Yellowhead Mining Inc. Reports Financial and Operating Results for the Three and Six Months Ended June 30, 2013

TSX:YMI, OTCQX:YHMGF

VANCOUVER, Aug. 7, 2013 /CNW/ - Yellowhead Mining Inc. ("Yellowhead" or the "Company") (TSX: YMI, OTCQX: YHMGF) is pleased to report its results of operations for the three and six months ended June 30, 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 six months ended June 30, 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.
• In April 2013, the Company submitted the application for an Environmental Assessment ("EA") Certificate for the Harper Creek Project to the Environmental Assessment Office ("EAO"). In May 2013, the EAO identified a number of deficiencies with, and provided comments on, the Company's EA Application. The Company is currently working to address the deficiencies raised and comments received in order to resubmit the application to the EAO.
• 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 a local First Nation for involvement in the EA process and Benefits Agreement ("BA") negotiations.
• Appointed Frank Wheatley as CEO and a member of the Board of Directors effective July 1, 2013.
• As at June 30, 2013, the Company's had cash and cash equivalents of $4.09M.

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.
• Explore short-term financing options to increase the Company's working capital.
• Continue through the process of environmental permitting with resubmission of the Company's EA Application.
• Prepare and submit the Company's applications for a British Columbia Mines Act Permit for Harper Creek.
• Ongoing 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 on a 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.

The extent of the work to be undertaken on the aforementioned activities is subject to and contingent on the Company's ability to raise additional financing.

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 six months ended June 30, 2013 and cumulative to date were as follows:

The Company's net loss for the three months ended June 30, 2013 and the eight prior quarterly periods 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 June 30, 2013 ("Q2") were approximately $195K lower than for the three months ended March 31, 2013 ("Q1"). This decrease was primarily due to the following items: (1) The Company received a $174K refund from BC Hydro in Q2 related to some funds it had advanced in 2011 and 2012 for various studies; (2) The TSX filing fees for the Company were $37K higher in Q1 compared to Q2; (3) The Company paid $27K in Q1 and $nil in Q2 related to its CEO recruitment effort; (4) The investor relations costs were $44K higher in Q2 as compared to Q1 due to additional investor relations activities being undertaken.

Exploration costs were $1,509K lower in Q2 as compared to Q1. This decrease is related primarily to the conclusion of the infill drilling program announced by the Company in November 2012 and completed in March 2013. The Company also incurred $76K less in environmental assessment costs in Q2 as compared to Q1 as the Company filed its initial application into screening in April 2013.

Other expenses were $132K higher in Q2 as compared to Q1 primarily due to the due to the recognition into income of the flow-through share premium liability in Q1. 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 Q1.

Cash and Cash Equivalents

The Company had cash and cash equivalents of $4.09M as at June 30, 2013, as compared to cash and cash equivalents of $5.08M as at March 31, 2013. As at June 30, 2013, the Company had working capital of $3.80M, as compared to working capital of $4.63M as at March 31, 2013.

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 increase its working capital and develop the Harper Creek project.

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, Chairman of the Board of Directors 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.