San Gold Reports 2012 Q1 Results
WINNIPEG, MANITOBA -- (Marketwire) -- 05/08/12 -- San Gold Corporation (TSX: SGR)(OTCQX: SGRCF). With greatly improved operating cash flow and cash costs, and record gold production, the Company is pleased to announce its quarterly financial and operating results for the first quarter of 2012.
2012 Q1 Financial and Operating Highlights
-- Generated quarterly operating income from operations of $8.0 million,
compared to income from operations of $3.2 million in the first quarter
of 2011.
-- Recognized quarterly total and comprehensive loss of $0.7 million,
compared to total and comprehensive loss of $5.3 million in the first
quarter of 2011.
-- Cash flow from operating activities before changes in non-cash working
capital of $10.0 million, compared to $0.6 million in the first quarter
of 2011.
-- Produced a record 22,162 ounces of gold, a 51% increase compared to
14,688 ounces in the first quarter of 2011.
-- Recognized record quarterly revenue of $35.5 million on gold sales of
21,322 ounces at a realized price of $1,665 per ounce, a 79% increase
from revenue of $19.8 million in the first quarter of 2011.
-- Achieved record average mill throughput of 1,687 tons per day for the
quarter, an 85% increase compared to average mill throughput of 920 tons
per day in the first quarter of 2011.
-- Achieved total cash costs of $840 per ounce of gold sold compared to
$862 per ounce sold in the first quarter of 2011.
-- Realized a cash operating margin of $825 per ounce of gold sold with a
realized price of $1,665 per ounce through the quarter.
-- Had a cash and cash equivalents balance of $36.2 million as at March 31,
2012.
-- Completed approximately 64,000 metres of exploration and definition
diamond drilling.
-- Appointed Mr. Torben Jensen as Vice-President, Corporate Development in
the subsequent period.
"It is incredible to see the mining complex taking shape in Rice Lake. Rice Lake has now reached the point where the cash contribution from operations is financing substantial vertical and lateral development in the 007 and Hinge zones. Development work continued ahead of schedule during the quarter, providing additional flexibility to our mine planners. With total tonnage now on budget, we believe this flexibility is critical to refining the mining sequence toward improving overall production volumes," said George Pirie, President and Chief Executive Officer of San Gold.
Review of Financial Results
The Company reports quarterly operating income from operations of $8.0 million and a total and comprehensive loss of $0.7 million, compared to income from operations of $3.2 million and a total and comprehensive loss of $5.3 million in the first quarter of 2011. The improvement was a result primarily of increased production volumes. The Company produced 22,162 ounces of gold during the first quarter of 2012 compared with 14,688 ounces in the first quarter of 2011.
The Company earned revenue during the first quarter of 2012 of $35.5 million, a 79% increase over revenue of $19.8 million in the first quarter of 2011. This increase was a result of both greater gold sales and a higher realized price of gold. The Company sold 21,322 ounces of gold in the first quarter of 2012, a 52% increase compared sales of 14,059 ounces in the first quarter of 2011. The Company realized $1,665 per ounce of gold sold in the first quarter of 2012, an 18% increase compared to the $1,410 the Company realized per ounce in the first quarter of 2011. San Gold recognized an expense of $1.0 million associated with its share of SGX's loss for the quarter. The carrying value of the Company's investment in SGX is currently therefore recognized at $1. The market value of the Company's 28.6 million shares of SGX is $12.3 million as at March 31, 2012.
The Company generated record cash flow from operating activities before changes in non-cash working capital of $14.2 million in the first quarter of 2012, a substantial change compared to a use of $4.4 million in the first quarter of 2011. After changes in non-cash working capital, operating activities generated $9.6 million in the first quarter of 2012, compared to a use of $10.0 million in the first quarter of 2011.
Capital spending in the first quarter of 2012 was focused on mine development, increasing mill capacity, improving key infrastructure, and sustaining capital. The Company capitalized $14.6 million of mine development and $3.7 million of property, plant, and equipment during the first quarter of 2012 compared to $12.9 million and $10.7 million in the first quarter of 2011, respectively.
Tables 1 to 4 at the end of this release provide a detailed summary of the Company's key financial and operating metrics.
2012 Guidance:
-- Production of between 95,000 and 105,000 ounces of gold.
-- Cash Costs: $700 - $800 per ounce of gold.
-- Exploration: In excess of 250,000 metres of diamond drilling.
Outlook
The company remains on track to produce between 95,000 and 105,000 ounces of gold in 2012 at a cash cost of between $700 and $800 per ounce sold and maintains its preliminary forecast of 115,000 to 125,000 ounces for 2013.
Capital expenditures will focus on development in the 007 and L10 zones and on the 16 and 26 Levels of the Rice Lake Mine as well as maintaining and improving the mining fleet, additional mill improvements and continued expansion of the tailings facility. In the 007 and L10 zones, declines are being advanced below 300 m from surface. A 5.5 m diameter raise bore hole is also being constructed to a depth of 335 m to facilitate ventilation of working areas in the down dip extension of the 007 Zone. In the Rice Lake Mine, development work remains focused on the 98 and 84 Veins on 26 Level and on extending 16 Level. Development continues from the 16 Level of the Rice Lake Mine to access the Shoreline Basalt deposits. This access will allow the Company to develop the exploration platforms and infrastructure required to explore and exploit these deposits from this horizon.
Bissett area exploration efforts remain focused primarily along the Shoreline Basalt unit, with particular attention being paid to the L10, 007, and L8 zones. Drilling continues to test the down-dip extensions of the L10 Zone from the 16 and 26 levels of the Rice Lake Mine (730 m and 1220 m below surface, respectively). Deep drilling continues from surface to trace the down dip extensions of the 007 Zone. Exploration activity has commenced on the properties joint ventured in 2011. Additional drill plans for these properties will be determined by the results of previous drilling in conjunction with the Company's contractual obligations.
2012 First Quarter Conference Call
The Company's senior management plans to host a conference call on Wednesday, May 9, 2012 at 11:00 am Eastern Standard Time to discuss the 2012 first quarter 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) 226-1793 for participants within Canada and the United States or 1 (416) 340-8527 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 May 30, 2012 by dialing 1 (800) 408-3053 for callers within Canada and the United States or 1 (905) 694-9451 for callers outside Canada and the United States. The pass code for the conference call playback is 3604382. 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 Hinge, 007, and Rice Lake mines near Bissett, Manitoba. The Company employs more than 400 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 March 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).
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: 2012 First Quarter Income Statement
SAN GOLD CORPORATION
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF NET LOSS AND COMPREHENSIVE
LOSS FOR THE THREE MONTH PERIOD ENDED MARCH 31
(Unaudited)
-
---------------------------------------------------------------------------
2012 2011
--------------- -----------
REVENUE 35,501,860 $ 19,817,478
OPERATIONS
Operations (Note 15) 27,517,466 16,619,833
INCOME FROM OPERATIONS 7,984,394 3,197,645
Exploration 4,601,290 5,305,747
General and administrative (Note 16) 4,672,796 3,170,564
LOSS BEFORE OTHER INCOME AND EXPENSES 1,289,692 5,278,666
OTHER INCOME AND EXPENSES
Finance income - net (Note 17) 298,713 61,533
Finance costs (Note 17) (114,831) (118,636)
Equity loss of associate (Note 8) (1,000,000) -
--------------- -----------
LOSS BEFORE INCOME TAX 2,105,810 5,335,769
Income tax recovery on flow-through shares 1,415,612 -
--------------- -----------
NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD 690,198 $ 5,335,769
--------------- -----------
LOSS PER COMMON SHARE: (Note 21)
Basic 0.00 $ 0.02
--------------- -----------
--------------- -----------
Diluted 0.00 $ 0.02
--------------- -----------
----------------------------------------------------------------------------
Notes on the Income Statement provided here reference notes to the Company's
interim financial statements, available on SEDAR and on the Company's
website at http://www.sangold.ca.
Table 2: Financial Highlights (000's $CDN)
----------------------------------------------------------------------------
Q1 Q1
2012 2011
----------------------------------------------------------------------------
Total and comprehensive income (loss) (000) $ (690) $ (5,336)
Items not affecting cash (000) $ 10,694 $ 5,908
----------------------------------------------------------------------------
Cash provided (used) by operating activities
before changes in non-cash working capital
(000) $ 10,004 $ 572
Net change in non-cash working capital (000) $ 4,246 $ 3,873
----------------------------------------------------------------------------
Cash provided by operating activities (000) $ 14,250 $ 4,445
Earnings (loss) per share
- basic $ 0.00 $ (0.02)
- diluted $ 0.00 $ (0.02)
Weighted average number of common shares
outstanding
- basic 314,566,676 302,297,160
- diluted 314,566,676 302,297,160
----------------------------------------------------------------------------
Table 3: Production Summary and Statistics
----------------------------------------------------------------------------
Q1 Q1 Change Change
2012 2011 (#) (%)
Ore milled (tons) 153,537 82,792 70,745 85%
Head grade (g/tonne Au) 5.35 6.47 -1.12 -17.4%
----------------------------------------------------------------------------
Contained gold (ounces) 23,995 15,636 8,359 53%
Ounces of gold produced 22,162 14,688 7,474 51%
Ore mined (tons) 144,549 102,200 42,349 41%
Ore milled per day (tons) 1,687 920 767 83%
Ore mined per day (tons) 1,588 1,136 453 40%
Mill recovery (%) 92% 94% -2% -1.7%
----------------------------------------------------------------------------
Table 4: Quarterly Production Summary and Statistics
----------------------------------------------------------------------------
Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2
2012 2011 2011 2011 2011 2010 2010 2010
----------------------------------------------------------------------------
Ore milled
(tons) 153,537 141,890 121,844 114,624 82,792 83,174 75,263 58,098
Head grade
(g/tonne
Au) 5.35 5.36 5.83 6.35 6.47 4.29 6.12 5.90
----------------------------------------------------------------------------
Contained
gold
(ounces) 23,995 22,190 20,732 21,244 15,636 10,414 13,436 9,996
Ounces of
gold
produced 22,162 20,359 19,119 20,111 14,688 9,280 12,568 9,188
Ore mined
(tons) 144,549 136,166 124,952 123,261 102,200 84,743 71,463 63,323
Ore milled
per day
(tons) 1,687 1,542 1,324 1,260 920 904 818 638
Ore mined
per day
(tons) 1,588 1,480 1,358 1,355 1,136 921 777 696
Mill
recovery % % % % % % % %
(%) 92 92 92 95 94 89 94 93
----------------------------------------------------------------------------
NOTE: Final refinery settlements, or the effects of rounding, may have
resulted in increases or decreases to reported gold production.
Contacts:
San Gold Corporation
Gestur Kristjansson
Chief Financial Officer
+1 (204) 772-9149
San Gold Corporation
Tim Friesen
Communications Director
+1 (855) 585-4653
www.sangold.ca