Yellowhead Mining Inc. Reports Financial and Operating Results for the Three Months Ended March 31, 2013

TSX:YMI, OTCQX:YHMGF

VANCOUVER, May 9, 2013 /CNW/ - Yellowhead Mining Inc. ("Yellowhead" or the "Company") (TSX: YMI), (OTCQX: YHMGF) is pleased to report its results of operations for the three months ended March 31, 2013.

For the full condensed consolidated interim Financial Statements and Management Discussion & Analysis, please visit SEDAR at www.sedar.com or the Company's web site, www.yellowheadmining.com.

Highlights

Key highlights for the three months ended March 31, 2013 and subsequent weeks include:

• Detailed NI 43-101 compliant amended feasibility study was completed and filed on March 29, 2012 and restated and amended as of January 25, 2013.
• The Environmental Assessment ("EA") study at Harper Creek was advanced with the completion of a comprehensive baseline study program and preparation of a full application.  The Company's EA application was filed in April 2013.
• Engaged Evercore Group L.L.C. to provide financing advisory services and to assist in the evaluation of strategic partnership and financing alternatives for Harper Creek.
• Completed all the drilling for the in-fill drilling program announced in November 2012, with an additional 35 holes drilled for a total of 11,969m.
• Executed a memorandum of understanding with local First Nations initiating a mediation process on the Benefits Agreement.

Outlook

The Company's plans for 2013 and beyond are to:

• Explore financing options in order to finance the development of Harper Creek, including but not limited to: strategic investors and/or partnerships, project and equipment financing, stock offerings and off-take agreements.
• Continue the process of environmental permitting through 2013 following the submission of the Environmental Assessment application in April 2013.
• Prepare and submit the Company's applications for a British Columbia Mines Act Permit for Harper Creek.
• Continue consultation with the First Nations and local communities to address any potential environmental and socio-economic impacts of Harper Creek and the Company's mitigation strategies.
• Continue negotiations with the local First Nations working towards the conclusion of a long term Benefits Agreement.
• Continue exploration activities to better define the resource/reserve at Harper Creek including the preparation of an updated resource report incorporating all new drilling.
• Issue an updated NI 43-101 compliant feasibility study for Harper Creek.

Summary of Key Financial Highlights

Yellowhead has no revenue from operations.  Results can fluctuate significantly from period to period due to the level of engineering and environmental study effort and resource drilling.

The Company's expenditures on the Harper Creek project for the three months ended March 31, 2013 and cumulative to date were as follows:

 The Company's net loss for the three months ended March 31, 2013 and the quarterly periods from the prior two fiscal years are as follows:

(Amounts are expressed in thousands of Canadian dollars, except per-share amounts)

The Company's administrative expenses for the three months ended March 31, 2013, were approximately $897K lower than for the three months ended December 31, 2012.  This decrease was due to three major expenses that were incurred in the three months ended December 31, 2012 and not incurred in the three months ended March 31, 2013.  These three major expenses incurred in the previous quarter and not incurred in the current quarter were: (1) the Company incurred approximately $284K related to severance payments to the former CEO; (2) the Company accrued approximately $202K related to annual bonuses for employees; and (3) the Company paid approximately $400K to BC Hydro for an Identification Phase study which is being partially funded by the Company and is studying an upgrade to the power infrastructure in the North Thompson Valley.

Exploration costs were $889K lower for the three months ended March 31, 2013 compared to the three months ended December 31, 2012.  This decrease is due to four main factors: (1) The Company recognized a one-time adjustment of approximately $652K in the three months ended December 31, 2012 as a result of an audit of its Mineral Exploration Tax Credit by the Canada Revenue Agency; (2) The Company spent approximately $919K more in the three months ended March 31, 2013 compared to December 31, 2012, related to an in-fill drilling program which started in November 2012; (3) The Company incurred $689K less in environmental assessment costs in the three months ended March 31, 2013 as compared to the three months ended December 31, 2012, as the Company completed all field work in 2012 and focused on completing the EA application in 2013; and (4) The Company incurred $467K less in mine permitting costs in the three months ended March 31, 2013 as compared to the three months ended December 31, 2012.

Other income for the three months ended March 31, 2013, was approximately $118K higher than the three months ended December 31, 2012.  This increase was due to the recognition of the flow-through share premium liability.  The recognition of the liability was related to the expenditure in the period of all funds raised through the sale of flow-through shares in December 2012.  Completion of the required expenditures led to the recognition of the flow-through share premium liability in the three months ended March 31, 2013.

Cash and Cash Equivalents

The Company had cash and cash equivalents of $5.08M as at March 31, 2013, as compared to cash and cash equivalents of $7.06M as at December 31, 2012.

The Company's focus going forward, is expediting the development of the Harper Creek project. Major activities include completing the Environmental Assessment process, advancing the Mine Permitting process and pursuing funding activities to develop the Harper Creek project.  Following the completion of the private placement announced by the Company on October 31, 2012, the Company believes its current working capital is sufficient to keep advancing its Harper Creek project in the permitting process.  However, additional funding will be required by the Company to finance the development of Harper Creek.

About Yellowhead Mining Inc.

Yellowhead's Harper Creek Project is a copper-gold-silver volcanogenic sulphide deposit located in south-central British Columbia, approximately 150 kilometers by highway north of Kamloops.  The Feasibility Study, dated and filed on SEDAR on March 29, 2012 and restated and amended as of January 25, 2013 (and available for review on SEDAR and Yellowhead's website) shows an after-tax NPV₈ of US$465.3 million with an IRR of 17.0% based on long-term metal price projections of US$2.50/lb Cu, US$1,250/oz Au and US$20/oz Ag, and a US$:Cdn$ exchange rate of 0.86:1.  The Feasibility Study demonstrated a 28 year project life at a milling rate of 70,000 tpd (25.55Mt/y). The project as designed is expected to produce a total of 3.63 billion pounds of copper, 372,000 ounces of gold and 14 million ounces of silver contained in concentrate.

At a 0.14% Cu cutoff,  Proven Reserves are estimated at 401.18Mt @ 0.272% Cu, 0.031g/t Au and 1.15g/t Ag; Probable Reserves 303.22Mt @ 0.248% Cu, 0.027g/t Au and 1.13g/t for a total Proven and Probable Reserve of 704.4Mt @ 0.262% Cu, 0.029g/t Au and 1.14g/t Ag.

The Feasibility Study is based on an updated resource.  At a 0.20% Cu cutoff Measured Resources are estimated at 348.5Mt at 0.31 % Cu, 0.034g/t Au, 1.3g/t Ag; Indicated Resources at 466.5Mt at 0.28% Cu, 0.03g/t Au, 1.3g/t Ag for a total Measured and Indicated Resource of 815Mt at 0.29% Cu, 0.032g/t Au and 1.3g/t Ag (5.26 billion pounds of copper contained).  A further 80.17Mt at 0.30% Cu, 0.033g/t Au, and 1.4g/t Ag are estimated in the Inferred Resource category (0.53 billion pounds of copper contained) and are reported as waste in the mine production schedule until they can be upgraded by additional infill drilling.

Yellowhead has a 100% interest in the Harper Creek Project (subject to the payment of a 3% NSR royalty capped at $2.5 million, adjusted for inflation and an additional 2.5% NSR royalty on an estimated 1.5 Mt of ore which is expected to be mined beginning in year 16 of the Feasibility Study mine plan).

T. Gregory Hawkins, Interim Chief Executive Officer of the Company and a Qualified Person under NI 43-101, has reviewed and approved the technical content of this press release.

Forward Looking Statements

Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities laws. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements, including, among others, the accuracy of mineral grades and related assumptions, inherent operating risks, planned expenditures, proposed exploration and development at the Harper Creek Project, operating and economic aspects of the Harper Creek Project, as well as those risk factors identified in the Company's Annual Information Form filed under the Company's SEDAR profile. Yellowhead undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change except as required by law. The reader is cautioned not to place undue reliance on forward-looking statements. More detailed information about potential factors that could affect projected results is included in the documents filed from time to time with the Canadian securities regulatory authorities by Yellowhead.

This news release includes disclosure of scientific and technical information, as well as information in relation to the calculation of mineral resources and reserves, with respect to the Harper Creek Project. Yellowhead's disclosure of mineral resource and reserve information is governed by National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM") Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as may be amended from time to time by the CIM ("CIM Standards"). There can be no assurance that mineral resources will ultimately be converted into mineral reserves. Mineral resources are not mineral reserves and do not have demonstrated economic viability. This news release uses the terms "measured", "indicated" and "inferred" resources. U.S. persons are advised that while such terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. "Inferred 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 resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred resources may not form the basis of feasibility or other economic studies. U.S. persons are cautioned not to assume that all or any part of measured or indicated resources will ever be converted into reserves. U.S. persons are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable.

SOURCE Yellowhead Mining Inc.