WINNIPEG, MANITOBA--(Marketwired - Aug. 12, 2013) -
(All amounts in Canadian dollars unless otherwise stated)
San Gold Corporation (TSX:SGR)(OTCQX:SGRCF) today reported 2013 second quarter financial and operating results.
During the quarter, the Company produced 22,526 ounces of
gold with an average milled grade of 5.05 grams per tonne with cash
operating costs of $783 per ounce of gold sold. The Company generated
income from operations of $3.4 million, a cash contribution from
operations before changes in non-cash working capital of $5.0 million,
and recognized a quarterly total and comprehensive loss of $3.6 million.
The Company initiated a number of cost-cutting initiatives
during the quarter in response to recent adverse market conditions.
Compared with the same quarter last year, the Company reduced its total
cash operating costs by $2.7 million, capital expenditures by $3.9
million, and general and administrative expenses by $2.6 million while
maintaining production levels.
"I am very pleased with the progress we have made this
quarter in improving grade and stabilizing production levels while
reducing costs across all aspects of the company. I anticipate continued
improvement in the Company's financial performance through the
remainder of the year as the full effect of our cost-cutting initiatives
takes hold," said Ian Berzins, San Gold's President, CEO and Chief
Operating Officer.
Through the first two quarters of the year the Company has
completed $10.4 million of flow- through eligible exploration pursuing a
number of prospective drilling targets near existing infrastructure.
The Company will continue to pursue these targets through the remainder
of 2013 with its remaining $6 million in flow-through exploration
commitments and anticipates a substantial reduction in surface
exploration in 2014 once these commitments are complete.
2013 Second Quarter Highlights:
- Produced 22,526 ounces of gold, a 23% increase compared to 18,241 ounces in the second quarter of 2012.
- Achieved average mill throughput of 1,784 tons per
day for the quarter, a 39% increase compared to average mill throughput
of 1,281 tons per day in the second quarter of 2012.
- Mined ore at a record quarterly rate of
approximately 1,905 tons per day for a total of 173,350 tons, an
increase of 11% compared to the rate of 1,709 tons per day in the same
period of 2012.
- Achieved total cash costs of $783 per ounce of gold
sold compared to $970 per ounce in the second quarter of 2012 and
realized a cash operating margin of $611 per ounce of gold sold with a
realized price of $1,394 per ounce through the quarter.
- Achieved a total cost per ton of ore of $105, a 36%
decrease compared to a total cost per ton of ore of $164 in the second
quarter of 2012.
- Generated cash flow from operating activities
before changes in non-cash working capital of $5.0 million, compared to
$5.7 million in the second quarter of 2012, despite a reduction in the
realized price of gold.
- Generated quarterly operating income from
operations of $3.4 million, compared to income from operations of $2.4
million in the second quarter of 2012.
- Recognized quarterly revenue of $30.4 million on
gold sales of 21,796 ounces at a realized price of $1,394 per ounce
compared to revenue of $31.6 million in the second quarter of 2012.
- Recognized quarterly total and comprehensive loss
of $3.6 million, compared to total and comprehensive loss of $7.8
million in the second quarter of 2012.
- Had a cash and short term investments balance of $21.3 million as at June 30, 2013.
- Accessed the down dip extension of the 007 zone at depth on 26 level and began silling on the structure.
- Began a program to segregate lower grade ore in a
separate surface stockpile to be milled as an incremental feed source at
a later date.
- Completed approximately 74,000 metres of exploration and definition diamond drilling.
- Purchased mineral claims from Wildcat Exploration Ltd. in the subsequent period.
Review of 2013 Second Quarter Results
The Company produced 22,526 ounces of gold during the quarter
compared with 18,241 ounces in the second quarter of 2012. The increase
in the number of ounces of gold produced was a result of a 39% increase
in tons milled which was offset somewhat by an 11% decrease in grade.
The Company milled 162,344 tons in the second quarter of 2013 compared
with 116,546 tons milled in the second quarter of 2012. Head grade was
5.05 grams of gold per tonne of ore in the second quarter of 2013, a 22%
increase compared with a head grade of 4.15 grams of gold per tonne of
ore in the first quarter of this year.
The Company reports quarterly income from operations of $3.4
million and a total and comprehensive loss of $3.6 million, compared to
income from operations of $2.4 million and a total and comprehensive
loss of $7.8 million in the second quarter of 2012. The increase in
income from operations is due to a reduction in total cash operating
costs which was partially offset by a reduction in the realized price of
gold.
The Company earned quarterly revenue of $30.4 million, a 4%
decrease over revenue of $31.6 million in the second quarter of 2012.
The decrease in gold sales revenue in the second quarter of 2013 is a
result of a 13% decrease in the average realized gold price compared to
the second quarter of 2012 which was partially offset by an 11% increase
in the number of ounces sold. The Company realized $1,394 per ounce of
gold sold in the second quarter of 2013, compared with the $1,607 the
Company realized per ounce in the second quarter of 2012 and the Company
sold 21,796 ounces of gold in the second quarter of 2013, compared with
sales of 19,648 ounces in the second quarter of 2012.
The Company generated $5.0 million of cash flow from
operating activities before changes in non-cash working capital in the
second quarter of 2013, compared with $5.7 million generated in the
second quarter of 2012. After changes in non-cash working capital,
operating activities used $5.1 million in the second quarter of 2013,
compared to $11.0 million generated in the second quarter of 2012.
Capital spending in the second quarter of 2013 was focused on
mine development, increasing mining capability, improving key
infrastructure, and sustaining capital. The Company invested $12.9
million in mine development activities and recognized related depletion
of $7.8 million compared with an investment of $14.8 million and related
depletion of $7.8 million in the second quarter of 2012. The Company
also capitalized $4.1 million of property, plant, and equipment and
recognized related amortization of $2.1 million during the second
quarter of 2013 compared to an investment of $6.1 million and related
amortization of $1.7 million in the second quarter of 2012. The Company
is continuing its critical review of all subsequent capital development
and property, plant and equipment spending for the year and may elect to
defer or cancel previously planned projects.
Outlook
The Company continues to carry out a comprehensive review of
its operating, capital, corporate overhead, and exploration costs as
well as evaluating investments that do not directly contribute to the
Company's core operations. The focus continues to be on optimizing
margins per ounce and to find the most direct path to achieving free
cash flows.
For the balance of 2013, the Company will continue to
concentrate mining operations on the 007 complex, with less dependence
on Hinge and with a supplemental feed provided by the Rice Lake mine.
Mining operations will continue in the Rice Lake mine alongside ongoing
capital development projects to provide operational access beneath the
current mining areas within the 007 and Hinge mines and extend the 16
and 26 levels in order to accelerate access to the down dip extensions
of these deposits. The Company expects the changes to result in improved
grade for the balance of the year, a further decrease in capital
development spending and property, plant and equipment spending
requirements while maintaining production guidance of 75,000 to 90,000
ounces at full year cash costs of between $800 and $900.
Exploration activities for the remainder of the year will
continue to focus on definition and extension drilling within the
Company's mineral lease for both production planning and exploration
purposes at the San Antonio Mining Unit, the Shoreline Basalt Unit, the
Normandy Creek Shear Zone, and within the intermediate volcanic rock
unit north of the Shoreline Basalt Unit. The objectives of the Company's
exploration program is to develop a larger mine complex that can be
exploited through existing infrastructure.
Underground drill bays constructed during the first quarter
of 2013 continue to provide better access for definition drilling of the
007 structures at depth. The Company has improved confidence about the
resource potential at depth as recent drill results below 26 Level
confirm continuity of the geological structures hosting the 007 and
Hinge deposits.
2013 Q2 Financial Results Conference Call
The Company's senior management plans to host a conference
call on August 13, 2013 at 11:00 am Eastern Time to discuss the 2013
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 (866)
225-0198 or 1 (416) 340-8061 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 August 29, 2013 by dialing 1 (800) 408-3053 or 1
(905) 694-9451 for calls outside Canada and the United States. The pass
code for the conference call playback is 8568217. 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 Rice Lake Mining Complex near
Bissett, Manitoba. The Company employs more than 420 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
December 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).
For further information on San Gold, please visit www.sangold.ca.
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: 2013 Second Quarter Income Statement
Table 2: Financial Highlights
Table 3: Production Summary and Statistics
Table 4: Quarterly Production Summary and Statistics
NOTE: Final refinery settlements, or the effects of rounding,
may have resulted in increases or decreases to reported gold
production.
"San Francisco Mine" is located about 150
km north of the capital city Hermosillo, which is in the state Sonora.
The "San Francisco" mine is an open pit operation and the ore is
processed in a multistage process thereafter.
In 2014, a total of 121,573 ounces GoldEq were mined and processed with
low cash cost AISC of 925 USD GoldEq ounce. The company expect to
produce in 2015 between 100-110.000 ounces gold at cash cost of 875-925
USD.
The project portfolio also includes the Mexican Gold Projects "Caballo
Blanco" and "Ana Paula". It is planned, that both projects will be
brought into production in the next few years.
