SAS Reports 2011 Third Quarter Results with Record Cash Flow and Gold Production
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES
All dollar amounts are stated in Canadian dollars, unless otherwise indicated
TORONTO, Nov. 11, 2011 /CNW/ - St Andrew Goldfields Ltd. (T-SAS), ('SAS' or the 'Company') earned net income attributable to shareholders for the third quarter 2011 of $8.2 million or $0.02 per share as compared to a net income of $4.7 million, or $0.01 per share for the same period last year. Adjusted net earnings((1)) for the quarter was $5.5 million, or $0.02 per share, as compared to adjusted earnings of $3.5 million, or $0.01 per share, for the same period last year.
THIRD QUARTER HIGHLIGHTS
-- Record production of 20,018 ounces of gold from three
operations (Holt, Holloway and Hislop) with an increase in gold
production by 32% over the previous quarter.
-- Gold sales of 19,260 ounces at an average realized price of
US$1,715 per ounce of gold sold(1)for revenues of $33.3
million, a 51% increase over the previous quarter.
-- Cash costs of US$990 per ounce and a royalty cost of US$140 per
ounce, for a total cash cost per ounce of gold sold(1)of
US$1,130 per ounce; a 12% improvement over the previous
quarter.
-- Cash margin from mine operations(1)during the quarter was $12.0
million, an increase of $8.6 million from the previous quarter.
-- Record cash flow from operations of $7.6 million since the
re-start of mining operations in the fourth quarter of 2009, an
increase of $9.8 million over the previous quarter. Generated
$10.8 million in operating cash flow before repayment of the
Gold Notes(1), or $0.03 on a per share basis, and after total
exploration expenses of $2.0 million.
-- Completion of 200 metres of ramp development to the Smoke Deep
Zone at the Holloway Mine, at a cost of $2.7 million, which
will allow for development of the stope areas for production in
November of this year.
-- Total capital expenditures incurred during the quarter of $8.6
million which included $2.8 million in stripping and waste
removal costs at the Hislop Mine.
-- Mill throughput increased approximately 6%, with the Holt Mill
averaging 2,829 tonnes per day ('tpd').
o (1) Refer to pages 6-9 for non-GAAP Measures
'We are very happy to report a strong quarter both on production and on the improvement in our cash costs', said Jacques Perron, President and CEO of SAS. 'The development and production at the Holt Mine saw significant improvements over the previous quarter, and Holt is on track to meet its production targets for 2011. Development of the Smoke Deep Zone at the Holloway Mine continued to progress, and Holloway's production for the quarter was satisfactory. Hislop continued to encounter difficult overburden conditions; however, all of the overburden stripping is expected to be completed during November. We remain confident that we will be able to meet our 2011 production target and that we will continue to see improvements in production in 2012'.
Holt Mine, Operations and Financial Review (see Operating and Financial Statistics on page 10)
Gold production at the Holt Mine ('Holt') increased by 82% over the previous quarter as a result of improved development and production rates. This resulted in a 22% increase in throughput coupled with a 48% improvement in the mined ore grades during the third quarter. Production from Zone 4 commenced on the 925m Level at the beginning of the third quarter with concurrent development on the 925m Level up to the 900m sublevel. For the remainder of 2011, ramp, footwall access, stope development and long-hole mining will be the primary focus in this area. Development has also commenced on the 1075m Level with production anticipated to commence in November. The head grade at the Holt Mine saw a steady increase over the past few months mainly attributable to higher grade reserves in the remaining portion of the C-103 Zone and better development grade ore from Zone 4 coupled with production ore which was in line or better than the reserve grade of 4.34 g/t Au.
The mining rate during the third quarter continued to progress towards the anticipated steady state rate of production of 1,000tpd expected by the end of the first quarter of 2012, which will positively impact unit costs.
Cash margin from mine operations((1)) for the quarter increased by $6.0 million over the previous quarter due to a stronger average realized price per ounce of gold sold((1)), increased throughput, and improved ore grade. The increase in throughput during the quarter has led to a decrease of $15 per tonne on mine-site cost per tonne milled((1)) when compared to the previous quarter. In conjunction with the improvement in ore grade in the third quarter, total cash cost per ounce of gold sold((1)) decreased by US$377 per ounce (in spite of a US$45 per ounce increase in royalty cost due to the higher gold price in the quarter). The Company expects operating cost at Holt will continue to decrease as the mining rate increases.
Production at Holt is on track to produce between 24,000 - 28,000 ounces of gold for 2011.
Holloway Mine, Operations and Financial Review (see Operating and Financial Statistics on page 11)
Production at the Holloway Mine ('Holloway') continued to be negatively impacted by the mining of the remnant pillar recovery area of the Lightning Zone and the lower grade Blacktop Footwall Lower Zone ('BFWL') which is winding down, while preparing the Smoke Deep Zone ('Smoke Deep') for production. Ramp development at Smoke Deep was completed during the third quarter of 2011. Results from the definition drilling program conducted on the western portion of the zone were recently released with additional drilling being conducted further to the east, and has returned values that are consistent with the previous drilling. Development is on track and production drilling commenced earlier this month.
Cash margin from mine operations((1)) in the quarter increased by $1.1 million from the previous quarter as a result of the increase in the average realized price per ounce of gold sold((1)), and a 12% increase in gold production during the quarter; offset slightly by the higher operating unit costs. Mine-site cost per tonne milled((1)) in the quarter increased by 9% over the previous quarter due to the increased costs in mining equipment maintenance. The total cash cost per ounce of gold sold((1)) in the quarter increased by US$44 per ounce over the previous quarter as a result of the increase in royalty costs due to the higher gold price. The Company expects the operating costs at the Holloway Mine will remain high until Smoke Deep is brought into steady state production and the ore grades improve.
Production at Holloway is on track to produce between 23,000 - 26,000 ounces of gold in 2011.
Hislop Mine, Operations and Financial Review (see Operating and Financial Statistics on page 12)
The head grade for the Hislop Mine ('Hislop') increased by approximately 10% over the previous quarter, but remains below the Company's expectation due to ore body continuity issues in the upper western portion of the pit. The operations at Hislop continued to be impacted by the additional overburden removal and waste rock mining activities as a result of overburden slope failures which continued to impact the third quarter, and have further delayed stripping of the eastern portion of the pit. The overburden removal is now expected to be completed for the entire pit, before the end of November. Waste rock mining was below the previous quarter, however, the fourth quarter may see a slight increase due to the change in the mining sequence required to accommodate the overburden stripping activities. An updated mine plan is being developed to optimize ore grades and throughput.
Cash margin from mine operations((1)) improved by $1.4 million over the previous quarter as a result of a higher average realized price per ounce of gold sold((1) )and slightly higher gold production due to increased throughput and better ore grade achieved in the quarter. Mine-site cost per tonne milled((1) )increased by $4 per tonne, to $59 per tonne, from that incurred in the previous quarter as a result of the additional waste rock mining activities as mentioned above. The Company expects the remaining life-of-mine cost will remain around the $59 per tonne of ore milled range rather than the $45 per tonne as initially expected. The higher cost is primarily due to the complexity of the ore body, the rock hardness and the increased fuel costs.
Forecasted production for Hislop is between 18,000 - 21,000 ounces of gold for 2011.
Holt Mill Performance
At the beginning of July the Company installed a new SAG mill motor which coupled with some operational improvements resulted in an increase in mill throughput of approximately 6% over the previous quarter. Capital costs incurred during the quarter for these improvements were $0.9 million, and the Company believes the full impact of this capital improvement will be reflected in future periods.
Exploration Projects
The Company's planned $10.9 million exploration program for 2011, which focused on targets that lie near its existing operations, and/or where previous exploration identified anomalous zones of gold mineralization, has returned positive results from a number of targets. The Company has now completed its drilling programs for the year at: the Deep Thunder Zone in anticipation of a mineral resource estimate expected by year end; the Taylor Project, and is now preparing an updated mineral resource estimate for the West Porphry Zone and a prefeasibility study for the project, also expected by year end; and the Garrison Creek Project, where the focus is on compiling the data received to date and constructing a geological model to assist with future drilling. Drilling at the optioned Stroud Project has also been substantially completed and in light of the results received to date, the Company is in discussion with Stroud Resources to develop a plan for further exploration efforts.
Exploration for the remainder of 2011 will include continued surface drilling at the Ghost Zone, near the Holt Mine, and surface drilling at the Hislop North Project (northwest of the Hislop Mine and immediately south of Brigus Gold Corporation's 147 Zone). SAS currently has 3 drills turning and will provide additional drilling results before year end.
Capital Resources
SAS achieved a record quarter for cash flow from operations of $7.6 million since the restart of mining operations in the fourth quarter of 2009. The Company had cash of $15.3 million as at the end of the third quarter, however, working capital decreased during the quarter, and in the first nine months of the year, as a result of a four-month delay in the development of Holt, and the additional overburden and waste rock removal activities at Hislop. These operational issues are now resolved, and cash flow from operations in the future periods is expected to improve. For the quarter, the Company generated $12.0 million in cash margin from mine operations((1)) and $10.8 million in cash flow from operations before repayment of the Gold Notes((1)), an improvement of $8.6 million and $10.3 million over the previous quarter, respectively.
Unusual Items
During the quarter, the Company incurred mark-to-market losses of $3.8 million on its gold-linked liabilities due to an increase in the gold price; and a mark-to-market loss of $6.8 million on its derivative foreign currency contracts which resulted from the strengthening of the United States dollar relative to the Canadian dollar.
For the quarter, the Company recorded a deferred tax asset of $16.1 million from the reversal of income tax valuation allowance previously recorded, as the Company expects that the previously unrecognized tax assets are more-likely-than-not to be realized. The Company has $90.3 million in tax losses and $107.4 million in tax deductions at the end of last year and, is currently utilizing these benefits to reduce taxes payable.
Conference Call Information
A conference call will be held on Monday morning, November 14, 2011 at 10:00 a.m. (EST) to discuss the third quarter results. Participants may join the call by dialling toll free 1-866-212-4491 or 1-416-800-1066 for calls from outside Canada and the US. The Company will post accompanying power point slides for the call, please visit the website for more detailed information and any webcast links (www.sasgoldmines.com).
A recorded playback of the call will also be available via the website and will be posted within 24 hours of the call.
Qualified Person
Production at the Holt, Holloway and Hislop mines, and processing at the Holt Mill are being conducted under the supervision of Duncan Middlemiss, P.Eng, the Company's Vice President & General Manager, East Timmins Operations. The exploration programs on the Company's various mineral properties are under the supervision of Michael Michaud, P.Geo, the Company's Vice President of Exploration. Messrs. Middlemiss and Michaud are qualified persons as defined by National Instrument 43-101, and have reviewed and approved this news release.
Non-GAAP Measures
The Company has included the non-GAAP performance measures, adjusted net earnings (loss), cash flow from operations before repayments of Gold Notes, average realized price per ounce of gold sold and total cash costs per ounce of gold sold, cash margin from mine operations and mine-site cost per tonne milled, throughout this press release, which do not have standardized meanings prescribed by International Financial Reporting Standards ('IFRS') and are not necessarily comparable to other similarly titled measures of other companies due to potential inconsistencies in the method of calculation. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, the Company and certain investors use this information to evaluate the Company's performance. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Refer to pages 6-9 of this press release for a discussion and the reconciliation of these non-GAAP measurements to the Company's Unaudited Condensed Interim Financial Report for the three and nine months ended September 30, 2011.
((1)) See pages 6-9 for non-GAAP Measures
The Balance Sheets, Statements of Operations and Statements of Cash Flows for the Company for the three and nine months ended September 30, 2011, can be found on pages 13-15.
To review the complete Unaudited Condensed Financial Report for the three and nine months ended September 30, 2011 and the Interim Management's Discussion and Analysis for the third quarter 2011, please see SAS's SEDAR filings under the Company's profile at www.sedar.com or the Company's website at www.sasgoldmines.com.
About SAS
SAS (operating as 'SAS Goldmines') is a gold mining and exploration company with an extensive land package in the Timmins mining district, northeastern Ontario which lies within the Abitibi greenstone belt, the most important host of historical gold production in Canada. SAS is focussed on developing its assets in the Timmins Camp with three producing mines and aggressive exploration activities across 120km of land straddling the Porcupine-Destor Fault Zone.
FORWARD-LOOKING INFORMATION
This news release contains forward‐looking information and forward-looking statements (collectively, 'forward-looking information') under applicable securities laws, concerning the Company's business, operations, financial performance, condition and prospects, as well as management's objectives, strategies, beliefs and intentions. Forward-looking information is frequently identified by such words as 'may', 'will', 'plan', 'expect', 'estimate', 'anticipate', 'believe', 'intend' and similar words referring to future events and results, including the targeted gold production levels at the Holt, Holloway and the Hislop mines for 2011; the commencement of production from the Smoke Deep Zone at Holloway and the 1075m Level in Zone 4 at Holt; the completion of overburden removal at the Hislop mine; the improvement in the ore grade at the Hislop and the Holt mines and the reduction of costs at the Holloway, Holt and Hislop mines; the increase in throughput at the Holt Mill; the continuance of the exploration program at the Ghost Zone, Hislop North and the Taylor Project and the completion of, an updated mineral resources estimate for the West Porphyry Zone, and prefeasibility study on the Taylor Project. This forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied by the forward‐looking information. Factors that may cause actual results to vary materially include, but are not limited to, uncertainties relating to the interpretation of the geology, continuity, grade and size estimates of the mineral reserves and resources; unanticipated operational or technical difficulties which could escalate operating and/or capital costs and reduce anticipated production levels; changes in the availability of qualified personnel; fluctuations in gold prices and exchange rates; insufficient funding or delays or inability to raise additional financing on satisfactory terms if required; changes in laws, regulations and the risks of obtaining necessary licenses and permits; changes in general economic conditions and changes in conditions in the financial markets. Such forward looking information is based on a number of assumptions, including but not limited to the level and volatility of the price of gold, the accuracy of reserve and resource estimates and the assumptions on which such estimates are based, the ability to achieve capital and operating cost estimates, the ability of the Company to retain and attract qualified personnel, the sufficiency of the Company's cash reserves and operating cash flow to complete planned development and exploration activities, the availability of additional financing on acceptable terms if and as required and the level of stability of general business and economic conditions. Should one or more risks and uncertainties materialize or should any assumptions prove incorrect, then actual results could vary materially from those expressed or implied in the forward-looking information and accordingly, readers are cautioned not to place undue reliance on this forward‐looking information. SAS does not assume the obligation to revise or update this forward‐looking information after the date of this release or to revise such information to reflect the occurrence of future unanticipated events, except as may be required under applicable securities laws.
NON-GAAP MEASURES
Adjusted net earnings (loss)
Adjusted net earnings (loss) are calculated by removing the gains and losses, resulting from the mark-to-market revaluation of the Company's gold-linked liabilities and foreign currency price protection derivative contracts, one-time gains or losses on the disposition of non-core assets and expenses, and significant tax adjustment not related to current period's earnings, as detailed in the table below. Adjusted net earnings (loss) does not constitute a measure recognized by IFRS and does not have a standardized meaning defined by IFRS and may not be comparable to information in other gold producers' reports and filings. The Company discloses this measure, which is based on its financial statements, to assist in the understanding of the Company's operating results and financial position.
Amounts in Three months ended Ninemonths ended
thousands of
Canadiandollars, September September
except per share 30, September30, June30, September 30, 30,
amounts
2011 2010 2011 2011 2010
Net income
(loss) per
Financial $
Reports $8,238 $4,660 (1,233) $4,252 $2,325
Reversal of
income and
mining tax asset
valuation
allowance (13,668) - (4,354) (18,022) -
Mark-to-market
adjustments on
the Gold Notes 2,837 (53) 782 3,417 3,839
Mark-to-market
adjustments on
the Advance
royalty payment
obligation 998 211 155 1,344 781
Mark-to-market
adjustment on
derivative
foreign exchange
contracts 6,763 (1,358) 635 7,305 (531)
Proceeds from
insurance claim - - (338) (338) -
Loss on the
divestiture of
the non-core
asset - - 1,353 1,353 -
Write down of
mining assets 300 - - 300 263
Secured
debenture
participation
fee - - - - 756
Total adjusted
net earnings $
(loss) $5,468 $3,460 (3,000) $(389) $7,433
Weighted average number of shares
outstanding (000s)
Basic 368,004 352,015 367,858 367,798 333,985
Diluted 369,777 359,669 370,257 370,280 340,223
Adjusted net
earnings (loss)
per share
Basic and
diluted $0.02 $0.01 $(0.01) $0.00 $0.02
Operating cash flow before repayment of Gold Notes
SAS uses the financial measure operating cash flow before repayment of Gold Notes to supplement the information included in its Financial Statements. The presentation of operating cash flow before repayment of Gold Notes does not constitute a measure recognized by IFRS and is not meant to be a substitute for cash flow from operations or cash flow from operating activities presented in accordance with IFRS, but rather should be evaluated in conjunction with such IFRS measures. Operating cash flow before repayment of Gold Notes excludes the non-cash value of gold delivered to the Company's Gold Note holders.
The term operating cash flow before repayment of Gold Notes does not have a standardized meaning prescribed by IFRS, and therefore the Company's definitions are unlikely to be comparable to similar measures presented by other companies. The Company's Management believes that the presentation of operating cash flow before repayment of Gold Notes provides useful information to investors because it excludes the repayment of Gold Notes in working capital items, and is a better indication of the Company's cash flow from operations and is considered by Management to be meaningful in evaluating the Company's past financial performance and its future prospects. The Company believes that conventional measures of performance prepared in accordance with IFRS do not fully illustrate the ability of the Company's operating mines to generate cash flow.
Amounts in
thousands
of
Canadian
dollars Three months ended Nine months ended
September
30, September30, June 30, September30, September30,
2011 2010 2011 2011 2010
Operating
cash flow
per
Financial $
Reports $7,647 $1,774 (2,209) $9,465 $8,156
Repayments
of Gold
Notes 3,148 2,468 2,718 8,439 8,450
Operating
cash flow
before
repayments
of Gold
Notes $10,795 $4,242 $509 $17,904 $16,606
Per share
amounts
(1) $0.03 $0.01 $0.00 $0.05 $0.05
Notes:
(1) Per share amounts are calculated by dividing the operating
cash flow before repayments of Gold Notes by the weighted
average number of shares outstanding for each period
Total cash cost per ounce of gold sold
Total cash cost per ounce of gold sold is a non-GAAP performance measure and may not be comparable to information in other gold producers' reports and filings. The Company has included this non-GAAP performance measure throughout this document as the Company believes that this generally accepted industry performance measure provides a useful indication of the Company's operational performance. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company's performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The following table provides a reconciliation of total cash costs per ounce of gold sold to production expenses per the Financial Statements for the three months and nine months ended September 30, 2011.
Amounts in Three months ended Nine months ended
thousands of
Canadian September September
dollars,except 30, 30, June30, September30, September30,
where
indicated 2011 2010 2011 2011 2010
Mine-site
costs per
Financial
Reports $18,699 $11,695 $17,282 $47,646 $27,480
Production
royalties per
Financial
Reports 2,659 1,620 1,449 4,937 4,026
Total cash
costs $21,358 $13,315 $18,731 $52,583 $31,506
Divided by
gold ounces
sold 19,260 19,760 15,160 46,160 52,509
Total cash
cost per ounce
of gold sold
(Canadian
dollars) $1,109 $674 $1,236 $1,139 $600
Average
CAD:USD
exchange rate 0.98 1.04 0.97 0.98 1.03
Total cash
cost per gold
ounce sold
(US$) $1,130 $648 $1,277 $1,165 $579
Breakdown of
total cash
cost per ounce
of gold sold
(US$)
Holt
Mine(2)
Production
costs $833 $- $1,255 $985 $-
Production
royalties 181 - 136 165 -
$1,014 $- $1,391 $1,150 $-
Holloway
Mine(1)(2)
Production
costs $960 $442 $964 $908 $456
Production
royalties 212 97 164 158 82
$1,172 $539 $1,128 $1,066 $538
Hislop
Mine
Production
costs $1,286 $1,114 $1,311 $1,299 $1,114
Production
royalties - - - - -
$1,286 $1,114 $1,311 $1,299 $1,114
Total
Production
costs $990 $569 $1,178 $1,056 $503
Production
royalties 140 79 99 109 76
$1,130 $648 $1,277 $1,165 $579
Notes:
(1) Commencing the first quarter of 2011, the Company reports the
implicit interest on the Advanced royalty payment obligation as a
financecost. For periods since January 1, 2011, the production
royalty recorded for the Hislop Mine when gold is produced has
been reclassified as a finance cost accordingly.
(2) The Hislop Mine commenced commercial operations on July 1, 2010
and the Holt Mine commenced commercial operations on April 1,
2011.
Mine-site cost per tonne milled
Mine-site cost per tonne milled is a non-GAAP performance measure and may not be comparable to information in other gold producers' reports and filings. As illustrated in the table below, this measure is calculated by adjusting Production Costs, as shown in the statements of operations for inventory level changes and then dividing by tonnes processed through the mill. Since total cash cost per ounce of gold sold data can be affected by fluctuations in foreign currency exchange rates, Management believes that mine-site cost per tonne milled provides additional information regarding the performance of mining operations and allows Management to monitor operating costs on a more consistent basis as the per tonne milled measure eliminates the cost variability associated with varying production levels. Management also uses this measure to determine the economic viability of mining blocks. As each mining block is evaluated based on the net realizable value of each tonne mined, in order to be economically viable, the estimated revenue on a per tonne basis must be in excess of the mine-site cost per tonne milled. Management is aware that this per tonne milled measure is impacted by fluctuations in production levels and thus uses this evaluation tool in conjunction with production costs prepared in accordance with IFRS. This measure supplements production cost information prepared in accordance with IFRS and allows investors to distinguish between changes in production costs resulting from changes in production versus changes in operating performance.
Amounts in Three months ended Nine months ended
thousands of
Canadian September30, September30, June30, September30, September30,
dollars,except
per tonne
amounts 2011 2010 2011 2011 2010
Holt Mine(2)
(3)
Mine-site
costs $7,242 N/A $6,045 $13,287 N/A
Inventory
adjustments
(1) (168) 528 359
Mine-site
operating
costs $7,074 N/A $6,573 $13,646 N/A
Divided by
tonnes of ore
milled (3) 66,556 N/A 54,538 121,094 N/A
Mine-site cost
per tonne
milled $106 N/A $121 $113 N/A
Holloway Mine
Mine-site
costs $4,821 $7,345 $4,658 $15,531 $23,130
Inventory
adjustments
(1) 10 (986) (334) (763) (303)
Mine-site
operating
costs $4,831 $6,359 $4,324 $14,768 $22,827
Divided by
tonnes of ore
milled 49,437 87,162 47,971 148,033 257,934
Mine-site cost
per tonne
milled $98 $73 $90 $100 $89
Hislop Mine(2)
(3)
Mine-site
costs $6,636 $4,350 $6,579 $18,828 $4,350
Inventory
adjustments
(1) (326) 1,022 14 832 1,022
Mine-site
operating
costs $6,310 $5,372 $6,593 $19,660 $5,372
Divided by
tonnes of ore
milled 107,741 110,587 120,677 339,293 110,587
Mine-site cost
per tonne
milled $59 $49 $55 $58 $49
Notes:
(1) This inventory adjustment reflects production costs associated
with unsold bullion and in-circuit inventory.
(2) The Hislop Mine commenced commercial operations on July 1,
2010 and the Holt Mine commenced commercial operations on
April 1, 2011.
(3) Exclude 43,458 tonnes of development ore processed while the
Holt Mine was in pre-production producing 5,435 ounces of gold
in 2011; and 55,930 tonnes of development ore processed while
the Hislop Mine was in pre-production producing 2,075 ounces
of gold in 2010.
Cash margin from mine operations
Cash margin from mine operations is a non-GAAP measure which may not be comparable to information in other gold producers' reports and filings. It is calculated as the difference between gold sales and production costs (comprised of mine-site operating costs and production royalties) per the Company's Financial Statements. The Company believes it illustrates the performance of the Company's operating mines and enables investors to better understand the Company's performance in comparison to other gold producers who present results on a similar basis.
Average realized price per ounce of gold sold
Average realized price per ounce of gold sold is a non-GAAP measure and is calculated by dividing gold sales as reported in the Company's Financial Statements by the gold ounces sold. It may not be comparable to information in other gold producers' reports and filings.
Operating and Financial Statistics - Holt Mine
Amounts in
thousands
ofCanadian
dollars,
except
whereindicated Three months ended Nine months ended
March September
September30, June30, 31, December31, 30, September30, September30,
Holt Mine(1) 2011 2011 2011 2010 2010 2011 2010
Tonnes mined 66,082 55,004 43,804 23,406 N/A 121,086 N/A
Tonnes milled 66,556 54,538 43,458 23,257 N/A 121,094 N/A
Head grade
(g/t Au) 5.01 3.39 4.15 2.92 N/A 4.27 N/A
Average mill
recovery 93.4% 92.5% 93.6% 92.5% N/A 93.0% N/A
Gold produced
(ounces) 10,012 5,508 5,435 2,022 N/A 15,520 N/A
Gold sold (1)
(ounces) 8,870 4,979 5,044 1,408 N/A 13,849 N/A
Gold sales
(from
production) $15,449 $7,284 N/A N/A N/A $22,733 N/A
Cash margin
from mine
operations(2) $6,625 $581 N/A N/A N/A $7,206 N/A
Mine-site cost
per tonne
milled (2) $106 $121 N/A N/A N/A $113 N/A
Total cash
cost per ounce
of gold sold
(2) (US
dollars):
Production
costs $833 $1,255 N/A N/A N/A $985 N/A
Production
royalties 181 136 N/A N/A N/A 165 N/A
Total cash
cost per ounce
of gold sold
(2) 1,014 1,391 N/A N/A N/A 1,150 N/A
Depreciation
and depletion 134 130 N/A N/A N/A 133 N/A
Total
production
cost per ounce
of gold sold
(2) (US
dollars) $1,148 $1,521 N/A N/A N/A $1,283 N/A
Average
CAD:USD
exchange rate 0.98 0.97 0.99 1.01 1.04 0.98 1.03
Capital
expenditures $1,841 $1,963 $1,740 $6,519 $2,027 $5,544 2,027
Notes:
(1) The Holt Mine commenced pre-production activities in the
second half of 2010 and was put into commercial production on
April 1, 2011. The operating results for the Holt Mine prior
to April 1, 2011, were classified as site maintenance and
pre-production expenditures.
(2) See pages 6-9 for non-GAAP measurements.
Operating and Financial Statistics - Holloway Mine
Amounts in
thousands of
Canadiandollars,
except where
indicated Three months ended Nine months ended
June March December September
September30, 30, 31, 31, September 30, 30, September30,
Holloway Mine(1) 2011 2011 2011 2011 2011 2011 2011
Tonnes mined 49,438 47,972 49,666 84,987 88,369 147,076 258,866
Tonnes milled 49,437 47,971 50,625 82,659 87,162 148,033 257,934
Head grade (g/t
Au) 3.71 3.43 4.13 4.85 5.99 3.76 6.42
Average mill
recovery 85.2% 85.0% 86.4% 85.9% 84.7% 85.6% 87.1%
Gold produced
(ounces) 5,026 4,497 5,813 11,069 14,230 15,336 46,390
Gold sold (2)
(ounces) 5,130 4,996 7,364 12,694 16,004 17,490 48,753
Gold sales $8,828 $7,272 $9,996 $17,508 $20,385 $26,096 $59,625
Cash margin from
mine operations
(3) $2,931 $1,822 $3,115 $8,450 $11,420 $7,868 $32,374
Mine-site cost
per tonne
milled (3) $98 $90 $111 $80 $73 $100 $89
Total cash cost
per ounce of
gold sold (US
dollars)(3):
Production costs $960 $964 $834 $596 $442 $908 $456
Production
royalties 212 164 114 108 97 158 82
Total cash cost
per ounce of
gold sold (3) 1,172 1,128 948 704 539 1,066 538
Depreciation and
depletion 540 462 345 263 189 436 159
Total production
cost per ounce
of gold sold (US
dollars) (3) $1,712 $1,590 $1,293 $967 $728 $1,502 $697
Average CAD:USD
exchange rate 0.98 0.97 0.99 1.01 1.04 0.98 1.03
Capital
expenditures $2,938 $2,986 $2,779 $2,333 $1,794 $8,703 $2,737
Notes:
(1) The Holloway Mine commenced production in October 2009.
(2) Includes 1,860 ounces of gold delivered to the Gold Note
holders in each of the quarters.
(3) See pages 6-9 for non-GAAP measurements.
Operating and Financial Statistics - Hislop Mine
Amounts in thousands of Three months ended Nine months ended
Canadian dollars, except
where indicated
September30, June 30, March 31, December 31, September September30, September
30, 30,
Hislop Mine(1) 2011 2011 2010 2010 2010 2011 2010
Overburden stripped (m3) 300,249 472,214 291,307 66,477 222,883 1,063,770 514,810
Tonnes mined (ore) 109,457 114,849 117,138 101,425 107,461 341,444 192,199
738,054 1,303,072 927,216 1,013,011 599,790 2,968,342 1,001,530
(waste)
847,511 1,417,921 1,044,354 1,114,436 707,251 3,309,786 1,193,729
Waste-to-Ore Ratio 6.7 11.3 7.9 10.0 5.6 8.7 5.2
Tonnes milled 107,741 120,677 110,875 98,333 110,587 339,293 166,517
Head grade (g/t Au) 1.68 1.53 1.66 1.54 1.51 1.62 1.46
Average mill recovery 85.4% 87.2% 88.0% 86.3% 87.5% 86.9% 86.4%
Gold produced (ounces) 4,980 5,192 5,209 4,195 4,682 15,381 6,757
Gold sold (2) (ounces) 5,260 5,185 4,376 5,258 3,756 14,821 3,756
Gold sales (2) $9,068 $7,579 $5,947 $7,253 $4,799 $22,594 $4,799
Cash margin from mine $2,432 $1,000 $334 $609 $176 $3,766 $449
operations(3)
Mine-site cost per tonne $59 $55 $61 $53 $49 $58 $49
milled (3)
Total cash cost per ounce of $1,286 $1,311 $1,301 $1,192 $1,114 $1,299 $1,118
gold sold (US dollars)(3)
Depreciation and depletion 150 104 95 46 29 118 29
Total production cost per $1,436 $1,415 $1,396 $1,238 $1,143 $1,417 $1,147
ounce of gold sold (US
dollars) (3)
Average CAD:USD exchange 0.98 0.97 0.99 1.01 1.04 0.98 1.03
rate
Capital expenditures $2,822 $5,244 $1,885 $1,944 $900 $9,951 $4,190
Notes:
(1) Pre-production activities to prepare the Hislop Mine commenced
in early 2010 and were completed at the end of the second
quarter. The Hislop Mine began production on July 1, 2010. The
operating results for the Hislop Mine prior to June 30, 2010,
were classified as exploration or site maintenance and
pre-production expenditures where appropriate.
(2) Incidental gold sales during the mine pre-production period
were recorded as a component of pre-production expenditures.
(3) See pages 6-9 for non-GAAP measurements.
(4) Commencing the first quarter of 2011, the Company reports the
implicit interest on the Advance royalty payment obligation as
a finance cost. For periods since January 1, 2011, a
production royalty cost was recorded for the Hislop Mine when
gold is produced with a corresponding decrease in interest
expense. These amounts have been reclassified as finance costs
to conform to the presentation adopted for the current period.
Statements of Operations (unaudited)
St Andrew Goldfields Ltd.
Expressed in thousands of Canadian dollars except per share information or otherwise indicated
Three monthsended Nine months endedSeptember
September 30, 30,
2011 2010 2011 2010
Gold sales $ 33,345 $ 25,184 $ $ 71,423 $ 64,424
Operating costs
and expenses:
Mine site
operating 18,699 11,695 47,646 27,480
Production
royalty 2,659 1,620 4,937 4,121
Site
maintenance and
pre-production 220 146 84 1,914
Exploration 1,992 1,765 6,924 4,735
Corporate
administration 1,461 1,525 4,926 5,250
Depreciation
and depletion 4,807 3,685 11,651 8,849
Write-down of
mining assets 300 - 300 263
30,138 20,436 76,468 52,612
Operating income 3,207 4,748
(loss) (5,045) 11,812
Finance costs (1,220) (1,639) (3,192) (6,485)
Other income (10,146) 1,397
(expense) (10,520) (3,156)
Income (loss) (8,159) 4,506
before taxes (18,757) 2,171
Deferred taxes 16,397 154 23,009 154
Net income for 8,238 4,660
the period $4,252 2,325
Other
comprehensive
income (loss)
Unrealized gain
(loss) on
available for (78) 50
sale investments,
net of tax (nil
for all periods) (301) 35
Comprehensive
income for the 8,160 4,710
period $ $ $ 3,951 $ 2,360
Basic and diluted
net income per 0.02 0.01
share $ $ $ 0.01 $ 0.01
Weighted average
number of shares
outstanding
(000's)
Basic 368,004 352,015 367,798 333,985
Diluted 369,777 359,669 370,280 340,223
Statements of Cash Flows (unaudited)
St Andrew Goldfields Ltd.
Expressed in thousands of Canadian dollars
Three Months Ended NineMonths Ended September
September 30, 30,
2011 2010 2011 2010
Cash provided by
(used in):
Operating
activities:
Net income for the 4,252
period $ 8,238 $ 4,660 $ $ 2,325
Items not
affecting cash:
Deferred taxes (16,397) (154) (23,009) (154)
Mark-to-market
adjustment on
the secured gold
notes and 4,620
advance royalty
payment
obligation 3,835 158 4,761
Implicit
interest on
secured gold
notes and 4,743
advance minimum
royalty payment
obligation 1,077 1,390 2,764
Mark-to-market
adjustment on
the foreign (531)
currency
derivative
contracts 6,763 (1,358) 7,305
Repayment of (8,450)
gold notes (3,148) (2,468) (8,439)
Depreciation and 8,849
depletion 4,807 3,685 11,651
Write-down of 263
mining assets 300 - 300
Loss on the
divestiture of -
non-core assets - - 1,353
Share-based 958
payments 349 343 1,203
Accretion of
asset retirement 375
obligation 131 125 391
Change in non-cash 6,933
operating working
capital and other 1,692 (4,607) (4,842)
7,647 1,774 9,465 8,156
Investing
activities:
Additions to
exploration and (451)
evaluation
assets (748) (7) (2,821)
Additions to
producing (7,994)
properties and
mine development (6,152) (3,989) (19,127)
Additions to
plant and (2,240)
equipment (1,745) (1,045) (5,951)
Amounts payable
on capital -
additions (1,756) - 2,872
Proceeds from
sale of non-core 75
assets - - 50
Interest earned
on reclamation -
deposits (17) - (50)
Cash
collateralized (1,322)
for banking
facilities (265) - (265)
(10,683) (5,041) (25,292) (11,932)
Financing
activities:
Share purchase
warrants and 3,235
stock options
exercised - 305 102
Private
placements of 28,938
common share
units - 28,938 -
Share issue (1,704)
costs - (1,704) -
Share purchase
plan 203
contributions - - -
Repayment of
secured (7,555)
debentures - (7,555) -
Advance minimum (960)
royalty payments (479) (376) (1,314)
Capital lease (71)
payments (7) (21) (24)
(486) 19,587 (1,236) 22,086
Increase (decrease)
in cash and cash
equivalents for the
period (3,522) 16,320 (17,063) 18,310
Cash and cash
equivalents,
beginning of period 18,871 17,634 32,412 15,644
Cash and cash $
equivalents, end of
period $ 15,349 $ 33,954 $ 15,349 33,954
Balance Sheets (unaudited)
St Andrew Goldfields Ltd.
Expressed in thousands of Canadian dollars
September 30, 2011 December31, 2010
Assets
Current assets:
Cash and cash equivalents $ 15,349 $ 32,412
Restricted cash 1,358 1,093
Accounts and settlements 2,278 10,694
receivable
Inventories 7,142 5,081
Fair value of derivative - 1,955
contracts
Prepayments and other 1,710 1,694
assets
27,837 52,929
Exploration and evaluation 24,474 23,309
assets
Producing properties and mine 56,996 46,357
development
Plant and equipment 44,945 42,401
Reclamation deposits 8,521 8,471
Restricted cash 1,641 1,641
Deferred tax assets 21,502 -
Other assets 766 996
$ 186,682 $ 176,104
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable and $ 16,425 $ 15,885
accrued liabilities
Employee-related 3,370 2,535
liabilities
Fair value of derivative 5,350 -
contracts
Current portion of 14,683 10,623
long-term debt
Current portion of capital 29 18
lease obligations
39,857 29,061
Long-term debt 9,058 14,838
Capital lease obligations 45 5
Asset retirement obligations 10,547 10,156
Deferred taxes - 125
59,507 54,185
Shareholders' equity:
Share capital 98,417 218,482
Share capital to be issued - 832
Contributed surplus 17,112 42,972
Warrants 878 878
Stock options 4,708 3,724
Retained earnings (deficit) 6,655 (144,675)
Accumulated other (595) (294)
comprehensive loss
127,175 121,919
$ 186,682 $ 176,104
St Andrew Goldfields Ltd.
CONTACT: about St Andrew Goldfields Ltd., please contact:
Tel: 1-800-463-5139 or (416) 815-9855; Fax: (416) 815-9437;
Website: www.sasgoldmines.com
Suzette N Ramcharan
Manager, Investor Relations
Email: sramcharan@sasgoldmines.com
Jacques Perron Ben Au
President & CEO CFO, VP
Finance &
Email:jperron@sasgoldmines.com
Administration
Email:bau@sasgoldmines.com