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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 (g) OFTHE
    SECURITIES EXCHANGE ACT OF 1934ORANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THEXXX
    
    THE
    SECURITIES EXCHANGE ACT OF 1934For
    the fiscal year ended December 31, 2005ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THETHE
    SECURITIES EXCHANGE ACT OF 1934For
    the transition period from  toORSHELL
    COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934Date
    of event requiring this shell company report


Commission file number0-28816

RICHMONT MINES INC.

Quebec, Canada
(Jurisdiction of incorporation or organization)

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

(Address of principal executive offices)

|Securities registered pursuant to Section 12(b) of the Act:
|-----------------------------------------------------------
|                                                           
|Title of
    each Class                                    
|                                                           
|Common Stock, no
    par value                             

|                                                                                                                                                                                   
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Securities registered or to be registered pursuant to Section 12(g) of the
    Act:                                                                                                
|None                                                                                                                                                                               
|                                                                                                                                                                                   
|Securities for which there is a reporting obligation pursuant to Section
    15(d) of the Act:                                                                                     
|None                                                                                                                                                                               
|                                                                                                                                                                                   
|Indicate the number of outstanding shares of each of the issuer's classes of
    capital or common stock as of the close of the period covered by the annual
    report: 20,994,553
|                                                                                                                                                                                   
|Indicate by check mark if the registrant is a well-known seasoned issuer, as
    defined in Rule 405 of the Securities Act.                                                        
|Yes                                                                                                                                                                                

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

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

|IIndicate 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 ninety days.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Yes                                                                                                                                                                                                                                                                                                                                                                          

|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                                                                                                                                                                                                                               

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

|Item 17 | XXX | 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                                                                                                                                              

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

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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.ITEM 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

> Not applicable.

ITEM 2.

> Not applicable.

ITEM 3.

> A.

The selected financial data of Richmont Mines Inc.
(consolidated with its wholly-owned subsidiary, Camflo Mill Inc., its
majority-owned subsidiary, Louvem Mines Inc. and its 55% interest in Island Gold
property, "Richmont Mines" or the "Company") set forth below has been derived
from the consolidated financial statements of the Company which have been
audited by KPMG

The selected financial data was extracted from the more
detailed consolidated financial statements and related notes included herein and
should be read in conjunction with such consolidated financial statements and
with the information appearing under the heading "item 5  Operating and
Financial Review and Prospects."

The Company's consolidated financial statements are stated in
Canadian dollars (CAN$) 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 herein for a
discussion of the material differences between Canadian GAAP and 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.

1

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The information contained in this Form 20-F is current as at December 31,
2005, 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.

Selected Financial Data(Canadian GAAP)

|                              | Year Ended December 31                               
|----------------------------- | -----------------------------------------------------
|                              | (thousands of Canadian dollars except per share data)
|                              |                                                      
|                              | 2005                                                 
|                              |                                                      
|Total revenues                | 21,645                                               
|                              |                                                      
|Net earnings (loss)           | (27,480)                                             
|                              |                                                      
|Net earnings (loss) per share |                                                      
|Basic                         | (1.54)                                               
|Diluted                       | (1.54)                                               
|                              |                                                      
|Total assets                  | 54,226                                               
|                              |                                                      
|Long-term debt                | -                                                    
|                              |                                                      
|Working capital               | 21,877                                               
|                              |                                                      
|Shareholders'
    equity      |                                                      
|                              |                                                      
|Total                         | 40,464                                               
|                              |                                                      
|Per share                     | 1.93                                                 
|                              |                                                      
|Capital stock                 | 50,600                                               
|                              |                                                      
|Number of outstanding         |                                                      
|common shares end of period   | 20,995                                               



2

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

|                                  | Year Ended
    December 31
|--------------------------------- | --------------------------
|                                  |                           
|                                  | 2005                      
|                                  |                           
|Net Income (loss)                 | (27,457)                  
|                                  |                           
|Net earnings
    (loss) per share |                           
|Basic                             | (1.54)                    
|Diluted                           | (1.54)                    
|                                  |                           
|Weighted average
    number of    |                           
|common shares outstanding         | 17,838                    
|                                  |                           
|Shareholders'
    Equity          | 39,825                    
|                                  |                           
|Total Assets                      | 53,588                    

Exchange Rates

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

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

US Dollar/Canadian Dollar Exchange Rates

| | Year ended  |         | 
| | ----------- | ------- | 
| | December 31 | Average | 
| | 2001        | 1.5484  | 
| | 2002        | 1.5704  | 
| | 2003        | 1.4015  | 
| | 2004        | 1.3015  | 
| | 2005        | 1.2116  | 

The following table sets forth the high and low exchange rate for the past
six months. As of April 28, 2006, the exchange rate was 1.1190.

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|US Dollar/Canadian Dollar Exchange Rates
|----------------------------------------
|                                        
|                                        
|                                        
|                                        
|                                        
|                                        
|                                        
|                                        

> B.

Not applicable.

> C.

Not applicable.

> D.

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

Speculative Nature of the Mining Industry

The mining industry is intensely competitive and Richmont
Mines competes with many companies possessing greater financial resources and
technical facilities.

The market price of precious metals and other
metals is volatile and cannot be controlled. If revenue from gold sales falls
below the cost of production for an extended period, the Company may from gold
sales falls below the cost of production for an extended period, the Company may
experience losses and be forced to curtail or suspend some or all of its capital
projects or existing operations, particularly those operations having operating
costs that are flexible to such short- to medium-term curtailment or closure. In
addition, the Company would have to assess the economic impact of low gold
prices on its ability to recover any losses that may be incurred during that
period and on its ability to maintain adequate cash reserves.

There is no assurance that Richmont Mines' mineral development
and exploration activities will be successful.

Mining Risks

The mining operations of Richmont Mines are
subject to the risks normally encountered in the mining business. Hazards such
as unusual or unexpected geological formations, rock bursts, cave-ins, floods,
industrial accidents, unanticipated ground and water conditions, underground
fires, inclement weather conditions, and other conditions are involved in the
drilling and mining of ore. The processing of ore may subject Richmont Mines to
liability under environmental legislation including, without limitation,
liability resulting from a failure to maintain dams around tailing disposal
areas. Richmont Mines may become subject to liability for pollution, cave-ins or

4

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other hazards against which it cannot insure
or against which it may elect not to insure because of high premium costs or for
other reasons.
Fuel, power and consumables, including diesel,
heavy fuel oil, chemical reagents, explosives and tires, which are used in
mining operations form a relatively large part of the operating costs of any
mining company. The cost of these consumables is linked, to a greater or lesser
extent, to the price of oil. Furthermore, the cost of steel, which is used in
the manufacture of most forms of fixed and mobile mining equipment, is also a
relatively large contributor to the operating costs and capital expenditure of a
mining company.
Fluctuations in the price of oil and steel
have a significant impact upon operating cost and capital expenditure estimates
and, in the absence of other economic fluctuations, could result in significant
changes in the total expenditure estimates for new mining projects. The Company
has no influence over the price of fuel, chemical reagents, explosives, steel
and other commodities used in its mining activities. High oil and steel prices
would have an adverse effect upon the profitability of existing mining
operations and the returns anticipated from new mining projects and could even
render certain projects non-viable.
Shortages of skilled labor, critical spares,
consumables and equipment result in production delays and production shortfalls
and increases in prices for such items which results in an increase in both
operating costs and the capital expenditure to maintain and develop mining
operations.
Ore Reserve Estimation Risks
The ore reserves presented in this Annual
Information Form are in large part estimates, and no assurance can be given that
the anticipated tonnages and grades will be achieved or that the indicated level
of recovery will be realized. The grade of ore mined may differ from that
indicated by drilling results, which variation may have an adverse impact on
production results. In addition, the reliability of estimates of future
production might also be affected by mining risks and other factors such as
strikes and environmental conditions.Reliance on Estimates of Proven and Probable ReservesThere are numerous uncertainties inherent in
estimating quantities of proven and probable reserves and in projecting future
rates of production, including many factors beyond the control of the Company.
The reserve data included in this Annual Report represents only estimates and
actual results may vary from such estimates. No assurance can be given that the
anticipated tonnages and grades will be achieved or that the indicated level of
recovery will be realized. The grade of ore mined may differ from that indicated
by drilling results, which variation may have an adverse impact on production
results. Estimates were calculated in accordance with the National Instrument
43-101 in force in Canada.
Proven Mineral Reserves
A proven mineral reserve is the economically
mineable part of a measured mineral resource demonstrated by at least a
preliminary feasibility study. This study must include adequate information on
mining, processing, metallurgical, economic, and other relevant factors that
demonstrate, at the time of reporting, that economic extraction is justified.
5
Probable Mineral Reserves
A probable mineral reserve is the economically
mineable part of an indicated and, in some circumstances, a measured mineral
resource, demonstrated by at least a preliminary feasibility study. This study
must include adequate information on mining, processing, metallurgical,
economic, and other relevant factors that demonstrate, at the time of reporting,
that economic extraction can be justified.
Depletion of Reserves
The life of mineral properties declines as
reserves are depleted. Except to the extent the Company acquires additional
properties containing proven reserves, conducts successful exploration and
development activities or, through engineering studies, identifies additional
zones or reserves, the proven reserves of the Company will decline as they are
produced. Future gold production is therefore highly dependent upon the
Company's level of success in acquiring or finding additional reserves.
Fluctuations in Gold Prices and Currencies
(see Item 4.4 "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:
·               
Speculative positions taken by investors or traders in gold;

·               
Changes in the demand for gold as an investment;

·               
Changes in the demand for gold used in jewellery and for industrial uses;

·               
Changes in the supply of gold from production, disinvestment, scrap and hedging;

·               
Financial market expectations regarding the rate of inflation;

·               
The strength of the dollar (the currency in which the gold price trades
internationally) relative to other currencies;

·                
Changes in interest rates;

·               
Actual or expected gold sales by central banks and the IMF;

·               
Gold sales by gold producers in forward transactions;

·               
Global and regional political and economic events; and

·                
Costs of gold production in major gold-producing nations, such as South Africa,
the United States and Australia.

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

See Item 11 "Quantitative and Qualitative
Disclosure about Market Risk Foreign Currency Risk Disclosure."

As at December 31, 2005, Richmont Mines had no
gold hedging contracts and no future US dollar exchange contracts for the coming
year.

Exploration and Development Risks

Mining exploration and the development of
mineral deposits involve significant financial risks which even 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. The exploration
process generally begins with the identification and appraisal of mineral
prospects. Substantial expenditures may be required in an attempt to establish
ore reserves through drilling and other techniques, to develop metallurgical
processes to extract metals from ore and to construct mining processing
facilities at the site chosen for mining. No assurance can be given that current
exploration programs will result in any commercial mining operation.

Actual cash operating costs, production and
economic returns may differ significantly from those anticipated to be incurred
during such identification and appraisal process of mineral prospects. Operating
costs and capital expenditure are determined particularly by the costs of the
commodity inputs, including the cost of fuel, chemical reagents, explosives,
tires and steel, that are consumed in mining activities. There are a number of
uncertainties inherent in the development and construction of an extension to an
existing mine, or in the development and construction of any new mine. In
addition to those discussed above these uncertainties include:

·

·

·the availability and cost of appropriate smelting and refining arrangements;

·the need to obtain necessary
environmental and other governmental permits and the timing of those permits;
and

·               
the availability and cost of funds to finance construction and development
activities.

The costs, timing and complexities of mine development and
construction can increase because of the remote location of many mining
properties. New mining operations could experience unexpected problems and
delays during development, construction and mine start-up. In addition, delays
in the commencement of mineral production could occur. Finally, operating cost
and capital expenditure estimates could fluctuate considerably as a result of
fluctuations in the prices of commodities consumed in the construction and
operation of mining projects. Accordingly, the

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Company's future exploration and development
activities may not result in the expansion or replacement of current production
with new production, or one or more of these new production sites or facilities
may be less profitable than currently anticipated or may not be profitable at
all.

Laws and Regulations

The Company's mining operations and
exploration activities in the Provinces of Quebec, Ontario and Newfoundland 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
imposes 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 this
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
government bodies.

Canadian federal, provincial, and local laws
and regulations relating to the exploration for and development, production and
marketing of mineral production, as well as environmental and safety matters
have generally become more stringent in recent years, often imposing greater
liability on a larger number of potentially responsible parties. Because the
requirements imposed by such laws and regulations are frequently changed, the
Company is unable to predict the ultimate cost of compliance with such
requirements. There is no assurance that laws and regulations enacted in the
future will not adversely affect the Company's financial condition and results
of operations.

The Company believes that it is in substantial
compliance with all current laws and regulations material to its activities.
However, changing government regulations may have an adverse effect on the
Company.

Competition

The gold mining industry is marked by strong
competition from major mining companies and independent operators in acquiring
properties and leases for the exploration and production of gold. Competition is
particularly intense with respect to the acquisition of desirable undeveloped
mineral properties. The Company anticipates encountering such competition in
connection with any expansion of its activities. The principal competitive
factors in the acquisition of such undeveloped properties include the staff and
data necessary to identify, investigate and acquire interests in such
properties, close working relationships with governmental authorities and the
financial resources necessary to acquire and develop such properties. Many of
the Company's competitors have financial resources, staff and facilities
substantially greater than those of the Company. In addition, the producing,
processing and marketing of gold is affected by a number of factors which are
beyond the control of the Company, the effect of which cannot be accurately
predicted.

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The principal raw materials and resources
necessary for the exploration and production of gold are interests in
prospective properties under which reserves may be discovered, equipment to
explore for and produce such reserves and knowledgeable personnel to conduct all
phases of operations. The Company must compete for such raw materials and
resources with both major mining companies and independent operators. Although
the Company believes that its current operating and financial resources are
adequate to preclude any significant disruption of its operations in the
immediate future, the continued availability of such materials and resources to
the Company cannot be assured.

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 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.

The head office and principal place of
business of the Company are located at rented offices of approximately 3,400
square feet at 110 avenue Principale, Rouyn-Noranda, Quebec, J9X 4P2, telephone
number: (819) 797-2465. The Company also utilizes an office of approximately
1,200 square feet in rented premises at 1 Place Ville-Marie, Suite #2130,
Montreal, Quebec H3B 2C6. The common shares of Richmont Mines are listed and
posted for trading on the Toronto Stock Exchange and the American Stock
Exchange. The co-transfer agent for the Company in the United States is
Computershare Trust Company of Canada, 350 Indiana Street, Suite 800, Golden
Colorado, 80401.

Richmont Mines is principally engaged in
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.

Three-Years History

In September 2003, Richmont Mines invested $1
million in Patricia Mining Corp. (TSXV.PAT) in the form of a private placement
in order to obtain an option to acquire a 55% undivided interest in the Island
Gold project, located 15 kilometres from Dubreuilville in northeastern Ontario.
Richmont Mines' investment was used to finance a portion of a $3 million
exploration

9

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program involving surface drilling, the
dewatering of the access ramp, and the lateral and vertical underground
infrastructures. Work was completed in September 2004.

On December 3, 2004, Richmont Mines decided to
invest up to $10 million in exploration and development work in order to fulfill
its obligations under the 2003 agreement pursuant to which Richmont Mines was
granted the option to acquire a 55% interest in the Island Gold project.
Patricia Mining Corp. continued to serve as manager of the Island Gold project
during a transition period, after which Richmont Mines assumed responsibility
for operations on 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 the 55% interest in the Island Gold project.

In December 2003, Richmont Mines acquired the
East Amphi property, located near Malartic, in Abitibi, for a cash amount of $7
million Canadian, thus committing itself to completing a $6 million exploration
program on this property by December 31, 2004. The work was conducted during the
course of the year 2004. Details are presented in Item 4.B.2 "Business Overview
- East Amphi Mine".

The following table sets forth the Company's
capital expenditures on its properties for the past three fiscal years.

|                         | Year Ended
    December 31
|------------------------ | --------------------------
|                         | 2005                      
|                         | $                         
|                         |                           
|Beaufor Mine             | 2,770,812                 
|East Amphi
    property  | 13,215,310                
|Island Gold
    property | 12,622,482                
|Other investments        | 426,719                   
|                         |                           
|                         | 29,035,323                

In 2005, in order to maintain the rate of
production at the Beaufor Mine and to proceed with exploration with the aim of
developing the reserves and resources at the East Amphi and Island Gold
properties, Richmont Mines made total investments of $28,608,604 in these three
properties. This amount was allocated to underground development, surface
infrastructures and exploration drilling.

The Company's major investment for 2004, was
the $10,504,244 to carry out a major exploration program on the East Amphi
property. Over 2,100 m were drilled to create an exploration ramp as well as
bays, drifts and crosscuts. A total of 12,700 m of surface drilling and 1,350 m
of underground drilling were completed.

In 2003, Richmont Mines' principal investment
was the $7,104,894 to acquire East Amphi property. In 2003, the Company also
invested $1,255,345 at the Beaufor Mine. These investments included the
construction of an office for administrative, engineering and geology

10

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departments, as well as the purchase of new
production equipment. Richmont Mines also invested a total of $915,615 in its
other properties, including about $681,000 at the Camflo Mill and about $195,000
for the administrative office at the East Amphi property.

Richmont Mines forecasts a budget of more than
$8 million in 2006 for exploration at all of its properties. The Island Gold
project is expected to receive an investment of $7 million and $0.7 million is
expected to be invested in the Beaufor Mine. Richmont Mines also expects to
invest $0.1 million in the Valentine Lake property, the Company's primary target
of exploration in Newfoundland. The Company plans to finance these expenditures
with cash on hand and cash flow from operations but may also resort to other
sources of financing if it deems such a move appropriate.

> B.        Business
>   Overview

Beaufor Mine, Quebec, Canada

Property Description and Location

1.1.1      Location

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

1.1.2     Description of Mineral
Rights

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

1.1.3      Ownership of Mineral
Rights

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

1.1.4      Mineral Royalties

All the properties jointly held by Richmont
Mines and Louvem are subject to the payment of royalties and financial
contractual obligations. The details can be found in the Technical Report of the
Beaufor Mine (43-101), pages 5 and 6.

11

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1.1.5      Environmental
Obligations

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

The rehabilitation plan for the Beaufor Mine is in approbation
phase by the Ministère des Ressources naturelles et de la Faune du Québec.

1.1.6      Infrastructures

Two mine shafts are located on the Beaufor
property, the old Perron shaft No. 5 presently used for hoisting and the
Pascalis shaft, used as the ventilation air intake shaft. A series of buildings
comprising warehouses, workshops, offices, etc. are used to service a workforce
of about 119 employees and approximately 14 contractuals as of December 31,
2005.

1.1.7      Permits

All necessary permits and authorizations have been requested
and issued. No other permits are needed.

Accessibility, Climate, Local Resources, Infrastructures and Physiography

1.1.8       Access

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

1.1.9       Climate

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

The average daily temperature in Val-d'Or is
slightly above freezing namely 1.2°C. The average temperature for July reaches
17.1°C while in January the temperature falls to 17.0°C. The lowest temperature
measured was -43.9°C and the highest temperature measured was 36.1°C. The area
is below the freezing point an average of 209 days per year.

1.1.10      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 was,
in 2001, approximately 43,300 people accrording to the Institut de la
statistiques du Québec. This town is accessible from the national road network
and commercial flights are available daily at the local airport. The latter also
hosts an excellent base of suppliers and manufacturers for the mining industry.

12

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A railroad is located a few kilometres to the south of the
property.

The local manpower is well trained. Since the
mining town of Val-d'Or is very active, it is generally easy to recruit and keep
a mining workforce. Professionals, engineers, geologists and technicians are
usualy also well trained and available.

1.1.11      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.

Historical

Intermittent exploration fieldwork has been
conducted on the Beaufor property since the 1930s. Following a development
period, Aurizon Mines (50%) and Louvem (50%) started commercial production at
the Beaufor Mine in January 1996. In August 2000, Aurizon Mines stopped the
mining operation at Beaufor Mine for reasons of risk instability of the crown
pillar. In spring 2001, Aurizon Mines transferred the mining rights of the
Perron, Beaufor, Pascalis, Colombière and Courvan properties to Richmont Mines
Inc. 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

1.1.12      Regional geology

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

1.1.13      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

13

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dipping extensional gold-bearing veins are
commonly observed at the Beaufor mine. Shear zones striking N070o and steeply
dipping to the southwest control the opening and gold enrichment of veins.

Work for 2003, 2004, and 2005

The 2005 exploration program consisted in
drift and raise development to access gold-bearing zones. The following table
summarizes the work completed over the last three years. Ramp development began
last October from level 20, the lowest level accessible from the shaft.

|DEVELOPMENT AND DRILLING PERFORMED AT THE BEAUFOR MINE
    (in metres)
|----------------------------------------------------------------------
|                                                                      
|                                                                      
|Drifts                                                                
|Raises                                                                
|Ramp                                                                  
|Definition drilling                                                   
|Exploration drilling                                                  

Drilling

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

· Exploration drilling using a 60 metres by 60 metres grid;

· Definition drilling based on a 10 to 20 metres by 10 to 20 metres grid.

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

Sampling and Analysis

1.1.14       Sampling

The 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 during the mineral reserve calculation. There is currently no face
sampling "chips" at the Beaufor Mine.

In definition drillholes, 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. The entire core is
then analyzed at the chemical assay laboratory.

14

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1.1.15      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.

1.1.16      Quality Control

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

·                
Crushing, pulverizing, weighing: daily check;

·                
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 ten (10) g/t Au are systematically re-assayed.

Security of Samples

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

Mineral Reserve Estimates

General

Methodology and procedures for mineral reserve
estimates have been established by Beaufor Mine personnel. All estimates are
performed under the direct supervision of the following qualified persons, as
per the National Instrument 43-101: Donald Trudel (chief geologist) and

15

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Marcel Beaudoin (chief engineer). Jules Riopel
(Geology and Exploration Manager) is also involved in the determination of
mineral inventory. The data base, factors and parameters used in the
determination of the mineral reserve are based on the knowledge of the Beaufor
deposit as of December 31, 2005. 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 reserve estimate is carried out in
accordance with the National Instrument 43-101 recommendations and regulations.
Mineral reserves were classified according to the Canadian Institute of Mining,
Metallurgy and Petroleum (CIM) classification and adopted by the CIM Council on
August 20, 2000. All standards generally accepted in the mineral industry as
well as National Instrument 43-101 recommendations and ICM 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. The entire work,
all performed by the Beaufor Mine geology department, from data entry to layout
drawings follows strict and established procedures, including crosschecks to
ensure full validity. Access to all database is restricted to selected personnel
for complete integrity.

The database and the parameters used to
estimate the mineral reserves are based on past mining experience and knowledge
of the current situation as of December 31, 2005. Thus, both the dilution and
the ore recovery factors by mining methods used in the reserve estimate are
based on actual results obtained in 2005. All these factors and parameters are
updated on an annual basis in order to account for changes in the mining
operations.

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

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

Technical Parameters

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

Mining Methods

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

Room and Pillar

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

16

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·Maximum vein dip : 40°;

·

·

·

Long-Holes

·

·

·

·

·

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 rooms and pillars and long-holes.

The main criteria are as follows:

·

·

·

·

17

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

|Mining Methods  | Workings     | Cut-off Grade(g/t)
|--------------- | ------------ | ------------------
|Room and pillar | Developed    | 5.71              
|Room and pillar | Un-developed | 7.27              
|Long-holes      | Developed    | 4.30              
|Long-holes      | Un-developed | 5.85              

Reserve Classification

Descriptions with more details about classification of
reserves at the Beaufor Mine are presented below:

Proven Mineral Reserve

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

Probable Mineral Reserve

The mineral reserve estimate in the Probable
category has been based on an economic study in order to determine the
economically mineable part of an Indicated Mineral Resource. At the Beaufor
Mine, probable reserves extend to a maximum of ten metres from drilling data. In
the advent of drilling intersections of more than three metres length, reserves
can be projected by a multiple of five metres to a maximum of 30 metres.
Dilution and mining recovery rates are included in the reserve calculation.

Reserve Table

In accordance with the calculation, as of December 31, 2005,
the mineral reserves of the Beaufor Mine are estimated to be as follows:

|Categories of reserves    | Tonnes   | Grade    | Au     
|------------------------- | -------- | -------- | -------
|                          | (metric) | (g/t Au) | (oz)   
|Proven                    | 114,600  | 7.31     | 26,900 
|Probable                  | 392,000  | 8.98     | 113,200
|                          |          |          |        
|Total (proven + probable) | 506,600  | 8.60     | 140,100



18

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Metallurgy

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

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

Production Summary

Operating Costs and Capital Expenses

In 2005, ore totalling 199,269 tonnes at an
average recovered grade of 5.72 g/t was extracted from the Beaufor Mine. This
production yielded gold sales of 36,649 ounces, produced at a cash cost of
US$377 per ounce, compared to the previous year with 266,793 tonnes of ore at an
average recovered grade of 6.13 g/t, for gold sales of 52,623 ounces, produced
at a cash cost of US$308 per ounce. The rise in the production cost in 2005 is
attributable primarily to the decline in production and grades of ore extracted
at the Beaufor Mine and to the general increase in costs. Moreover, since these
costs are incurred in Canadian dollars but reported in US dollars, the
appreciation of the Canadian currency, which rose from an average of US$0.77 in
2004 to US$0.83 in 2005, also contributed to the rise in the production cash
cost.

In 2003, ore totalling 255,845 tonnes at an
average recovered grade of 6.78 g/t coming from the Beaufor Mine had yielded
total gold sales of 55,774 ounces produced at a cash cost of US$245 per ounce.
The increase in the production cash cost compared with 2003 was primarily
attributable to the decline in grades from the ore extracted from the Beaufor
Mine. The appreciation of the Canadian dollar, which rose from an average of
US$0.71 in 2003 to US$0.77 in 2004, also contributed to the rise in the
production cash cost.

19

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|                                     | Year ended   | Year ended   | Year ended  
|------------------------------------ | ------------ | ------------ | ------------
|                                     | December 31, | December 31, | December 31,
|                                     |              | 2005         |             
|                                     |              |              |             
|Revenues                             | 19,686,025   | 28,088,714   | 28,942,244  
|                                     |              |              |             
|Tonnes processed                     |              | 199,269      |             
|Grade (g/t)                          |              | 5.81         |             
|Gold recovery (%)                    |              | 98.51        |             
|Recovered grade
    (g/t)            |              | 5.72         |             
|Ounces sold                          |              | 36,649       |             
|                                     |              |              |             
|Data per ounce of
    gold sold      | US$          | CAN$         | US$         
|Cash cost                            | 377          | 457          | 308         
|Depreciation and depletion           | 23           | 28           | 12          
|                                     |              |              |             
|Total                                | 400          | 485          | 320         
|                                     |              |              |             
|Average price
    obtained per ounce | 443          | 537          | 410         

In this annual report on Form 20-F, the
Company presents the financial items "cash costs per ounce" and "depreciation
and depletion per ounce" which have been determined using industry guidelines
promulgated by the Gold Institute and are not US GAAP measures. An investor
should not consider these items in isolation or as alternatives to production
costs, net income/(loss) applicable to common shareholders, income/(loss) before
income tax provision, net cash provided by operating activities or any other
measure of financial performance presented in accordance with US GAAP. While the
Gold Institute has provided definitions for the calculation total cash costs per
ounce and depletion and depreciation per ounce, such costs may vary
significantly among gold mining companies, and by themselves do not necessarily
provide a basis for comparison with other gold mining companies.

Summary of Exploration and Development Work

Investments in property, plant and equipment
totalled $2,770,812 in 2005. Most of the funds invested in 2005 contributed to
the development of drifts and raises. In addition, the sinking of a ramp began
last October below level 20, which is the last level accessible from the shaft.
The increase in investments in 2005 compared with 2004 is attributable to the
planned two-month production shutdown during which underground development and
exploration drilling were performed. In 2005, expenses related to exploration
were $862,150, compared with $980,166 in 2004.

In 2004, investments in property, plant and
equipment totalled $1,478,118, compared with $1,255,345 in 2003. Most of the
funds invested in 2004 contributed to the development of drifts and raises. In
2003, in addition to the completion of similar work, new surface infrastructures

20

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were constructed. Furthermore, an amount of $980,166 went to
exploration drilling in 2004, compared to $1,221,682 in 2003.

For 2006, Richmont Mines expects to extract
192,000 tonnes of ore at an average recovered grade of 6.65 g/t Au for a
production of 40,000 ounces at the Beaufor Mine. Investments of approximately
$557,000 have been allocated for the completion of the ramp to a planned
vertical depth of 30 metres, which the Company is currently driving, below the
lowest level accessible from the shaft, located 610 metres below the surface.
This work will allow for the extension of Zone C, where reserves of 50,000
tonnes at an average grade of 9.4 g/t have already been identified. Richmont
Mines plans to begin extraction of this ore starting in the middle of 2006. The
potential of Zone B, located farther to the south, will also be confirmed by
drilling, as will that of Zone C, which is open at depth.

East Amphi Mine, Quebec, Canada

Property Description and Location

1.1.17      Location

The East Amphi property is located within the
limits of the city of Malartic, some 30 kilometres to the west from the center
of Val-d'Or, Abitibi East County, Province of Quebec. This property is
contiguous to the city of Malartic which is part of the Vallée de l'Or MRC
(township regional municipality).

1.1.18      Mining Claims
Description

The property consists of 34 claims (1,077.1
hectares) which includes a mining lease (ML #848) of 119.1 hectares. The
property covers part of Rang I (lots 8 to 35 incl.) and part of Rang II (lots 16
to 20 incl.) in Malartic township.

1.1.19      Ownership of Mining
Rights

All of the mining claims of the East Amphi property belongs to
Richmont Mines, which also holds contiguous mining claims. The surface rights
are held by the Crown.

1.1.20       Mining Royalty

Century Mining Corp. will be entitled to
receive a 2% Net Smelter Returns royalty, applicable after 300,000 ounces of
gold is produced from the East Amphi property. Richmont Mines has the option to
purchase the 2% royalty for $1.5 million at any time after the start of
production.

1.1.21       Environmental
Obligations

The rehabilitation plan for the East Amphi project was
approved by the Ministère des Ressources naturelles et de la Faune du Québec and
is valid until September 2008.

1.1.22       Infrastructure

All facilities are installed at the site. The main facilities
are:

21

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·               
The staff offices, core-shack, garage, warehouse and compressor room;

·               
The backfill plant;

·               
Two electrical substations and mine ventilation system;

·               
The mine water settling and polishing ponds; and

·               
The surface ramp to the underground ramp portal.

1.1.23       Permits

All necessary permits and authorizations have been requested
and issued. No other permits are needed.

Accessibility, Climate, Local Resources, Infrastructures and Physiography

1.1.24      Access

A gravel road of about two kilometers,
bordering the Malartic-Fournière township line in an east-west direction allows
easy access. The road leads to the mining site, in the south-central part of the
property, two kilometers west of the highway 117 which links Val-d'Or and
Rouyn-Noranda.

1.1.25       Climate

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

The average daily temperature in Val-d'Or is
slightly above freezing namely 1.2°C. The average temperature for July reaches
17.1°C while in January the temperature falls to -17.0°C. The lowest temperature
measured was -43.9°C and the highest temperature measured was 36.1°C. The area
is below the freezing point an average of 209 days per year.

1.1.26       Local Resources
and Basic Infrastructures

The area is well served by existing
infrastructure and human resources. The city of Malartic is located less than
three kilometres east from the center of the mining property. The city of Val-d'Or,
30 km to the east, counts a population of approximately 43,300 inhabitants. It
is accessible by a network of roads and is served by an airport with daily
commercial flights. The latter also hosts an excellent base of suppliers and
manufacturers for the mining industry. The local manpower is well trained. Since
the mining town of Val-d'Or is very active, it is generally easy to recruit and
keep a mining workforce.

The Camflo Mill is less than 13 kilometres of
the property. A railroad line crosses the south west part of the property. Two
120 kV hydro lines linking the Cadillac and Malartic stations pass less than two
kilometres north of the property and a 25 kV line, located 1.5 kilometres east
of the property, are meeting the energy requirements of the mine.

22

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1.1.27Physiography

The property is located in the low lands of
the Abitibi which are part of the James Bay physiographic area. The East Amphi
deposit is located in a very flat sector where swamps occupy the poorly drained
zones.

History

In 1937, McIntyre Porcupine Mines Ltd explored
the Cadillac fault and intersected mineralized diorite and feldspar porphyry.
East Amphi Gold Mines Ltd became the owner in 1940 and started underground
development in early 1946. Following the sinking of a three-compartment shaft to
a depth of 155 metres, 1,490 metres of drifting and 415 metres of cross-cuts,
the company announced its decision to suspend underground activities. However,
from 1948 to 1987, sporadic drilling was completed.

Breakwater Resources carried out surface and
underground work on the property from 1987 to 1990 ; 85 diamond drill-holes were
done on the surface and 92 underground. Geological mapping of underground
developments was also completed. A resource estimate was calculated in 1990.
(758,015 tonnes of indicated resources at an average grade of 11.02 g/t Au).

In 1995 Placer Dome optioned the property and
started an exploration program. Two surface diamond drilling program were done
in 1995 and 1996. A resource calculation was carried out, based on their
geological model (850,000 tonnes of indicated resources with an average grade of
8.11 g/t Au).

In 1998, McWatters Mining acquired the
property from Placer Dome and completed 44 additional drillholes on the East
Amphi property. A new resource calculation was carried out, resulting in an
estimated 2.29 million tonnes of measured and indicated resources at an average
grade of 5.98 g/t Au (cut-off grade of 2.7 g/t Au). From December 1998 to August
1999, a total of 120,427 tonnes of ore was extracted from the open pit and
shipped to the Sigma mill for processing. The average diluted grade of the ore
was 5.66 g/t Au.

Geological Setting

1.1.28

The East Amphi property is located in the
southern part of Abitibi greenstone belt, which is an Archean
volcano-sedimentary complex in the Superior Structural Province of the Canadian
Shield. The property is located in the Malartic mining camp. The Cadillac-Larder
Lake deformation zone runs across the central part of the East Amphi property
and lies along the boundary between metasedimentary rocks of the Pontiac
Subprovince and basaltic to ultramafic volcanic rocks of the Piché Group.

1.1.29

The East Amphi property is cut by the tectonic
zone of Larder Lake-Cadillac. On the property, this deformation zone is found in
the ultramafic rocks in the Piché Group, which have been transformed into
schists of chlorite and talc. This group is bordered on the north by the
sediments

23

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of Cadillac and on the south by the Pontiac
Group. An intrusive mass of feldspathic porphyry is found in the southern part
of the Piché Group, south of the band of talc-chlorite schists from the Cadillac
fault.

Given the association with the Lader-Lake
Cadillac fault, Richmont Mines expects a complexity in the history of
deformation and hydrothermalism in the gold deposits. East Amphi mineralized
zones were defined stratigraphically as zones A, B, and P, in which distinct
lenses have been identified and named as zones A1-A2-A2' and A3, and zones B2-Bn
and B1-B1'. The B2-Bn zones occur at the interface between the feldspar porphyry
and the talc-chlorite schist. These zones are marked by the injection of several
generations of intrusions, generally subparallel to the foliation and showing a
boudinaged structure. A1-A2-A2'A3 zones, and B1-B1 zones are situated within the
talc-chlorite schists. The P zones are developed within the porphyritic body to
the south. The zones have been identified over a strike length of more than 1
km, from the surface to a depth of 600 metres, and they can reach a thickness of
more than 20 metres.

Mineralization

The mineralization is generally associated
with the fault system of the Cadillac Lader Lake deformation zone. The
mineralization is characterized primarily by structural control and secondarily
by lithological control. Regarding the Piché Group, which hosts the Cadillac
fault, it is well established that most of the gold concentration came from
porphyry and dioritic intrusive led inside sheared volcanic rock.

The mineralization of the gold ore assumes two
forms. In general, gold is associated with the spreading of large automorphic
pyrites up to 5 mm in the lightly silicified zones associated with compacted and
broken intrusions, either of a variably biotized dioritic nature or hematized
and silicified felsic ones, or in the ultramafic deformed host rocks of the
intrusions. This type of mineralization represents the majority of the resources
and is typical of the gold-bearing mineralization found on the property. The
second form is that the gold is associated with injected quartz veins and
veinlets encased in the porphyric feldspathic intrusion to the south and in a
shearing zone that divides the first type of mineralization. The gold is
generally found within pyrite, and a few specks of free gold have been observed.

2004 and 2005 Work

Following the acquisition of the property at
the end of 2003, Richmont Mines launched an underground exploration program
involving drilling and drifting in order to improve the quality of the
resources, transfer resources to reserve categories and increase the resources.
Table below presents the total exploration program. A total of $23,719,554 was
therefore invested in exploration in 2004-2005. Before reaching a decision about
entering into commercial production, three bulk samples totalling 40,581 tonnes
of ore were milled, of which 24,917 tonnes came from development and 15,664
tonnes of stopes mined.

24

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|DEVELOPMENT AND DRILLING PERFORMED AT THE EAST AMPHI
    PROPERTY (in metres)
|-----------------------------------------------------------------------------
|                                                                             
|                                                                             
|Drifts                                                                       
|Other excavations
    and drawpoints                                         
|Ramp (vertical
    depth of 200 metres)                                      
|Exploration drilling                                                         

Drilling

A total of 969 holes totalling 109,554 metres
of surface and underground diamond drilling were completed in the property from
the early 1930's to September 2005. Approximately 430 holes totalling 80,147
metres were drilled from the surface, and 539 holes totalling 29,407 metres from
underground, including Richmont Mines drilling. The majority of the drill-holes
used for resource and reserve estimates were BQ size.

Most of the drillholes are planned on vertical
cross-sections to intersect mineralized zones at right angles, along a grid
spacing of 10 by 15 metres or 20 by 20 metres. Drilling operations are performed
by a drilling contractor, under the supervision of the geological staff at the
East Amphi mine. Underground drillholes are BQ size, whereas surface drillholes
are NQ calibre. Core recovery is 100%. The drill core is logged in detail by
experienced and highly skilled personnel, following established guidelines for
the East Amphi mine. A rock quality designation (RQD) analysis was completed for
all drill-holes drilled in the 2004-2005 program and the RQD for zones B2 and Bn
is relatively good.

Sampling and Analysis



The 2005 mineral reserve estimate is supported
by 546 surface and underground diamond drill hole samples and 110 chip sampling.
The sampling approach was planned to coincide with lithological contacts with a
minimum with of 0.5 metre and maximum 1 metre length.

The panel (or chip) sampling method generally
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 weighted an average 3 kg for a zone of two metres vertically by 0.5 to
1.5 metres horizontally.



ALS Chemex Chimitec Laboratories in Val-d'Or,
was selected to analyze samples from the East Amphi 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:

25

---



·

·               
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 atomic absorption finish. Samples
exceeding seven grams per tonne gold (7 g/t Au) on the first analysis are
re-analyzed with a gravimetric finish. Rejects and pulps are preserved by the
laboratory or stored at the East Amphi site.

1.1.32Quality Control

During the course of the geological
confirmation program, an evaluation of "Quality Assurance/Quality Control"
(QA/QC) data was done to address the three (3) main concerns of analytical
determination protocols, namely: (i) contamination, (ii) accuracy, and (iii)
precision, as measured by the results obtained from field and analytical blank
standards, certified reference standards and an assortment of specific duplicate
samples collected and/or prepared, in addition to the regular samples submitted
to the laboratory. 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.

Good accuracy was demonstrated by the
laboratory during the sampling/assaying programs, as monitored internally and
externally by the assaying of certified reference standards. Precision results
from evaluation of AAS, gravimetric finish sample duplicates as well as assorted
pulp duplicate results for the various original sample types demonstrate overall
poor precision is being realized for the 50 g pulp samples. It is recommended
that the split size be increased from the 250 g to 1000 g size. A comparison of
the AAS versus gravimetric results demonstrates that precision for the AAS
finish results is better up to grades of 3.5 g/t Au when gravimetric grades are
more precise.

Security of Samples

At the East Amphi mine, there are no specific quality control
measures for the shipment of samples. The latter are collected in plastic bins
and picked up by the assay laboratory on a daily basis. In the event the sample
location is uncertain, or the sample number is duplicated, or any other anomaly,
then the results are simply excluded from the resource calculation.

Mineral Reserve Estimates

General

Methodology and procedures for mineral reserve estimates have
been established by East Amphi Mine and Head Office personnel. All estimates are
performed by qualified persons, as per the

26

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National Instrument 43-101 under the
supervision of Jules Riopel, Geology and Exploration Director. The base data,
factors and parameters used in the determination of the mineral reserve are
based on the knowledge of the East Amphi deposit as of December 31, 2005.
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 reserve estimate is carried out in
accordance with the National Instrument 43-101 recommendations and regulations.
Mineral reserve were classified according to the Canadian Institute of Mining,
Metallurgy and Petroleum (CIM) classification and adopted by the CIM Council on
August 20th, 2000. All standards generally accepted in the mineral
industry as well as National Instrument 43-101 recommendations and ICM
regulations for mineral reserve estimates have been fully applied in this study.
Richmont Mines has estimated the Global
Reserves using all information from its 2004-2005 exploration program including
information from underground openings and historical diamond drilling. The East
Amphi Global Mineral Resource estimate served as a basis for the East Amphi
mineral reserve estimate.
The source data and parameters used in the
reserve calculation correspond to knowledge acquired and best estimates as at
December 31, 2005. Budget costs used in the evaluation are based on estimated
and actual data, taking into account acquired experience and evolving economic
conditions in 2005. These factors and parameters are revised on an annual basis,
to take into consideration experience gathered from the mining operation.
The conversion of mineral resources into
mineral reserves is based on economic feasibility studies conducted by the
engineering staff at the East Amphi mine. As stipulated in National Instrument
43-101, only mineral resources classified in the measured and indicated
categories by the geological staff are used in the economic reserve estimate
calculations.
Mineral Reserve Classification
The classification of mineral reserves for East Amphi was
carried out according to definitions adopted by the Canadian Institute of
Mining, Metallurgy and Petroleum (CIM).

Proven mineral reserves

The geologists and mining engineers at East
Amphi estimated the tonnage and grade of the mineral reserves in the proven
category based on the conclusions of an economic study in which grade, geometry
and continuity were established with a high degree of confidence from drilling
or mining work. The proven mineral reserves were confirmed by a high density of
drill-holes, some cross-cuts through the mineralized zones and a bulk sampling
program. The blocks are considered proven if drill spacing is less than 10
metres and several drill-holes form a cluster of similar results, especially if
there is some underground development in the mineralization to confirm its
location and grade.

27

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Probable mineral reserves

The estimate of the mineral reserves in the
probable category was made based on an economic study in order to determine the
area in which geological continuity, geometry and grade are sufficiently known
to allow for a reliable estimate of tonnage and grade and which can be mined
economically. The blocks are considered to be indicated resources if drill
spacing is between 10 to 20 metres and several drill-holes form a cluster of
similar results.

Technical Parameters

The parameters and the basis of calculation used in the
economic study are:

·             
The extraction methods will be transversal and longitudinal long hole and
cut-and-fill with a minimum dip of the zone at 60° and a maximum panel length of
11 metres by 25 metres high (B2-Bn);

·              
Ore recovery: 100% for stopes designed with 4-metre pillars between stopes
clearly identified during the process of the mineral reserve estimate. The
pillars are excluded from the reserves;

·               
Internal dilution: minimum mining width is three metres for the B2-Bn zones and
four metres for the A1-A2-A2', A3, and B1-B1' zones;

·               
External dilution: a rate of 10% at a grade of 2.7 g/t Au for the B2-Bn zones,
1.9 g/t Au for the B2-Bn zones below 4800 elevation, and 20% at a grade of 0.5
g/t Au for the A1-A2-A2', A3, and B1-B1' zones;

·               
Operating costs of $62.00/tonne;

·               
Cut-off grade of 3 g/t Au fixed with a gold price at US$450/oz (or CAN$540/oz
with an exchange rate of CAN$1.2 for US$1). However, the final cut-off grade
will be based on the current gold price at the time of extraction of the
reserves;

·                
Grade capping at 30 g/t Au for all zones;

·                
The mill recovery is 97.5%.

·                
An average rock density of 2.8 t/m3 is defined.

The main parameters for the block
model used to estimate the Global Mineral Reserve are as follows:

·                
A wireframe of 3 g/t;

·               
Compositing of gold assay results was done on 1-metre equal lengths;

·               
A 30-metre ellipsoid search was fixed according to the distance;

28

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·

·               
Interpolation method: the IDP interpolation method to the power 1 was used to
minimize the nugget effect of gold assays;

·               
A maximum of seven composite samples per diamond drill-hole within a maximum of
15 composites was fixed.

Reserve Table

According to the calculation, as of December 31, 2005, the
mineral reserve estimates at the East Amphi Mine are:

|Reserves
    Categories                                                      | Tonnes   | Grade    | Au     
|---------------------------------------------------------------------------- | -------- | -------- | -------
|                                                                             | (metric) | (g/t Au) | (oz)   
|Proven                                                                       | 288,900  | 4.04     | 37,500 
|Probable                                                                     | 351,900  | 5.57     | 63,000 
|                                                                             |          |          |        
|Total (Proven +
    Probable)                                                | 640,800  | 4.88     | 100,500
|(1) Including
    dilution and 100% mining recovery (excluding the pillars). |          |          |        
|(2) Before
    milling recovery (97.5%).                                     |          |          |        

Metallurgy

Before a decision to begin commercial
production was reached, three bulk samples totalling 40,581 tonnes of ore were
processed, of which 24,917 tonnes came from development and 15,664 tonnes from
the mined stopes. For the third lot, 10,256 dry tonnes of development ore and
15,664 tonnes of ore from four stopes were transported and milled. The East
Amphi ore was hauled by truck to Richmont Mines' Camflo mill located at an
approximate distance of 13 km from the minesite. The Camflo mill is a
traditional gold recovery mill using a conventional Merrill-Crow type process,
with circuits for crushing, grinding, gold cyanidation and precipitation using
zinc powder.

For the bulk sample from lot 3, the head grade
averaged 4.0 g/t Au, whereas the head grade for the entire 2005 mill test,
including development ore from lots 1 and 2, was 3.7 g/t. Gold recovery of the
zinc precipitation circuit at the Camflo mill was established at 97.5%.

The main conclusions of the reconciliation between planning,
mining and milling are:

·

·

·



29

---



·

·              
Average grade milled from the four stopes returned a content of 4.14 g/t
compared to an undiluted planned grade of 3.85 g/t and an average grade of 3.80
g/t according to outlined tonnage effectively withdraw in the block model
evaluation. This represents an upgrade of over 9% based on CMS measurement
evaluation.

Summary of Exploration and Development Work

In 2005, Richmont Mines invested an amount of
$13,215,310 towards the completion of its major exploration program at the East
Amphi property and to underground and surface infrastructures. Following the
compilation of the advanced exploration program results in 2006, Richmont Mines
brought the project into commercial production last February.

In 2004, an amount of $10,504,244 was invested
to sink the ramp, install ventilation raises, improve the underground and
surface infrastructures overall, and commence exploration. In 2003, the Company
had invested $7,104,894, primarily for the cost of acquiring the property.

Since the beginning of exploration and
development work on the East Amphi project in January 2004, the cost of oil,
steel, cement, mining equipment and labour have risen significantly. These
economic factors led to higher investments than the amounts initially planned by
Richmont Mines. In addition, after the geotechnical studies were completed at
the end of 2005, modifications to the mining plan proved necessary and resulted
in a reduction in the size of the stopes' openings, the creation of permanent
pillars and the abandonment of the use of cemented fill in most of the stopes.
Definition drilling also showed significant variation in the grades. As at
December 31, 2005, the Company recorded a non-cash write-down of mining assets
of $26,040,953 related to the East Amphi property.

In 2006, the Company plans to extract
approximately 200,000 tonnes of ore at an average grade of 4.0 g/t for
production of approximately 25,000 ounces of gold. Mine life is anticipated to
be around 4.5 years, based on current ore reserves and mine plan. On the
positive side, the East Amphi property has a 4-km strike along the mineralized
Malartic shear, and has the potential to find additional reserves. The actual
resource base could also be partly transferred into mineable reserves.

Low dilution level from production and ground
stability of future developments to access satellite zones are key elements in
the success and profitability of the overall project. A complete review of the
proposed mining methods, associated costs as well as mining productivity and
risk based on ground conditions will be conducted prior to going ahead with the
second phase of development. Actual and future short-term mining experience in
the B2 zone above the 200 level will serve as a basis for that review. Actual
ground conditions look more stable than predicted, mainly because of low depth
of mining and the absence of lateral constraints.

30

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Technical Report 43-101

On March 9, 2006, the Company filed
the technical report with accordance to the National Instrument 43-101. The
report is available on SEDAR Web site (www. Sedar.com).

Hammerdown Mine, Newfoundland, Canada

Property Description and Location

The Hammerdown Mine is located near King's Point in northeast
Newfoundland and includes mining lease 153, covering an area of 96 hectares.

Richmont Mines's purchased a 100% interest in
the Hammerdown property in Newfoundland in March 2000 for $6 million, $5.4
million of which was paid in cash. Following the completion of this development
work, the Hammerdown Mine started up in July 2001.

In 2004, production reached 14,985 ounces of
gold. Exploration did not lead to the identification of new reserves, and
therefore Richmont Mines closed the mine down. Work to restore the site, at a
cost of $188,037 that was charged to the provision already reported, was begun
in the second quarter of 2004. All of the buildings and equipment were removed,
the site was secured, and revegetation carried out. In February 2005, Richmont
Mines received a letter from the relevant authorities that confirmed that the
work had been completed in accordance with the law.

Summary of Production

|                                     | Year ended   | Year ended   | Year ended  
|------------------------------------ | ------------ | ------------ | ------------
|                                     | December 31, | December 31, | December 31,
|                                     |              | 2005         |             
|                                     |              |              |             
|Revenues                             |              | 159,029      | 8,892,302   
|                                     |              |              |             
|Tonnes
    processed                 |              | -            |             
|Grade
    (g/t)                      |              | -            |             
|Gold
    recovery (%)                |              | -            |             
|Recovered grade (g/t)                |              | -            |             
|Ounces
    sold                      |              | 307          |             
|                                     |              |              |             
|Data
    per ounce of gold sold      | US$          | CAN$         | US$         
|Cash cost                            | 15           | 18           | 251         
|Depreciation and depletion           | -            | -            | 104         
|                                     |              |              |             
|Total                                | 15           | 18           | 355         
|                                     |              |              |             
|Average
    price obtained per ounce | 428          | 518          | 412         

31

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Nugget Pond Property, Newfoundland, Canada
Description and Location of the Property

1.1.33      Location and Access
The Nugget pond property is located
approximately 65 km east-southeast of the town of Baie Verte on the northwest
coast of Notre Dame Bay in north-central part of the province of Newfoundland
and Labrador. Access to the property is provided by a road which joins the
property with the settlement of Snook's Arm located some five kilometres east of
the Nugged Pond mill. An all weather dirt road, highway 416, branches off of
highway 414 linking Baie Verte and La Scie and leads due south to the head of
Snook's Arm and the Nugged Pond access road.
1.1.34     Description and
Infrastructures
The property consists of 99 contiguous mining
claims totalling 2,475 hectares, grouped under Licence 10243, and one mining
lease (144) of 131.2 hectares. Richmont Mines holds a 100% interest in the
property, which includes a gold mill with a processing capacity of 450 t/day,
administrative offices and operational buildings, and a chemical analysis
laboratory for mining and environmental samples.
1.1.35      Agreement
In November 2005, Richmont Mines announced
that the Company signed a 12-month option agreement with New Island Resources
Inc. (TSXV.NIR) to sell the Nugget Pond property and gold mill. In order to earn
this option, New Island made a non-refundable deposit of $250,000 and must
undertake a $1,000,000 exploration program on the property. Upon exercise of the
option, New Island will pay Richmont Mines an additional $2,250,000 and assume
reclamation liabilities. Richmont Mines will have the right to retain a 30%
interest in the property by reducing by $1,000,000 the purchase price proposed
to New Island. During the option period, Richmont Mines will retain full control
and responsibility for the operation and maintenance of the mill.
Island Gold Property, Ontario, Canada
Project Description and Location

1.1.36     Location
The Island Gold Project is located
approximately 85 km north-east of Wawa, Ontario, in the Sault Ste. Marie Mining
Division. Dubreuilville is approximately 15 km to the northwest of the Project.
1.1.37      Mining Claims
Description
The Island Gold Project consists of 108 patented and leased
claims totalling 1,735 ha and 197 staked claims totalling 6,001 ha.32
Property
    Number of
    claims
    Area (ha)
    Patricia Mining /Richmont MinesOwnership (%)Kremzar
    20
    364
    45/55Lochalsh
    31
    424
    45/55Goudreau
    67
    948
    45/55Island Gold
    187
    6,001
    45/551.1.38       Agreements summary
Richmont Mines entered into an agreement with Patricia Mining
Corp. (Patricia Mining or Patricia) 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 agreed to invest up to
$10 million in order to acquire a 55% interest in this project. Patricia Mining
retained its role as project manager during a transition period, and Richmont
Mines became project operator as of January 1, 2005. During the course of the
fourth quarter 2005, after having fulfilled its obligation to invest $10 million
for the project development, the Company acquired its 55% interest.
In January 2006, Richmont Mines and Patricia Mining Corp.
announced the purchase of Algoma Steel Inc.'s remaining joint venture interest
in the Goudreau property near Dubreuiville Ontario, for $100,000. The property
will remain subject to the 15% net profits interest as per the original joint
venture agreement between Algoma and Patricia Mining. The purchase will allow
the Island Gold Joint Venture to expedite the exploration program on the
Goudreau property. The Island Gold Joint Venture will share the cost of this
purchase and will now own 100% of the property subject to royalties. Patricia
Mining through the joint venture will therefore own a 45% interest and Richmont
Mines will own the remaining 55% interest in the property.
1.1.39      Ownership of Mining Rights
All mining titles on the Island Gold project are currently been transferred
and will be jointly held by Richmont Mines (55%), and Patricia Mining (45%).
1.1.40      Mining Royalties
The Kremzar Property is subject to a 4% net smelter royalty (NSR)
in favour of Algoma Steel Inc. (Algoma). The Algoma NSR will become payable by
Patricia at such time as the aggregate amount of NSRs received by the company
and Aur equals the aggregate preproduction costs.
The Kremzar Property is also subject to a 3% NSR in favour of
Aur, which is payable until such time as the Algoma NSR becomes payable. In the
event the Algoma NSR becomes payable and is reduced below 4%, Aur will be
entitled to receive a net smelter return equal to 50% of the amount by which the
Algoma royalty is reduced, payable on the same terms as the Algoma NSR.
The Lochalsh Property is subject to a 3% NSR in favour of Aur.
33The Goudreau Property has a 2% NSR in favour of Aur and a 15% NPI royalty in
favour of Algoma.
1.1.41      Environmental Obligations and
permitting status·The most important permit being maintained at
this time is the ministry of the environment permit number 4-105-86-876 - permit
to operate the Kremzar Mill which will be amended to take in consideration the
anticipated modifications to the mill. In addition, permits number 03-P-6053 and
1360-6EXKTH have been obtained during the course of the year 2005.

·

·

·

·

1.1.42      Infrastructures

The Island Gold Project infrastructure including the location
of 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 Lochalsh ramp
and portal, the mine access road, and the hydro lines, all with respect to the
property . An office, a core logging and storage facility, and a mine dry are
located on the Kremzar mine site.

Access, Local Resources, Infrastructures, Climate and Physiogeology

1.1.43      Access

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

34

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1.1.44Local 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 Project 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 Project area. Power is supplied by
Great Lakes Power Corporation.

1.1.45Climate

The Project 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 31°C
to -41°C. Annual precipitation is normally 669 mm of
rain and 278 cm of snow. Winter winds are from the northwest to north and during
the summer south-west to westerly winds prevail.

1.1.46     Physiogeology

The Project area is within the Precambrian Shield adjacent to
Lake Superior, in an area of low rolling hills that trend in an east-west
direction. 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 Project 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 two kilometres south of the Kremzar mine intersected a series
of sub-parallel lenses containing gold mineralization within deformed rocks of
the Goudreau lake deformation Zone (gldz). These lenses, are known as the
Lochalsh, Island Gold, Shore, and Goudreau lake Zones. During 1989 and 1990, a
1,280 m long ramp was driven into the Island deposit beneath Goudreau lake from
an adit on the north shore. Drifts and raises totalling 382 m were developed on
two levels at depths of 125 m and 140 m below the Goudreau lake elevation at
approximately 382 m. A bulk sample weighing 4,167 tonnes was extracted and
processed at the Kremzar Mill.

Patricia Mining acquired the project in 1996 and completed
16,862 m of diamond drilling in 49 holes on the Island deposit and Lochalsh Zone
between 1996 and 2002. In 2002 Kallio completed a resource estimate by block
model in order to estimate the potential of an open pit mining concept. In late
2002, Amec used the Kallio estimate to carry out a preliminary assessment. These
reports are filed on SEDAR as NI 43-101 technical reports.

35

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Geological Context

1.1.47Regional Geology

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

1.1.48       Project Geology

The Island Gold project covers part of the interface between
the Catfish assemblage, composed of mafic rocks, and the Wawa assemblage,
consisting of felsic rocks. The pyrite-rich Goudreau iron formation lies at the
contact between the Wawa and Catfish assemblages. A unit of pyroclastic rocks
marks the transition between the two assemblages and hosts gold occurrences
encountered on the property. This gold mineralization is controlled by the
Goudreau Lake Deformation Zone (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°
host the gold mineralization. Moderate to high strain intensity are present
within the shear zones containing pervasive alteration occurring in the form of
iron carbonate, silica and calcite. Within areas of intense sericitization and
silicification with 2% to 5% pyrite are narrow, subparallel quartz veins
carrying gold mineralization. Gold is found primarily in quartz stringers and
veins one centimetres to 1,5 meters wide. Visible gold (VG) forms clouds of fine
gold droplets up to 3 mm in diameter.

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

36

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2005 Work

The work performed in 2005, permitted among other things, for the development
of underground infrastructures and the exploration drilling. The following table
presents work achieved in 2005.

|DEVELOPMENT AND DRILLING PERFORMED AT THE ISLAND GOLD
    PROPERTY (in metres)
|------------------------------------------------------------------------------
|                                                                              
|                                                                              
|Development in ore                                                            
|Crosscuts and ventilation drifts                                              
|Ventilation raises                                                            
|Ramp (vertical depth of 255 metres)                                           
|Service infrastructures                                                       
|Exploration drilling                                                          

Drilling

A total of 395 holes totalling 88,800 metres of surface and
underground diamond drilling were completed in the property from the early
1980's to December 2005. The majority of the drill-holes used for resource
estimates were BQ size.

Most of the drillholes 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 project. Underground
drillholes are BQ calibre, whereas surface drillholes are NQ size. Core recovery
is 100%. The drill core is logged in detail by experienced and highly skilled
staff, following established guidelines for the Island Gold project. A rock
quality designation (RQD) analysis was completed for all drill-holes drilled in
the 2005 program and the RQD for the zones is excellent.

Sampling and Analysis

1.1.49Sampling

The sampling approach was planned to coincide with lithological contacts with
a minimum with of 0.3 metre and a maximum length of 1 metre.

The panel (or chip) sampling method generally 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 sample
weighted an aveargae 3 kg for a zone of 2 metres vertically by 0.5 to 1.5 metres
horizontally.

1.1.50Assays

Accurassay Laboratories (Accurassay) of Thunder Bay, Ontario
was used for the underground drilling and development program to perform fire
assay, gravimetric and specific gravity analyses. A number of underground muck
and chip samples were sent to River Gold's assay lab

37

---



in Wawa. Accurassay are commercial Canadian Assay Laboratories accredited by
the Standards Council of Canada to ISO/IEC 17025 guidelines for gold analysis.

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

·

·

·

1.1.51      Quality Control

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

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

Security of Samples

At the Island Gold project, there are no specific quality control measures
for the shipment of drill core samples.

Metallurgy

Metallurgical testing was carried out by Lakefield Research
in June 1988 on ore extracted from the Island Zone. These tests were conducted
on three composite samples with respective average grades of 3.56 g/t Au, 7.59
g/t Au, and 15.38 g/t Au. Metal assay results at Lakefield, for the three
composite samples, were 2.75 g/t Au, 6.83 g/t Au, and 12.3 g/t Au, and indicated
very little coarse gold was present. Cyanidation tests were conducted with 500 g
of material, crushed to

38

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77% passing 200 mesh. Gold dissolution was fairly rapid and the recovery
rate was above 94% after 48 hours.

A bulk sample of 4,167 tonnes was extracted from underground stopes at the
Island Zone and processed at the Kremzar mill in three lots in 1990. Gold
recovery was approximately 94%.

Summary of Exploration and Development Work

In 2005, Richmont Mines invested $12,622,482 in the Island
Gold project and as of the fourth quarter of 2005 holds 55% of the property. The
work performed to date has allowed, among other things, for the development of
underground infrastructures and the confirmation and expansion of the resources
that were identified in 2004 by Patricia Mining Corp.

The Company plans to prepare a reserve calculation, using the
data from drilling that will be available in September 2006. In the third
quarter of 2006, Richmont Mines plans to restart the mill located on site, which
has a capacity of 650 tonnes per day, and to begin processing ore from
development. Subsequently, the Company plans for the milling work to continue
with the processing of ore from the Island Gold property so as to achieve
production during the second half of the year.

The Island zone remains open at depth and along strike in
certain areas. Based on a preliminary review of drillholes in the Lochalsh and
Goudreau zones, these two zones offer, in Management's opinion, excellent
exploration potential and the distinct possibility to develop mineral reserves.
The 2005 exploration campaign also led to the identification of two areas of
interest near underground infrastructure, which will be investigated over the
course of 2006.

Exploration Projects and Others Properties

General

Richmont Mines owns or holds interests in many mining
properties at different stage of exploration. Richmont Mines 2005 annual report
presents details on all of these properties in the section under the heading
"Summary of operation and financial results for 2005, 2004 and 2003" of the
Management's discussion and analysis. The following table outline Richmont
Mines' interest in these exploration properties as at December 31, 2005.

39

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|Property                      | Year of acquisition | Number of claims     | Participation(1)
|----------------------------- | ------------------- | -------------------- | ----------------
|                              |                     |                      |                 
|Quebec                        |                     |                      |                 
|East Amphi                    | 2003                | 34                   | 100%            
|Francoeur                     | 1992                | 13                   | 100%            
|Monique                       | 1994                | 21                   | 81% by Louvem   
|Wasamac                       | 1988                | 3 mining concessions | 100%            
|Camflo North West             | 2005                | 13                   | 50%             
|Newfoundland and
    Labrador |                     |                      |                 
|Valentine Lake                | 2003                | 502                  | Option for 70%  
|Cripple Creek (TN)            | 2005                | 83                   | Option for 100% 
|Ontario                       |                     |                      |                 
|Island Gold                   | 2003                | 305                  | 55%             
|Sewell                        | 2002                | 6                    | 100%            
|Cripple Creek                 | 2002                | 42                   | 100%            

|(1) The Company
    is subject to payment of royalties if some of these properties are brought
    into commercial production.
|------------------------------------------------------------------------------------------------------------------------------

The following table presents Richmont Mines' exploration and evaluation of
projects expenses in 2003, 2004 and 2005 and the budgeted amounts for 2006.

|                                            | 2003        | 2004        | 2005        | 2006      
|------------------------------------------- | ----------- | ----------- | ----------- | ----------
|                                            |             |             | $           | $         
|                                            |             |             |             | Estimated 
|Quebec                                      |             |             |             |           
|Beaufor Mine                                | 1,221,682   | 980,166     | 862,150     | 700,000   
|East Amphi                                  | 52,997      | 11,659,892  | 15,450,202  | 60,000    
|Francoeur Mine                              | 1,776,152   | 10,864      | 49,974      | 10,000    
|Monique                                     | -           | 270,047     | 19,186      | 20,000    
|Wasamac                                     | 551,320     | 290,982     | 39,685      | 26,500    
|Newfoundland                                |             |             |             |           
|Hammerdown Mine                             | 710,290     | 186,631     | -           | -         
|Valentine Lake                              | 33,649      | 1,056,283   | 393,200     | 125,000   
|Ontario                                     |             |             |             |           
|Island Gold                                 | 86,822      | 359,567     | 12,763,660  | *7,000,000
|Sewell and Cripple Creek                    | 4,006       | 253,443     | 178,596     | 200,000   
|                                            |             |             |             |           
|Other properties                            | 127,121     | 72,990      | 83,831      | 395,000   
|Evaluation of projects                      | 309,664     | 349,763     | 508,746     | 150,000   
|Tax
    credit                              | (1,194,599) | (1,511,045) | (2,136,164) | (122,475) 
|                                            |             |             |             |           
|                                            | 3,679,104   | 13,979,583  | 28,213,066  | 8,564,025 
|*
    Richmont Mines' equity interest  55% |             |             |             |           

40

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Valentine Lake, Newfoundland, Canada
Description and Location of the Property

1.1.52      Location and Access

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

1.1.53     Description of the Property

The Valentine Lake property consists of two grouped mineral
exploration licences 10 943M (Valentine Lake North) and 10 899M (Valentine Lake
South). The two (2) blocs of claims cover a total area of 12,550 hectares; 6400
hectares and 256 claims for Valentine North and 6,150 hectares and 246 claims
for Valentine South.

1.1.54      Agreement

In November 2003, Richmont Mines signed an option agreement
to acquire a 70% interest in the Valentine Lake Property from Mountain Lake
Resources (TSXV.MAO) by carrying out $2.5 million in exploration work by October
31, 2007. As of December 31, 2005, exploration work has been done for an amount
totalling $1,483,132.

Wasamac, Quebec, Canada

Description and Location of the Property

1.1.55     Location and Access

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

1.1.56      Description of the property

The Wasamac property consists of three mining concessions (CM
349, CM 364, and CM 370) which represent a total area of 757.65 hectares in the
Beauchastel township. Richmont Mines owns 100% of the Wasamac property.

Francoeur, Quebec, Canada

Description and Location of the Property

1.1.57      Location and Access

The Francoeur property is located approximately 25 km southwest of
Rouyn-Noranda, province of Quebec. The property can be reached from
Rouyn-Noranda via the Trans Canada Highway

41

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117 to the town of Arntfield and thence by a secondary road from the north
that crosses the Arnfield town and leads directly to the property.

1.1.58      Description and Infrastructures of
the Property

The Francoeur property consists of 13 mining claims,
including three mining concessions and four 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. A head frame is present on the property, as well as
various basic infrastructures.

1.1.59      Agreement

In 2004, the Company concluded an agreement with
Cadillac-West Exploration Inc. for the Norcoeur and Lac Fortune group of
properties, adjacent to the Francoeur property. Cadillac-West Exploration
committed itself to invest $0.5 million in exploration, after which it will have
the right to acquire from Richmont Mines an interest of 50% in the Norcoeur and
Lac Fortune group of properties by completing exploration programs of $2.2
million and $1.5 million, respectively, over three years. In accordance with
this agreement, Cadillac-West Exploration completed a drilling program of
approximately $300,000 in 2005 on the Norcoeur and Lac Fortune group of
properties. The work led to the completion of 2,496 metres of drilling, and
gold-bearing zones were intersected. Cadillac-West Exploration must complete its
$0.5 million exploration program before May 22, 2006.

Camflo Northwest, Quebec, Canada

Description and Location Property

1.1.60      Location and Access

The Camflo Nord-Ouest property is located about 21 km west of
Val-d'Or, in northwestern Québec. The property is located west of the Camflo
mill, held by Richmont Mines. The property can be reached via the Camflo mill
road, which turns off Highway 117, about 5 km east of Malartic.

1.1.61      Description of the Property

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

1.1.62      Agreement

Richmont Mines has the option to acquire a 50% interest in
the property by investing $200,000 in exploration work prior to December 31,
2005. As at December 31, 2005, Richmont Mines had invested $220,837, and had
thus met the conditions stipulated in the agreement and acquired a 50% interest
in the Camflo Nord-Ouest property. Richmont Mines also has the option to acquire
an additional 30% interest, by investing another $125,000 prior to December 31,
2006.

42

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Cripple Creek, Newfoundland, Canada
Description and Location of Property

1.1.63      Location and Access

The Cripple Creek property is located approximately 25 km
north of the town of Gander, north central part of the province of Newfoundland.
The property is accessible by the Gander Bay Highway.

1.1.64     Description of the Property

The property consists of 83 claims in seven contiguous claims blocks.

1.1.65      Agreement

Richmont Mines concluded an agreement in late 2005 with
Derrick Fancey and Donald Le Drew, to acquire a 100% interest in the Cripple
Creek property, Newfoundland, for a cash consideration of $73,480, payable prior
to December 23, 2007. The sellers retain a 2% NSR, half of which may be
purchased at any time for an amount of $1 million.

Table of reserves

|                                                                                                                                             |           | December 31, 2005 |           | December 31, 2004
|-------------------------------------------------------------------------------------------------------------------------------------------- | --------- | ----------------- | --------- | -----------------
|                                                                                                                                             | Tonnes    | Grade             | Ounces    | Tonnes           
|                                                                                                                                             | (metric)  | (g/t
    Au)      | contained | (metric)         
|                                                                                                                                             |           |                   |           |                  
|Beaufor Mine                                                                                                                                 |           |                   |           |                  
|Proven reserves1                                                                                                                             | 114,600   | 7.31              | 26,900    | 165,000          
|Probable reserves1                                                                                                                           | 392,000   | 8.98              | 113,200   | 500,000          
|                                                                                                                                             |           |                   |           |                  
|East Amphi Mine                                                                                                                              |           |                   |           |                  
|Proven reserves1                                                                                                                             | 288,900   | 4.04              | 37,500    | -                
|Probable reserves1                                                                                                                           | 351,900   | 5.57              | 63,000    | -                
|                                                                                                                                             |           |                   |           |                  
|TOTAL GOLD                                                                                                                                   |           |                   |           |                  
|Proven and                                                                                                                                   |           |                   |           |                  
|probable reserves                                                                                                                            | 1,147,400 | 6.52              | 240,600   | 665,000          
|1Established in 2005
    according to a price of US$450/oz at an exchange rate of 1.20 (in 2004, at
    US$400 and an exchange rate of 1.31)

43

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National Instrument 43-101

The Company's main properties mineral reserves calculation were established
by «qualified persons» designated by National Instrument 43-101 and their names
are in the table below.

|Property        | Qualified Persons                    | Titles                             
|--------------- | ------------------------------------ | -----------------------------------
|Beaufor Mine    | Donald Trudel,
    P.Geo.            | Chief geologist                    
|East Amphi Mine | Jules Riopel,
    M.Sc., P.Geo., MBA | Geology and
    Exploration Manager
|                | Jacques
    Daigneault, Geo          | Senior geologist                   
|                | Christian Bézy, Geo                  | Senior geologist                   

Gold Marketing and Sales

The profitability of gold mining is directly related to the
market price of gold as compared to the cost of production. Gold prices
fluctuate widely and are affected by numerous factors, including expectations
with respect to the rate of inflation, exchange rates (specifically the US
dollar relative to other currencies), interest rates, global and regional
political and economic crises and governmental policies with respect to gold
holdings by a nation's central bank. The demand and supply of gold usually
affect gold prices but not necessarily in the same manner as supply and demand
affect the prices of other commodities. The 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
US dollars over the past five years:

|                                        |      | (US$) | Exchange rate | (CAN$)
|--------------------------------------- | ---- | ----- | ------------- | ------
|                                        |      |       |               |       
|                                        | 2001 | 271   | 1.55          | 420   
|                                        | 2002 | 310   | 1.57          | 487   
|                                        | 2003 | 363   | 1.40          | 509   
|                                        | 2004 | 410   | 1.30          | 534   
|                                        | 2005 | 444   | 1.21          | 538   
|2006 (January 1st
    until April 28th) | 729  | 1.119 | 652          

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 occasionally uses put and call options on
gold, and forward sales contracts on gold and US dollars. All such hedging
policies are previously approved by the Company's Board of Directors. Financial
derivatives are used only in accordance with the Company's hedging policy, and
not for speculative purposes.

44

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Gold bars are carried between the mills and the refinery by
commercial armored truck. These bars are refined at the Royal Canadian Mint
refinery in Ottawa under a service contract at competitive rates. Refined metal
is sold under forward sales contracts or on the spot market to commercial
bullion dealers.

As at December 31, 2005 and 2004, Richmont Mines had no gold hedging
contracts.

> C.      Organization Structure

See Exhibit 8.1

> D.      Property, Plants and Equipment

See Item 4.B. "Business Overview  Description of Properties."

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, 2003,
2004 and 2005 should be read in conjunction with the Company's consolidated
financial statements and the accompanying notes. Notice should also be taken of
the cautionary statement regarding forward-looking statements on page 1, in
particular with respect to trend and other forward looking information and
disclosure regarding the Company's contractual obligations.

> A.      Operating Results

Year
ended December 31, 2005 compared to year ended December 31, 2004

General

In 2005, the markets experienced not only a significant rise
in the price of gold, which exceeded the mark of US$536, but also an increase in
the value of the Canadian dollar, which averaged US$0.83 in 2005 compared with
US$0.77 during the previous year. Although the average price of gold climbed to
US$443 in 2005 from US$410 in 2004, the appreciation of the Canadian currency
led to a decrease in cash receipts from gold sales and thus limited the benefits
associated with the rising gold price for Canadian producers.

Production in 2005

Gold sales for 2005 totalled 36,956 ounces, compared with
69,207 ounces in 2004. The decline in gold sales can be explained by the reduced
production at the Beaufor Mine, which fell from 52,623 ounces of gold in 2004 to
36,649 ounces of gold in 2005 as a result of the planned two-month halt in
production held in the third quarter of 2005 and a lower availability of ore,
with lower grades, in the fourth quarter. In addition, during the month of
December, the Camflo Mill processed the East Amphi bulk sampling, leaving an
inventory of 12,118 tonnes of ore from the

45

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Beaufor Mine. In 2004, production at the Hammerdown Mine totalled 16,584
ounces of gold, whereas only 307 ounces of gold were sold in 2005.

In 2005, ore totalling 199,269 tonnes at an average recovered
grade of 5.72 g/t was extracted from the Beaufor Mine. This production yielded
gold sales of 36,649 ounces, produced at a cash cost of US$377 per ounce,
compared to the previous year with 266,793 tonnes of ore at an average recovered
grade of 6.13 g/t, for gold sales of 52,623 ounces, produced at a cash cost of
US$308 per ounce. The rise in the production cost in 2005 is attributable
primarily to the decline in production and grades of ore extracted at the
Beaufor Mine and to the general increase in costs. Moreover, since these costs
are incurred in Canadian dollars but reported in US dollars, the appreciation of
the Canadian currency, which rose from an average of US$0.77 in 2004 to US$0.83
in 2005, also contributed to the rise in the production cash cost expressed in
US dollars.

In 2005, no operations were performed at the Hammerdown Mine.
In 2004, ore totalling 40,058 tonnes at an average recovered grade of 12.88 g/t
was extracted. This production had generated gold sales of 16,584 ounces
produced at a cash cost of US$251 per ounce.

In 2005, in order to maintain the rate of production at the
Beaufor Mine and to proceed with exploration with the aim of developing the
reserves and resources at the East Amphi and Island Gold properties, Richmont
Mines made total investments of $28,608,604 on these three properties. This
amount was allocated to underground development, surface infrastructures and
exploration drilling. In 2004, the Company continued its annual investments at
the Beaufor Mine and launched an advanced exploration program at the East Amphi
property. Investments on these two properties totalled $11,982,362.

Summary of operational and financial results for 2005

During 2005, the Company yielded a net loss of $27,480,010, or $1.54 per
share, compared with net earnings of $732,096, or $0.05 per share, in 2004.

The Company's mining operations generated (used) annual cash
flow of ($4,661,334) in 2005 compared with $7,217,715 in 2004, which represents,
respectively, (22%) and 18% of revenues for each of these years.

The Company has no long-term debt and possessed working
capital of $21,877,251 as at December 31, 2005. The Company would have access to
other sources of financing if additional capital became necessary to finance its
expansion.

Financial aspects

The preparation of financial statements involves making
estimates and assumptions that have a significant impact on the reported amounts
of revenues, expenses, assets and liabilities. The items most dependent on the
use of estimates include the useful life of assets, 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.

46

---

Changes in accounting policies

In 2005, the Company adopted the following new accounting
policies, which are detailed in note 1 to the Company's consolidated financial
statements, that have had a significant impact on the financial statements.

In 2003, the Company early adopted the recommendations of the
Canadian Institute of Chartered Accountants (CICA) Handbook Section 1100
"Generally Accepted Accounting Principles". In this respect, the Company no
longer includes future required additions to property, plant and equipment to
extract proven and probable reserves nor those required to classify resources in
reserves; this change constitutes a change in accounting principle. In
accordance with paragraph 33 c) of Section 1100, this change has been applied
prospectively. Following this change in accounting principle, depreciation
expense in 2003 amounted to $4,817,968.

Revenues

Precious metal revenues

Other revenues

Expenses

Operating costs

The average cost of production per ounce sold was $453
(US$374) for 2005, compared with $383 (US$294) for 2004. This increase in the
average cost can be explained primarily by the closure of the Hammerdown Mine in
May 2004 and the decline in production at the Beaufor Mine, which had total
sales of 36,956 ounces in 2005, while the combined production of the Beaufor and
Hammerdown mines allowed for sales of 69,207 ounces in 2004. The Beaufor Mine's
two-month production shutdown, the lower production of the fourth quarter, the
decrease in gold grades and the increase in the cost of the material used also
contributed to the rise in the average production cost in 2005. In addition, the
strength of the Canadian dollar is reflected in the average cost per ounce
expressed in US dollars, as the costs of production are incurred in Canadian
dollars. In 2005, the increase of US$80 in the production cash cost per ounce is
attributable to three factors. The decline in grades resulted in a rise of
US$63, the appreciation of the Canadian dollar led to an increase of US$23, and,
finally, the cost per tonne led to a decrease of US$6. Although the Company has
no control over the strength of the dollar and the price of materials, Richmont
Mines expects to see an improvement in the average grade of the ore and a
stabilization of metal market prices in 2006.

47

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Royalties Due to
the decline in production, and consequently in sales, the royalties paid in 2005
totalled $231,381, compared with $430,325 in 2004, a year in which royalties
were paid on ounces sold that came from the production of the Beaufor and
Hammerdown mines.

Custom milling- In
2005, ore totalling 42,842 tonnes was milled, compared with 70,268 tonnes in
2004. In 2005, the Company gave priority to the processing of the ore from bulk
sampling from the East Amphi property, which explains the decline. Activities
related to custom milling represented expenses of $722,285 in 2005, compared
with $973,056 in 2004. Note that the revenues from custom milling are presented
under the caption "Other revenues" in the consolidated results. Richmont Mines
plans to perform custom milling of approximately 30,000 tonnes of ore in 2006.

Administration Expenses related to administration totalled $3,923,063 in 2005, compared with
$3,036,622 in 2004. The increase in these expenses is due in part to stock-based
compensation, which was $1,349,711, compared with $902,370 in 2004, and to the
increase in general administrative expenses.

Exploration and project evaluation 
As in previous years, Richmont Mines continued its
investments related to exploration and project evaluation. These expenses fell
from 3,475,339 in 2004 to $2,375,274 in 2005. The differences are attributable
primarily to a slowdown in exploration at certain properties, notably Wasamac,
Sewell and Cripple Creek, Monique and Camflo Northwest, as a result of the
exploration and development efforts that were spent at the Beaufor, East Amphi
and Island Gold properties. The following table shows the amounts invested in
these properties for the past two years.

Investments for exploration and project evaluation

|                        | 2005      | 2004     
|----------------------- | --------- | ---------
|                        | $         | $        
|                        |           |          
|Beaufor Mine            | 862,150   | 980,166  
|Hammerdown Mine         | -         | 186,631  
|Francoeur Mine          | 49,974    | 10,864   
|Valentine Lake property | 393,200   | 1,056,283
|Wasamac property        | 39,685    | 290,982  
|Other properties        | 610,023   | 1,080,642
|Project evaluation      | 521,764   | 349,763  
|                        |           |          
|                        | 2,476,796 | 3,955,331
|                        |           |          
|Exploration tax credits | 101,522   | 479,992  
|                        |           |          
|                        | 2,375,274 | 3,475,339

Accretion expense of asset retirement
obligations This charge was $167,245 in 2005,
compared with $159,726 in 2004. 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

48

---

environment, the Company has reported the asset retirement
obligations for the mining sites on the basis of management's best estimate of
the future costs. These estimates may be subject to changes if the laws and
regulations are changed or if new events arise.Depreciation and depletion The amounts related to depreciation and depletion totalled $1,617,356 in 2005,
compared with $3,548,287 in 2004. The differences are attributable primarily to
the decline in gold sales, which were 36,956 ounces in 2005, 69,207 ounces in
2004.

Write-down of mining assets 

|                                                                | 2005        
|--------------------------------------------------------------- | ------------
|                                                                | $           
|                                                                |             
|Existing
    carrying value, before write-down of mining assets | 31,194,466  
|                                                                |             
|New carrying
    value                                          |             
|Cash flow from
    operation of the mine                        | *13,552,942 
|Investment in
    property, plant and equipment                 | *(8,929,533)
|Property, plant
    and equipment salvage value                 | 530,104     
|                                                                |             
|New carrying
    value                                          | 5,153,513   
|Write-down of mining assets                                     | 26,040,953  

* Discount rate used 8%

The discounted future cash flow method was used to set the
fair value of this property's mining assets. This method is based on revenues
from proven and probable reserves, the costs of production, the investments
required to extract these reserves, and the residual value of the assets at the
end of the project. The price of gold that the Company used is US$500 per ounce
and an exchange rate of 1.15 (US$0.87), for a price in Canadian dollars of $575
per ounce. This evaluation resulted in a non-cash charge of $26,040,953 for this
property as at December 31, 2005. When the reduction of $3,134,699 in future
mining and income taxes is taken into account, the net write-down is
$22,906,254.

Mining and income taxes

In 2005, mining and income taxes showed a
recovery of $2,479,820, compared with charges of $631,437 in 2004. This
situation is directly related to the operating loss before the write-down of
mining assets and tax expenses in 2005, compared with earnings in 2004. Details
on taxes are found in note 6 of the financial statements.

49

---



Minority interest

In the consolidated results, the minority
interest totalled $5,828 in 2005, compared with $559,869 in 2004. This amount
represents the share of earnings due to the minority shareholders of Louvem
Mines Inc., in which Richmont Mines owns a 70% interest, and to the share of the
losses from the Island Gold project for 2005 that belongs to Patricia Mining
Corp., a partner in this project.

Net earnings (loss)

In 2005, the write-down of mining assets for
the East Amphi property and the decrease in the level of production that was
caused by the planned two-month production shutdown at the Beaufor Mine, by the
decline in the average grade and by the lack of a contribution from the
Hammerdown Mine are elements that had a major effect on the Company's
profitability relative to 2004.

Revenues generated by gold sales declined, and
the costs of production rose relative to the number of ounces of gold produced.
In 2005, this special context for Richmont Mines resulted in a net loss of
$27,480,010, or $1.54 per share.

In 2004, the Company's net earnings were
$732,096, or $0.05 per share. The differences for these years are attributable
primarily to the decline in revenues from precious metals, which is due to the
decrease in production and the reduced sales.

Balance sheet

Assets

The total assets of Richmont Mines fell from
$56,193,554 as at December 31, 2004, to $54,226,497 at the end of 2005. This
decline is due to the write-down of the mining assets of the East Amphi
property.

Cash and cash equivalents fell from
$25,269,901 as at December 31, 2004, to $14,678,478 as at December 31, 2005,
because of the investments made in the East Amphi and Island Gold properties.

Receivables rose from $1,654,835 in 2004 to
$2,783,351 in 2005. The increase is due to the funds advanced to Patricia Mining
Corp. as provided for in the agreement related to the Island Gold project. Under
this agreement, signed with Patricia Mining Corp. in 2003, after investing an
amount of $10 million in the project, Richmont Mines agreed to finance the
project's development up to an additional amount of $10 million. The money
advanced to Patricia Mining Corp. bears interest at the Canadian prime rate plus
3%. As at December 31, 2005, the Company had advanced $1,678,500 to its partner.

Mining and income taxes receivable rose from
$1,620,141 in 2004 to $5,441,853 in 2005. The difference is attributable
primarily to a tax recovery recorded based on the operating loss suffered in
2005.

50

---

LiabilitiesThe amount of liabilities was $13,762,995 as
at December 31, 2005, compared with $10,782,019 at the same date in 2004, and is
composed of short-term liabilities, asset retirement obligations, the minority
interest and future mining and income taxes. Richmont Mines has no long-term
debt.
The substantial change in liabilities is
attributable to the asset retirement obligations and the minority interest. An
amount of $1,665,005 was accounted for under "Minority interest" in accordance
with AcG-15, which has been in effect since January 2005, which relates to the
"Consolidation of variable interest entities" following the consolidation of the
Island Gold project.

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, 2005, the Company had the following financial legal obligations:

|                     | Total amount     |                  |                
|-------------------- | ---------------- | ---------------- | ---------------
|                     | of the estimated | Cash flow        | Credit-adjusted
|                     | cash flow        | payment schedule | risk-free rate 
|                     | $                |                  | %              
|                     |                  |                  |                
|Newfoundland         | 759,191          | 2007             | 5.5            
|Francoeur Mine       | 192,432          | 2007             | 5.5            
|Beaufor Mine         | 354,290          | 2008             | 5.5            
|Camflo Mill          | 2,381,055        | 2010             | 5.5            
|East Amphi property  | 149,308          | 2010             | 5.5            
|Island Gold property | 721,866          | 2010             | 5.5            
|                     |                  |                  |                
|                     | 4,558,142        |                  |                

Future mining and income taxes

Note that future mining and income taxes were
recorded as both assets and liabilities, since these amounts come from different
corporate entities and various legislations, such as federal, provincial and
mining taxes. Note 6 of the financial statements provides detailed information
about tax reconciliation as well as future income tax assets and liabilities.

Future tax obligations total $11,236,870
before a valuation allowance of $9,945,965. They come from property, plant and
equipment, asset retirement obligations, share issue costs and loss
carry-forwards.

Since the Company anticipates that it is more
likely than not that it will recover part of its future tax assets, a net amount
of $1,290,905, after valuation allowance, has been recorded on the balance
sheet. The valuation allowance, totalling $9,945,965, is made up of tax assets
that are currently deemed unlikely to be recoverable.

51

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The available non-refundable provincial and federal tax
credits of $4,509,729 and $1,985,557, respectively, can be carried forward for
ten years and were not reported as assets because the Company is not confident
that they will reduce the taxes due in future years. All tax liabilities, in the
amount of $1,571,257, were recorded.

Shareholders' equity

Shareholders' equity totalled $40,463,502 as
at December 31, 2005, compared with $45,411,535 at the end of 2004. The
difference comes primarily from the rise in capital stock, which increased from
$29,236,630 in 2004 to $50,600,371 in 2005 as a result of two private
placements. In June 2005, 3,246,000 common shares at a unit price of $4.90 were
issued, for gross proceeds of $15,905,400. In December 2005, 1,500,000 common
flow-through shares at $5.00 each were issued, for gross proceeds of $7,500,000.
The total issue costs were $2,212,619. The contributed surplus rose from
$2,894,356 in 2004 to $4,272,898 in 2005. The difference of $1,378,542 is
primarily attributable to the charge for stock-based compensation. Retained
earnings were $13,280,549 as at December 31, 2004, compared with a deficit of
$14,409,767 as at December 31, 2005, as a result of the loss of $27,480,010
mainly related to the write-down of the mining assets of the East Amphi
property.

At year-end 2005, Richmont Mines had
20,994,553 shares outstanding, 1,948,000 options granted under its
stock-purchase plan and 90,000 options outside the plan at a price of $5.00
each, valid until December 5, 2006, granted to underwriters of the private
placement concluded December 6, 2005.

Commitments and contingency

Since the conclusion of an agreement with the
Quebec Ministry of Natural Resources in July 2001, the amounts of government
assistance recorded as revenues and as a reduction of property, plant and
equipment totalled $2,125,756 and $574,244, respectively. According to the
agreement, an amount of $900,000 must be repaid on July 31, 2007, if the Beaufor
Mine is in production during the twelve months preceding the date of repayment
and if the average daily price of an ounce of gold on the "AM FIX" of the London
exchange is greater than or equal to US$325. Currently it is impossible to
predict the amount that could become repayable; consequently, no provision for
this purpose has been recorded in the financial statements.

In addition, the Company is subject to royalty
payments on the output of the Beaufor Mine and also on certain other properties,
if they enter into commercial production which are detailed under Item 4.B,
1.1.4 above.

U.S. GAAP Reconciliation

Please refer to note 17 to the audited consolidated financial
statements included herein.

52

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A. Operating Results

Year ended December 31, 2004 compared to year ended December
31, 2003

General

In 2004, the price of gold ranged from US$375
to US$454 per ounce. In terms of the increase in the market price of gold, 2004
was a particularly remarkable year. Indeed, the average price of gold in 2004
was US$410 per ounce compared with an average price of US$363 in 2003. However,
the rebounding Canadian dollar, which rose in value from an average of US$0.71
in 2003 to an average of US$0.77 in 2004, limited the benefits of the increase
in the gold price for Canadian producers.

Production in 2004

Richmont Mines' gold sales were slightly lower than
anticipated, declining from 92,892 ounces in 2003 to 69,207 ounces in 2004. The Hammerdown Mine sold 16,584 ounces of gold at a cash cost of US$251 per ounce
compared with 37,118 ounces at a cash cost of US$230 in 2003. As for the Beaufor
Mine, it sold 52,623 ounces of gold at a cash cost of US$308 compared with
55,774 ounces at a cash cost of US$245 in 2003. The increase in production costs
is primarily attributable to the fact that the grades of ore obtained at the
Beaufor and Hammerdown mines declined. Because cash costs are incurred in
Canadian dollars and presented in American dollars, the appreciation of the
Canadian dollar, which rose in value from an average of US$0.71 in 2003 to
US$0.77 in 2004, also increased production costs.

Summary of operational and financial results for 2004

Richmont Mines reported solid results for
2004, despite a decline in earnings compared with last year. With the objective
of increasing reserves and resources, the Company invested $3,955,331 in
exploration and project evaluation. These initiatives contributed to the
acquisition an option to acquire the Island Gold project, a very promising
property.

Richmont Mines financial results dropped in 2004, with net
earnings of $0.7 million, or $0.05 per share (basic), compared with net earnings
of $5 million, or $0.32 per share (basic) in 2003.

Richmont Mines maintains its excellent
financial position, with no long-term debt and, as at December 31, 2004, working
capital of $25,925,031 million. Thanks to sound management, cash flow from
operations has amounted to more than $7.2 million per year, or approximately 18%
of revenues, over the past two years.

Changes in accounting policies

In 2004, the Company adopted the following new
accounting policies, which are detailed in note 1 to the Company's consolidated
financial statements, that have had a significant impact on the financial
statements.

a)  In 2003,
the Company early adopted the recommendations of the Canadian Institute of
Chartered Accountants (CICA) Handbook Section 1100 "Generally Accepted
Accounting

53

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Principles". In this
respect, the Company no longer includes future required additions to property,
plant and equipment to extract proven and probable reserves nor those required
to classify resources in reserves; this change constitutes a change in
accounting principle. In accordance with paragraph 33 c) of Section 1100, this
change has been applied prospectively. Following this change in accounting
principle, depreciation expense in 2003 amounted to $4,817,968 compared to
$6,812,412 in 2002.

b) 
Effective January 1, 2002, the Company early adopted the new accounting policy
related to the recognition of stock-based compensation charge. Since then, the
Company uses the fair value method based on the Black & Scholes option pricing
model to record the compensation cost related to the issuance of stock options
to employees over the vesting period and a related credit to the contributed
surplus. The charge for stock-based compensation has been reported as an
administration expense in the consolidated statements of earnings. The amounts
were, respectively, $902,370 for 2004, $354,102 in 2003 and $1,831,437 for 2002.

Revenues

The average selling price of gold obtained in
2004 was $534 (US$410) per ounce compared with $518 (US$370) per ounce in 2003.
In fact, Richmont Mines posted precious metal revenues of $36,981,017 in 2004
compared with revenues of $48,103,530 in 2003.

Expenses

Operating cost
The average cost of production per ounce sold was $383 (US$294) in 2004 and $336
(US$240) in 2003. This increase in the average cost is due primarily to the drop
in production at the two mines, which had total sales of 69,207 ounces in 2004,
whereas sales of 92,892 ounces were achieved in 2003. These increases can be
explained, on the one hand, by the fall in the grades of ore extracted from the
Beaufor and Hammerdown mines. On the other hand, the cost per ounce in US
dollars is also influenced by the appreciation of the Canadian dollar on
conversion of the costs of production, which are incurred in Canadian dollars.

Royalties The
royalties paid in 2004 were $430,325, compared to $851,242 in 2003. The
difference relative to the amount paid in 2004 is essentially due to the
reduction in ounces of gold sold and to the exemption from payment of royalties
on the last 13,000 ounces produced at the Hammerdown Mine. According to the
agreement to this effect, Richmont Mines was exempt from paying royalties on the
first 70,000 ounces of gold produced and on amounts in excess of 130,000 ounces
of gold.

Administration
Administrative expenses reached $3,036,622 in 2004, compared with $2,772,658 in
2003. The increase by $263,964 can be explained primarily by an increase in the
amount coming from stock-based compensation.

Exploration and evaluation of projects The Company recognized expenses of $3,475,339 for exploration and project
evaluation in 2004. This represents a total investment of $3,955,331 over the
course of the year minus $479,992 in tax credits applied directly against these
costs.

54

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The following table shows the amounts invested in the previous 2 years.

|                        | 2004      | 2003     
|----------------------- | --------- | ---------
|                        | $         | $        
|                        |           |          
|Beaufor Mine            | 980,166   | 1,221,682
|Hammerdown Mine         | 186,631   | 710,289  
|Francoeur Mine          | 10,864    | 1,776,152
|Valentine Lake property | 1,056,283 | 33,649   
|Wasamac property        | 290,982   | 551,320  
|Other properties        | 1,080,642 | 217,950  
|Project evaluation      | 349,763   | 309,664  
|                        |           |          
|                        | 3,955,331 | 4,820,706
|                        |           |          
|Exploration tax credits | 479,992   | 1,194,599
|                        |           |          
|                        | 3,475,339 | 3,626,107

Accretion expense of asset retirement
obligations This charge totalled $159,726 in 2004
and $150,848 in 2003. 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 contingencies arise.

Depreciation and depletion The amounts related to depreciation and depletion totalled $3,548,287 in 2004
compared with $4,817,968 in 2003. The differences are attributable primarily to
the sales of gold, which fell from 92,892 ounces in 2003 to 69,207 ounces in
2004.

Mining and income taxes In 2004, mining and income taxes were $631,437, compared with $1,725,596 in
2003. This decline is attributable primarily to the reduction in earnings before
taxes.

Minority interest
The minority interest recognized in the consolidated results, which totalled
$559,869 in 2004, compared with $1,005,290 in 2003, represents the share of
earnings due to the minority shareholders of Louvem Mines Inc., in which
Richmont Mines owns a 70% interest.

Net earnings

The Company's net earnings reached $732,096,
or $0.05 per share in 2004, compared with $5,034,541, or $0.32 per share in
2003. The difference for these years are attributable primarily to the decline
in revenues from precious metals, which is due to the decreased in production
and the reduced sales.

55

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Assets

The total assets of Richmont Mines increased from $53,495,197
as at December 31, 2003, to $56,193,554 as at December 31, 2004. This increase
in assets is primarily the result of expenses incurred in costs of development
for the East Amphi property. These expenses contributed to the $10,504,244
increase in fixed assets in 2004. Since these investments were financed with the
Company's cash reserves, short-term assets fell by 15% relative to the previous
year, to total $30,700,076 as at December 31, 2004.
Future mining and income taxes

Since the Company anticipates that it is more likely than not
that it will recover a portion of its future tax assets, an amount of $1,689,760
was accounted for in the balance sheet. Note that future income and mining taxes
were recognized as both assets and liabilities, since the amounts pertain to
different corporate entities and various legislations as federal, provincial and
mining taxes. All tax liabilities, which total $1,490,336, were recorded. Note 6
of the consolidated financial statements provides detailed information about tax
conciliation as well as future income tax assets and liabilities.
Shareholders' equity

The change in shareholders' equity results
mainly from the increase in capital stock and contributed surplus. Furthermore,
capital stock increased from $28,346,424 in 2003 to $29,236,630 in 2004 as a
result of the issue of common shares following the exercise of options as well
as private flow-through share financing. The contribution surplus rose from
$2,008,971 in 2003 to $2,894,356 in 2004. The difference of $885,385 is
primarily attributable to the charge for stock-based compensation.

The Stock Option Purchase Plan was amended at the 2003 meeting
of shareholders. At year-end 2004, Richmont Mines had 16,169,653 shares
outstanding and had granted 1,842,500 options.

B. Liquidity and Capital Resources

As at December 31, 2005, the Company had $14,678,478 in cash
and cash equivalents, compared with $25,269,901 in 2004. The change of 50%
compared with 2004 is essentially attributable to the major investments incurred
in 2005. Capital expenditures were $29,035,323, of which $12,622,482 are
attributable to the Island Gold property and $13,215,310 are attributable to the
East Amphi property.

Cash flow from operations

The decline in the Company's net earnings
affected cash flow from operations before net change in non-cash working capital
and payments of asset retirement obligations, which fell from $6,075,315 in 2004
to $2,180,859 in 2005 mainly due to decrease in net earnings.

56

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Cash flow used in investments

In 2005, Richmont Mines made major investments
in exploration at the East Amphi Property at a total cost of $13,215,310 and
$12,622,482 was spent in exploration at the Island Gold property. In 2004, a
total of $10,504,244 was invested in the acquisition of the East Amphi property.
Just as last year, much development work was performed at the Beaufor Mine, at a
cost of $2,770,812, whereas these costs totalled $1,478,118 in 2004.

In 2005, the Company has a credit facility of
$3 million, with no security requirement other than the maintenance of cash and
cash equivalents in excess of $10 million, for the issuance of letters of credit
in regard to the settlement of asset retirement obligations.

In 2005, an investment of $426,719 is recorded
under the caption "Other property, plant and equipment". This investment
contributed primarily to restore the tailing ponds at the Camflo Mill. In 2004,
the sum of $642,216 was also invested to restore the mill building and its
equipment.

Cash flow from financing activities

During fiscal year 2005, the Company issued
154,500 shares following the exercise of stock options for an amount of
$289,845. It also completed a private placement by issuing 3,246,000 common
shares for an amount of $15,905,400 and 1,500,000 flow-through shares for an
amount of $7,500,000. Through its share buyback program, Richmont Mines also
redeemed 75,600 common shares for a total amount of $345,630.

In 2004, the Company issued 203,000 shares
following the exercise of stock options for an amount of $705,650. It also
completed a private placement by issuing 110,000 common shares for an amount of
$770,000. Through its share buyback program, Richmont Mines also redeemed
217,000 common shares for a total amount of $1,088,001.

As at December 31, 2005, Richmont Mines Inc.
had working capital of $21,877,251 cash and cash equivalents of $14,678,478 and
no long-term debt. Consequently the Company has sufficient liquidity for the
present requirements. Capital expenditures were $29,035,323, of which
$12,622,482 are attributable to the Island Gold property and $13,215,310 are
attributable to the East Amphi property.

Commitments and contingency

The Company is subject to pay royalties on the production of
the Beaufor Mine and on other properties if they are brought into commercial
production.

In July 2001, Richmont Mines reached an
agreement with the Quebec Ministry of Natural Resources entitling the Company to
a total of $2.7 million in government assistance, an amount which may become
repayable under certain conditions. Since it was not possible to determine the
amount of any such repayment as at December 31, 2005, no provision was recorded
for this purpose.

57

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U.S. GAAP Reconciliation

Please refer to note 17 to the audited consolidated financial
statements included herein.

C. Research and Development, Patents and Licenses, etc.

None

D. Trend Information

In 2006, Richmont Mines anticipates production
of 77,000 ounces of gold. Starting in the first quarter of 2006, the Company
will benefit from the production of the Beaufor and East Amphi mines, the latter
having been placed into commercial production on February 1, 2006. For the year,
approximately 40,000 ounces and 25,000 ounces, respectively, will be produced by
these two deposits.

Furthermore, the continuation of the
development and exploration work at the Island Gold project, in which Richmont
Mines now holds a 55% interest since the fourth quarter of 2005, will enable the
Company to increase its production even further during the second half of 2006.
This deposit could yield approximately 12,000 ounces in 2006.

According to these estimates, Richmont Mines
will begin to expand its gold production and should return to profitability in
2006. In line with its objective, the Company will pursue its exploration
activities and plans for a budget of approximately $10 million for exploration
at all of its properties in 2006. For 2007, the Company anticipates production
of more than 100,000 ounces of gold.

The advanced exploration program currently
under way at the Island Gold property will run until June and will require an
investment of approximately $7 million. Richmont Mines expects that a
calculation of reserves will be available subsequently and that a decision about
bringing the deposit into production will be made in the second half of 2006.
The Company also plans to invest approximately $3 million in its other
properties, including approximately $700,000 for the Beaufor Mine.

Richmont Mines plans to continue exploration
at the Valentine Lake property in order to increase its resources and thus
attain a critical mass that will allow for determining whether the project could
be economically profitable.

The Company plans to finance these expenses with cash on hand
and cash flow from operations but may also resort to various sources of
financing if it deems such a move appropriate.

E. Off-Balance Sheet Arrangements

The Company did not have any off-balance sheet
arrangements as of December 31, 2005 that have or are reasonably likely to have
a current or future effect on the Company's financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.

58

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F. Tabular Disclosure of Contractual Obligations

As of December 31, 2005, 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
|---------------------------- | ----------------------
|                             |                       
|Contractual obligations      | Total                 
|Asset retirement obligations | $4,558,142            

As of December 31, 2005, the Company had no long-term debt
obligations, capital lease obligations, operating lease obligations or purchase
obligations.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

Names, municipalities of residence, offices and principal
occupations of the directors and senior executives of the Company are as follows

59

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|Name and                   |                     |                         |                | Number of shares 
|-------------------------- | ------------------- | ----------------------- | -------------- | -----------------
|Municipality of            | Office held with    |                         | Director or    | owned on         
|Residence                  | the Company         | Principal Occupation    | Officer since  | March 24, 2006(1)
|                           |                     |                         |                |                  
|Jean-Guy Rivard            | Chairman of the     | Chairman of the Board   | Feb. 25, 1981  | 1,100,000        
|Rouyn-Noranda (QC)         | Board and Director  | of Richmont Mines       |                |                  
|Canada                     |                     |                         |                |                  
|                           |                     |                         |                |                  
|Martin Rivard(2)           | President, Chief    | President and CEO of    | Oct. 1, 2005   | 3,000            
|Rouyn-Noranda (QC)         | Executive Officer   | Richmont Mines          |                |                  
|Canada                     | and Director        |                         |                |                  
|                           |                     |                         |                |                  
|Denis Arcand(3) (4)        | Director            | Business Man            | Sept. 28, 1995 | 36,348           
|Brossard (QC)              |                     |                         |                |                  
|Canada                     |                     |                         |                |                  
|                           |                     |                         |                |                  
|Gilles Loiselle, CP(3) (4) | Director            | Advisor to the          | July 8, 1996   | NIL              
|Montreal (QC)              |                     | Chairman of the         |                |                  
|Canada                     |                     | Executive Committee,    |                |                  
|                           |                     | Power Corporation of    |                |                  
|                           |                     | Canada (holding and     |                |                  
|                           |                     | management              |                |                  
|                           |                     | company)                |                |                  
|                           |                     |                         |                |                  
|Réjean Houle(3) (4)        | Director            | Ambassador,             | Jan. 27, 1989  | 37,000           
|Montreal (QC)              |                     | Canadien Hockey         |                |                  
|Canada                     |                     | Club Inc.               |                |                  
|                           |                     |                         |                |                  
|Campbell Stuart            | Secretary           | Partner, Colby, Monet,  | July 23, 2002  | 0                
|Montreal (QC)              |                     | Demers, Delage &        |                |                  
|Canada                     |                     | Crevier, law firm       |                |                  
|                           |                     |                         |                |                  
|Christian Pichette         | Vice President,     | Vice President,         | October 6,     | 0                
|Brossard (QC)              | operations          | operations of           | 2005           |                  
|Canada                     |                     | Richmont Mines          |                |                  
|                           |                     |                         |                |                  
|Nicole Veilleux            | Director Finance    | Director of finances of | March 1,       | 1,000            
|Rouyn-Noranda (QC)         | and Chief Financial | Richmont Mines          | 2006           |                  
|Canada                     | Officer             |                         |                |                  

(1) As the Company has no personal knowledge of the number of
shares controlled by the above-mentioned nominees, the information was provided
by each of them. 
(2) Martin Rivard is Jean-Guy Rivard's son. 
(3) Member of the Audit Committee 
(4) Member of the Compensation Committee

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 was, prior to October
2005, Executive Vice-President of Richmont Mines; Mr. Christian Pichette, who
was,

60

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prior October 2005, General Manager of Niobec Mine, Cambior
Inc.; and Mrs Nicole Veilleux, who was, prior March 2006, Controller of Richmont
Mines.

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
owns a total of 1,117,348 voting shares, which represents less than 5.61% of all
the shares issued and outstanding of Richmont Mines Inc. Furthermore, no
directors or officers own voting shares of Louvem Mines Inc.

B. Compensation

Remuneration of Directors

On April 24, 2003, the board of directors of the Company
adopted an amendment to the remuneration plan for the directors who are not
senior officers of the Company or its affiliates or who do not receive any
remuneration as such. Pursuant to the remuneration plan as amended, an annual
fee of $3,500 is paid to each such director plus an attendance fee of $500 per
meeting. As such, three directors have received an aggregate remuneration of
$28,500 during the year ended December 31, 2005.

Remuneration of senior officers

During the year ended December 31, 2005 the four Named
Executive Officers of the Company (as hereinafter defined) were paid an
aggregate cash remuneration of $699,974.

The following information indicates the
remuneration paid for the financial year ended December 31, 2005 and the two
previous financial years to the Company's President and Chief Executive Officer,
the Chief Financial Officer and other senior officers (collectively, the "Named
Executive Officers") whose salary and bonus for services in all capacities to
the Company and its subsidiaries in the most recent year exceeded $150,000.

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Summary Compensation Table

|                     |      | Annual          |       |         | Long-Term Compensation |         |              |              
|-------------------- | ---- | --------------- | ----- | ------- | ---------------------- | ------- | ------------ | -------------
|                     |      | Compensation(1) |       |         |                        |         |              |              
|                     |      |                 |       |         |                        |         |              |              
|                     |      |                 |       | Awards  |                       
|                     |      |                 |       |         |                        |         |              | Market       
|                     |      |                 |       |         |                        |         |              | value of     
|                     |      |                 |       |         |                        |         |              | securities   
|                     |      |                 |       | Shares  |                        |         |              | underlying   
|Name and             |      |                 |       | Under   | Options                | % of    | Exercise     | option on the
|Principal Position   | Year | Salary          | Bonus | Options | exercisable/           | Options | price        | date of grant
|                     |      | ($)             | ($)   | (#)     | not exercisable        | granted | ($/security) | ($/security) 
|Jean-Guy Rivard      |      |                 |       |         |                        |         |              |              
|Chairman of the      | 2005 | 271,368         | Nil   | 300,000 | 140,000/160,000        | 36.4%   | $5.30        | $5.30        
|Board (2)            |      |                 |       |         |                        |         |              |              
|                     |      |                 |       |         |                        |         |              |              
|Martin Rivard        |      |                 |       |         |                        |         |              |              
|President and Chief  | 2005 | 151,659         | Nil   | 50,000  | 10,000/40,000          | 6.1%    | $5.30        | $5.30        
|Executive Officer(3) |      |                 |       |         |                        |         |              |              
|                     |      |                 |       |         |                        |         |              |              
|Louis Dionne         |      |                 |       |         |                        |         |              |              
|President and Chief  | 2005 | 161,353         | Nil   | Nil     | Nil                    | N/A     | N/A          | N/A          
|Executive Officer(4) |      |                 |       |         |                        |         |              |              
|                     |      |                 |       |         |                        |         |              |              
|Jean-Yves Laliberté  |      |                 |       |         |                        |         |              |              
|Vice President,      | 2005 | 115,594         | Nil   | 50,000  | 10,000/40,000          | 6.1%    | $5.30        | $5.30        
|Finance(5)           |      |                 |       |         |                        |         |              |              

* Corresponds to the latest expiry date

(1)

(2)

(3)

(4)

(5)

The Company has an Employee and Director Stock
Option Plan (the "Plan"), adopted April 18, 1995 amended May 22, 1997, April 23,
2002, May 15, 2002 and May 14, 2003 for the benefit of senior officers,
employees and directors of the Company and its affiliates. Subject to the
requirements of the Plan, the Board of Directors of the Company has the
authority to select those directors and employees to whom stock options will be
granted, the number of stock options to be granted to each director and employee
and the price at which shares of common stock may be purchased. The exercise
price for purchasing shares of common stock upon exercise of a stock option
granted under the Plan will be determined by the Board of Directors at the time
the stock option is granted but cannot be less than the closing price of the
common stock on the Toronto

62

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Stock Exchange on the trading day preceding
the date of grant. The stock options are not transferable. The aggregate number
of shares of common stock at any time that will be available for issuance under
the Plan or pursuant to other outstanding stock options to insiders will not be
permitted to exceed 10% of the shares of common stock then outstanding and the
aggregate number of shares of common stock at any time available for issuance
under the Plan or pursuant to other outstanding stock options to any one person
will not be permitted to exceed 5% of the shares of common stock then
outstanding. Each stock option, unless sooner terminated pursuant to the
provisions of the Plan, will expire on a date to be determined by the Board of
Directors at the time the stock option is granted, which date will not be later
than ten (10) years from the date the stock option is granted. The Plan does not
provide for the Company to provide any financial assistance to optionees to
enable them to exercise stock options granted thereunder. The Board of Directors
may amend or terminate the Plan provided that amendments which materially
increase benefits under the Plan, materially increase the number of shares of
common stock which may be issued thereunder or materially modify the eligibility
requirements therefor will require shareholder approval and any material
amendment will require approval of the Toronto Stock Exchange.
The following table sets forth information concerning stock
options granted during 2005 to the Company's directors and executive officers.

|                        | Shares under    | Options         |                |                
|----------------------- | --------------- | --------------- | -------------- | ---------------
|Name and Principal      | options granted | exercisable /   |                |                
|Position                | during 2005     | not exercisable | Exercise price | Expiration date
|                        | (#)             |                 | ($/security)   |                
|Jean-Guy Rivard         | 300,000         | 140,000/160,000 | $5.30          | *07-07-2010    
|Chairman of the Board   |                 |                 |                |                
|                        |                 |                 |                |                
|Martin Rivard           | 50,000          | 10,000/40,000   | $5.30          | 07-07-2010     
|President and CEO       |                 |                 |                |                
|                        |                 |                 |                |                
|Jean-Yves Laliberté     | 50,000          | 10,000/40,000   | $5.30          | 04-29-2006     
|Vice President, Finance |                 |                 |                |                

* Corresponds to the latest expiry date

The Company has directors' and officers'
liability insurance for a maximum amount of $5,000,000 for which the Company
pays an annual premium of $53,137. The insurance policy does not contain a
deductible for the directors and officers but a deductible of $100,000 per
event.

No director or executive officer of the Company is currently
indebted to the Company or was indebted to the Company during the year ended
December 31, 2005.

No funds were set aside or accrued by the Company during 2005
to provide pension, retirement or similar benefits.

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

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Stock options to purchase securities from
Company can be granted to directors and employees of the Company on terms and
conditions acceptable to the regulatory authorities in Canada, notably the
Toronto Stock Exchange and the Ontario Securities Commission.

C. Board Practices

The directors serve as directors of the
Company from their election on the day of the Annual General Meeting of the
Company, last held on May 12, 2005, until the next Annual General Meeting that
will be held on May 17, 2006 or until a successor is duly elected.

Directors (1)

Name
      Elected orAppointedJean-Guy Rivard (3)
      February 1981Martin Rivard
      October 2005Denis Arcand (2)
      September 1995Réjean Houle (2) (3)
      January 1989Gilles Loiselle, PC (2) (3)
      July 1996(1) All Directors are residents and citizens of
      Canada.(2) Member of the Audit Committee.(3) Member of the Compensation Committee.


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

The Compensation Committee reviews annually
the compensation paid to the directors by taking into account and comparing it
with compensation paid to directors of comparable companies. At its last meeting
held on March 7, 2006, the Compensation Committee decided to maintain the
directors' compensation to an annual fee of $3,500 and an attendance fee of $500
per meeting for the coming year. The Compensation Committee meets at least
annually. In 2005 the Compensation Committee held 2 meetings.

The Compensation Committee takes into account
senior management's responsibilities and workload in setting each member's
compensation. The Committee favours competitive compensation in order to keep
competent key employees.

The Audit Committee meets at least twice a
year in order to review the Company's financial position, meets with auditors
and analyzes performance, existing and potential investments and the mining
property portfolio. In 2005, the Audit Committee met 4 times. The Audit
Committee Charter is annexed hereto as Exhibit 15.1.

D. Employees

The number of employees of the Company as of December 31,
2005, 2004 and 2003 was 257, 180 and 232 respectively. The distribution of the
employees was the following:

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Category of Activity or
      December 31,Geographical Location
      2005
      2004
      2003Corporate Office
      13
      12
      12Exploration
      1
      2
      2Beaufor
      119
      123
      118Camflo
      28
      28
      27Newfoundland
      4
      6
      73East Amphi
      37
      9
      0Island Gold
      55
      0
      0Total
      257
      180
      232


E. Share Ownership

Set forth below is the amount of the Company's common stock
and options owned by the Company's directors and executive officers as of April
28, 2006.

Shareholdings of Directors and Executive Officers

|Title of | Identity of Person or    | Stock options currently | Number of    | Percent of
|-------- | ------------------------ | ----------------------- | ------------ | ----------
|class    | Group                    | Exercisable/            | Shares of    | Class(1)  
|         |                          | Unexercisable           | Common       |           
|         |                          |                         | Stock        |           
|         |                          |                         | Beneficially |           
|         |                          |                         | Owned        |           
|Common   | Jean-Guy Rivard          | 690,000 / 160,000       | 1,100,000(2) | 8.79%     
|Common   | Denis Arcand             | 50,000 / 0              | 36,348       | 0.39%     
|Common   | Gilles Loiselle          | 100,000 / 0             |              | 0.45%     
|Common   | Réjean Houle             | 50,000 / 0              | 37,000       | 0.39%     
|Common   | Martin Rivard            | 140,000 / 110,000       | 3,000        | 1.14%     
|Common   | Campbell Stuart          | 16,000 / 4,000          | 0            | 0.09%     
|Common   | Christian
    Pichette   | 20,000 / 80,000         | 0            | 0.45%     
|Common   | Nicole Veilleux          | 17,000 / 18,000         | 1,000        | 0.16%     
|         | Total Officers/Directors |                         |              | 11.86%(3) 

(1) Based upon 21,115,553 shares outstanding at
April 28, 2006.

(2) 1,000,000 are held indirectly through Les
Entreprises Tremoy Ltee, a private company controlled by Mr. Rivard and 100,000
are directly held.

(3) Includes 1,083,000 stock options exercisable
within 60 days of April 28, 2006 held by all directors and officers as a group.

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Information regarding the outstanding stock options held by
directors and executive officers of the Company as of April 28, 2006, is set
forth below.

Stock Options Outstanding

|Name               | Number of shares of | CAN$           | Expiration
|------------------ | ------------------- | -------------- | ----------
|                   | common stock option | Exercise price | date      
|Jean-Guy Rivard    | 100,000             | 1.78           | 01-08-2007
|Jean-Guy Rivard    | 100,000             | 3.10           | 03-18-2007
|Jean-Guy Rivard    | 200,000             | 4.72           | 12-01-2007
|Jean-Guy Rivard    | 150,000             | 6.60           | 01-14-2009
|Jean-Guy Rivard    | 100,000             | 5.30           | 29-06-2010
|Jean-Guy Rivard    | 200,000             | 5.30           | 07-07-2010
|Gilles Loiselle    | 100,000             | 5.30           | 29-06-2010
|Réjean Houle       | 50,000              | 5.30           | 29-06-2010
|Denis Arcand       | 50,000              | 5.30           | 29-06-2010
|Martin Rivard      | 50,000              | 4.25           | 07-07-2007
|Martin Rivard      | 100,000             | 4.72           | 12-01-2007
|Martin Rivard      | 50,000              | 5.30           | 07-07-2010
|Martin Rivard      | 50,000              | 4.36           | 30-01-2011
|Christian Pichette | 50,000              | 4.97           | 05-10-2010
|Christian Pichette | 50,000              | 4.36           | 30-01-2011
|Nicole Veilleux    | 25,000              | 5.16           | 25-08-2008
|Nicole Veilleux    | 10,000              | 5.30           | 07-07-2010
|Campbell Stuart    | 20,000              | 5.50           | 12-19-2007
|Total              | 1,455,000           |                |           

ITEM 7.

A.

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

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

Such major shareholders do not have different voting rights
from the Company's other shareholders.

On December 31, 2005, the shareholders' list
for the Company's common stock showed 292 registered shareholders and 20,994,553
shares outstanding. 131 (44.82%) of these shareholders were US residents, owning
3,060,057 shares representing approximately 18.9% of the issued and outstanding
shares of common stock.

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

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

B.

None

C.

Not applicable.

ITEM 8.

A. Consolidated Statements and
Other Financial Information

The following consolidated financial statements of the Company
are attached to this Annual Report:

Report of the Independent Registered Public Accounting Firm
dated January 27, 2006

Consolidated Balance Sheets at December 31, 2005 and December
31, 2004

Consolidated Statements of Earnings for the Years ended
December 31, 2005, December 31, 2004 and December 31, 2003

Consolidated Statements of Retained Earnings for the Years
ended December 31, 2005, December 31, 2004 and December 31, 2003

Consolidated Statements of Cash Flow for the Years ended
December 31, 2005, December 31, 2004 and December 31, 2003

Notes to consolidated financial statements

Reference is made to Items 10 A. 2. and 17 for further details
relating to the consolidated financial statements of the Company included in
this Annual Report.

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 will 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.

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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, 2005 in the Company's
financial condition or results of operations.

ITEM 9. THE OFFER AND LISTING

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

> Toronto Stock Exchange

Set forth below are the high and low sales 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

- Sales -Canadian DollarsYear Ended
      High
      LowDecember 31, 2001
      $2.24
      $1.20December 31,
      2002
      $6.74
      $1.75December 31,
      2003
      $6.90
      $3.80December 31,
      2004
      $6.90
      $4.00December 31, 2005
      $5.85
      $3.82


Last Two Full Years 
Toronto Stock Exchange 
Common Stock Trading Activity

- Sales -Canadian DollarsQuarter Ended
      High
      LowMarch 31, 2004
      $6.90
      $5.54June 30, 2004
      $6.30
      $4.26September 30,
      2004
      $5.05
      $4.00December 31,
      2004
      $5.60
      $4.60March 31, 2005
      $5.35
      $4.00June 30, 2005
      $5.85
      $4.00September 30,
      2005
      $5.35
      $4.62December 31, 2005
      $5.24
      $3.82


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Last Six Months 
Toronto Stock Exchange 
Common Stock Trading Activity

- Price -Canadian DollarsMonth Ended
      High
      LowOctober 31, 2005
      $5.24
      $3.82November 30,
      2005
      $4.55
      $3.90December 31,
      2005
      $4.62
      $3.99January 31,
      2006
      $4.65
      $3.98February 28,
      2006
      $4.43
      $3.55March 31, 2006
      $4.47
      $3.75


On April 28, 2006, the closing price for the Company's common
stock on the Toronto Stock Exchange was CAN$5.00.

> American Stock Exchange

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

Last Five Full Years 
American Stock Exchange 
Common Stock Trading Activity

- Sales -US DollarsYear Ended
      High
      LowDecember 31, 2001
      $1.47
      $0.80December 31, 2002
      $4.40
      $1.05December 31, 2003
      $5.29
      $2.78December 31, 2004
      $5.39
      $3.00December 31, 2005
      $4.73
      $3.20


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Last Two Full Years 
American Stock Exchange 
Common Stock Trading Activity

- Sales -US DollarsQuarter Ended
      High
      LowMarch 31, 2004
      $5.39
      $4.12June 30, 2004
      $4.81
      $3.15September 30, 2004
      $4.05
      $3.00December 31, 2004
      $4.76
      $3.85March 31, 2005
      $4.50
      $3.29June 30, 2005
      $4.73
      $3.20September 30, 2005
      $4.60
      $3.86December 31, 2005
      $4.50
      $3.23


Last Six Months 
American Stock Exchange 
Common Stock Trading Activity

- Sales -US DollarsMonth Ended
      High
      LowOctober 31, 2005
      $4.50
      $3.23November 30,
      2005
      $3.83
      $3.28December 31,
      2005
      $4.04
      $3.45January 31,
      2006
      $4.00
      $3.38February 28,
      2006
      $3.88
      $3.21March 31, 2006
      $3.81
      $3.21


On April 28, 2006, the closing price for the Company's common stock on the
American Stock Exchange was US$4.48.

ITEM 10. ADDITIONAL INFORMATION

A. Share Capital

Not applicable.

B. Memorandum and Articles of Association

The Company was incorporated pursuant to Part
1A of the Companies Act (Quebec) on February 12, 1981 (File number
1843-2286) under the name Resources Minières Rouyn Inc. By Article of Amendment
filed February 10, 1987 the Company added the English version Rouyn Mining
Resources Inc. and another amendment filed with the Government of Quebec on June
20, 1991,

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the Company changed its name to Richmont Mines Inc. The
Articles of Incorporation of the Company are registered by the Government of
Quebec in register S02473, folio 10.

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

> Directors

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

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

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

The directors of the Company may:

(a) borrow funds on
the Company's credit for the amounts and on the conditions 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.

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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,
preemptive rights, subscription rights, or restrictions or transfers attached to
the common shares. In the event of liquidation, dissolution, or winding up of
the Company, the holders of common shares are entitled to participate in the
assets of the Company available for distribution after satisfaction of the
claims of creditors. There are no redemption or sinking fund provisions
applicable to the common shares or any liability to further capital calls by the
Company.

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

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

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

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

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

C. Material Contracts

Patricia Mining Purchase Agreement

On August 28, 2003, Richmont Mines entered into the
Option/Joint Venture Agreement for the Island Gold project between Patricia
Mining Corp. and Richmont Mines Inc., whereby the

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Company agreed to invest $1.0 million, by way
of a private placement, to purchase from Patricia Mining Corp. 1,400,000
flow-through shares and 600,000 common shares. Upon this investment, Richmont
Mines was granted an option to acquire a 55% undivided interest in Patricia
Mining's Island Gold property.

Richmont Mines' investment in Patricia Mining
was used to partly finance a $2.5 million exploration program on the Island Gold
project located in Ontario. Following this exploration program and its
significant results, Richmont Mines exercised its option and decided to advance
the project towards commercial production by funding development work up to a
maximum of $10.0 million within 24 months in order to acquire a 55% managing
interest in the joint venture. Richmont Mines has held a 55% interest in this
property since the fourth quarter of 2005. The money advanced to Patricia Mining
Corp. bears interest at the Canadian prime rate plus 3%. As at December 31,
2005, the Company had advanced $1,678,500 to Patricia Mining Corp.

East Amphi Purchase Agreement

On December 5, 2003, Richmont Mines signed
with McWatters Mining Inc. a Memorandum of Agreement and Management Agreement, a
transaction whereby Richmont Mines acquired from McWatters the East Amphi
Property and the Fourax Property, located near Malartic in northwestern Quebec,
for a cash consideration paid on closing of CAN$7 million. McWatters was
obligated to complete a CAN$6 million exploration program on the East Amphi
Property by December 31, 2004, which would also constitute additional
consideration for Richmont Mines under the agreement. Richmont Mines, on behalf
of McWatters, agreed to manage the exploration work. Subject to completion of
this exploration program, McWatters will be entitled to receive a 2% Net Smelter
Returns royalty, which gives the right to McWatters to receive 2% of the ounces
produced from the East Amphi and Fourax properties in excess of 300,000 ounces
of gold. Richmont Mines has the option to purchase the 2% royalty for CAN$1.5
million at any time after the start of production.

D. Exchange Controls

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

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

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

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the case of an indirect acquisition (for
example, the acquisition of the foreign parent of the Canadian business) where
the Canadian business has assets of $50 million or more in value or if the
Canadian business represents more than 50% of the assets of the original group
and the Canadian business has assets of $5 million or more in value. Review and
approval are also required to the acquisition or establishment of a new business
in areas concerning "Canada's cultural heritage or national identity" such as
book publishing, film production and distribution, television and radio,
production and distribution of music, and the oil and natural gas industry,
regardless of the size of the investment.

In the context of the Company, in essence,
three methods of acquiring control of a Canadian business are regulated by the
ICA: (i) the acquisition of all or substantially all of the assets used in
carrying on the Canadian business; (ii) the acquisition, directly or indirectly,
of voting shares of a Canadian corporation carrying on the Canadian business;
(iii) the acquisition of voting shares of an entity which controls, directly or
indirectly, another entity carrying on a Canadian business. An acquisition of a
majority of the voting interests of an entity, including a corporation, is
deemed to be an acquisition of control under the ICA. An acquisition of less
than one-third of the voting shares of a corporation is deemed not to be an
acquisition of control. An acquisition of less than a majority, but one-third or
more, of the voting shares of a corporation is presumed to be an acquisition of
control unless it can be established that on the acquisition, the corporation is
not, in fact, controlled by the acquirer through the ownership of voting shares.
For partnerships, trusts, joint ventures or other unincorporated entities, an
acquisition of less than a majority of the voting interests is deemed not to be
an acquisition of control.

In 1988, the ICA was amended pursuant to the
North American Free Trade Agreement dated January 2, 1988 between Canada and the
United States to relax the restrictions of the ICA. As a result of these
amendments, except where the Canadian business is in the cultural, oil and gas,
uranium, financial services or transportation sectors, the threshold for direct
acquisition of control by US investors and other foreign investors acquiring
control of a Canadian business from US investors has been raised from $5 million
to $150 million of gross assets, and indirect acquisitions are not reviewable.

In addition to the foregoing, the ICA requires that all other
acquisitions of control of Canadian businesses by non-Canadians are subject to
formal notification to the Canadian government.

E. Taxation

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

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

Disposition of Common Stock

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

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

Dividend

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

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

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

Certain United States Federal Income Tax Consequences

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

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

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

76

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United States and Canada (the "Treaty"), all as currently in
effect and all subject to change at any time, possibly with retroactive effect.

Distributions on Common Shares of the Company

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

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

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

Effect of Canadian Withholding Taxes.As discussed above in Taxation, Dividend, under current law payments by the
Company to foreign investors are subject to a 25 % Canadian withholding tax. The
rate of withholding applicable to US Holders that are eligible for benefits
under the Treaty generally is reduced to a maximum rate of 15 % (except for
certain corporate holders). For

77

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US federal income tax purposes, US Holders
will be treated as having received the amount of Canadian taxes withheld by the
Company, and as then having paid over the withheld taxes to the Canadian taxing
authorities. As a result of this rule, the amount of dividend income included in
gross income for US federal income tax purposes by a US Holder with respect to
the payment of dividends may be greater than the amount of cash actually
received (or receivable) by the US Holder from the Company with respect to the
payment.

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

Foreign Tax Credit

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

Disposition of Common Shares of the Company

A US Holder will recognize gain or loss from
the sale of common shares of the Company equal to the difference, if any,
between (i) the amount of cash plus the fair market value of any property
received, and (ii) the shareholder's tax basis in the common shares of the
Company. This gain or loss will be capital gain or loss if the common shares are
a capital asset in the hands of the US Holder, which will be a short-term or
long-term capital gain or loss depending upon the holding period of the US
Holder. Gains and losses are netted and combined according to special rules in
arriving at the overall capital gain or loss for a particular tax year.
Deductions for net capital losses are subject to significant limitations. For US
Holders that are individuals, net capital loss

78

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may be offset against up to $3,000 of ordinary
income each tax year, and any unused portion of such net capital loss may be
carried over to be used in later tax years until such net capital loss is
thereby exhausted. For US Holders that are corporations (other than corporations
subject to Subchapter S of the Code), an unused net capital loss may be carried
back three years from the loss year and carried forward five years from the loss
year to be offset against capital gains until such net capital loss is thereby
exhausted.

Backup Withholding and Information Reporting

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

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.

H. Documents on Display

Subject to confidentiality concerns, all
documents concerning the Company that are referred to in this annual report on
Form 20-F may be inspected by shareholders upon reasonable advance notice, at
the Company's headquarters at 110, Avenue Principale, Rouyn-Noranda, Quebec J9X
4P2. A summary in English of any such document not in English will be provided.

I. Subsidiary Information

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET

RISK

Commodity Price Risk Disclosure

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

At current 2006 estimates of production of
65,000 ounces of gold and at an estimated average gold price of US$450,
including management's estimates of the Company's operating expenses, a US$45
change in the market price of gold would result in an increase or decrease of
approximately CAN$2,150,000 in annual net income and in annual cash flows.

79

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Foreign Currency Risk Disclosure

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

At current 2006 estimates of production of
65,000 ounces of gold and at an estimated average gold price of US$450 excluding
management's estimates of the Company's operating expenses, a $0.10 change in
the CAN dollar exchange rate would result in an increase or decrease of CAN
approximately CAN$1,800,000 in annual net income and in annual cash flow.

To reduce the effects of fluctuations in
US/CAN dollar exchange rates, the Company may use financial instruments to hedge
currency exposures in the ordinary course of business. It is current Company
policy to seek to harmonize the amount and duration of its gold and US/CAN
hedging policies.

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

Interest Rate Risk Disclosure

At December 31, 2005, 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

None

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY

HOLDERS AND USE OF PROCEEDS

None

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, Vice President, Finance and Financial Director, 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

80

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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. Not applicable*.

c) Attestation
Report of the Registered Public Accounting Firm. Not applicable*.

d) Changes in
Internal Controle Over Financial Reporting. During the period covered by
this Annual Report, there have been no changes identified, in connection with
the evaluation required by Rule 13(a)-15(d) or Rule 15d-15(d), in the Company's
internal control over financial reporting (as defined in Rule 13a-15(f) or Rule
15d-15(f)) that have materially affected, or are reasonably likely to materially
affect, the Company's internal control over financial reporting.

* Richmont Mines Inc. is an accelerated filer and a foreign private issuer
therefore it only has to comply (based on current legislation) to SOX-404 for
fiscal year ending on December 31, 2006.

ITEM 16.A. AUDIT COMMITTEE FINANCIAL EXPERT

The Company's board of directors has determined that Gilles Loiselle serves as "audit committee financial expert" on its audit committee and
that he is also an "independent" director as defined under the listing standards
of the American Stock Exchange.

ITEM 16.B. CODE OF ETHICS

The Company has adopted a Code of Ethics that applies to the
Company's principal executive officer, principal financial officer and principal
accounting officer or controller. This Code of Ethics is included as Exhibit
14.1 to this Annual Report on Form 20-F. The Company will provide to any person,
without charge a copy of the Company's Code of Ethics, upon a request in writing
made to Richmont Mines, Inc., 110, Avenue Principale, Rouyn-Noranda, Quebec, JPX
4P2, Canada, Attention: Corporation Secretary.

ITEM 16.C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Committee's Pre-Approval Policies and Procedures

Starting with the year 2004, the Company's
audit committee provided to the external auditor of the Company a list of
services preapproved. If officers of Richmont Mines ask for other services, the
external auditor must have the approval of the audit committee president before
accepting the mandate, which must also be formally approved by the audit
committee at the next audit committee meeting. The list of services provided to
the external auditor will be revised every year by the audit committee and can
be modified by the audit committee at any time by sending a written notice to
the external auditor.

The following tables show the total fees
billed for each of the two past fiscal years by the Company's external auditor
and the percentage of such fees for services approved by the audit committee or
the audit committee president.

81

---

Audit feesThe aggregate fees billed by the external auditors for audit services for
each of the last two financial years are the following:

|Audit services* | 2005     | 2004    
|--------------- | -------- | --------
|Current year    | $132,000 | $105,000

Audit-related fees

The aggregate fees billed for each of the last two financial
years for certification services and related services provided by the external
auditors which are reasonably related with the performance of the audit or
review of the Company's financial statements are described in the following
table:

|Nature of services* | 2005    | 2004  
|------------------- | ------- | ------
|Accounting advices  | $12,890 | $2,650

Tax fees

The aggregate fees billed for each of the last two financial
years for the professional services provided by the external auditors with
regards to tax compliance, tax advice and tax planning are described in the
following table:

|Nature of services*            | 2005    | 2004   
|------------------------------ | ------- | -------
|Review quarterly tax provision | $12,800 | $12,864
|Planning and tax advices       | $19,270 | $28,265

Other fees

The aggregate fees billed for each of the last two financial
years for the products and services provided by the external auditors, other
than the services previously stated, are described in the following table:

|Nature of services*                        | 2005    | 2004   
|------------------------------------------ | ------- | -------
|Sarbanes / Oxley Law compliance assistance | $39,088 | $14,500
|Other consultations                        | $11,550 | $16,705

* 100% of the above fees have been approved by the Audit Committee for each
year.

ITEM 16.D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

None.

82

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ITEM 16.E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS

|                     |              |                | Total Number     | Maximum        
|-------------------- | ------------ | -------------- | ---------------- | ---------------
|                     |              |                | of Shares        | Number of      
|                     |              |                | Purchased as     | Shares that May
|                     |              |                | Part of Publicly | Yet be         
|                     | Total Number |                | Announced        | Purchased      
|                     | of Shares    | Average Price  | Plans or         | Under the Plans
|Period               | Purchased    | Paid per Share | Programs         | or Programs    
|                     |              |                |                  |                
|January 1-31, 2005   | -            | -              |                  | 748,700        
|February 1-29, 2005  | 29,900       | 4.74           | 29,900           | 718,800        
|March 1-31, 2005     | 41,600       | 4.50           | 41,600           | 677,200        
|April 1-30, 2005     | 4,100        | 4.02           | 4,100            | 673,100        
|May 1-31, 2005       | -            | -              | -                | 673,100        
|June 1-30, 2005      | -            | -              | -                | 673,100        
|July 1-9, 2005       | -            | -              | -                | 673,100        
|July 10-31, 2005     | -            | -              | -                | -              
|August 1-31, 2005    | -            | -              | -                | -              
|September 1-30, 2005 | -            | -              | -                | -              
|October 1-31, 2005   | -            | -              | -                | -              
|November 1-30, 2005  | -            | -              | -                | -              
|December 1-31, 2005  | -            | -              | -                | -              

Only one Richmont Mines share repurchase programs was in
effect in 2005. On July 7, 2004, Richmont Mines publicly announced a Normal
Course Issuer bid commencing July 9, 2004 and expiring July 8, 2005 for up to
800,000 shares of its common stock.

PART III

ITEM 17.

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

Audited Consolidated Financial Statements

Independent Registered Public Accounting Firm's Report dated
January 27, 2006.

> Consolidated Balance Sheets at December 31, 2005 and
>   December 31, 2004
>   Consolidated Statements of Earnings for the Years ended
>   December 31, 2005, December 31, 2004 and December 31, 2003

83

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> Consolidated Statements of Retained Earnings for the Years
>   ended December 31, 2005, December 31, 2004 and December 31, 2003
>   Consolidated Statements of Cash Flow for the Years ended
>   December 31, 2005, December 31, 2004 and December 31, 2003
>   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.



84

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ITEM 19.

Exhibit

|     | Exhibit                                                                                                                                                                                     
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|No.  |                                                                                                                                                                                             
|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                                                                                                                                                                    
|     |                                                                                                                                                                                             
|5.1  | Option/Joint Venture Agreement for the Island
    Gold project between Patricia Mining Corp. and Richmont Mines Inc. dated
    August 28, 2003(2)                                           
|     |                                                                                                                                                                                             
|5.2  | Memorandum of Agreement and Management
    Agreement between McWatters Mining Inc. and Richmont Mines Inc. dated
    December 5, 2003(2)                                                    
|     |                                                                                                                                                                                             
|5.3  | Beaufor Mine Purchase Agreement dated April
    5, 2001 between Richmont Mines Inc. and Aurizon Mines Ltd., as amended by a
    letter agreement dated August 15, 2002 between the parties.
|     |                                                                                                                                                                                             
|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                                                        
|     |                                                                                                                                                                                             
|14.1 | Code of Ethics(2)                                                                                                                                                                           
|     |                                                                                                                                                                                             
|15.1 | Audit Committee Charter                                                                                                                                                                    

 Filed herewith.

(1)

(2)

85

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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.                             
|--------------------- | ------------------------------------------------
|                      | Registrant                                      
|                      |                                                 
|                      |                                                 
|                      |                                                 
|Dated: April 28, 2006 | By: (/s/) Nicole Veilleux                       
|                      | Nicole
    Veilleux                             
|                      | Director
    Finance and Chief Financial Officer

---

Consolidated Financial Statements of
  RICHMONT MINES INC.
  
  Years ended December 31, 2005, 2004 and 2003

---

REPORT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the consolidated balance sheets of Richmont
Mines Inc. and its subsidiaries as at December 31, 2005 and 2004 and the
consolidated statements of earnings, retained earnings (deficit) and cash flow
for each of the years in the three-year period ended December 31, 2005. 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 in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform an audit to obtain reasonable assurance whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. 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
and its subsidiaries as at December 31, 2005 and 2004 and the results of their
operations and their cash flow for each of the years in the three-year period
ended December 31, 2005 in conformity with Canadian generally accepted
accounting principles.
Canadian generally accepted accounting principles vary in
certain significant respects from accounting principles generally accepted in
the United States of America. Information relating to the nature and effect of
such differences is presented in Note 17 to the financial statements.
/s/ KPMG LLP
Chartered Accountants
Montreal, Canada 
January 27, 2006

---



RICHMONT MINES INC. Consolidated Financial Statements 
Years ended December 31, 2005, 2004 and 2003

|                                                           |  
|---------------------------------------------------------- | -
|                                                           |  
|CONSOLIDATED FINANCIAL STATEMENTS                          |  
|                                                           |  
|                                                           |  
|Consolidated Statements of Earnings                        | 1
|                                                           |  
|Consolidated Statements of Retained Earnings
    (Deficit) | 1
|                                                           |  
|Consolidated Balance Sheets                                | 2
|                                                           |  
|Consolidated Statements of Cash Flow                       | 3
|                                                           |  
|Notes to Consolidated Financial Statements                 | 4



---



RICHMONT MINES INC. Consolidated Statements of Earnings
Years ended December 31 
(in Canadian dollars)

|                                                               | 2005         | 2004       | 2003      
|-------------------------------------------------------------- | ------------ | ---------- | ----------
|                                                               | $            | $          | $         
|                                                               |              |            |           
|REVENUES                                                       |              |            |           
|Precious metals                                                | 19,845,054   | 36,981,017 | 48,103,530
|Other revenues (note 2)                                        | 1,799,979    | 2,660,390  | 2,205,511 
|                                                               |              |            |           
|                                                               | 21,645,033   | 39,641,407 | 50,309,041
|                                                               |              |            |           
|EXPENSES                                                       |              |            |           
|Operating costs                                                | 16,521,478   | 26,094,650 | 30,324,791
|Royalties                                                      | 231,381      | 430,325    | 851,242   
|Custom milling                                                 | 722,285      | 973,056    | -         
|Administration                                                 | 3,923,063    | 3,036,622  | 2,772,658 
|Exploration and
    project evaluation (note 3)                | 2,375,274    | 3,475,339  | 3,626,107 
|Accretion expense of
    asset retirement obligations (note 4) | 167,245      | 159,726    | 150,848   
|Depreciation and
    depletion                                 | 1,617,356    | 3,548,287  | 4,817,968 
|Write-down of mining
    assets (note 5)                       | 26,040,953   | -          | -         
|                                                               |              |            |           
|                                                               | 51,599,035   | 37,718,005 | 42,543,614
|                                                               |              |            |           
|EARNINGS (LOSS) BEFORE OTHER ITEMS                             | (29,954,002) | 1,923,402  | 7,765,427 
|                                                               |              |            |           
|MINING AND INCOME TAXES (note 6)                               | (2,479,820)  | 631,437    | 1,725,596 
|                                                               |              |            |           
|                                                               | (27,474,182) | 1,291,965  | 6,039,831 
|                                                               |              |            |           
|MINORITY INTEREST                                              | 5,828        | 559,869    | 1,005,290 
|                                                               |              |            |           
|NET EARNINGS (LOSS)                                            | (27,480,010) | 732,096    | 5,034,541 
|                                                               |              |            |           
|NET EARNINGS (LOSS) PER SHARE(note
    7)                      |              |            |           
|Basic                                                          | (1.54)       | 0.05       | 0.32      
|Diluted                                                        | (1.54)       | 0.04       | 0.31      
|                                                               |              |            |           
|WEIGHTED AVERAGE NUMBER OF                                     |              |            |           
|COMMON SHARES
    OUTSTANDING                                  | 17,837,886   | 16,126,784 | 15,926,191
|                                                               |              |            |           
|                                                               |              |            |           
|                                                               |              |            |           
|CONSOLIDATED STATEMENTS OF
    RETAINED EARNINGS (DEFICIT)     |              |           
|Years ended December 31 (in Canadian dollars)                  |              |            |           
|                                                               |              |            |           
|                                                               | 2005         | 2004       | 2003      
|                                                               | $            | $          | $         
|                                                               |              |            |           
|BALANCE, BEGINNING OF YEAR                                     | 13,280,549   | 13,252,364 | 8,596,132 
|                                                               |              |            |           
|Net earnings
    (loss)                                        | (27,480,010) | 732,096    | 5,034,541 
|                                                               |              |            |           
|Redemption of shares
    (note 11)                             | (210,306)    | (703,911)  | (378,309) 
|                                                               |              |            |           
|                                                               |              |            |           
|BALANCE, END OF YEAR                                           | (14,409,767) | 13,280,549 | 13,252,364

See accompanying notes to consolidated financial statements.

1

---



RICHMONT MINES INC.

Consolidated Balance SheetsDecember 31 
(in Canadian dollars)

|                                         | 2005         | 2004      
|---------------------------------------- | ------------ | ----------
|                                         | $            | $         
|                                         |              |           
|ASSETS                                   |              |           
|                                         |              |           
|CURRENT ASSETS                           |              |           
|Cash and cash
    equivalents            | 14,678,478   | 25,269,901
|Short-term
    investments (note 8)      | 812,678      | 809,900   
|Accounts receivable                      | 2,783,351    | 1,654,835 
|Mining and income
    taxes receivable   | 5,441,853    | 1,620,141 
|Inventories (note
    9)                 | 3,368,115    | 1,345,299 
|                                         |              |           
|                                         | 27,084,475   | 30,700,076
|                                         |              |           
|PROPERTY, PLANT AND EQUIPMENT (note 10)  | 25,851,117   | 23,803,718
|                                         |              |           
|FUTURE MINING AND INCOME TAXES (note 6)  | 1,290,905    | 1,689,760 
|                                         |              |           
|                                         | 54,226,497   | 56,193,554
|                                         |              |           
|LIABILITIES                              |              |           
|                                         |              |           
|CURRENT LIABILITIES                      |              |           
|Accounts payable and
    accrued charges | 5,187,224    | 4,349,430 
|Mining and income
    taxes payable      | 20,000       | 425,615   
|                                         |              |           
|                                         | 5,207,224    | 4,775,045 
|                                         |              |           
|ASSET RETIREMENT OBLIGATIONS (note 4)    | 3,788,912    | 2,967,867 
|                                         |              |           
|MINORITY INTEREST                        | 3,195,602    | 1,548,771 
|                                         |              |           
|FUTURE MINING AND INCOME TAXES (note 6)  | 1,571,257    | 1,490,336 
|                                         |              |           
|                                         | 13,762,995   | 10,782,019
|                                         |              |           
|SHAREHOLDERS' EQUITY                     |              |           
|                                         |              |           
|Capital stock (note 11)                  | 50,600,371   | 29,236,630
|Contributed surplus
    (note 12)        | 4,272,898    | 2,894,356 
|Retained earnings
    (deficit)          | (14,409,767) | 13,280,549
|                                         |              |           
|                                         | 40,463,502   | 45,411,535
|                                         |              |           
|Commitments (note
    13)                |              |           
|Contingency (note
    14)                |              |           
|                                         | 54,226,497   | 56,193,554

See accompanying notes to consolidated financial statements.

On behalf of the Board:

|                |             
|--------------- | ------------
|Jean-Guy Rivard | Réjean Houle
|Chairman        | Director    

| |   | 
| | - | 
| | 2 | 

---



RICHMONT MINES INC.

Consolidated Statements of Cash FlowsYears ended December 31 
(in Canadian dollars)

|                                                         | 2005         | 2004         | 2003       
|-------------------------------------------------------- | ------------ | ------------ | -----------
|                                                         | $            | $            | $          
|                                                         |              |              |            
|CASH FLOW FROM (USED IN) OPERATIONS                      |              |              |            
|Net earnings (loss)                                      | (27,480,010) | 732,096      | 5,034,541  
|Adjustments for:                                         |              |              |            
|Depreciation and depletion                               | 1,617,356    | 3,548,287    | 4,817,968  
|Stock-based compensation                                 | 1,349,711    | 902,370      | 354,102    
|Accretion expense of asset retirement obligations        | 167,245      | 159,726      | 150,848    
|Write-down of short-term investments                     | -            | 110,000      | -          
|Write-down of mining assets                              | 26,040,953   | -            | -          
|Minority interest                                        | 5,828        | 559,869      | 1,005,290  
|Future mining and income taxes                           | 479,776      | 62,967       | (462,391)  
|                                                         |              |              |            
|                                                         | 2,180,859    | 6,075,315    | 10,900,358 
|                                                         |              |              |            
|Net change in non-cash working capital items             |              |              |            
|and payment of asset retirement
    obligations          | (6,842,193)  | 1,142,400    | (2,322,939)
|                                                         |              |              |            
|                                                         | (4,661,334)  | 7,217,715    | 8,577,419  
|                                                         |              |              |            
|CASH FLOW USED IN INVESTMENTS                            |              |              |            
|Short-term investments                                   | (2,778)      | 80,100       | 10,505,685 
|Security deposits                                        | -            | 1,286,061    | (1,267,061)
|Property, plant and equipment 
    Beaufor Mine         | (2,770,812)  | (1,478,118)  | (1,255,345)
|Development project - East Amphi                         | (13,215,310) | (10,504,244) | (7,104,894)
|Development project - Island
    Gold                    | (12,622,482) | -            | -          
|Other property, plant and
    equipment                  | (426,719)    | (642,216)    | (915,615)  
|                                                         |              |              |            
|                                                         | (29,038,101) | (11,258,417) | (37,230)   
|                                                         |              |              |            
|CASH FLOW FROM FINANCING ACTIVITIES                      |              |              |            
|Issue of common shares                                   | 23,695,245   | 1,486,407    | 1,658,320  
|Redemption of common shares                              | (345,630)    | (1,088,001)  | (577,201)  
|Redemption of shares by a
    subsidiary                 | (60,755)     | (142,586)    | -          
|Common share issue costs                                 | (1,859,348)  | (29,096)     | (10,664)   
|Contribution from a minority
    partner                 | 1,678,500    | -            | -          
|                                                         |              |              |            
|                                                         | 23,108,012   | 226,724      | 1,070,455  
|                                                         |              |              |            
|                                                         |              |              |            
|                                                         |              |              |            
|Net increase (decrease) in cash and cash
    equivalents | (10,591,423) | (3,813,978)  | 9,610,644  
|                                                         |              |              |            
|Cash and cash equivalents, beginning of year             | 25,269,901   | 29,083,879   | 19,473,235 
|                                                         |              |              |            
|Cash and cash equivalents, end of year                   | 14,678,478   | 25,269,901   | 29,083,879 
|                                                         |              |              |            
|                                                         |              |              |            
|SUPPLEMENTAL INFORMATION                                 |              |              |            
|Cash paid (received) during the
    year:                |              |              |            
|Mining and income taxes                                  | (522,198)    | (133,984)    | 3,984,254  

See accompanying notes to consolidated financial statements.

| | 3 | 
| | - | 

---



RICHMONT MINES INC.

Notes to Consolidated Financial StatementsYears ended December 31, 2005, 2004 and 2003
(in 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 17, 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 those of other
entities in which the Company has a controlling financial interest. The usual
condition for a controlling financial interest is ownership of a majority of the
voting interests of an entity. However, a controlling financial interest may
also exist in entities through arrangements that do not involve voting
interests, such as variable interest entities (« VIE's ») under the principles
outlined in the AcG-15. Intercompany balances and transactions are eliminated on
consolidation.

A VIE is defined as an
entity that by design either lacks enough equity investment at risk to permit
the entity to finance its activities without additional subordinated financial
support from other parties; has equity owners who are unable to make decisions
about the entity; or has equity owners that do not have the obligation to absorb
the entity's expected losses or the right to receive the entity's expected
residual returns in the same proportion as their participation. VIE's can arise
from a variety of entities or legal structures.

AcG-15 requires a
variable interest holder (i.e. a counterparty to a VIE) to consolidate the VIE
if that party will absorb a majority of the expected losses of the VIE, receive
a majority of the residual returns of the VIE, or both. This party is considered
the primary beneficiary of the VIE.

The Company's 55%
interest in the Island Gold development project is held through an
unincorporated joint venture. The Company has entered into an agreement to
finance the other joint venture partner's share of mine construction costs,
which caused the Company to reconsider whether this joint venture is a VIE. The
Company concluded that the joint venture is in fact a VIE and that it is the
primary beneficiary. The Company has therefore consolidated the project Island
Gold using the principles of AcG-15.

b) Revenue
recognition

Precious metals
revenue, based upon spot metal prices, is recorded when rights and obligations
related to ownership are transferred to the purchaser. Milling revenue is
recorded when the service of ore processing is rendered.

c) Cash and cash equivalents

Cash and cash equivalents comprise cash and
short-term investments with original maturity dates of less than 90 days.

d) Short-term investments

Short-term investments are carried at the lower of
cost and market value.

e) Inventories

Supply inventories and ore inventories are valued at
the lower of average cost and replacement cost. Precious metals inventories are
valued at the lower of average cost and net realizable value.

f) Exploration
properties

Mining exploration
expenditures are expensed as incurred. The acquisition costs of exploration
properties and expenditures incurred on properties identified as having
development potential are capitalized in accordance with the policy described in
note 1 g).

| | 4 | 
| | - | 

---



RICHMONT MINES INC.

Notes to Consolidated Financial Statements (continued)Years ended December 31, 2005, 2004 and 2003
(in Canadian dollars)

1. Significant accounting policies (continued)

g) Property, plant and equipment

Property, plant and equipment are
recorded at cost, net of related government assistance. Development costs are
capitalized when a decision is made to bring an ore body into commercial
production. Upon commencement of commercial production, construction costs are
transferred to the various categories of property, plant and equipment.
Property, plant and equipment are depreciated according to the
units-of-production method, calculated on proven and probable reserves.
Depreciation of mobile equipment is calculated using the straight-line method
based on its anticipated useful life.

Costs include interest on funds borrowed incurred to
finance construction and future costs of asset retirement.

When the net carrying value of a capital asset is not
recoverable and exceeds its fair value, a write-down is recorded in the books.

h) 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 on future tax assets and liabilities of a
change in tax rates is recognized in the income statement in the period in which
the revised tax rate comes into effect.

The Company renounces to tax deductions relating to
resource expenditures that are financed by the issuance of flow-through shares
to the benefit of its shareholders, in accordance with current tax legislation.

Under the asset and liability method
of accounting for income taxes, future income taxes related to the temporary
differences created by this renouncement are recorded, in accordance with
EIC-146, at the time that the Company renounces to its right to these deductions
and the counterpart is recorded as share issue costs.

i) Asset retirement obligations

Total estimated cash flow required to
settle the obligations arising from environmentally acceptable closure plans is
discounted based on the credit-adjusted risk-free rate and is recorded as a
liability with a corresponding increase to property, plant and equipment and,
thereafter, depreciated in accordance with the units-of-production method using
proven and probable reserves. The asset retirement obligations are adjusted for
accumulated accretion in accordance with the expected timing of payment of the
cash flow required to settle these obligations.

j) Foreign currency translations

Transactions pertaining to the
statement of earnings are translated at the rate of exchange prevailing at the
date of the transaction. Monetary assets and liabilities resulting from these
transactions are translated at the rate of exchange in effect at the balance
sheet date. Exchange gains or losses are included in earnings and presented
under the caption Other revenues (nil in 2005, 2004 and 2003).

k) Government assistance

Grants originating from government assistance are
recorded as a revenue or as a reduction of property, plant and equipment, based
on the nature of the grant.

l) Net earnings (loss) per share

Net earnings (loss) per share are the
result of net earnings (loss) divided by the average outstanding number of
shares during the period. Diluted earnings per share are determined by taking
into account the dilutive effect of arrangements to issue common shares as if
these arrangements were exercised at the beginning of the year or at the grant
date. Diluted earnings per share are determined using the treasury-stock method.
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 period.

| | 5 | 
| | - | 

---



RICHMONT MINES INC.

Notes to Consolidated Financial Statements (continued)Years ended December 31, 2005, 2004 and 2003
(in Canadian dollars)

1.
Significant accounting policies (continued)

m) Guarantees

A guarantee is a contract or an
indemnification agreement that contingently requires the Company to make
payments to the other party to the contract or agreement, based on charges in an
underlying obligation that is related to an asset, a liability or an equity
security of the other party, or based on a third party failure to perform under
an obligation agreement. It could also be an indirect guarantee of the
indebtedness of another party, even though the payment to the other party may
not be based on changes in an underlying obligation that is related to an asset,
a liability or an equity security of the other party. In management's opinion,
the Company does not have guarantees, other than those disclosed in notes 4, 13
and 14.

n) Derivative financial instruments

In 2004, the Company adopted the
recommendations of the Emerging Issues Committee (EIC-128) relating to the
accounting for trading, speculative or non-hedge derivative financial
instruments. Derivative financial instruments, which documentation does not
clearly establish a hedge relationship in accordance with accounting standards,
are measured at fair value. Previously, gains or losses on forward gold sales
contracts and other instruments which establish the sale price of future
production were recorded in earnings as revenue from precious metals upon
delivery of the production. This change had no significant impact on the
financial statements.

o) 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 over the vesting
period with a corresponding credit to the contributed surplus.

p) Use of estimates

The preparation of financial
statements in compliance with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities and the
reported amounts of revenues and expenses. Significant areas requiring the use
of management estimates relate to the useful life of assets for amortization
purposes and for the evaluation of their net recoverable amount, asset
retirement obligations and income and mining taxes. Accordingly, actual results
could differ from these estimates.

2. Other revenues

Other revenues include interest income on short-term
investments and revenues from custom milling. There was no government assistance
recorded in 2005 and 2004 ($1,006,196 in 2003).

3. Exploration and project
evaluation

|                        | 2005      | 2004      | 2003     
|----------------------- | --------- | --------- | ---------
|                        | $         | $         | $        
|                        |           |           |          
|Beaufor Mine            | 862,150   | 980,166   | 1,221,682
|Hammerdown Mine         | -         | 186,631   | 710,289  
|Francoeur Mine          | 49,974    | 10,864    | 1,776,152
|Valentine Lake property | 393,200   | 1,056,283 | 33,649   
|Wasamac property        | 39,685    | 290,982   | 551,320  
|Other properties        | 610,023   | 1,080,642 | 217,950  
|Project evaluation      | 521,764   | 349,763   | 309,664  
|                        |           |           |          
|                        | 2,476,796 | 3,955,331 | 4,820,706
|                        |           |           |          
|Exploration tax credits | 101,522   | 479,992   | 1,194,599
|                        |           |           |          
|                        | 2,375,274 | 3,475,339 | 3,626,107

| |   | 
| | - | 
| | 6 | 

---



RICHMONT MINES INC.

Notes to Consolidated Financial Statements (continued)Years ended December 31, 2005, 2004 and 2003
(in Canadian dollars)

4. 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 its asset retirement
obligations of the mining sites based on management's best estimate of the
future costs. Such estimates are, however, subject to change based on
modifications to laws and regulations or as new information becomes available.

a) Changes in obligations

The following tables set forth the evolution of the
asset retirement obligations for the years ended December 31, 2005, 2004 and
2003:

|                     | Balance as at | Accretion     | New         | Liability   | Balance as at
|-------------------- | ------------- | ------------- | ----------- | ----------- | -------------
|2005                 | January 1     | expense       | liabilities | settlement  | December 31  
|                     | $             | $             | $           | $           | $            
|                     |               |               |             |             |              
|Newfoundland         | 682,866       | 35,560        | -           | (16,585)    | 701,841      
|Francoeur Mine       | 163,878       | 9,013         | -           | -           | 172,891      
|Beaufor Mine         | 285,988       | 15,730        | -           | -           | 301,718      
|Camflo Mill          | 1,726,850     | 94,977        | -           | -           | 1,821,827    
|East Amphi property  | 108,285       | 5,956         | -           | -           | 114,241      
|Island Gold property | -             | 6,009         | 670,385     | -           | 676,394      
|                     |               |               |             |             |              
|                     | 2,967,867     | 167,245       | 670,385     | (16,585)    | 3,788,912    
|                     |               |               |             |             |              
|                     |               |               |             |             |              
|                     | Balance as at | Accretion     | Subsequent  | Liability   | Balance as at
|2004                 | January 1     | expense       | measurement | settlement  | December 31  
|                     | $             | $             | $           | $           | $            
|                     |               |               |             |             |              
|Newfoundland         | 830,299       | 40,604        | -           | (188,037)   | 682,866      
|Francoeur Mine       | 155,334       | 8,544         | -           | -           | 163,878      
|Beaufor Mine         | 271,080       | 14,908        | -           | -           | 285,988      
|Camflo Mill          | 1,636,825     | 90,025        | -           | -           | 1,726,850    
|East Amphi property  | 313,991       | 5,645         | (211,351)   | -           | 108,285      
|                     |               |               |             |             |              
|                     | 3,207,529     | 159,726       | (211,351)   | (188,037)   | 2,967,867    
|                     |               |               |             |             |              
|                     |               |               |             |             |              
|                     |               | Balance as at | Accretion   | New         | Balance as at
|2003                 |               | January 1     | expense     | liabilities | December 31  
|                     |               | $             | $           | $           | $            
|                     |               |               |             |             |              
|Newfoundland         |               | 787,013       | 43,286      | -           | 830,299      
|Francoeur Mine       |               | 147,236       | 8,098       | -           | 155,334      
|Beaufor Mine         |               | 256,948       | 14,132      | -           | 271,080      
|Camflo Mill          |               | 1,551,493     | 85,332      | -           | 1,636,825    
|East Amphi property  |               | -             | -           | 313,991     | 313,991      
|                     |               |               |             |             |              
|                     |               | 2,742,690     | 150,848     | 313,991     | 3,207,529    

| |   | 
| | - | 
| | 7 | 

---



RICHMONT MINES INC.

Notes to Consolidated Financial Statements (continued)Years ended December 31, 2005, 2004 and 2003
(in Canadian dollars)

4. Asset retirement
obligations (continued)

b) 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 year ended
December 31, 2005:

|                     | Total amount     |                  |                
|-------------------- | ---------------- | ---------------- | ---------------
|                     | of the estimated | Cash flow        | Credit-adjusted
|                     | cash flow        | payment schedule | risk-free rate 
|                     | $                |                  | %              
|                     |                  |                  |                
|Newfoundland         | 759,191          | 2007             | 5.5            
|Francoeur Mine       | 192,432          | 2007             | 5.5            
|Beaufor Mine         | 354,290          | 2008             | 5.5            
|Camflo Mill          | 2,381,055        | 2010             | 5.5            
|East Amphi property  | 149,308          | 2010             | 5.5            
|Island Gold property | 721,866          | 2010             | 5.5            
|                     |                  |                  |                
|                     | 4,558,142        |                  |                

c) Fair value of asset obligations

As at December 31, 2005, the Company
has guaranteed the settlement of asset retirement obligations through the
issuance of letters of credit amounting to $3,000,000. The following table
discloses the allocation of these letters of credit as at December 31, 2005:

|                    | 2005     
|------------------- | ---------
|                    | $        
|                    |          
|Camflo Mill         | 1,227,261
|Newfoundland        | 843,659  
|East Amphi property | 82,600   
|Francoeur Mine      | 53,809   
|Beaufor Mine        | 27,120   
|                    |          
|                    | 2,234,449

As at December 31, 2004, the Company
had guaranteed the restoration of its mining sites by the pledge of letters of
credit amounting to $1,478,190.

5.Write-down of mining assets

At December 31, 2005,
the Company recorded a non-cash expense of $26,040,953 related to the reduction
of the carrying value of the East Amphi property following the establishment of
proven and probable reserves. The Company used the discounted future cash flow
method to establish the fair value of this mining asset.

6.Mining and income taxes

Mining and income tax expense
attributable to earnings consists of:

|        | 2005        | 2004    | 2003     
|------- | ----------- | ------- | ---------
|        | $           | $       | $        
|        |             |         |          
|Current | (2,959,596) | 568,470 | 2,187,987
|Future  | 479,776     | 62,967  | (462,391)
|        |             |         |          
|        | (2,479,820) | 631,437 | 1,725,596

| |   | 
| | - | 
| | 8 | 

---



RICHMONT MINES INC.

Notes to Consolidated Financial Statements (continued)Years ended December 31, 2005, 2004 and 2003
(in Canadian dollars)

6. Mining and income taxes
(continued)

The income tax expense (recovery)
attributable to earnings (loss) differs from the amounts computed by applying
the combined federal and provincial income tax rate of 33.55% (32.99% in 2004
and 33.07% in 2003) to earnings (loss) before mining and income taxes as a
result of the following:

|                                                                                                                                                                                               | 2005         | 2004        | 2003     
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------ | ----------- | ---------
|                                                                                                                                                                                               | $            | $           | $        
|                                                                                                                                                                                               |              |             |          
|Earnings (loss) before mining and income taxes:                                                                                                                                                | (29,954,002) | 1,923,402   | 7,765,427
|                                                                                                                                                                                               |              |             |          
|Computed "expected" tax expense (recovery)                                                                                                                                                     | (10,049,568) | 634,530     | 2,568,027
|Increase (decrease) in mining and income                                                                                                                                                       |              |             |          
|taxes resulting from:                                                                                                                                                                          |              |             |          
|Resource allowance deduction                                                                                                                                                                   | 109,140      | (528,410)   | (696,616)
|Change
    in the valuation allowance                                                                                                                                                          | 9,060,084    | (1,014,865) | (987,202)
|Impact
    of the change in tax rates                                                                                                                                                          | (583,932)    | 461,159     | -        
|Other                                                                                                                                                                                          | 429,857      | 364,795     | (267,621)
|                                                                                                                                                                                               |              |             |          
|Income taxes                                                                                                                                                                                   | (1,034,419)  | (82,791)    | 616,588  
|Mining duties                                                                                                                                                                                  | (1,445,401)  | 714,228     | 1,109,008
|                                                                                                                                                                                               |              |             |          
|Total current and future mining and                                                                                                                                                            |              |             |          
|income tax provision (recovery)                                                                                                                                                                | (2,479,820)  | 631,437     | 1,725,596
|                                                                                                                                                                                               |              |             |          
|                                                                                                                                                                                               |              |             |          
|The tax effect of temporary differences that give
    rise to significant portions of the future tax assets and future tax
    liabilities at December 31, 2005 and 2004, are presented below:
|                                                                                                                                                                                               |              |             |          
|                                                                                                                                                                                               | 2005         | 2004        |          
|                                                                                                                                                                                               | $            | $           |          
|                                                                                                                                                                                               |              |             |          
|Long-term future tax asset:                                                                                                                                                                    |              |             |          
|Property, plant and equipment                                                                                                                                                                  | 9,068,988    | 1,311,075   |          
|Asset retirement obligations                                                                                                                                                                   | 1,274,277    | 1,063,643   |          
|Share issue costs                                                                                                                                                                              | 531,286      | -           |          
|Losses carried forward                                                                                                                                                                         | 362,319      | 200,923     |          
|                                                                                                                                                                                               |              |             |          
|Future tax asset                                                                                                                                                                               | 11,236,870   | 2,575,641   |          
|Less valuation allowance                                                                                                                                                                       | (9,945,965)  | (885,881)   |          
|                                                                                                                                                                                               |              |             |          
|                                                                                                                                                                                               | 1,290,905    | 1,689,760   |          
|                                                                                                                                                                                               |              |             |          
|Long-term future tax liability:                                                                                                                                                                |              |             |          
|Property, plant and equipment                                                                                                                                                                  | (1,337,587)  | (1,207,634) |          
|Other                                                                                                                                                                                          | (233,670)    | (282,702)   |          
|                                                                                                                                                                                               |              |             |          
|                                                                                                                                                                                               | (1,571,257)  | (1,490,336) |          
|                                                                                                                                                                                               |              |             |          
|Net long-term future tax asset (liability)                                                                                                                                                     | (280,352)    | 199,424     |          

The Company has capital losses
without expiry dates amounting to $775,647. Non-refundable provincial tax
credits of $4,509,729 and non-refundable federal tax credits of $1,985,557 may
be used within the next ten years to reduce income taxes otherwise payable. The
tax benefits relating to these tax credits have not been accounted for by the
Company.

| | 9 | 
| | - | 

---



RICHMONT MINES INC.

Notes to Consolidated Financial Statements (continued)Years ended December 31, 2005, 2004 and 2003
(in Canadian dollars)

7. Net earnings (loss) per share

|                                                           | 2005         | 2004       | 2003      
|---------------------------------------------------------- | ------------ | ---------- | ----------
|                                                           |              |            |           
|Net earnings (loss) attributed to                          |              |            |           
|common shareholders ($)                                    | (27,480,010) | 732,096    | 5,034,541 
|                                                           |              |            |           
|Weighted average number of shares outstanding              | 17,837,886   | 16,126,784 | 15,926,191
|Effect of dilutive share purchase options                  | -            | 388,661    | 488,876   
|                                                           |              |            |           
|Weighted average number of dilutive shares
    outstanding | 17,837,886   | 16,515,445 | 16,415,067
|                                                           |              |            |           
|Basic earnings (loss) per share ($)                        | (1.54)       | 0.05       | 0.32      
|Diluted earnings (loss) per share ($)                      | (1.54)       | 0.04       | 0.31      

8. Short-term investments

Short-term investments include
investments in shares of publicly-traded companies and short-term investments
with an original term of more than 90 days, but not exceeding one year. The fair
market value is $1,530,000 ($1,346,800 in 2004).

9. Inventories

|                | 2005      | 2004     
|--------------- | --------- | ---------
|                | $         | $        
|                |           |          
|Precious metals | 609,033   | 72,108   
|Ore             | 1,504,499 | 354,562  
|Supplies        | 1,254,583 | 918,629  
|                |           |          
|                | 3,368,115 | 1,345,299

10. Property, plant and equipment

|                  |            |               | 2005       |            |               | 2004      
|----------------- | ---------- | ------------- | ---------- | ---------- | ------------- | ----------
|                  |            | Accumulated   |            |            | Accumulated   |           
|                  |            | depreciation  | Net book   |            | depreciation  | Net book  
|                  | Cost       | and depletion | value      | Cost       | and depletion | value     
|                  | $          | $             | $          | $          | $             | $         
|                  |            |               |            |            |               |           
|Mining properties | 13,802,843 | 13,109,359    | 693,484    | 13,704,014 | 5,915,144     | 7,788,870 
|Development costs | 9,814,060  | 5,856,973     | 3,957,087  | 7,221,257  | 5,329,650     | 1,891,607 
|Buildings         | 7,200,464  | 6,272,144     | 928,320    | 7,143,644  | 5,869,081     | 1,274,563 
|Equipment         | 13,762,718 | 12,183,176    | 1,579,542  | 13,326,640 | 11,693,195    | 1,633,445 
|Asset retirement  | 2,313,482  | 1,608,826     | 704,656    | 1,944,770  | 1,481,779     | 462,991   
|                  |            |               |            |            |               |           
|                  | 46,893,567 | 39,030,478    | 7,863,089  | 43,340,325 | 30,288,849    | 13,051,476
|                  |            |               |            |            |               |           
|Projects under    |            |               |            |            |               |           
|development a)    | 36,904,707 | 18,916,679    | 17,988,028 | 10,752,242 | -             | 10,752,242
|                  |            |               |            |            |               |           
|Total             | 83,798,274 | 57,947,157    | 25,851,117 | 54,092,567 | 30,288,849    | 23,803,718

a)
Exploration tax credits of $2,034,642 were recorded as a reduction of projects
under development ($1,031,053 in 2004). The write-down of mining assets of
$26,040,953 is included in accumulated depreciation and depletion.

| | 10 | 
| | -- | 

---



RICHMONT MINES INC.

Notes to Consolidated Financial Statements (continued)Years ended December 31, 2005, 2004 and 2003
(in Canadian dollars)

11. Capital stock

Authorized: Unlimited number of common shares with no
par value

|                               |            | 2005        |            | 2004      
|------------------------------ | ---------- | ----------- | ---------- | ----------
|                               | Number     | Amount      | Number     | Amount    
|                               | of shares  | $           | of shares  | $         
|                               |            |             |            |           
|Issued and paid: Common shares |            |             |            |           
|Balance, beginning of year     | 16,169,653 | 29,236,630  | 16,073,653 | 28,346,424
|Issue of shares for cash a)    |            |             |            |           
|Common                         | 3,400,500  | 16,211,684  | 203,000    | 722,635   
|Flow-through                   | 1,500,000  | 7,500,000   | 110,000    | 770,000   
|Share issue costs              | -          | (2,212,619) | -          | (218,339) 
|Redemption of shares b)        | (75,600)   | (135,324)   | (217,000)  | (384,090) 
|                               |            |             |            |           
|Balance, end of year           | 20,994,553 | 50,600,371  | 16,169,653 | 29,236,630

a) Issue of shares

In 2005, the Company issued, through
a private placement, 3,246,000 common shares and 1,500,000 flow-through shares.
The Company received cash proceeds of $15,905,400 and $7,500,000, respectively.
Furthermore, share capital has been reduced by the future income tax expense of
$308,000 related to the flow-through shares at the time the tax deductions were
renounced. The Company also issued, through the exercise of stock options,
154,500 common shares for a cash consideration of $289,845 and has decreased the
contributed surplus in an amount of $16,439, representing the fair value of the
stock options that were exercised.

The Company is committed, in
accordance with the flow-through share agreements, to incur exploration expenses
in Canada of $7,500,000 prior to December 31, 2006. As at December 31, 2005, an
amount of $464,606 has been committed.

In 2004, the Company issued, through
the exercise of stock options, 203,000 common shares and 110,000 flow-through
shares from a private placement for a cash consideration of $705,650 and
$770,000, respectively and reduced the contributed surplus by an amount of
$16,985, representing the fair value of the stock options that were exercised.
Furthermore, share capital has been reduced by the future income tax expense
related to the flow-through shares at the time the tax deductions were
renounced.

b) Redemption of shares

In 2005, the Company redeemed 75,600 common shares
for $345,630 in cash. This transaction reduced retained earnings by $210,306.

In 2004, the Company redeemed 217,000 common shares
for $1,088,001 in cash. This transaction reduced retained earnings by $703,911.

c) Stock Option Purchase Plan

The Company offers 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 and 2003, the Company may grant
options for up to 4,444,400 common shares. The exercise price of each option is
the market price of the Company's stock on the date of grant and the maximum
term of the options granted is 10 years.

| | 11 | 
| | -- | 

---



RICHMONT MINES INC.

Notes to Consolidated Financial Statements (continued)Years ended December 31, 2005, 2004 and 2003
(in Canadian dollars)

11. Capital stock (continued)

c) Stock Option Purchase Plan (continued)

A summary of the status, as at December 31, 2005 and
2004, of the Company's Stock Option Purchase Plan, and changes during the years
then ended, is presented below:

|                                       |            | 2005             |            | 2004            
|-------------------------------------- | ---------- | ---------------- | ---------- | ----------------
|                                       |            | Weighted average |            | Weighted average
|                                       | Number     | exercise price   | Number     | exercise price  
|                                       | of options | $                | of options | $               
|                                       |            |                  |            |                 
|Options outstanding, beginning of year | 1,842,500  | 4.29             | 1,745,500  | 3.84            
|Granted                                | 825,000    | 5.24             | 340,000    | 6.28            
|Exercised                              | (154,500)  | 1.88             | (203,000)  | 3.48            
|Cancelled or expired                   | (565,000)  | 4.80             | (40,000)   | 5.80            
|                                       |            |                  |            |                 
|Options outstanding, end of year       | 1,948,000  | 4.73             | 1,842,500  | 4.29            
|                                       |            |                  |            |                 
|Exercisable options, end of year       | 1,367,000  | 4.54             | 1,520,500  | 4.11            

The following table summarizes information about the
Stock Option Purchase Plan at December 31, 2005:

|               | Options outstanding at | Exercisable options at
|-------------- | ---------------------- | ----------------------
|               | December 31, 2005      | December 31, 2005     
|               |                        | Weighted average      
|               | Number                 | remaining contractual 
|Exercise price | of options             | life (years)          
|               |                        |                       
|$1.65 to $2.28 | 213,500                | 0.7                   
|$3.10 to $4.42 | 289,500                | 1.8                   
|$4.72 to $6.60 | 1,445,000              | 3.5                   
|               |                        |                       
|               | 1,948,000              | 3.0                   

During 2005, the Company granted
825,000 stock options (340,000 in 2004) to senior executives and management. The
weighted average fair value of these stock options at the grant date, calculated
using the Black & Scholes option pricing model, is $2.35 ($3.07 in 2004).

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

|                        | 2005    | 2004    | 2003   
|----------------------- | ------- | ------- | -------
|Risk-free interest rate | 3.0%    | 3.5%    | 4.0%   
|Expected life           | 4 years | 4 years | 4 years
|Expected volatility     | 55%     | 60%     | 60%    
|Expected dividend yield | 0.0%    | 0.0%    | 0.0%   

In 2005, the stock-based compensation costs charged
to earnings amount to $1,349,711 ($902,370 in 2004 and $354,102 in 2003). The
contributed surplus was increased by the same amount.

| | 12 | 
| | -- | 

---



RICHMONT MINES INC.

Notes to Consolidated Financial Statements (continued)Years ended December 31, 2005, 2004 and 2003
(in Canadian dollars)

11. Capital stock (continued)

d) Other stock options

|                                       |            | 2005             |            | 2004            
|-------------------------------------- | ---------- | ---------------- | ---------- | ----------------
|                                       | Number     | Weighted average | Number     | Weighted average
|                                       | of options | exercice price   | of options | exercice price  
|                                       |            | $                |            | $               
|                                       |            |                  |            |                 
|Options outstanding, beginning of year | 100,000    | 2.00             | 100,000    | 2.00            
|Granted                                | 90,000     | 5.00             | -          | -               
|Expired                                | (100,000)  | 2.00             | -          | -               
|                                       |            |                  |            |                 
|Options outstanding and exercisable,   |            |                  |            |                 
|end of year                            | 90,000     | 5.00             | 100,000    | 2.00            

As at December 31, 2005, the other
90,000 stock options have an exercise price of $5.00 and a weighted average
remaining life of 0.9 year. In 2005, the cost, considered as issue cost and
presented against capital stock amounts to $45,270. The contributed surplus was
increased by the same amount. These amounts were calculated based on the Black &
Scholes pricing model using the following assumptions:

|Risk-free interest rate | 2.5%  
|----------------------- | ------
|Expected life           | 1 year
|Expected volatility     | 43%   
|Expected dividend yield | 0.0%  

12. Contributed surplus

|                           | 2005      | 2004     
|-------------------------- | --------- | ---------
|                           | $         | $        
|                           |           |          
|Balance, beginning of year | 2,894,356 | 2,008,971
|                           |           |          
|Stock-based compensation   | 1,349,711 | 902,370  
|Options exercised          | (16,439)  | (16,985) 
|Share issue costs          | 45,270    | -        
|                           |           |          
|Balance, end of year       | 4,272,898 | 2,894,356

13. Commitments

The Company is subject to pay royalties on the
production of the Beaufor Mine and on that of other properties if they are
brought into commercial production.

14. Contingency

Since the signing of an agreement in
July 2001 with the Quebec Ministry of Natural Resources, the amounts of
government assistance recorded in revenues and as a reduction of the cost of
property, plant and equipment are $2,125,756 and $574,244, respectively.
According to this agreement, an amount of $900,000 is reimbursable on July 31,
2007, if the Beaufor mine is in operation during the twelve-month period
preceeding the date of the repayment and if the annual average daily price per
ounce of gold on "AMFIX" at the London exchange is equal to or greater than
US$325. It is currently not possible to determine the amount that may become
payable and, accordingly, no amount has been recorded in these financial
statements.

| | 13 | 
| | -- | 

---



RICHMONT MINES INC.

Notes to Consolidated Financial Statements (continued)Years ended December 31, 2005, 2004 and 2003
(in Canadian dollars)

15. Financial instruments and risk management

The Company is exposed to gold price fluctuations.
The Company manages its exposure to this risk through the use of derivative
financial instruments and gold commodity contracts.

The Board of Directors approves all
policies concerning the use of derivative financial instruments and gold sales
contracts. The Company does not own any financial instruments or derivative
financial instruments for trading or speculative purposes.

a) 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 will occasionally enter into various types of foreign exchange
contracts. As at December 31, 2005 and 2004, the Company did not have any
forward exchange contracts.

b) Commodity price risk

For its gold production, the Company
reduces its risk of a decrease in the price of gold through the use, on
occasion, of forward sales contracts and put and call options. As at December
31, 2005 and 2004, the Company did not have any forward sales contracts.

c) Credit risk

Financial instruments that expose the
Company to market risk and concentrations of credit risk consist primarily of
cash and cash equivalents, short-term investments, accounts receivable, forward
contracts and option contracts for currencies and gold. The Company invests its
cash and cash equivalents in high-quality securities issued by government
agencies, financial institutions and major corporations, and limits the amount
of credit exposure by diversifying its holdings. The Company is exposed to
credit risk in the event of non-performance by counterparties in connection with
its currency and gold forward option contracts. 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 Company continually monitors the market risk of its hedging
activities.

d) Fair value of financial instruments

The Company owns and assumes other
assets and liabilities such as cash and cash equivalents, short-term
investments, accounts receivable, as well as accounts payable and accrued
charges. The fair value of these financial assets and liabilities approximates
their book value as these items will be realized or paid within one year.

| | 14 | 
| | -- | 

---



RICHMONT MINES INC.

Notes to Consolidated Financial Statements (continued)Years ended December 31, 2005, 2004 and 2003
(in Canadian dollars)

16. Segmented information

The Company operates gold mines at
different sites in Quebec and Newfoundland. The exploration, corporate and
others segment includes mining projects under development. These sites are
managed separately given their different locations. The Company assesses the
performance of each segment based on earnings (loss) before other items.
Accounting policies for each segment are the same as those used for the
preparation of the consolidated financial statements:

|2005                                         |            |              | Exploration, |             
|-------------------------------------------- | ---------- | ------------ | ------------ | ------------
|                                             |            |              | corporate    |             
|                                             | Quebec     | Newfoundland | and others   | Total       
|                                             | $          | $            | $            | $           
|                                             |            |              |              |             
|Revenues                                     | 20,689,744 | 159,029      | 796,260      | 21,645,033  
|Mining operation and others                  | 17,749,915 | 5,534        | 3,810,003    | 21,565,452  
|Exploration and project evaluation           | 879,685    | -            | 1,495,589    | 2,375,274   
|Depreciation and amortization                | 1,531,556  | -            | 85,800       | 1,617,356   
|Write-down of mining assets                  | -          | -            | 26,040,953   | 26,040,953  
|                                             |            |              |              |             
|Earnings (loss) before other items           | 528,588    | 153,495      | (30,636,085) | (29,954,002)
|                                             |            |              |              |             
|Acquisition of property, plant and equipment | 3,136,710  | -            | 25,898,613   | 29,035,323  
|                                             |            |              |              |             
|Current assets                               | 5,309,642  | -            | 21,774,833   | 27,084,475  
|Property, plant and equipment                | 6,874,900  | -            | 18,976,217   | 25,851,117  
|Future mining and income taxes               | 662,328    | -            | 628,577      | 1,290,905   
|                                             |            |              |              |             
|Total assets                                 | 12,846,870 | -            | 41,379,627   | 54,226,497  
|                                             |            |              |              |             
|                                             |            |              |              |             
|2004                                         |            |              | Exploration, |             
|                                             |            |              | corporate    |             
|                                             | Quebec     | Newfoundland | and others   | Total       
|                                             | $          | $            | $            | $           
|                                             |            |              |              |             
|Revenues                                     | 29,678,614 | 9,195,356    | 767,437      | 39,641,407  
|Mining operation and others                  | 22,136,003 | 5,629,770    | 2,928,606    | 30,694,379  
|Exploration and project evaluation           | 1,101,766  | 1,438,462    | 935,111      | 3,475,339   
|Depreciation and amortization                | 1,155,016  | 2,243,898    | 149,373      | 3,548,287   
|                                             |            |              |              |             
|Earnings (loss) before other items           | 5,285,829  | (116,774)    | (3,245,653)  | 1,923,402   
|                                             |            |              |              |             
|Acquisition of property, plant and equipment | 1,951,062  | -            | 10,673,516   | 12,624,578  
|                                             |            |              |              |             
|                                             |            |              |              |             
|Current assets                               | 5,945,879  | 181,102      | 24,573,095   | 30,700,076  
|Property, plant and equipment                | 5,325,418  | -            | 18,478,300   | 23,803,718  
|Future mining and income taxes               | 863,877    | -            | 825,883      | 1,689,760   
|                                             |            |              |              |             
|Total assets                                 | 12,135,174 | 181,102      | 43,877,278   | 56,193,554  

| |    | 
| | -- | 
| | 15 | 

---



RICHMONT MINES INC.

Notes to Consolidated Financial Statements (continued)Years ended December 31, 2005, 2004 and 2003
(in Canadian dollars)

16. Segmented information (continued)

|2003                                         |            |              | Exploration, |           
|-------------------------------------------- | ---------- | ------------ | ------------ | ----------
|                                             |            |              | corporate    |           
|                                             | Quebec     | Newfoundland | and others   | Total     
|                                             | $          | $            | $            | $         
|                                             |            |              |              |           
|Revenues                                     | 30,053,401 | 19,161,730   | 1,093,910    | 50,309,041
|Mining operation and others                  | 19,481,450 | 12,027,015   | 2,591,074    | 34,099,539
|Exploration and project evaluation           | 1,202,249  | 703,200      | 1,720,658    | 3,626,107 
|Depreciation and amortization                | 899,155    | 3,825,046    | 93,767       | 4,817,968 
|                                             |            |              |              |           
|Earnings (loss) before other items           | 8,470,547  | 2,606,469    | (3,311,589)  | 7,765,427 
|                                             |            |              |              |           
|Acquisition of property, plant and equipment | 1,936,366  | -            | 7,339,488    | 9,275,854 
|                                             |            |              |              |           
|Current assets                               | 5,182,808  | 1,473,211    | 29,479,887   | 36,135,906
|Security deposits                            | 1,237,061  | 30,000       | 19,000       | 1,286,061 
|Property, plant and equipment                | 4,431,964  | 2,285,634    | 8,221,180    | 14,938,778
|Future mining and income taxes               | 424,299    | -            | 710,153      | 1,134,452 
|                                             |            |              |              |           
|Total assets                                 | 11,276,132 | 3,788,845    | 38,430,220   | 53,495,197

17. Effect of applying United States generally accepted accounting principles

These consolidated financial
statements have been prepared in accordance with Canadian generally accepted
accounting principles (GAAP). Had these consolidated financial statements been
prepared in accordance with United States generally accepted accounting
principles (U.S. GAAP), the effect on net earnings (loss) and on shareholders'
equity would have been as follows:

|                                                              | 2005         | 2004       | 2003     
|------------------------------------------------------------- | ------------ | ---------- | ---------
|                                                              | $            | $          | $        
|                                                              |              |            |          
|Net earnings (loss) reported under
    Canadian GAAP          | (27,480,010) | 732,096    | 5,034,541
|                                                              |              |            |          
|Add (deduct):                                                 |              |            |          
|Differences in
    accounting related to forward contracts a) | -            | -          | 254,153  
|Differences in
    accounting related to investments b)       | 180,422      | (3,100)    | 540,000  
|Flow-through shares
    c)                                    | (130,000)    | (59,053)   | -        
|Income taxes d)                                               | (27,109)     | (56,504)   | (128,630)
|                                                              |              |            |          
|                                                              | (27,456,697) | 613,439    | 5,700,064
|                                                              |              |            |          
|Cumulative impact of changes to
    accounting                |              |            |          
|policies e)                                                   | -            | -          | (880,398)
|                                                              |              |            |          
|Net earnings (loss) reported under
    U.S. GAAP              | (27,456,697) | 613,439    | 4,819,666
|                                                              |              |            |          
|Net earnings (loss) per share
    under U.S. GAAP:            |              |            |          
|                                                              |              |            |          
|Basic                                                         | (1.54)       | 0.04       | 0.30     
|Diluted                                                       | (1.54)       | 0.04       | 0.29     
|                                                              |              |            |          
|Shareholders' equity reported
    under Canadian GAAP         | 40,463,502   | 45,411,535 |          
|Differences in
    accounting related to investments b)       | 717,322      | 536,900    |          
|Income taxes d)                                               | (125,603)    | (98,494)   |          
|Flow-through shares
    c)                                    | (1,230,000)  | (178,000)  |          
|                                                              |              |            |          
|Shareholders' equity reported
    under U.S. GAAP             | 39,825,221   | 45,671,941 |          

| |    | 
| | -- | 
| | 16 | 

---



RICHMONT MINES INC.

Notes to Consolidated Financial Statements (continued)Years ended December 31, 2005, 2004 and 2003
(in Canadian dollars)

17. Effect of applying United
States generally accepted accounting principles (continued)

> a) The standards
>   on the designation and the documentation of hedging transactions under U.S.
>   GAAP are different than those applicable in Canada prior to January 1, 2004.
>   When hedge accounting is not applicable, U.S. GAAP requires that the changes
>   in the fair value of the financial instruments be recorded in the income
>   statement of the related year, and taken into account in the calculation of
>   net earnings.
>   b) Under U.S. GAAP, short-term
>   investments classified as trading securities must be recorded at fair value
>   and changes in the value must be accounted for in the income statement.
>   c) Under U.S.
>   GAAP, the premium paid on flow-through shares issued must be recognized as a
>   liabiliy when these shares are issued; under GAAP in Canada, the tax effect of
>   the renouncement to the deductibility of exploration expenses by the Company
>   is charged to shareholders' equity on the date of the renouncement.
>   d) These amounts represent the
>   tax impact relating to the adjustments described in a), b) and c) above.
>   e) Under U.S. GAAP, the
>   cumulative effect of changes in accounting policies must be recorded in the
>   income statement of the year during which the modifications are applied.

18. Comparative figures

Certain comparative figures provided for fiscal years
2004 and 2003 have been reclassified to conform with the presentation adopted
for the fiscal year ended December 31, 2005.

17

---