San Gold Reports 2012 Q1 Results
WINNIPEG, MANITOBA--(Marketwire - May 8, 2012) - San Gold
Corporation (TSX:SGR)(OTCQX:SGRCF). With greatly improved operating cash
flow and cash costs, and record gold production, the Company is pleased
to announce its quarterly financial and operating results for the first
quarter of 2012.
2012 Q1 Financial and Operating Highlights
- Generated quarterly operating income from operations of $8.0 million, compared to income from operations of $3.2 million in the first quarter of 2011.
- Recognized quarterly total and comprehensive loss of $0.7 million, compared to total and comprehensive loss of $5.3 million in the first quarter of 2011.
- Cash flow from operating activities before changes in non-cash working capital of $10.0 million, compared to $0.6 million in the first quarter of 2011.
- Produced a record 22,162 ounces of gold, a 51% increase compared to 14,688 ounces in the first quarter of 2011.
- Recognized record quarterly revenue of $35.5 million on gold sales of 21,322 ounces at a realized price of $1,665 per ounce, a 79% increase from revenue of $19.8 million in the first quarter of 2011.
- Achieved record average mill throughput of 1,687 tons per day for the quarter, an 85% increase compared to average mill throughput of 920 tons per day in the first quarter of 2011.
- Achieved total cash costs of $840 per ounce of gold sold compared to $862 per ounce sold in the first quarter of 2011.
- Realized a cash operating margin of $825 per ounce of gold sold with a realized price of $1,665 per ounce through the quarter.
- Had a cash and cash equivalents balance of $36.2 million as at March 31, 2012.
- Completed approximately 64,000 metres of exploration and definition diamond drilling.
- Appointed Mr. Torben Jensen as Vice-President, Corporate Development in the subsequent period.
"It is incredible to see the mining complex taking shape in
Rice Lake. Rice Lake has now reached the point where the cash
contribution from operations is financing substantial vertical and
lateral development in the 007 and Hinge zones. Development work
continued ahead of schedule during the quarter, providing additional
flexibility to our mine planners. With total tonnage now on budget, we
believe this flexibility is critical to refining the mining sequence
toward improving overall production volumes," said George Pirie,
President and Chief Executive Officer of San Gold.
Review of Financial Results
The Company reports quarterly operating income from
operations of $8.0 million and a total and comprehensive loss of $0.7
million, compared to income from operations of $3.2 million and a total
and comprehensive loss of $5.3 million in the first quarter of 2011. The
improvement was a result primarily of increased production volumes. The
Company produced 22,162 ounces of gold during the first quarter of 2012
compared with 14,688 ounces in the first quarter of 2011.
The Company earned revenue during the first quarter of 2012
of $35.5 million, a 79% increase over revenue of $19.8 million in the
first quarter of 2011. This increase was a result of both greater gold
sales and a higher realized price of gold. The Company sold 21,322
ounces of gold in the first quarter of 2012, a 52% increase compared
sales of 14,059 ounces in the first quarter of 2011. The Company
realized $1,665 per ounce of gold sold in the first quarter of 2012, an
18% increase compared to the $1,410 the Company realized per ounce in
the first quarter of 2011. San Gold recognized an expense of $1.0
million associated with its share of SGX's loss for the quarter. The
carrying value of the Company's investment in SGX is currently therefore
recognized at $1. The market value of the Company's 28.6 million shares
of SGX is $12.3 million as at March 31, 2012.
The Company generated record cash flow from operating
activities before changes in non-cash working capital of $14.2 million
in the first quarter of 2012, a substantial change compared to a use of
$4.4 million in the first quarter of 2011. After changes in non-cash
working capital, operating activities generated $9.6 million in the
first quarter of 2012, compared to a use of $10.0 million in the first
quarter of 2011.
Capital spending in the first quarter of 2012 was focused on
mine development, increasing mill capacity, improving key
infrastructure, and sustaining capital. The Company capitalized $14.6
million of mine development and $3.7 million of property, plant, and
equipment during the first quarter of 2012 compared to $12.9 million and
$10.7 million in the first quarter of 2011, respectively.
Tables 1 to 4 at the end of this release provide a detailed summary of the Company's key financial and operating metrics.
2012 Guidance:
- Production of between 95,000 and 105,000 ounces of gold.
- Cash Costs: $700 - $800 per ounce of gold.
- Exploration: In excess of 250,000 metres of diamond drilling.
Outlook
The company remains on track to produce between 95,000 and
105,000 ounces of gold in 2012 at a cash cost of between $700 and $800
per ounce sold and maintains its preliminary forecast of 115,000 to
125,000 ounces for 2013.
Capital expenditures will focus on development in the 007
and L10 zones and on the 16 and 26 Levels of the Rice Lake Mine as well
as maintaining and improving the mining fleet, additional mill
improvements and continued expansion of the tailings facility. In the
007 and L10 zones, declines are being advanced below 300 m from surface.
A 5.5 m diameter raise bore hole is also being constructed to a depth
of 335 m to facilitate ventilation of working areas in the down dip
extension of the 007 Zone. In the Rice Lake Mine, development work
remains focused on the 98 and 84 Veins on 26 Level and on extending 16
Level. Development continues from the 16 Level of the Rice Lake Mine to
access the Shoreline Basalt deposits. This access will allow the Company
to develop the exploration platforms and infrastructure required to
explore and exploit these deposits from this horizon.
Bissett area exploration efforts remain focused primarily
along the Shoreline Basalt unit, with particular attention being paid to
the L10, 007, and L8 zones. Drilling continues to test the down-dip
extensions of the L10 Zone from the 16 and 26 levels of the Rice Lake
Mine (730 m and 1220 m below surface, respectively). Deep drilling
continues from surface to trace the down dip extensions of the 007 Zone.
Exploration activity has commenced on the properties joint ventured in
2011. Additional drill plans for these properties will be determined by
the results of previous drilling in conjunction with the Company's
contractual obligations.
2012 First Quarter Conference Call
The Company's senior management plans to host a conference
call on Wednesday, May 9, 2012 at 11:00 am Eastern Standard Time to
discuss the 2012 first quarter results, and to provide an update of the
Company's operating, exploration, and development activities.
Participants may join the conference call by dialing 1 (866)
226-1793 for participants within Canada and the United States or 1
(416) 340-8527 for participants outside of Canada and the United States.
The conference call will also be available by webcast on the Company's
website at www.sangold.ca.
A recorded playback of the conference call can be accessed
after the event until May 30, 2012 by dialing 1 (800) 408-3053 for
callers within Canada and the United States or 1 (905) 694-9451 for
callers outside Canada and the United States. The pass code for the
conference call playback is 3604382. The archived audio webcast will
also be available on the Company's website at www.sangold.ca.
About San Gold
San Gold is an established Canadian gold producer, explorer,
and developer that owns and operates the Hinge, 007, and Rice Lake
mines near Bissett, Manitoba. The Company employs more than 400 people
and is committed to the highest standards of safety and environmental
stewardship. San Gold is on the Toronto Stock Exchange under the symbol
"SGR" and on the OTCQX under the symbol "SGRCF".
This press release should be read in conjunction with the
Company's consolidated financial statements for the quarter ended March
31, 2012 and associated Management's Discussion and Analysis
("MD&A"), which are available from the Company's website (www.sangold.ca), in the "News & Reports" section under "Financial Statements", and on SEDAR (www.sedar.com).
Cautionary Non-IFRS Statements
The Company believes that investors use certain indicators
to assess gold mining companies. They are intended to provide additional
information and should not be considered in isolation or as a
substitute for measures of performance prepared with International
Financial Reporting Standards ("IFRS"). "Total cash operating costs" as
used in this analysis is a non-IFRS term typically used by gold mining
companies to assess the level of gross margin available to the Company
per ounce of gold by subtracting these costs from the unit price
realized during the period. This non-IFRS term is also used to assess
the ability of a mining company to generate cash flow from operations.
There may be some variation in the method of computation of "total cash
operating costs" as determined by the Company compared with other mining
companies. In this context, "total cash operating costs" reflects the
per ounce cash costs allocated from in-process and dore inventory
associated with ounces of gold sold in the period and net royalties.
"Total cash operating costs" may vary from one period to another due to
operating efficiencies, quantity of ore processed, grade of ore
processed, and gold recovery rates.
Cautionary Note Regarding Forward Looking Statements
No stock exchange, securities commission or other regulatory
authority has approved or disapproved the information contained herein.
This news release includes certain "forward-looking statements". All
statements, other than statements of historical fact included in this
release, including, without limitation, statements regarding forecast
gold production, gold grades, recoveries, cash operating costs,
potential mineralization, mineral resources, mineral reserves,
exploration results, and future plans and objectives of the Company, are
forward-looking statements that involve various risks and
uncertainties. These forward-looking statements include, but are not
limited to, statements with respect to mining and processing of mined
ore, achieving projected recovery rates, anticipated production rates
and mine life, operating efficiencies, costs and expenditures, changes
in mineral resources and conversion of mineral resources to proven and
probable mineral reserves, and other information that is based on
forecasts of future operational or financial results, estimates of
amounts not yet determinable and assumptions of management.
Any statements that express or involve discussions with
respect to predictions, expectations, beliefs, plans, projections,
objectives, assumptions or future events or performance (often, but not
always, using words or phrases such as "expects" or "does not expect",
"is expected", "anticipates" or "does not anticipate", "plans",
"estimates" or "intends", or stating that certain actions, events or
results "may", "could", "would", "might" or "will" be taken, occur or be
achieved) are not statements of historical fact and may be
"forward-looking statements." Forward-looking statements are subject to a
variety of risks and uncertainties that could cause actual events or
results to differ from those reflected in the forward-looking
statements.
There can be no assurance that forward-looking statements
will prove to be accurate and actual results and future events could
differ materially from those anticipated in such statements. Important
factors that could cause actual results to differ materially from the
Company's expectations include, among others, the actual results of
current exploration activities, conclusions of economic evaluations and
changes in project parameters as plans continue to be refined as well as
future prices of precious metals, as well as those factors discussed in
the section entitled "Other MD&A Requirements and Additional
Disclosure and Risk Factors" in the Company's most recent quarterly
Management's Analysis and Discussion ("MD&A"). Although the Company
has attempted to identify important factors that could cause actual
results to differ materially, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can be no
assurance that such statements will prove to be accurate as actual
results and future events could differ materially from those anticipated
in such statements. Accordingly, readers should not place undue
reliance on forward-looking statements.
Exploration results that include geophysics, sampling, and
drill results on wide spacings may not be indicative of the occurrence
of a mineral deposit. Such results do not provide assurance that further
work will establish sufficient grade, continuity, metallurgical
characteristics, and economic potential to be classed as a category of
mineral resource. A mineral resource that is classified as "inferred" or
"indicated" has a great amount of uncertainty as to its existence and
economic and legal feasibility. It cannot be assumed that any or part of
an "indicated mineral resource" or "inferred mineral resource" will
ever be upgraded to a higher category of resource. Investors are
cautioned not to assume that all or any part of mineral deposits in
these categories will ever be converted into proven and probable
reserves.
Cautionary Note to United States and Other Investors Concerning Estimates of Measured, Indicated and Inferred Mineral Resources:
This press release uses the terms "Measured", "Indicated",
and "Inferred" resources. United States investors are advised that while
such terms are recognized and required by Canadian regulations, the
United States Securities and Exchange Commission does not recognize
them. "Inferred Mineral Resources" have a great amount of uncertainty as
to their existence, and as to their economic and legal feasibility. It
cannot be assumed that all or any part of an Inferred Mineral Resource
will ever be upgraded to a higher category. Under Canadian rules,
estimates of Inferred Mineral Resources may not form the basis of
feasibility or pre-feasibility studies. United States investors are
cautioned not to assume that all or any part of Measured or Indicated
Mineral Resources will ever be converted into Mineral Reserves. United
States investors are also cautioned not to assume that all or any part
of a Mineral Resource is economically or legally mineable.
| Table 1: 2012 First Quarter Income Statement | |||||||
| SAN GOLD CORPORATION | |||||||
| INTERIM CONDENSED CONSOLIDATED STATEMENTS OF NET LOSS AND COMPREHENSIVE LOSS FOR THE THREE MONTH PERIOD ENDED MARCH 31 | |||||||
| (Unaudited) | |||||||
| 2012 | 2011 | ||||||
| REVENUE | 35,501,860 | $ | 19,817,478 | ||||
| OPERATIONS | |||||||
| Operations (Note 15) | 27,517,466 | 16,619,833 | |||||
| INCOME FROM OPERATIONS | 7,984,394 | 3,197,645 | |||||
| Exploration | 4,601,290 | 5,305,747 | |||||
| General and administrative (Note 16) | 4,672,796 | 3,170,564 | |||||
| LOSS BEFORE OTHER INCOME AND EXPENSES | 1,289,692 | 5,278,666 | |||||
| OTHER INCOME AND EXPENSES | |||||||
| Finance income - net (Note 17) | 298,713 | 61,533 | |||||
| Finance costs (Note 17) | (114,831 | ) | (118,636 | ) | |||
| Equity loss of associate (Note 8) | (1,000,000 | ) | - | ||||
| LOSS BEFORE INCOME TAX | 2,105,810 | 5,335,769 | |||||
| Income tax recovery on flow-through shares | 1,415,612 | - | |||||
| NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD | 690,198 | $ | 5,335,769 | ||||
| LOSS PER COMMON SHARE: (Note 21) | |||||||
| Basic | 0.00 | $ | 0.02 | ||||
| Diluted | 0.00 | $ | 0.02 | ||||
| Notes on the Income Statement provided here reference notes to the Company's interim financial statements, available on SEDAR and on the Company's website at http://www.sangold.ca. |
| Table 2: Financial Highlights (000's $CDN) | ||||||
| Q1 | Q1 | |||||
| 2012 | 2011 | |||||
| Total and comprehensive income (loss) (000) | $ | (690 | ) | $ | (5,336 | ) |
| Items not affecting cash (000) | $ | 10,694 | $ | 5,908 | ||
| Cash provided (used) by operating activities before changes in non-cash working capital (000) | $ | 10,004 | $ | 572 | ||
| Net change in non-cash working capital (000) | $ | 4,246 | $ | 3,873 | ||
| Cash provided by operating activities (000) | $ | 14,250 | $ | 4,445 | ||
| Earnings (loss) per share | ||||||
| - basic | $ | 0.00 | $ | (0.02 | ) | |
| - diluted | $ | 0.00 | $ | (0.02 | ) | |
| Weighted average number of common shares outstanding | ||||||
| - basic | 314,566,676 | 302,297,160 | ||||
| - diluted | 314,566,676 | 302,297,160 | ||||
| Table 3: Production Summary and Statistics | ||||||||
| Q1 | Q1 | Change | Change | |||||
| 2012 | 2011 | (#) | (%) | |||||
| Ore milled (tons) | 153,537 | 82,792 | 70,745 | 85 | % | |||
| Head grade (g/tonne Au) | 5.35 | 6.47 | -1.12 | -17.4 | % | |||
| Contained gold (ounces) | 23,995 | 15,636 | 8,359 | 53 | % | |||
| Ounces of gold produced | 22,162 | 14,688 | 7,474 | 51 | % | |||
| Ore mined (tons) | 144,549 | 102,200 | 42,349 | 41 | % | |||
| Ore milled per day (tons) | 1,687 | 920 | 767 | 83 | % | |||
| Ore mined per day (tons) | 1,588 | 1,136 | 453 | 40 | % | |||
| Mill recovery (%) | 92 | % | 94 | % | -2 | % | -1.7 | % |
| Table 4: Quarterly Production Summary and Statistics | ||||||||||||||||
| Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | |||||||||
| 2012 | 2011 | 2011 | 2011 | 2011 | 2010 | 2010 | 2010 | |||||||||
| Ore milled (tons) | 153,537 | 141,890 | 121,844 | 114,624 | 82,792 | 83,174 | 75,263 | 58,098 | ||||||||
| Head grade (g/tonne Au) | 5.35 | 5.36 | 5.83 | 6.35 | 6.47 | 4.29 | 6.12 | 5.90 | ||||||||
| Contained gold (ounces) | 23,995 | 22,190 | 20,732 | 21,244 | 15,636 | 10,414 | 13,436 | 9,996 | ||||||||
| Ounces of gold produced | 22,162 | 20,359 | 19,119 | 20,111 | 14,688 | 9,280 | 12,568 | 9,188 | ||||||||
| Ore mined (tons) | 144,549 | 136,166 | 124,952 | 123,261 | 102,200 | 84,743 | 71,463 | 63,323 | ||||||||
| Ore milled per day (tons) | 1,687 | 1,542 | 1,324 | 1,260 | 920 | 904 | 818 | 638 | ||||||||
| Ore mined per day (tons) | 1,588 | 1,480 | 1,358 | 1,355 | 1,136 | 921 | 777 | 696 | ||||||||
| Mill recovery (%) | 92 | % | 92 | % | 92 | % | 95 | % | 94 | % | 89 | % | 94 | % | 93 | % |
| NOTE: Final refinery settlements, or the effects of rounding, may have resulted in increases or decreases to reported gold production. |
Contact Information
San Gold Corporation
Gestur Kristjansson
Chief Financial Officer
+1 (204) 772-9149
San Gold Corporation
Tim Friesen
Communications Director
+1 (855) 585-4653
www.sangold.ca
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