St Andrew Goldfields Reports 2012 First Quarter Results

• Operating cash flow was $8.3 million.
  
  
• Earned net income attributable to shareholders of $2.7 million, and adjusted net earnings ⁽¹⁾ of $1.8 million.
  
  
• Produced 21,018 ounces of gold from three operations (Holt, Holloway and Hislop).
  
  
• Sold 20,325 ounces of gold at an average realized price ⁽¹⁾ of US$1,695 per ounce for revenues of $34.3 million.
  
  
• Mine cash costs of US$858 per ounce and a royalty cost of US$138 per ounce, for a total cash cost per ounce of gold sold ⁽¹⁾ of US$996 per ounce.
  
  
• Earned cash margin from mine operations ⁽¹⁾ of $13.9 million.
  
  
• Incurred total capital expenditures of $8.8 million.
  
  
• Completed a positive Pre-Feasibility study on the Taylor Project and subsequently commenced activities to advance the project.
  
  
• Subsequently, completed a US$25.0 million bank facility on May 8, 2012, to retire the Gold Notes in full; and to increase the Company's capital resources and cash flow (see press release dated May 8, 2012).

"We have achieved another strong quarter of production and cash flow from operations meeting our objectives", said Jacques Perron, President and CEO of SAS. "We are pleased with our production results for the first quarter of 2012, and pleased to be able to report cash costs in line with guidance. The mines are performing well and the grades at Holt and Hislop have been in line or better than reserve grade. Production is expected to increase at Holt and Holloway in the latter half of 2012, as the mines reach their steady state levels. We re-iterate our production guidance of 90,000 - 100,000 ounces of gold at a total cash cost of between US$800-850 per ounce, before royalties, for 2012."

Holt Mine, Operations and Financial Review (see Operating and Financial Statistics on page 12)

For the first quarter of 2012, the Holt Mine ("Holt") produced 11,025 ounces of gold from processing 67,937 tonnes of ore at a head grade of 5.36 g/t Au. The average head grade remained above reserve grade for Zone 4 and recoveries of 94% were in line with expectations. Development of Zone 4 on the 925m Level and 1075m Level has progressed sufficiently enough to enable a steady increase in production rates in the second and third quarters of 2012, which will enable Holt to meets its annual gold production target of approximately 50,000 ounces.

Gold sales during the quarter decreased by 14% when compared to the previous quarter primarily due to a 3% decrease in gold production and an 18% increase in unsold bullion and gold inventory in circuit.

Mine-site cost per tonne milled⁽¹⁾ for the quarter increased by 20% over the previous quarter mainly due to the increased level of development work; repairs to the shaft workings in February pursuant to the shaft incident as well as a slight increase in heating costs due to the winter season. As a result, total cash cost per ounce of gold sold⁽¹⁾ increased by US$116 per ounce. Holt contributed cash margin from mine operations⁽¹⁾ of $9.1 million during the first quarter. The Company expects unit operating costs at Holt will decrease as the mining rate increases towards its steady state levels.

Holloway Mine, Operations and Financial Review (see Operating and Financial Statistics on page 13)

Production at the Holloway Mine ("Holloway") of 5,058 ounces of gold was impacted by lower grade ore mined at the Smoke Deep Zone ("Smoke Deep"), and resulted in a 17% reduction in production when compared to the previous quarter. The grade in the second quarter is expected to remain close to that achieved in the first quarter, but is expected to improve in third and fourth quarters of 2012. The mill recovery rate of 88% was an improvement over the previous quarter and is in line with expectations.

Gold sales decreased by 23% when compared to the previous quarter due to the lower production as discussed above.

Mine-site cost per tonne milled⁽¹⁾ in the quarter increased by 13% over the previous quarter mainly due to additional heating requirements during the winter months and led to an increase of US$101 per ounce in total cash cost per ounce of gold sold⁽¹⁾. The decrease in gold sales resulted in a decrease in cash margin from mine operations⁽¹⁾ of $2.5 million for the quarter

The Company expects the operating costs at Holloway will decrease once the mining rate at Smoke Deep reaches a steady state rate and the ore grade improves.

Hislop Mine, Operations and Financial Review (see Operating and Financial Statistics on page 14)

The Hislop Mine ("Hislop") produced 4,935 ounces of gold in the first quarter of 2012. The throughput at Hislop is expected to return to normal levels as the harsh weather is now over. The overburden removal is now complete with only minor trim amounts remaining. The Company anticipates the capital expenditures for the second quarter of 2012, will be similar to that incurred during the first quarter, however, does not anticipate any significant capital expenditures for the remainder of 2012 as the strip ratio is expected to remain below the life-of-mine ratio of 4.8.

Gold sales in the quarter decreased by 7% due to a 3% decrease in head grade when compared to the previous quarter, however, ore grade is expected to range from 1.88 g/t Au to 2.00 g/t Au for 2012, depending on the mining area of the pit. Mine-site cost per tonne milled⁽¹⁾ during the first quarter of 2012 was $61 per tonne, which was in line with expectations. Cash margin from mine operations⁽¹⁾ of $2.4 million remained at the same level as the previous quarter.

Holt Mill Performance

The Holt Mill processed 209,748 tonnes of ore from the Holt, Holloway and Hislop mines in the first quarter of 2012 as compared to 216,797 tonnes of ore from the three mining operations in the previous period. This represents an average milling rate of 2,300tpd or 90% of the mill capacity.  During the quarter, throughput was negatively impacted by the harsh weather experienced in northeastern Ontario.

Taylor Project Update

SAS recently released results from a Pre-feasibility study focused on the West Porphyry Zone only ("WPZ") and disclosed mineral reserves of approximately 1.0 million tonnes at a grade of 5.45 g/t Au containing approximately 173,000 ounces of gold. (see the Company's National Instrument 43-101 compliant technical report dated March 29, 2012, available under the Company's profile on SEDAR at www.sedar.com and on the Company's website at www.sasgoldmines.com).

A stepped approach will be taken in order to improve the quality of information prior to allocating capital expenditures on the development and production activities at the WPZ. Once underground access is re-established, SAS will validate its geological model, mining method and mill recovery rate by initiating a bulk sampling program. SAS is currently assessing competitive bids from mining contractors to rehabilitate the underground workings for mine exploration and development. The Company expects the bulk sampling activities to commence in the last quarter of 2012.

Exploration Projects

The Company's initial 2012 exploration program focused on surface drilling at the Ghost Zone near Holt and the Hislop North Project located northwest of the Hislop pit, and recent results were encouraging. As well, SAS recently released results from underground drilling west of Zone 4 at Holt, which will be followed up on with surface drilling expected to commence this quarter.

Exploration in the second quarter will continue to concentrate on targets near existing mining operations in order to increase mine life. The priorities will include the Ghost Zone, Hislop North, and Zone 4 at Holt.

SAS is also pleased to announce that Mr. Douglas F. Cater, P.Geo., will be joining SAS in June as Vice President of Exploration. Mr. Cater, a seasoned geologist, most recently held the position of Exploration Manager with Sabina Silver Corp., and prior to that, Dundee Precious Metals. He is currently a member of the Discipline Review and Admissions Review committees at the Association of Professional Geoscientists of Ontario.

Financial Performance

Commercial gold production sold in the first quarter of 2012 increased by 73% from the same period in 2011 due to the commencement of the mine operations at Holt in the second quarter of 2011, but declined by $6.1 million or 13% when compared to the fourth quarter of 2011 as a result of a 6% decrease in gold production.

For the first quarter, mine cash cost per ounce of gold sold decreased by US$149 per ounce from the first quarter of 2011 as a result of the addition of the Holt operation, but increased by US$86 per ounce when compared to the fourth quarter of 2011 due to lower production and a higher operating cost during the winter season.  The decrease in revenue in the first quarter resulted in a decrease in cash margin from mine operations⁽¹⁾ of $4.8 million when compared to the previous quarter.

Mark-to-market loss on the gold-linked derivatives in the current quarter was $0.8 million due to the higher gold price which was offset by a foreign currency transaction and translation gain of $1.5 million as a result of the fluctuation of the US dollar to the Canadian dollar exchange rate.

Capital Resources

At March 31, 2012, the Company's working capital, adjusted for the non-cash current liabilities in connection with the Gold Notes of $10.1 million, was $7.0 million. The Company had cash and cash equivalents of $12.9 million. Subsequent to quarter end and following the completion of a US$25.0 million credit facility with the Bank of Nova Scotia, the Company has access to cash resources of US$13.9 million and in conjunction with the expected cash flows from operations, the Company believes it has sufficient capital resources to finance its ongoing capital programs at the mines and to finance the advancement of Taylor and other advanced stage exploration projects.

Q1 2012 Conference Call Information

SAS is scheduled to release its 2012 first quarter results on Thursday, May 10, 2012. A conference call and webcast is scheduled for 10:00am EDT, Friday, May 11, 2012. Participants may join the call by dialling 1-866-212-4491 (toll free within North America) or 1-416-800-1066 (outside North America) with the password "St Andrew Goldfields". The Company will post accompanying power point slides for the call on the website the morning of May 11. For further information, please see the Company's website at 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 and ongoing development programs 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 COO and VP of Operations. The exploration programs on the Company's various mineral properties are under the supervision of Craig Todd, P.Geo, the Company's Exploration Manager. The calculation of mineral reserves and the Taylor Pre-feasibility study were completed by the Company under the supervision of Pierre Rocque, P.Eng, the Company's VP of Engineering. Messrs. Middlemiss, Todd and Rocque 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), operating cash flow 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 news 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 the "non-GAAP Measures", section of this news release for a discussion and the reconciliation of these non-GAAP measurements to the Company's Unaudited Condensed Interim Financial Report for the three months ended March 31, 2012.

The Unaudited Balance Sheets, Statements of Operations and Statements of Cash Flows for the Company for the three months ended March 31, 2012, can be found on pages 15-17.

To review the complete Unaudited Condensed Financial Report for the three months ended March 31, 2012, and the Interim Management's Discussion and Analysis for the first quarter 2012, 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, north-eastern Ontario, which lies within the Abitibi greenstone belt, the most important host of historical gold production in Canada.

SAS owns and operate the Holt, Holloway and Hislop mines and is forecasting 2012 production of between 90,000 - 100,000 ounces of gold. The Company is also advancing the Taylor Project and is conducting an aggressive exploration program 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 in respect of the targeted gold production levels at the Company's three operating mines for 2012; the improvement in throughput and the impact on operating costs at Holt; the improvement in throughput and the grade mined, and the subsequent impact on operating costs at Holloway; the maintenance of grade, strip ratio and the increase in throughput at Hislop; the increase in throughput at the Holt Mill; the rehabilitation of the underground mine workings at Taylor and the completion of an initial bulk sample, and the timing thereof; the continuance of the exploration programs at the Ghost Zone, Hislop North, Smoke Deep and Zone 4 areas, as well as the commencement of exploration activities at the Deep Thunder Zone; and the sufficiency of the Company's cash flow and cash resources to finance its capital programs and the advancement of Taylor and other advance stage exploration projects.

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, unanticipated operational or technical difficulties which could escalate operating and/or capital costs and reduce anticipated production levels; uncertainties relating to the interpretation of the geology, continuity, grade and size estimates of the mineral reserves and resources; fluctuations in gold prices and exchange rates; operational hazards and risks; compliance with applicable government regulations, including the ability to obtain requisite permits and licenses; dependence on key employees and 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 ability to achieve capital and operating cost estimates, the accuracy or reserve and resource estimates and the assumptions upon which such estimates are based, the continued availability of qualified personnel, and the sufficiency of the Company's cash reserves and operating cash flow to complete planned development and exploration activities. 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. A description of these risks and uncertainties are can also be found in the Company's Annual Information Form obtained on SEDAR at www.sedar.com.

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 Report, to assist in the understanding of the Company's operating results and financial position.

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 Reports. 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. 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.

Note:

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 Report for the three months ended March 31, 2012:

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.

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 Report. 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 Report by the gold ounces sold.  It may not be comparable to information in other gold producers' reports and filings.

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Statements of Operations (unaudited)
St Andrew Goldfields Ltd.
Expressed in thousands of Canadian dollars except per share information

Statements of Cash Flows (unaudited)
St Andrew Goldfields Ltd.
Expressed in thousands of Canadian dollars

Balance Sheets (unaudited)
St Andrew Goldfields Ltd.
Expressed in thousands of Canadian dollars

SOURCE St Andrew Goldfields Ltd.