evaluations. A second independent firm was selected to determine the condominiums market value, namely the firm Janson, Thibault, Ryan & Associates Inc. Assuming that a sale was made without using a real estate agent, the two firms estimated the condominiums market value at CAN$ 520,000 and CAN$ 541,000, for an average price of CAN$ 530,000. On December 10, 2009, members of Richmonts Board of Directors decided to sell the condominium to Ms. Lorraine Rivard for the amount of CAN$ 530,000. The sale was completed by a notary on January 3, 2010. It should be noted that Mr. Martin Rivard did not participate in any of the discussions regarding this topic, nor was he involved in any of the Boards decisions throughout the process, due to his family relationship with the condominiums buyer. Davies, Ward, Phillips & Vineberg 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. 88


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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 $ 11,350 CAD (including taxes) for professional services rendered, mainly in connection with the acquisition of Patricia Mining by the Company. 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 10, 2010 on Internal Control over financial reporting and on the Consolidated Balance Sheets as at December 31, 2009 and 2008, Consolidated Statements of Earnings, Comprehensive Income, Deficit, Accumulated other Comprehensive Income and Cash Flows for each of the years in the three-year period ended December 31, 2009. 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 2009. The Company knows of no active, pending or overtly threatened legal or arbitration proceeding to which the Company is a party or to which any of its properties is subject which may have, or has had in the recent past, a significant effect on the Companys financial position or profitability. B.
     Significant Changes
  No significant change has occurred since December 31, 2009 in the Companys financial condition or results of operations. ITEM 9.
     THE OFFER AND LISTING
  The Companys common stock is traded on the Toronto Stock Exchange under the symbol RIC and on the NYSE Amex also under the symbol RIC. 89


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Toronto Stock Exchange Set forth below are the high and low sell prices on the Toronto Stock Exchange for actual trades of shares of the Companys common stock for the periods indicated. Last Five Full Years
Toronto Stock Exchange
Common Stock Trading Activity - Price -Canadian DollarsYear Ended
     High
     LowDecember 31, 2005
     $5.85
     $3.82December 31, 2006
     $5.40
     $2.40December 31, 2007
     $4.00
     $2.56December 31, 2008
     $4.20
     $1.21December 31, 2009
     $4.93
  $2.04
 Last Two Full Years
Toronto Stock Exchange
Common Stock Trading Activity - Price -Canadian DollarsQuarter Ended
     High
     LowMarch 31, 2008
     $4.18
     $2.03June 30, 2008
     $4.20
     $2.85September 30, 2008
     $3.00
     $1.80December 31, 2008
     $2.80
     $1.21March 31, 2009
     $4.85
     $2.04June 30, 2009
     $4.93
     $3.29September 30, 2009
     $4.01
     $2.80December 31, 2009
     $4.05
  $2.85
 Last Six Months
Toronto Stock Exchange
Common Stock Trading Activity - Price -Canadian DollarsMonth Ended
     High
     LowOctober 31, 2009
     $3.43
     $2.85November 30, 2009
     $4.05
     $2.85December 31, 2009
     $4.00
     $3.43January 31, 2010
     $5.08
     $3.98February 28, 2010
     $4.55
     $3.78March 31, 2010
     $4.44
  $3.93
  90


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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 DollarsYear Ended
  High
  LowDecember 31, 2005
     $4.73
     $3.20December 31, 2006
     $4.75
     $2.18December 31, 2007
     $4.07
     $2.19December 31, 2008
     $4.18
     $0.95December 31, 2009
     $4.36
  $1.60
  Last Two Full Years 
American Stock Exchange / 
NYSE Amex 
Common Stock Trading Activity - Price -US DollarsQuarter Ended
  High
  LowMarch 31, 2008
     $4.18
     $2.50June 30, 2008
     $4.13
     $2.85September 30, 2008
     $3.00
     $1.57December 31, 2008
     $2.19
     $0.95March 31, 2009
     $3.84
     $1.60June 30, 2009
     $4.36
     $2.86September 30, 2009
     $3.64
     $2.57December 31, 2009
     $3.98
  $2.65
  91


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Last Six Months 
NYSE Amex
Common Stock Trading Activity - Price -US DollarsMonth Ended
  High
  LowOctober 31, 2009
     $3.27
     $2.65November 30, 2009
     $3.79
     $2.70December 31, 2009
     $3.98
     $3.24January 31, 2010
     $5.25
     $3.75February 28, 2010
     $4.34
     $3.50March 31, 2010
     $4.36
  $3.86
  ITEM 10.
     ADDITIONAL INFORMATION
  A.
     Share Capital
  Not applicable. B.
     Memorandum and Articles of Association
  The Company was incorporated pursuant to Part 1A of the Companies Act(Quebec) on February 12, 1981 (File number 1843-2286) under the name Resources Minières Rouyn Inc. By Article of Amendment filed February 10, 1987 the Company added the English version Rouyn Mining Resources Inc. and by another amendment filed with the Government of Quebec on June 20, 1991, the Company changed its name to Richmont Mines Inc. The Articles of Incorporation of the Company are registered by the Government of Quebec in register S02473, folio 10. The Company has no specific objects or purposes set forth in its Articles of Incorporation or Bylaws. Directors A director who is a party to a contract or proposed contract with the Company or who is a director or officer of a company which is a party to a contract or proposed contract with the Company must disclose such interest in writing to the Company and ask that the nature and extent of his interest be recorded in the minutes of the Board of Directors meetings. Such director may not attend nor participate in discussions relating to such contract or proposed contract, unless authorized by the Board, nor vote on any resolution regarding approval of the contract or proposed contract. However, notwithstanding the foregoing, directors have the right to vote on determining the compensation of directors; provided that no director who is a paid employee or officer of the Company may receive fees from the Company. 92


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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 fully paid and non-assessable. Each holder of record of common shares is entitled to one vote for each common share so held on all matters requiring a vote of shareholders, including the election of directors. The holders of common shares will be entitled to dividends on a pro-rata basis, if and when as declared by the board of directors. There are no preferences, conversion rights, pre-emptive rights, subscription rights, or restrictions 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. There are no redemption or sinking fund provisions applicable to the common shares or any liability to further capital calls by the Company. Under Quebec law (i) the Articles of Incorporation of the Company may be amended by the affirmative vote of the holders of two thirds (2/3) of the vote cast by the shareholders at a special meeting and (ii) the Bylaws of the Company may be amended by the Companys directors and ratified by the majority of the vote cast by the shareholders at the meeting. The annual meeting of shareholders must be held each year within six (6) months of the end of the fiscal year. For any general meeting, a notice specifying the date, time and place of the meeting and the items to be discussed at the meeting must be sent to each shareholder entitled to vote at that meeting at least twenty-one (21) days before the date of such a meeting at the address indicated in the books of the Company or, if no address is indicated, the last address known by the registrar. 93


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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 Investment Act) discussed below. The Investment Canada Act(the ICA), which became effective on June 30, 1985, regulates the acquisition by non-Canadians of control of a Canadian business enterprise. In effect, the ICA required review by Investment Canada, the agency which administers the ICA, and approval by the Canadian government in the case of an acquisition of control of a Canadian business by a non-Canadian where: (i) in the case of a direct acquisition (for example, through a share purchase or asset purchase), the assets of the Canadian business are $5 million or more in value; or (ii) in the case of an indirect acquisition (for example, the acquisition of the foreign parent of the Canadian business) where the Canadian business has assets of $50 million or more in value or if the Canadian business represents more than 50% of the assets of the original group and the Canadian business has assets of $5 million or more in value. Review and approval are also required to the acquisition or establishment of a new business in areas concerning Canadas cultural heritage or national identity such as book publishing, film production and distribution, television and radio, production and distribution of music, and the oil and natural gas industry, regardless of the size of the investment. In the context of the Company, in essence, three methods of acquiring control of a Canadian business are regulated by the ICA: (i) the acquisition of all or substantially all of the assets used in carrying on the Canadian business; (ii) the acquisition, directly or indirectly, of voting shares of a Canadian corporation carrying on the Canadian business; (iii) the acquisition of voting shares of an entity which controls, directly or indirectly, another entity carrying on a Canadian business. An acquisition of a majority of the voting interests of an entity, including a corporation, is deemed to be an acquisition of control under the ICA. An acquisition of less than one-third of the voting shares of a corporation is deemed not to be an acquisition of control. An acquisition of less than a majority, but one-third or more, of the voting shares of a corporation is presumed to be an acquisition of control unless it can be established that on the acquisition, the corporation is not, in fact, controlled by the acquirer through the ownership of voting shares. For partnerships, trusts, joint ventures or other unincorporated entities, an acquisition of less than a majority of the voting interests is deemed not to be an acquisition of control. In 1988, the ICA was amended pursuant to the North American Free Trade Agreement dated January 2, 1988 between Canada and the United States to relax the restrictions of the ICA. As a result of these amendments, except where the Canadian business is in the cultural, oil and gas, uranium, financial services or transportation sectors, the threshold for direct acquisition of control by US investors and other foreign investors acquiring control of a Canadian business from US investors has been raised from $5 million to $150 million of gross assets, and indirect acquisitions are not reviewable. 94


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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
  Not applicable. 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. 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. 95


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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. 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 capital gain realized upon the disposition of a share of a class that is listed on a prescribed stock exchange unless the share represents taxable Canadian property to other holder thereof. A common share of the Company will be taxable Canadian property to a non-resident holder if, at any time during the period of five years immediately preceding the disposition, the non-resident holder, persons with whom the nonresident holder did not deal at arms length, or the non-resident holder and persons with he/she did not deal at arms length owned 25% or more of the issued shares of any class or series of the Company. In the case of a non-resident holder to whom shares of the Company represent taxable Canadian property and who is resident in the United States, American tax will be payable on a capital gain realized on such shares by reason of the Treaty unless the value of such shares is derived principally from real property situated in Canada or the non-resident holder previously held the shares while resident in Canada. However, in such a case, certain transitional relief under the Treaty may be available. 96


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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 organisations, 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. 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 US Federal taxable income by those who itemize deductions. (See more detailed discussion in the section captioned Foreign Tax Credit below). To the extent that distributions exceed current or accumulated earnings and profits of the Company, they will be treated first as a return of capital up to the 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 US Federal income tax accounting principles. 97


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For taxable year beginning before January 1, 2011, 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 US Holder, regardless of whether the Canadian dollars are converted into US dollars at that time. If dividends received in Canadian dollars are converted into US dollars on the day they are received, the US Holder generally will not be required to recognize foreign currency gain or loss with respect to the dividend income. 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. 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 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. 98


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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 US dollars at the spot rate on the date received. This difference in exchange rates may reduce the US dollar value of the credits for Canadian taxes relative to the 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 five years from the loss year to be offset against capital gains until the earlier of five years or the exhaustion of the net capital loss. 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. 99


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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. 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 2009 net earnings. SENSITIVITY ANALYSISVariable
     Change
     Impact on net earnings(in thousands of CAN$)Price of gold (CAN$)
     +/- CAN$50 per ounce
     +/- 1,979Exchange rate (US$/CAN$)
     +/- US$/CAN$ 0.10
     +/- 3,863
  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. 100


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Interest Rate Risk Disclosure At December 31, 2009, 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. 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.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 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, 2009. 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, 2009, the Companys internal control over financial reporting was effective based on those criteria. 101


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The effectiveness of the Companys internal control over financial reporting as of December 31, 2009 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 make changes to the Companys processes and systems to improve controls and increase efficiency, while ensuring that the Company maintains an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.
There were no changes in the Companys internal control over financial reporting that occurred during the period covered by this Annual Report on Form 20-F that have materially affected, or are reasonable likely to materially affect, the Companys internal control over financial reporting. ITEM 16.A.
     AUDIT COMMITTEE FINANCIAL EXPERT
  The Companys board of directors has determined that A. Michel Lavigne, 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. Mr. Lavigne has served on the Board of the Caisse de dépôt et placement du Québec (CDPQ) since 2005 and is Chairman of its Audit Committee. He is also Chairman of the Board of Primary Energy Recycling Corporation and serves on the Boards of Nstein Technologies Inc., Canada Post, Quebecor Media Inc. and TVA Group Inc. He is a member of the Investment Committees of Propulsion Ventures Funds and ID Capital Funds. Until 2005, Mr. Lavigne was partner, President and Chief Executive Officer of the accounting firm Raymond Chabot Grant Thornton, Chairman of the Board of Grant Thornton Canada and a member of the Board of Governors of Grant Thornton International. 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. 102


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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 fiscal years by the Companys principal independent accounting firm. Audit Fees The aggregate fees billed by Companys principal independent accounting firm for the audit of the Companys annual financial statements or services that are normally provided by such firm in connection with statutory and regulatory filings for each of the last two fiscal years are the following: 2009
     2008Audit services*
     $146,000
  $137,000
  *
     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 assurance and related services provided by the Companys principal independent accounting firm 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
     2009
     2008Special work
     $24,525
  $69,650
  Taxation Fees The aggregate fees billed for each of the last two financial years for the professional services provided by Companys principal independent accounting firm with regards to tax compliance, tax advice and tax planning are described in the following table: Nature of services
     2009
     2008Review quarterly tax provision
     $6,945
     $6,600Planning and tax advice
     $20,700
  $9,450
  103


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All Other Fees The aggregate fees billed for each of the last two financial years for the products and services provided by the Companys principal independent accounting firm, other than the services previously stated, are described in the following table: Nature of services
     2009
     2008Other consultations
     $23,139
     $28,000Other expenses
     $5,696
  $2,982
  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
  Period
     Total Number of Shares Purchased
     Average Price Paid per Share
     Total Number of Shares Purchased asPart of Publicly Announced Plans orPrograms
     Maximum Number of Shares that May Yet be PurchasedUnder the Plans or ProgramsJanuary 1-31, 2009
     7,000
     $2.51
     7,000
     1,181,000February 1-28, 2009
     14,300
     $3.01
     14,300
     1,166,700March 1-31, 2009
     NIL
     NIL
     NIL
     1,166,700April 1-30, 2009
     NIL
     NIL
     NIL
     1,166,700May 1-31, 2009
     NIL
     NIL
     NIL
     1,166,700June 1-30, 2009
     11,900
     $3.84
     11,900
     1,154,800July 1-31, 2009
     300
     $3.92
     300
     1,154,500August 1-31, 2009
     5,600
     $2.98
     5,600
     1,148,900September 1-30, 2009
     2,800
     $2.96
     2,800
     1,146,100October 1-31, 2009
     1,600
     $2.87
     1,600
     1,144,500November 1-30, 2009
     NIL
     NIL
     NIL
     1,144,500December 1-31, 2009
     NIL
     NIL
     NIL
     1,144,500TOTAL
     43,500
  Only one Richmont Mines share repurchase program was in effect in 2009. On December 3, 2008, Richmont Mines publicly announced a Normal Course Issuer bid commencing December 5, 2008 and expiring December 4, 2009 for up to 1,188,000 shares of its common stock. 104


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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: Shareholder Meeting Quorum Requirement: The NYSE Amex 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 bylaws. 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 foregoing are consistent with the laws, customs and practices in Canada. 105


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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. Audited Consolidated Financial Statements Report of the Independent Auditor dated February 10, 2010 on Internal Control over financial reporting and on the Consolidated Balance Sheets as at December 31, 2009 and 2008,, Consolidated Statements of Earnings, Comprehensive Income, Deficit, Accumulated other Comprehensive Income and Cash Flows for each of the years in the three-year period ended December 31, 2009. Notes to Consolidated Financial Statements. ITEM 18.
     CONSOLIDATED FINANCIAL STATEMENTS
  The Company has elected to provide consolidated financial statements pursuant to Item 17 of Form 20-F. 106


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ITEM 19.
     EXHIBITS
  Exhibit No.
     Exhibit
  1.1
     Articles of Incorporation of the Company, including all amendments thereto(1)1.2
     Bylaws of the Company, including all amendments thereto(1)2.1
     Shareholder Rights Plan(2)5.6
     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 12.1
     Rule 13a-14(a)/15d-14(a) Certifications 13.1
     Certification of periodic financial report pursuant to Section 906 of the Sarbanes-Oxley Actof 2002, 18 U.S.C. Section 1350 15.1
     Audit Committee Charter (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. 107


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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 6, 2010
     By:
     (/s/) Nicole VeilleuxNicole VeilleuxDirector, Finance


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Consolidated Financial Statements of RICHMONT MINES INC. Years ended December 31, 2009, 2008 and 2007


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Independent Auditors Report
  To the Shareholders of Richmont Mines Inc., We have completed an integrated audit of Richmont Mines Inc.s (the Company) 2009, 2008 and 2007 consolidated financial statements and of its internal control over financial reporting as of December 31, 2009. Our opinions, based on our audits, are presented below. Consolidated Financial statements We have audited the consolidated balance sheets of Richmont Mines Inc. as at December 31, 2009 and 2008 and the consolidated statements of earnings, comprehensive income, deficit, accumulated other comprehensive income and cash flows for each of the years in the three-year period ended December 31, 2009. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of the Companys financial statements in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. A financial statements audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2009 and 2008 and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2009 in accordance with Canadian generally accepted accounting principles. Internal control over financial reporting We have also audited the Companys internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal ControlIntegrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Companys management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Managements report on Internal Control over Financial Reporting. 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 opinion.


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Independent Auditors Report
  The 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, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, 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 10, 2010 1Chartered accountant auditor permit no. 22865


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RICHMONT MINES INC.Consolidated Financial StatementsYears ended December 31, 2009, 2008 and 2007 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)
  2009
        
        2008
        
        2007$
        
        $
        
        $REVENUEPrecious metals
        
        66,151
        
        66,237
        
        34,691Other (note 4)
        
        5,733
        
        4,354
        
        3,38071,884
        
        70,591
        
        38,071EXPENSESOperating costs
        
        48,751
        
        42,998
        
        24,199Royalties
        
        1,563
        
        1,591
        
        565Custom milling
        
        3,708
        
        1,785
        
        1,023Administration
        
        3,681
        
        3,665
        
        3,315Exploration and project evaluation (note 5)
        
        7,066
        
        10,547
        
        3,288Accretion expense - asset retirement obligations (note 6)
        
        240
        
        182
        
        178Depreciation and depletion
        
        5,696
        
        5,687
        
        5,628Loss (gain) on disposal of mining assets (note 7)
        
        (594
        )
        29
        
        (8,066
        )70,111
        
        66,484
        
        30,130EARNINGS BEFORE OTHER ITEMS
        
        1,773
        
        4,107
        
        7,941MINING AND INCOME TAXES (note 8)
        
        1,475
        
        437
        
        1,306298
        
        3,670
        
        6,635MINORITY INTEREST
        
        (38
        )
        2,035
        
        (36
        )NET EARNINGS
        
        336
        
        1,635
        
        6,671NET EARNINGS PER SHARE basic and diluted
        
        0.01
        
        0.07
        
        0.28WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (thousands)
        
        26,108
        
        24,047
        
        24,159DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (thousands)
        
        26,215
        
        24,047
        
        24,159
  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)
  2009
        
        2008
        
        2007$
        
        $
        
        $COMPREHENSIVE INCOMENet earnings
        
        336
        
        1,635
        
        6,671Comprehensive income, net of income taxes:Change in unrealized gain (loss) on available-for-sale investments
        
        169
        
        (599
        )
        473Realized losses (gains) on sale of available-for-sale investments included in net earnings
        
        23
        
        11
        
        (444
        )192
        
        (588
        )
        29Comprehensive income
        
        528
        
        1,047
        
        6,700DEFICITBALANCE, BEGINNING OF YEAR
        
        (3,096
        )
        (4,647
        )
        (11,241
        )Net earnings
        
        336
        
        1,635
        
        6,671Redemption of shares (note 11)
        
        (29
        )
        (84
        )
        (77
        )BALANCE, END OF YEAR
        
        (2,789
        )
        (3,096
        )
        (4,647
        )ACCUMULATED OTHER COMPREHENSIVE INCOMEBALANCE, BEGINNING OF YEAR
        
        (236
        )
        352
        
        -Adjustment due to the adoption of CICA Handbook Section 3855 for the cumulative unrealized gain on available-for-sale investments as at January 1st, 2007
        
        -
        
        -
        
        323Changes in other comprehensive income for the year
        
        192
        
        (588
        )
        29BALANCE, END OF YEAR
        
        (44
        )
        (236
        )
        352
  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)
  2009
        
        2008$
        
        $ASSETSCURRENT ASSETSCash and cash equivalents
        
        21,139
        
        26,021Restricted cash
        
        -
        
        116Shares of publicly-traded companies
        
        741
        
        121Accounts receivable
        
        1,213
        
        986Income taxes and tax credit receivable
        
        2,848
        
        1,586Inventories (note 9)
        
        7,360
        
        6,01233,301
        
        34,842DEPOSITS RESTRICTED (note 6)
        
        106
        
        -PROPERTY, PLANT AND EQUIPMENT (note 10)
        
        51,823
        
        48,03985,230
        
        82,881LIABILITIESCURRENT LIABILITIESAccounts payable and accrued charges
        
        7,130
        
        6,912Mining and income taxes payable
        
        1,235
        
        1,1778,365
        
        8,089ASSET RETIREMENT OBLIGATIONS (note 6)
        
        5,928
        
        4,664MINORITY INTEREST
        
        1,986
        
        2,024FUTURE MINING AND INCOME TAXES (note 8)
        
        976
        
        1,08617,255
        
        15,863SHAREHOLDERS EQUITYCapital stock (note 11)
        
        64,675
        
        64,672Contributed surplus (note 12)
        
        6,133
        
        5,678Deficit
        
        (2,789
        )
        (3,096
        )Accumulated other comprehensive income
        
        (44
        )
        (236
        )67,975
        
        67,01885,230
        
        82,881Commitments and subsequent events (note 15)
  The accompanying notes are an integral part of the consolidated financial statements. On behalf of the Board: /s/ Martin RivardMartin RivardDirector
  3


---

Consolidated statements of cash flowYears ended December 31 (in thousands of Canadian dollars)
  2009
        
        2008
        
        2007$
        
        $
        
        $CASH FLOW FROM OPERATING ACTIVITIESNet earnings
        
        336
        
        1,635
        
        6,671Adjustments for:Depreciation and depletion
        
        5,696
        
        5,687
        
        5,628Stock-based compensation
        
        484
        
        526
        
        575Accretion expense - asset retirement obligations
        
        240
        
        182
        
        178Loss (gain) on disposal of mining assets
        
        (594
        )
        29
        
        (8,042
        )Loss (gain) on disposal of shares of publicly-traded companies
        
        23
        
        11
        
        (444
        )Minority interest
        
        (38
        )
        2,035
        
        (36
        )Future mining and income taxes
        
        (110
        )
        (359
        )
        (334
        )6,037
        
        9,746
        
        4,196Net change in non-cash working capital items (note 13)
        
        (3,070
        )
        2,371
        
        1,8032,967
        
        12,117
        
        5,999CASH FLOW FROM (USED IN) INVESTING ACTIVITIESRestricted cash
        
        116
        
        -
        
        -Acquisition of Patricia Mining Corp. (note 3)
        
        -
        
        (6,984
        )
        -Acquisition of shares of publicly-traded companies
        
        -
        
        (23
        )
        (642
        )Disposal of shares of publicly-traded companies
        
        199
        
        712
        
        6,454Deposits restricted
        
        (106
        )
        -
        
        -Property, plant and equipment - Island Gold Mine
        
        (4,318
        )
        (3,079
        )
        (4,495
        )Property, plant and equipment - Beaufor Mine
        
        (1,092
        )
        (127
        )
        (1,060
        )Property, plant and equipment  Francoeur Project
        
        (1,976
        )
        -
        
        -Disposal of mining assets
        
        9
        
        91
        
        3,435Other property, plant and equipment
        
        (626
        )
        (1,987
        )
        (616
        )Cash received from an advance to a minority partner
        
        -
        
        750
        
        1,125(7,794
        )
        (10,647
        )
        4,201CASH FLOW FROM (USED IN) FINANCING ACTIVITIESRedemption of common shares
        
        (137
        )
        (768
        )
        (658
        )Issue of common shares
        
        82
        
        25
        
        183Repayment of the long-term debt
        
        -
        
        (1,950
        )
        -Contribution from (distribution to) a minority partner
        
        -
        
        (47
        )
        1,440(55
        )
        (2,740
        )
        965Net increase (decrease) in cash and cash equivalents
        
        (4,882
        )
        (1,270
        )
        11,165Cash and cash equivalents, beginning of year
        
        26,021
        
        27,291
        
        16,126Cash and cash equivalents, end of year (note 17 d))
        
        21,139
        
        26,021
        
        27,291
  The accompanying notes are an integral part of the consolidated financial statements. 4


---

Notes to consolidated financial statementsYears ended December 31, 2009, 2008 and 2007 (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 19, 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%), Louvem Mines Inc. (approximately 70%) and Patricia Mining Corp. (100%) was liquidated in the current financial year. All inter-company transactions have been eliminated. The Companys 55% interest in the Island Gold Mine is consolidated until December 15, 2008 (note 3) using the principles outlined in AcG-15, on the consolidation of variable interest entities due to an agreement for the financing of the interest held by the other participant of the development costs of the project. b)
        Revenue 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, bankers acceptances, discount notes and restricted cash are classified as assets held-for-trading. Shares of publicly-traded companies are classified as available-for-sale financial assets, accounts receivable, term deposits and the advance to a minority partner 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 90 days. e)
        Shares of publicly-traded companies
 Shares of publicly-traded companies include investments in shares of publicly-traded companies and are recorded at market 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


---

Notes to consolidated financial statementsYears ended December 31, 2009, 2008 and 2007 (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 10 years. 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 exploration properties 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. 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. 6


---

Notes to consolidated financial statementsYears ended December 31, 2009, 2008 and 2007 (in thousands of Canadian dollars)
  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. 2.
        Accounting changes
  a)
        2009 Accounting changes
 Mining exploration costsIn 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 neither on the consolidated financial statements nor on the comparative data. 7


---

Notes to consolidated financial statementsYears ended December 31, 2009, 2008 and 2007 (in thousands of Canadian dollars)
 Financial instrument disclosuresDuring the year, 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 follow: 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 quote 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. 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 to eliminate 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. b)
        Future accounting changes
 Business combinations, consolidated financial statements and non-controlling interestsIn January 2009, the Canadian Institute of Chartered Accountants(CICA) issued 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. 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. This new section will be applied prospectively and will only impact the Companys consolidated financial statements for future acquisitions concluded in periods subsequent to the date of adoption. Sections 1601 and 1602 dealing with consolidated financial statements require an entity to measure non-controlling interest upon acquisition either at fair value or at the non-controlling interests proportionate share of the acquirers identifiable net assets. The new sections also require non-controlling interest to be presented as a separate component of shareholders equity. The new standards will apply as of the beginning of the first annual reporting period beginning on or after January 1, 2011, with simultaneous early adoption permitted. The Company is currently assessing the impact of these new sections on its consolidated financial statements. 8


---

Notes to consolidated financial statementsYears ended December 31, 2009, 2008 and 2007 (in thousands of Canadian dollars)
  3.
        Acquisition
 On December 16, 2008, the Company acquired 42,929,581 common shares of Patricia Mining Corp.s, a development stage Company engaged in mining and exploration (Patricia Mining), (representing approximately 98.2% of Patricia Minings outstanding common shares), in exchange for CAN$0.15 in cash and 0.055 common share of Richmont for each common share of Patricia Mining. Patricia Minings principal activity is its 45% participation in the Island Gold Mine, the other 55% being held by the Company. Following this transaction, Richmont now wholly-owns Patricia Mining and 100% interest in Island Gold Mine. The purchase price has been determinated to be $11,372, including transaction costs, in exchange for a net cash consideration of $6,997 and 2,347,003 common shares valued at $4,375 or $1.86 per share. The value of the common shares issued by the Company has been determinated based on the average closure share price two days before and after the announced date of the acquisition agreement, on October 27, 2008. Richmont recorded this acquisition using the purchase method. Before the acquisition, the Company consolidated Island Gold Mines assets, liabilities, revenues and expenses in accordance with AcG-15 (note 1a)), Patricia Minings share being considered as minority interest. Following this transaction, on December 16, 2008, the advance to a minority partner which amounted to $1,742 and the $12,336 minority interest have been cancelled. The allocation of the purchase price based on the fair values of the assets acquired less the liabilities assumed by the Company is as follows: $Assets acquiredCash and cash equivalents
        
        13Restricted cash
        
        116Accounts receivable
        
        16Inventories
        
        448Future tax asset
        
        4,504Future tax asset on mining taxes
        
        1,236Valuation of future tax asset
        
        (5,740
        )Property, plant and equipment
        
        3,4474,040Liabilities assumedAccounts payable
        
        935Asset retirement obligations
        
        (40
        )Long-term debt
        
        1,9502,845Net value of assets acquired
        
        1,195Cancelled minority interest
        
        12,336Shares of publicly-traded companies already held in the Company
        
        (417
        )Cancelled due to Richmont Mines
        
        (1,742
        )Purchase price, including transaction costs
        
        11,372Shares issued by the Company
        
        (4,375
        )Cash and cash equivalents acquired
        
        (13
        )Net effect on cash
        
        6,984
  4.
        Other revenue
 Other revenue includes interest income on cash, variation on fair value on cash equivalents of $135 ($661 in 2008 and $706 in 2007), gain and loss on disposal of shares of publicly-traded companies, foreign exchange gain of $9 ($859 in 2008 and loss of $74 in 2007) and revenue from custom milling. 9


---

Notes to consolidated financial statementsYears ended December 31, 2009, 2008 and 2007 (in thousands of Canadian dollars)
  5.
        Exploration and project evaluation
  2009
        
        2008
        
        2007$
        
        $
        
        $Island Gold Mine
        
        3,136
        
        2,293
        
        505Beaufor Mine
        
        3,006
        
        2,921
        
        1,874Francoeur/Wasamac properties
        
        1,938
        
        184
        
        142Golden Wonder property
        
        -
        
        4,202
        
        665Valentine Lake property
        
        -
        
        347
        
        1,017Camflo Northwest property
        
        -
        
        -
        
        112Other properties
        
        28
        
        20
        
        49Project evaluation
        
        305
        
        373
        
        1248,413
        
        10,340
        
        4,488Exploration tax credits
        
        (1,347
        )
        (643
        )
        (1,200
        )Reversal of exploration tax credits recorded in 2007 a)
        
        -
        
        850
        
        -7,066
        
        10,547
        
        3,288
  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. 10


---

Notes to consolidated financial statementsYears ended December 31, 2009, 2008 and 2007 (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, 2009 and 2008: Total amount
        
        Anticipatedof the estimated
        
        cash flow
        
        Credit-adjustedcash flow
        
        payment schedule
        
        risk-free rate$
        
        
        
        %2009Beaufor 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 5.56,5102008Beaufor Mine
        
        391
        
        2012
        
        5.5Island Gold Mine
        
        945
        
        2013
        
        5.5Camflo Mill
        
        3,121
        
        2012
        
        5.5Francoeur property
        
        193
        
        2012
        
        5.54,650
 In 2008, cash payment schedules were revised from 2011 to 2012 for the Beaufor Mine, from 2010 to 2012 for the Camflo Mill and Francoeur property and from 2010 to 2013 for the Island Gold Mine. b)
        Changes in obligations
 The following table sets forth the movement of the asset retirement obligations for the years ended December 31, 2009, 2008 and 2007: 2009
        
        2008
        
        2007$
        
        $
        
        $Balance, beginning of year
        
        4,664
        
        3,358
        
        3,333Accretion expense
        
        240
        
        182
        
        178Changes to estimated cash flow and payment schedules
        
        1,024
        
        1,164
        
        -Changes in liability related to the acquisition of Patricia Mining Corp.
        
        -
        
        (40
        )
        -Decrease related to the disposal of properties
        
        -
        
        -
        
        (153
        )Balance, end of year
        
        5,928
        
        4,664
        
        3,358
 11


---

Notes to consolidated financial statementsYears ended December 31, 2009, 2008 and 2007 (in thousands of Canadian dollars)
  c)
        Deposits restricted and letters of credit
 As at December 31, 2009, the Company had $106 in deposits restricted with Quebec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% (0.75% in 2008). The following table provides the allocation of deposits restricted and letters of credit issued as at December 31, 2009: 2009
        
        Date of$
        
        renewalDeposits restrictedBeaufor Mine
        
        52Francoeur property
        
        54106Letters of creditCamflo Mill
        
        1,332
        
        January 20, 2010Island Gold Mine (Kremzar property)
        
        590
        
        January 26, 2010Island Gold Mine (Lochalsh property)
        
        184
        
        January 5, 20102,106
 As at December 31, 2008, the Company had guaranteed the restoration of its mining sites by the pledge of letters of credit amounting to $1,539 and the Island Gold property has been pledged to the Ontario Ministry of Northern Development and Mines in the amount of $578. 7.
        Loss (gain) on disposal of mining assets
 The loss (gain) on disposal of mining assets includes the following items: 2009
        
        2008
        
        2007$
        
        $
        
        $Valentine Lake property a)
        
        (650
        )
        -
        
        -East Amphi property b)
        
        -
        
        -
        
        (7,439
        )Other mining equipment
        
        56
        
        29
        
        (627
        )(594
        )
        29
        
        (8,066
        )
  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. Mountain Lake currently 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 (note 10 a)).
  b)
        The mining operation at the East Amphi Mine ceased at the end of June 2007, following the depletion of its reserves. Work required for the closure of mining activities was completed in August 2007. In 2007, the Company generated precious metal revenue from the milling of ore extracted until the end of June 2007 and assumed the closing costs.
 On June 29, 2007, the Company concluded the sale of its East Amphi property in Quebec (including some service buildings, the rights, the mining concession and the exploration and drilling data) to Osisko Exploration Ltd. (Osisko) in exchange for a cash payment of $2,450 and a total of 1,109,000 common shares of Osisko valued at $6,086 of which all have been sold for a net amount of $6,139. The Company retains a net smelter return royalty of 2% on a specified portion of the future production of the East Amphi property and a similar royalty on future production of up to 300,000 ounces of gold on another portion of the property. 12


---

Notes to consolidated financial statementsYears ended December 31, 2009, 2008 and 2007 (in thousands of Canadian dollars)
  The gain on disposal of the East Amphi property was calculated net of transaction costs and the book value of the assets sold. 8.
        Mining and income taxes
 The income tax expense (recovery) attributable to earnings differs from the amounts computed by applying the combined federal and provincial income tax rate of 32.41% (32.23% in 2008 and 33.39% in 2007) to earnings before mining and income taxes as a result of the following: 2009
        
        2008
        
        2007$
        
        $
        
        $Earnings before mining and income taxes
        
        1,773
        
        4,107
        
        7,941Tax expense at combined statutory rate
        
        575
        
        1,324
        
        2,651Increase (decrease) in mining and income taxes resulting from:Resource allowance deduction
        
        (193
        )
        (204
        )
        -Deductible mining taxes
        
        5
        
        (601
        )
        (558
        )Change in the valuation allowance
        
        (3,483
        )
        (931
        )
        (1,130
        )Impact of the change in tax rates
        
        675
        
        98
        
        80Prior years future income taxes adjustment
        
        3,395
        
        123
        
        (197
        )Other
        
        217
        
        (288
        )
        101Income taxes
        
        1,191
        
        (479
        )
        947Mining tax
        
        284
        
        916
        
        359Total mining and income tax expense
        
        1,475
        
        437
        
        1,306
 Mining and income tax expense consist of: 2009
        
        2008
        
        2007$
        
        $
        
        $Current taxes
        
        1,585
        
        796
        
        1,640Future taxes
        
        (110
        )
        (359
        )
        (334
        )1,475
        
        437
        
        1,306
 13


---

Notes to consolidated financial statementsYears ended December 31, 2009, 2008 and 2007 (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, 2009 and 2008, are presented below: 2009
        
        2008$
        
        $Long-term future tax asset:Property, plant and equipment
        
        2,399
        
        7,348Asset retirement obligations
        
        1,870
        
        1,311Harmonization of Ontarios fiscal credits
        
        582
        
        982Share issue costs
        
        94
        
        329Losses carried forward
        
        1,955
        
        1,273Deductible future mining taxes
        
        215
        
        239Future tax asset
        
        7,115
        
        11,482Less valuation allowance
        
        (6,589
        )
        (11,332
        )526
        
        150Long-term future tax liability:Property, plant and equipment
        
        (1,222
        )
        (1,236
        )Exploration credit
        
        (280
        )
        -Net long-term future tax liability
        
        (976
        )
        (1,086
        )As presented on consolidated balance sheets:Future mining and income tax asset
        
        -
        
        -Future mining and income tax liability
        
        (976
        )
        (1,086
        )(976
        )
        (1,086
        )
 Non-refundable provincial tax credits of $4,776 and non-refundable federal tax credits of $3,307, 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, Quebec losses carry forwards of approximately $7,047, and $8,368 respectively, which expire at various dates through 2029. 9.
        Inventories
  2009
        
        2008$
        
        $Precious metals
        
        1,859
        
        2,157Ore
        
        3,146
        
        1,846Supplies
        
        2,355
        
        2,0097,360
        
        6,012
 During the year, a write-down of inventories of $71 was recognized as an expense (none in 2008). There was no reversal of write-down in 2009 and 2008. 14


---

Notes to consolidated financial statementsYears ended December 31, 2009, 2008 and 2007 (in thousands of Canadian dollars)
  10.
        Property, plant and equipment
  2009
        
        
        2008Accumulated
        
        
        Accumulateddepreciation
        Net book
        
        depreciation
        Net bookCost
        and depletion
        value
        Cost
        and depletion
        value$
        $
        $
        $
        $
        $Mine sitesMining properties a)
        1,564
        888
        676
        1,564
        860
        704Development costs b)
        45,767
        13,632
        32,135
        42,859
        10,936
        31,923Buildings
        6,588
        2,571
        4,017
        5,955
        2,131
        3,824Equipment
        14,079
        4,841
        9,238
        12,518
        3,959
        8,559Asset retirement obligations
        3,395
        1,028
        2,367
        2,493
        651
        1,84271,393
        22,960
        48,433
        65,389
        18,537
        46,852Corporate officeBuildings and leasehold improvements
        1,476
        648
        828
        1,476
        550
        926Equipment and rolling stock
        560
        413
        147
        736
        475
        2612,036
        1,061
        975
        2,212
        1,025
        1,18773,429
        24,021
        49,408
        67,601
        19,562
        48,039Project under development
        2,415
        -
        2,415
        -
        -
        -Total
        75,844
        24,021
        51,823
        67,601
        19,562
        48,039
  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. Mountain Lake currently 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 aond 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. b)
        In 2008, the development costs had increased by $350 following the cancellation of exploration tax credits which had been applied against these costs in 2007. A distribution of $742 from a minority partner was applied as a reduction of development costs in 2008.
 During the year ended December 31, 2009, the Beaufor Mines average depletion rate was $43 per ounce sold ($41 in 2008 and $122 in 2007), the Island Gold Mines average depletion rate was $104 per ounce sold ($100 in 2008 and $105 for the three-month period ended December 31, 2007) while that of East Amphi Mines settled at $64 per ounce sold in 2007. Camflo Mill has an average depletion rate of $2.14 per processed tonnes for the year ended December 31, 2009 ($1.25 in 2008 and $2.67 in 2007). 15


---

Notes to consolidated financial statementsYears ended December 31, 2009, 2008 and 2007 (in thousands of Canadian dollars)
  11.
        Capital stock
 Authorized: Unlimited number of common shares with no par value Number
        
        2009
        
        Number
        
        2008
        
        Number
        
        2007of shares
        
        Amount
        
        of shares
        
        Amount
        
        of shares
        
        Amount(thousands)
        
        $
        
        (thousands)
        
        $
        
        (thousands)
        
        $Issued and paid:Common sharesBalance, beginning of year
        
        26,113
        
        64,672
        
        24,053
        
        61,016
        
        24,180
        
        61,340Issue of shares for cash Exercise of stock options a)
        
        34
        
        111
        
        9
        
        34
        
        102
        
        257Issue of shares related to Patricia Minings acquisition (note 3)
        
        -
        
        -
        
        2,347
        
        4,375
        
        -
        
        -Redemption of shares b)
        
        (43
        )
        (108
        )
        (296
        )
        (753
        )
        (229
        )
        (581
        )Balance, end of year
        
        26,104
        
        64,675
        
        26,113
        
        64,672
        
        24,053
        
        61,016
  a)
        Issue of shares
 In 2009, the Company issued 34,000 commoon shares (9,000 in 2008 and 102,000 in 2007) following the exercise of stock options and received cash proceeds in the amount of $82 ($25 in 2008 and $183 in 2007). Contributed surplus was reduced by $29 ($9 in 2008 and $74 in 2007) which represents the fair value of the exercised stock options. 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 and 229,000 in 2007) for $137 in cash ($768 in 2008 and $658 in 2007). This transaction increased the deficit by $29 ($84 in 2008 and $77 in 2007) and increased the contributed surplus by $0 ($69 in 2008 and $0 in 2007). 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 date of grant and the maximum term of the options granted is 10 years. The options are vested to 20% at the date of grant and vesting cumulatively thereafter at every anniversary date for a total length of four years. 16


---

Notes to consolidated financial statementsYears ended December 31, 2009, 2008 and 2007 (in thousands of Canadian dollars)
 A summary of the status, in 2009 and 2008, of the Companys Stock Option Purchase Plan, and changes during the years then ended, is presented below: 2009
        
        2008Weighted
        
        WeightedNumber
        average
        Number
        averageof options
        exercise price
        of options
        exercise price(thousands)
        $
        (thousands)
        $Options outstanding, beginning of year
        2,308
        3.84
        2,023
        4.22Granted
        490
        3.18
        445
        2.19Exercised
        (34)
        2.42
        (9)
        2.74Cancelled
        (91)
        4.01
        (126)
        3.92Expired
        (193)
        6.34
        (25)
        5.16Options outstanding, end of year
        2,480
        3.53
        2,308
        3.84Exercisable options, end of year
        1,529
        3.90
        1,339
        4.43
 The following table summarizes information about the Stock Option Purchase Plan at December 31, 2009: Options outstanding at December 31, 2009
        Exercisable options atDecember 31, 2009Exercise
        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
        434
        4.0
        1.91
        137
        1.88$2.74 to $4.04
        1,296
        2.9
        3.22
        726
        3.19$4.12 to $5.30
        750
        1.0
        4.99
        666
        5.092,480
        2.5
        3.53
        1,529
        3.90
 During 2009, the Company granted 490,000 stock options (445,000 in 2008 and 620,000 in 2007) to senior executives and management. The weighted average fair value of these stock options at the grant date, calculated using the Black- Scholes option pricing model, is $1.45 ($0.76 in 2008 and $1.06 in 2007). The compensation costs were calculated using the Black-Scholes option pricing model with the following assumptions: 2009
        2008
        2007Risk-free interest rate
        2.3%
        3.2%
        4.0%Expected life
        4 years
        4 years
        4 yearsExpected volatility
        56%
        39%
        38%Expected dividend yield
        0.0%
        0.0%
        0.0%
 In 2009, the stock-based compensation costs charged to earnings amount to $484 ($526 in 2008 and $575 in 2007). The contributed surplus was increased by the same amounts. 17


---

Notes to consolidated financial statementsYears ended December 31, 2009, 2008 and 2007 (in thousands of Canadian dollars)
  12.
        Contributed surplus
  2009
        
        2008$
        
        $Balance, beginning of year
        
        5,678
        
        5,092Stock-based compensation
        
        484
        
        526Options exercised
        
        (29
        )
        (9
        )Redemption of shares
        
        -
        
        69Balance, end of year
        
        6,133
        
        5,678
  13.
        Consolidated statements of cash flow
  2009
        
        2008
        
        2007$
        
        $
        
        $Change in non-cash working capital itemsAccounts receivable
        
        (227
        )
        151
        
        205Income taxes and tax credit receivable (payable)
        
        (1,204
        )
        1,152
        
        588Inventories
        
        (1,348
        )
        (126
        )
        (45
        )Accounts payable and accrued charges
        
        (291
        )
        1,194
        
        1,055(3,070
        )
        2,371
        
        1,803Supplemental informationCash received (paid) during the year:Interests
        
        175
        
        1,188
        
        1,450Mining and income taxes
        
        (1,391
        )
        (372
        )
        303Items 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
        
        1,024
        
        1,164
        
        -Common shares of public company received as consideration from disposal of mining assets (note 7)
        
        650
        
        -
        
        6,086Distribution presented as a reduction of the advance to a minority partner
        
        -
        
        904
        
        -Distribution presented as a reduction of contribution from a minority partner
        
        -
        
        90
        
        -Distribution presented as a reduction of accounts receivable
        
        -
        
        129
        
        -Asset retirement obligation transferred to accounts payable and accrued charges
        
        -
        
        -
        
        129Accounts payable and accrued charges related to development projects and other property, plant and equipment
        
        764
        
        255
        
        477
  14.
        Pension plan
 The Company contributes a percentage of its Canadian payroll expense to a defined contribution plan. The expense in 2009 was $464 ($357 in 2008 and $289 in 2007). 18


---

Notes to consolidated financial statementsYears ended December 31, 2009, 2008 and 2007 (in thousands of Canadian dollars)
  15.
        Commitments and subsequent events
 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 $313 for a space. Minimum lease payments for the next five years amount to $64 in 2010, 2011, 2012 and 2013 and to $57 in 2014. 16.
        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. For the purpose of management of capital, the Company includes the components of shareholders equity, less cash and cash equivalents as well as shares of publicly-traded companies. 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. 17.
        Financial instruments and risk management
  a)
        Fair value of financial instruments
 The Company has classified its cash, bankers acceptances, discount notes and restricted 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. 19


---

Notes to consolidated financial statementsYears ended December 31, 2009, 2008 and 2007 (in thousands of Canadian dollars)
 The following table presents the carrying amounts and fair values of each financial instruments category: December 31, 2009
        December 31, 2008Book
        Fair
        Book
        Fairvalue
        value
        value
        value$
        $
        $
        $Held-for-trading financial assetsCash a)
        
        10,253
        10,253
        7,722
        7,722Restricted cash a)
        
        -
        -
        116
        116Bankers acceptances b)
        
        -
        -
        1,812
        1,812Discount notes b)
        
        -
        -
        16,487
        16,48710,253
        10,253
        26,137
        26,137Available-for-sale financial assetsShares of publicly-traded companies b)
        
        741
        741
        121
        121Loans and receivablesAccounts receivable a)
        
        194
        194
        183
        183Term deposits a)
        
        10,886
        10,886
        -
        -11,080
        11,080
        183
        183Other financial liabilitiesAccounts payable and accrued charges a)
        
        7,078
        7,078
        6,912
        6,912
  a)
        The Company owns and assumes financial assets and liabilities such as cash and cash equivalents, restricted 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, bankers acceptances and discount notes is the bid price.
 The variation on fair value of cash equivalents is $135 ($661 in 2008 and $706 in 2007) and interest income from the advance to a minority partner is $245 in 2008 ($411 in 2007). b)
        Fair value hierarchy
 The fair value measurements of shares of publicly-traded companies, bankers acceptances and discount notes have been classified at level one from the fair value hierarchy. This valuation is based on data observed in the market. 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 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. 20


---

Notes to consolidated financial statementsYears ended December 31, 2009, 2008 and 2007 (in thousands of Canadian dollars)
 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 2009, 2008 and 2007, the Company did not enter into any forward exchange contracts. At December 31, 2009 and 2008, 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 2009, 2008 and 2007, the Company did not enter into any hedging contracts for its gold production. Interest rate risk The 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, 2009, 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 $40 in net earnings. d)
        Credit risk
 Financial instruments that expose the Company to market risk and to a credit risk consist of cash and cash equivalents and accounts receivable. The Company invests its cash and cash equivalents in high-quality securities issued by government agencies, financial institutions and major corporations, and limits the amount of credit exposure by diversifying its holdings. At December 31, 2009, the Companys cash and term deposits are held through two financial institutions (56% of cash and cash equivalents were held through two financial institutions in 2008). The following table presents the composition of cash and cash equivalents: 2009
        2008
        2007$
        $
        $Cash a)
        
        10,253
        7,722
        6,942Cash equivalentsTerm deposits, 0.90% maturing in January 2010
        
        10,886
        -
        -Discount notes, 1.55% to 2.48% (4.48% to 4.73% in 2007)
        
        -
        16,487
        20,349Bankers acceptances, 3.10%
        
        -
        1,812
        -21,139
        26,021
        27,291
  a) In 2009, 49% of cash is 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. 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. 21


---

Notes to consolidated financial statementsYears ended December 31, 2009, 2008 and 2007 (in thousands of Canadian dollars)
  18.
        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. 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
        3,159
        (719
        )
        7,066Depreciation and depletion
        1,454
        4,034
        208
        
        5,696Loss (gain) on disposal of mining assets
        2
        12
        (608
        )
        (594
        )Earnings (loss) before other items
        858
        2,994
        (2,079
        )
        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
  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
        2,313
        5,413
        
        10,547Depreciation and depletion
        1,589
        3,794
        304
        
        5,687Gain (loss) on disposal of mining assets
        8
        23
        (2
        )
        29Earnings (loss) before other items
        8,707
        2,282
        (6,882
        )
        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
 22


---

Notes to consolidated financial statementsYears ended December 31, 2009, 2008 and 2007 (in thousands of Canadian dollars)
  2007
        
        
        
        
        Exploration,corporateQuebec
        
        Ontario
        
        and others
        
        Total$
        
        $
        
        $
        
        $Revenue
        30,363
        
        5,743
        
        1,965
        
        38,071Mine operating costs and others
        21,290
        
        4,912
        
        3,078
        
        29,280Exploration and project evaluation
        1,578
        
        506
        
        1,204
        
        3,288Depreciation and depletion
        4,683
        
        763
        
        182
        
        5,628Gain on disposal of mining assets
        (8,044
        )
        -
        
        (22
        )
        (8,066
        )Earnings (loss) before other items
        10,856
        
        (438
        )
        (2,477
        )
        7,941Acquisition of property, plant and equipment
        951
        
        4,495
        
        725
        
        6,171Current assets
        5,741
        
        2,341
        
        31,009
        
        39,091Advance to a minority partner
        -
        
        -
        
        1,875
        
        1,875Property, plant and equipment
        4,969
        
        38,242
        
        1,799
        
        45,010Total assets
        10,710
        
        40,583
        
        34,683
        
        85,976
 In 2009, 92% of precious metals have been sold through US brokers (41% in 2008 and 45% in 2007). 23


---

Notes to consolidated financial statementsYears ended December 31, 2009, 2008 and 2007 (in thousands of Canadian dollars)
  19.
        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, minority interest, accumulated other comprehensive income, shareholders equity and on consolidated statements of cash flow would have been as follows: 2009
        
        2008
        
        2007$
        
        $
        
        $Net earnings reported under Canadian GAAP
        
        336
        
        1,635
        
        6,671Add (deduct):Difference in accounting related to investments a)
        
        (4
        )
        (1
        )
        (412
        )Difference in accounting related to stock-based compensation b)
        
        48
        
        58
        
        57Exploration and development costs related to mining properties c)
        
        (902
        )
        393
        
        (509
        )Depreciation and depletion d)
        
        2,101
        
        2,712
        
        75Minority interest e)
        
        -
        
        (1,221
        )
        353Net earnings reported under US GAAP
        
        1,579
        
        3,576
        
        6,235Net earnings per share reported under US GAAPBasic and diluted
        
        0.06
        
        0.15
        
        0.26Property, plant and equipment reported under Canadian GAAP
        
        51,823
        
        48,039
        
        45,010Exploration and development costs related to mining properties c)
        
        (31,768
        )
        (30,865
        )
        (31,258
        )Company acquisition
        
        -
        
        9,645
        
        -Cumulative depreciation and depletion d)
        
        3,381
        
        1,280
        
        (1,432
        )Property, plant and equipment reported under US GAAP
        
        23,436
        
        28,099
        
        12,320Minority interest under Canadian GAAP
        
        1,986
        
        2,024
        
        14,238Minority interest e)
        
        -
        
        -
        
        (10,866
        )Minority interest under US GAAP
        
        1,986
        
        2,024
        
        3,372Accumulated other comprehensive income under Canadian GAAP
        
        (44
        )
        (236
        )
        352Difference in accounting related to investments a)
        
        94
        
        90
        
        88Accumulated other comprehensive income under US GAAP
        
        50
        
        (146
        )
        440Shareholders equity reported under Canadian GAAP
        
        67,975
        
        67,018
        
        61,813Difference in accounting related to exploration costs c)
        
        (31,768
        )
        (30,865
        )
        (31,258
        )Depreciation and depletion d)
        
        3,381
        
        1,280
        
        (1,432
        )Difference in accounting related to share of a minority partner e)
        
        9,645
        
        9,645
        
        10,866Difference in accounting related to investments a)
        
        94
        
        90
        
        88Shareholders equity reported under US GAAP
        
        49,327
        
        47,168
        
        40,077
 24


---

Notes to consolidated financial statementsYears ended December 31, 2009, 2008 and 2007 (in thousands of Canadian dollars)
  2009
        
        2008
        
        2007$
        
        $
        
        $Cash flow from operating activities under Canadian GAAP
        
        2,967
        
        12,117
        
        5,999Exploration and development costs related to mining properties c)
        
        (902
        )
        393
        
        (509
        )Cash flow from operating activities under US GAAP
        
        2,065
        
        12,510
        
        5,490Cash flow from (used in) investing activities under Canadian GAAP
        
        (7,795
        )
        (10,647
        )
        4,201Exploration and development costs related to mining properties c)
        
        902
        
        (393
        )
        509Cash flow from (used in) investing activitiesunder US GAAP
        
        (6,893
        )
        (11,040
        )
        4,710
  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, 2009, 2008 and 2007 (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 non material impact on the consolidated financial statements of the Company. 20.
        Comparative figures
 Certain comparative figures provided for fiscal years 2008 and 2007 have been reclassified to conform with the presentation adopted for the fiscal year ended December 31, 2009. 26


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EXHIBIT 8.1

|                      |                          |                        
|--------------------- | ------------------------ | -----------------------
|                      | List of Subsidiaries     |                        
|                     
|Name                  | Country of Incorporation | Proportion of Ownership
|                     
|Louvem Mines Inc.     | Canada                   | 70%                    
|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 6, 2010(/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 6, 2010(/s/) Nicole VeilleuxNicole VeilleuxDirector, Finances


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EXHIBIT 13.1

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, 2009 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 6, 2010(/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, 2009 as filed with Securities and Exchange Commission on the date hereof (the Report), I, Nicole Veilleux, Financial Director 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 6, 2010(/s/) Nicole VeilleuxNicole VeilleuxDirector, Finances
  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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