BISSETT, MB--(Marketwire - Jul 7, 2011) - San Gold Corporation (TSX:
SGR) (
OTCQX:
SGRCF) ("San Gold" or the "Company") reports preliminary operating results for the second quarter of 2011. The Company is also announcing that it plans to report second quarter 2011 financial results before market open on Monday, August 15, 2011, and that senior management will host a conference call that day at 11:00 am Eastern Standard Time.
Second Quarter 2011 Operating Results
In the second quarter of 2011, the Company's Rice Lake, Hinge, and 007 mines (the "Rice Lake Project")
produced a quarterly record of 20,055 ounces of gold at a cash operating cost that is expected to be below the Company's full-year guidance of $825 per ounce of gold sold.
Year-to-date production of 34,743 ounces is consistent with the Company's
full-year production forecast of 80,000 ounces.
Commenting on these results, George Pirie, President and Chief Executive Officer of San Gold, stated, "I am very pleased with this quarter's operating results as they demonstrate that we continue to execute on our plan of growing the production profile and lowering the cost profile of the Rice Lake Project. In addition, we continue our aggressive exploration program, which is designed to significantly grow our mineral resource base."
Gold production in the second quarter of 2011 was approximately 118% higher than gold production of 9,188 ounces in second quarter of 2010 and 37% higher than gold production of 14,688 ounces in the first quarter of 2011.
Gold production in the first half of 2011 increased 61% compared to gold production of 21,650 ounces in the first half of 2010.
Higher gold production in the second quarter of 2011 was primarily attributable to increased crushing and milling system capacity resulting in higher throughput relative to prior periods. Gold production in the second quarter of 2011 also benefited from approximately 80% of the milled tonnage being sourced from the generally lower cost and higher grade Hinge and 007 mines.
The Hinge and 007 mines are expected to continue to be the primary source of ore at the Company's Rice Lake Mill for the foreseeable future.
During the second quarter of 2011, the Company milled ore at a record quarterly rate of approximately 1,260 tons per day for a total of 114,624 tons, an increase of 97% compared to the rate of 639 tons per day in the same period of 2010. In the second quarter of 2011,
the average head grade of 6.34 grams of gold per tonne of ore ("g/t Au"), an increase of 9% relative to the average head grade of 5.82 g/t Au in the same period of 2010.
The Company continues to have a substantial surface stockpile of approximately 25,000 tons of ore ahead of the crushing circuit.
Commenting on the improved quarterly operating results, Ian Berzins, Chief Operating Officer of San Gold, stated,
"This quarter's record gold production is a direct result of nearly two years of successfully executing on our strategy of debottlenecking the operation, improving safety performance, and investing in new infrastructure and equipment. We continue to make incremental improvements at the Rice Lake Project."
Key operational metrics and production statistics for the second quarter of 2011 compared to the second quarter of 2010 and the first quarter of 2011 are presented in tables 1 and 2 at the end of this press release, respectively.
Notice of Second Quarter 2011 Financial Results Conference Call
The Company's senior management plans to host a conference call on Monday, August 15, 2011 at 11:00 am Eastern Standard Time to discuss the 2011 second quarter financial results, and to provide an update of the Company's operating, exploration, and development activities.
Participants may join the conference call by dialing 1 (888) 231-8191 or 1 (647) 427-7450 for outside Canada and the United States. The conference call will also be available by webcast at the following link:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3595460.
A recorded playback of the conference call can be accessed after the event until August 22, 2011 by dialing 1 (800) 642-1687 or 1 (416) 849-0833 for calls outside Canada and the United States. The pass code for the conference call playback is 81672417. 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-based gold producer, explorer, and developer that owns and operates the Hinge, 007, and Rice Lake mines near Bissett, Manitoba. The Company employs over 400 people and is committed to the highest standards of safety and environmental stewardship. The Company has over $45 million in cash and equivalents and is unhedged to the price of gold. As of June 30, 2011, San Gold has 310,491,175 common shares outstanding (320,861,811 shares fully diluted), which are traded on the Toronto Stock Exchange under the symbol "SGR" and on the OTCQX under the symbol "SGRCF".
Cautionary Non-GAAP 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
Generally Accepted Accounting Principles ("GAAP"). "Cash operating costs" as used in this analysis is a non-GAAP 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-GAAP 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 "cash operating costs" as determined by the Company compared with other mining companies. In this context, "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. "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
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.
Table 1: Second Quarter 2011 and 2010 Production Summary and Statistics (1,2)
(1) All amounts for Q2-2011 are preliminary and based on initial end of period estimates. Final adjustments may be required.
(2) Certain numbers may not compute due to the effects of rounding and truncation.
(3) Before final refinery settlements, which may result in increases or decreases to reported gold production.
Table 2: Year-to-Date Production Summary and Statistics (1,2)
(1) All amounts for Q2-2011 are preliminary and based on initial end of period estimates. Final adjustments may be required.
(2) Certain numbers may not compute due to the effects of rounding and truncation.
(3) Before final refinery settlements, which may result in increases or decreases to reported gold production.
The TSX or the OTCQX have not reviewed and do not accept responsibility for the adequacy or accuracy of this release.
