Alhambra Resources Ltd.: Financial and Operating Results for Second Quarter Ending June 30, 2013

CALGARY, ALBERTA--(Marketwired - Aug 30, 2013) - Alhambra Resources Ltd. ("Alhambra" or the "Corporation") (TSX VENTURE:ALH) (PINKSHEETS:AHBRF) (FRANKFURT:A4Y) announces its financial and operating results for the quarter ended June 30, 2013.

HIGHLIGHTS FOR THE QUARTER:

• Alhambra has been informed by its legal counsel that an extension to December 25, 2013 to raise funds has been approved by the Kazakhstan Ministry of Industry and New Technology ("MINT")
• Revenue from gold sales amounted to $1.3 million based on the sale of 930 ounces ("ozs") at an average price of $1,387/oz
• Cash operating costs were $946 per oz of gold sold
• Kazakhstan mining operations recorded a net loss of $0.2 million ($0.00/share)
• The Corporation recorded net cash used in operating activities of $1.1 million ($0.01/share) and a net loss of $0.7 million ($0.01/share)
• The suspension of mining operations continued in the quarter; no fresh ore was stacked on the heaps
• Gold sales were realized from the drawdown of recoverable gold inventory from work in progress ("WIP")
• The estimated recoverable gold in WIP as of June 30, 2013 was 36,488 ozs
• No field work was carried out in the quarter due to financial constraints
• Continued pursuing various financing alternatives
• Assay results on 2,593 drill samples were pending
• 6,755 drill and soil samples were prepared for export for analysis
• Subsequent to June 30, 2013, three claims from creditors totaling $0.7 million were filed in the courts of Kazakhstan against Saga Creek, the Corporation's 100% owned operating subsidiary in Kazakhstan, for the collection of outstanding accounts payable

FINANCIAL HIGHLIGHTS

For the second quarter of 2013, the Corporation recognized $1.3 million in revenue from the sale of 930 ozs of gold at an average price of $1,387/oz. This compares to $2.5 million in revenue from the sale of 1,542 ozs of gold at an average price of $1,625/oz during the second quarter of 2012.

Kazakhstan mining operations recorded a net loss of $0.2 million for the second quarter of 2013. This compares to a net loss of $0.5 million for the second quarter of 2012. The Corporation recorded a net loss of $0.7 million ($0.01 per basic and diluted share) for the second quarter of 2013. This compares to a net loss of $1.1 million ($0.01 per basic and diluted share) for the second quarter of 2012.

OPERATING HIGHLIGHTS

During the second quarter of 2013, no fresh ore was stacked on its heap leach pads (2012 - 107,800 tonnes ("t')) nor was any waste mined during the same period (2012 - 81,999 t). Gold sales were realized from the drawdown of recoverable gold inventory from WIP. As of June 30, 2013, the estimated recoverable gold classified as WIP was 36,488 ozs.

As previously announced, the Corporation is pursuing a number of financing alternatives. Should a financing be successfully concluded, a portion of the proceeds will go towards resuming the mining of ore.

The decrease in sales volume for the second quarter of 2013 was as a result of the Corporation not mining any fresh ore to stack on the heaps plus the inability to maintain optimum operating conditions (such as ripping and fluffing of leach pads, maintenance of optimum levels of cyanide and resin) due to the Corporation's current financial constraints. Revenues from gold sales were also negatively impacted by a 15% decline in the average price of gold in the second quarter of 2013 as compared to the second quarter of 2012.

OPERATING EXPENSES

Operating expenses consist of all costs associated with the production of gold, (including direct costs incurred in the mining, leaching and resin stripping processes ("process operating costs"), Mineral Extraction Tax ("MET")), transportation and refining of the cathodic sediment. Except in periods in which no new ore is being mined, all process operating costs are charged to WIP and are expensed on the basis of the quantity of gold sold as a percentage of total recoverable gold mined. In those periods in which no new ore is being mined, certain direct mining costs and depreciation of mining equipment are expensed directly and not charged to WIP.

Operating costs for the three months ended June 30, 2013 were $0.9 million or $1,018/oz of gold sold as compared to $1.2 million or $789/oz of gold sold for the three months ended June 30, 2012. The 2013 figure includes $0.1 million ($105/oz) of mining costs charged directly to operating costs for the months in which there was no new ore mined. There was no comparable amount for the three months ended June 30, 2012. Included in the three months 2013 operating cost amount is $0.07 million or $72/oz related to the amortization of the bump-up to fair value from the estimated cost of WIP on re-valuation on September 15, 2009. Cash operating costs for the second quarter were therefore $946/oz (compared to $703/oz for the second quarter of 2012).

The $0.3 million decrease in operating costs in the second quarter of 2013 as compared to the second quarter of 2012 is due to the reduction in the quantity of recoverable gold mined and sold during 2013. The $243/oz increase in per unit operating costs for the second quarter of 2013 as compared to the second quarter of 2012 is primarily the result of the $105/oz of mining costs charged directly to operating expenses instead of charging such costs to WIP.

Operating costs for the six months ended June 30, 2013 totaled $1.4 million or $1,069/oz of gold sold as compared to $2.9 million or $844/oz of gold sold for the same period in 2012. The 2013 figure includes $0.2 million ($160/oz) of mining costs charged directly to operating costs for the months in which there was no new ore mined. There was no comparable amount for the six months ended June 30, 2012. Included in the six months ended June 30, 2013 operating cost amount is $0.1 million or $73/oz (six months ended June 30, 2012 - $0.2 million or $72/oz of gold sold) related to the amortization of the bump-up to fair value from the estimated cost of WIP on re-valuation in 2009. Cash operating costs for the six months ended June 30, 2013 were therefore $966/oz as compared to $772/oz for the six months ended June 30, 2012.

CAPITAL EXPLORATION PROGRAMS

During the three months ended June 30, 2013, no field work was carried out in Kazakhstan. This was as a result of the Corporation's lack of financial resources. Proposed 2013 drilling and soil sampling locations were prepared.

As of June 30, 2013, there were 2,593 Shirotnaia assay results pending (2,586 core and 7 QA/QC core re-sampling) from the laboratory. The assays will be released once the laboratory's outstanding account has been paid. In addition, 6,755 samples (including 887 QA/QC samples) were prepared for export as follows:

• Shirotnaia - 2,871 (RC samples),
• Zhusaly - 386 (RC samples) and 650 (soil samples),
• Vasilkovskoe East - 959 (soil samples) and 2 (rock chip samples),
• Dombraly East - 1,887 (soil samples).

GOVERNMENT OF KAZAKHSTAN PRE-EMPTIVE RIGHT

Alhambra's original application to the relevant Kazakhstan authority (MINT) included a floor price for the issuance of common shares at $0.60 per share. Unfortunately, during the time period that MINT was considering the Corporation's application, the trading price of Alhambra's common shares dropped below that floor. The Corporation applied to MINT to have that floor price reduced to $0.20 per share. The Corporation received the approval effective December 25, 2012 and it was effective until June 25, 2013. As provided for under Kazakhstan legislation, the Corporation has applied for an extension. Subsequent to June 30, 2013, Alhambra was informed by its legal counsel that an extension to December 25, 2013 has been approved by MINT. The Corporation expects to receive the formal documentation from MINT shortly.

LEGAL CLAIMS AGAINST THE CORPORATION

Subsequent to June 30, 2013, three claims from creditors totaling $0.7 million were filed in the courts of Kazakhstan against Saga Creek for the collection of outstanding accounts payable. Saga Creek's mining contractor submitted a claim to the International Arbitration Court in Kazakhstan ("IUS"), demanding payment of indebtedness of approximately $0.37 million for work performed. In order to securitize its claim, the contractor also applied to the Specialized Interdistrict Economic Court of Akmola oblast ("Economic Court") and obtained the Resolution of the Economic Court to attach property of Saga Creek within the limits of the claim amount. On August 5, 2013 the hearing of the claim by the IUS took place and the decision was made in favor of the contractor. The decision came into force on the date of the hearing, August 5, 2013. The contractor is now able to apply to the Economic Court and obtain an enforcement order which will allow it to realize on its security in order to cover the outstanding liabilities. Also, two of Saga Creek's exploration contractors submitted statements of claim to the Economic Court for the repayment by Saga Creek of a total of $0.33 million. On August 13, 2013 the Economic Court accepted the exploration contractors' claims which allow the exploration contractors to proceed to the courts to attach property of Saga Creek within the limits of the claim amounts and eventually realize on the outstanding liabilities.

The Corporation recognizes the desire of these creditors to protect their ability to collect on their outstanding liabilities and is in discussion with these creditors to defer any further action given that the Corporation is currently pursuing financing alternatives in order that the obligations to all creditors can be settled to everyone's mutual satisfaction.

OBJECTIVES FOR 2013

Currently Alhambra's efforts are focused on arranging financing, the use of proceeds from which will be directed towards the settlement of outstanding accounts payable, the re-initiation of the stacking of ore on the heap leach pads, optimization of operating processes to enhance recovery, and the resumption of exploration and development programs. The Corporation has identified a number of exploration targets it wishes to drill once funds have been raised. In addition the Corporation plans to begin a pre-feasibility study directed towards bringing into production the transitional and sulphide zones of Uzboy. However, these programs as well as the Corporations ability to continue on a going concern are dependent of Alhambra completing one or more of the financing deals it is currently investigating. While the Corporation has been successful in the past, there is no guarantee that the Corporation will be successful in the future in raising sufficient funds to continue as a going concern.

UNAUDITED FINANCIAL STATEMENTS AND MANAGEMENT DISCUSSION AND ANALYSIS ("MD&A")

The Corporation's second quarter 2013 financial statements and MD&A are available on the Corporation's website, can be obtained on application from the Corporation and are available under the Corporation's profile on SEDAR at www.sedar.com.

ABOUT ALHAMBRA

Alhambra is a Canadian based international exploration and gold production corporation producing gold in Kazakhstan.

Alhambra holds exploration and exploitation rights to a 2.4 million acre (9,800 km²), 100% owned license called the Uzboy Project, located in the Northern Kazakhstan Metallogenic Province which hosts numerous world-class gold deposits. Over 100 mineral targets, including three advanced exploration areas, are contained within the Uzboy Project.

Alhambra common shares trade in Canada on The TSX Venture Exchange under the symbol ALH, in the United States on the Over-The-Counter Pink Sheets Market under the symbol AHBRF and in Germany on the Frankfurt Open Market under the symbol A4Y. The Corporation's website can be accessed at www.alhambraresources.com.

Neither the TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the Policies of the TSX Venture Exchange Inc.) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements

Certain statements contained in this news release constitute "forward-looking statements" as such term is used in applicable Canadian and US securities laws. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. In particular, statements regarding the formalization of a financing, re-initiation of the stacking of ore on the heap leach pads, the resumption of exploration and development programs, initiating the Uzboy pre-feasibility study, availability of capital to fund ongoing projects and other factors and events described in this news release should be viewed as forward-looking statements to the extent that they involve estimates thereof. 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 should be viewed as "forward-looking statements". Such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Corporation to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks and other factors include, among others, the formalization of a financing, the re-initiation of the stacking of ore on the heap leach pads, the resumption of exploration and development programs, initiating the Uzboy pre-feasibility study, the availability of capital to fund exploration and production development; political, social and other risks inherent in carrying on business in a foreign jurisdiction and such other business risks as discussed herein and other publicly filed disclosure documents. Although the Corporation has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or 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 vary or differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements contained in this news release.

Forward looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and the Corporation undertakes no obligation to update forward-looking statements and if these beliefs, estimates and opinions or other circumstances should change, except as required by applicable law.

This news release contains forward-looking statements based on assumptions, uncertainties and management's best estimates of future events. When used herein, words such as "intended" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on assumptions by and information available to the Corporation. Investors are cautioned that such forward-looking statements involve risks and uncertainties. Actual results may differ materially from those currently anticipated. The forward-looking statements contained herein are expressly qualified by this cautionary statement.