San Gold Reports Second Consecutive Quarterly Profit
WINNIPEG, MANITOBA -- (Marketwire) -- 03/28/12 -- San Gold Corporation (TSX: SGR)(OTCQX: SGRCF) has reported quarterly and full year financial and operating results for the fourth quarter of 2011 and provided additional operational guidance for 2012.
Q4 Financial and Operating Highlights
-- Net earnings of $3.2 million, compared to a net loss of $9.3 million in
Q4 2010 and operating income of $7.5 million, compared to an operating
loss of $3.9 million in Q4 2010 - demonstrating another consecutive
quarter of solid performance en route to a profitable year.
-- Production of 20,359 ounces, a 119% increase compared to 9,280 ounces in
Q4 2010.
-- Revenue of $33.0 million on gold sales of 19,482 ounces at a realized
price of $1,693 per ounce, an 89% increase from revenue of $17.5 million
in Q4 2010 contributing to a positive and growing contribution margin.
-- Record average mill throughput of 1,542 tons per day.
Full Year Financial and Operating Highlights
-- Operating income of $30.4 million, compared to a 2010 operating loss of
$4.0 million and a net loss of $5.1 million, compared to a 2010 net loss
of $24.6 million.
-- Production of 74,277 ounces, a 71% increase over 2010 production of
43,498 ounces - positioning the Company well for strong production
growth into 2012.
-- Cash flow from operating activities before changes in non-cash working
capital of $19.7 million, compared to a use of $12.6 million in 2010 -
confirming the shift from explorer to positive cash flow producer.
-- Revenue of $114.1 million on gold sales of 71,684 ounces at a realized
price of $1,592 per ounce, a 97% increase from 2010 revenue of $58.0
million.
-- Record low cash costs of $848 per ounce of gold sold compared to 2010
cash costs of $1,119 per ounce.
-- Cash operating margin of $744 per ounce of gold sold.
-- Mill throughput of 1,263 tons per day, a 67% increase compared to 2010
mill throughput of 756 tons per day.
"2011 is a watershed year for San Gold. We have improved on all metrics over the prior year," said George Pirie, President and Chief Executive Officer of San Gold. "In these volatile times our shareholders should be heartened that some of the risk is leaving the San Gold equation as we start to deliver on our potential. The operations team did an exceptional job building out the Rice Lake Mining Complex this year. Our mill capacity has increased by two-thirds while our mining team continues to build out the mining complex along the new Shoreline Basalt mining trend. Financially, we generated almost $10 million in cash from operations in 2011 and have now posted two consecutive profitable quarters. We will continue to aggressively explore and develop our unique land position at Rice Lake and will continue to improve our production profile and deliver positive results from all facets."
Review of Financial Results
The Company reports a total and comprehensive loss of $5.1 million for 2011, a significant improvement over its loss of $24.6 million in 2010. The improvement was a result of reduced losses in the first two quarters of the year combined with two consecutive profitable quarters to end the year, including a $3.2 million profit in the fourth quarter.
San Gold earned revenue of $114.1 million in 2011, a 97% increase compared to revenue of $58.0 million in 2010. This increase was a result of both increased gold sales and an increased realized price of gold. The Company sold 71,684 ounces of gold in 2011, a 59% increase compared to gold sales of 45,204 ounces in 2010. The Company realized $1,592 per ounce of gold sold in 2011, a 24% increase compared to the $1,282 the Company realized per ounce in 2010.
The Company generated record cash flow from operating activities before changes in non-cash working capital of $19.7 million in 2011, a substantial change compared to a use of $12.6 million in 2010. After changes in non-cash working capital, operating activities generated $9.6 million in 2011, compared to a use of $10.0 million in 2010.
The Company reported record income from operations of $30.4 million, a significant improvement from a loss of $4.0 million from operations in 2010.
Capital spending in 2011 was focused on mine development, increasing mill capacity, improving key infrastructure, and sustaining capital. The Company capitalized $50.4 million of mine development and $27.8 million of property, plant, and equipment during the year compared to $39.7 million and $14.5 million in 2010, respectively.
Tables 1 to 4 at the end of this release provide a detailed summary of the Company's key financial and operating metrics for 2011.
2012 Guidance:
-- Production of between 95,000 and 105,000 ounces.
-- Cash Costs: $700 - $800 per ounce.
-- Exploration: In excess of 250,000 metres.
Outlook
In 2012, mining operations are projected to produce between 95,000 and 105,000 ounces. The Company is providing a range of 115,000 to 125,000 ounces for 2013.
Planned development is primarily in four regions - 007, L10, L13 and the Rice Lake Mine. In the 007 Zone, planned ramp access will reach more than 450 metres below surface by year end. In the L10 Zone, development will extend to more than 375 metres below surface. Development work is expected to reach the L13 Zone during the year, although no mining is anticipated at this time. In the Rice Lake Mine, development work will be 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.
Capital expenditures will focus on development in the 007, L10, L13 zones and on the 16 and 26 Levels of the Rice Lake Mine as well as maintaining and improving the mining fleet, constructing additional mill improvements and continued expansion of the tailings facility.
Bissett area exploration efforts remain focused primarily along the Shoreline Basalt, 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. Additional exploration activity in 2012 is planned for the properties joint ventured in 2011. The Company also plans to release an updated resource estimate in the first half of the year.
2011 Financial Results Conference Call
The Company's senior management plans to host a conference call on Thursday, March 29, 2011 at 11:00 am Eastern Standard Time to discuss the 2011 financial results, and to provide an update of the Company's operating, exploration, and development activities.
Participants may join the conference call by dialing 1 (877) 240-9772 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 April 13, 2011 by dialing 1 (800) 408-3053 or 1 (905) 694-9451 for calls 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 December 31, 2011 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: 2011 Income Statement
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SAN GOLD CORPORATION
CONSOLIDATED STATEMENTS OF NET INCOME (LOSS) AND COMPREHENSIVE INCOME
(LOSS)
FOR THE YEARS ENDED DECEMBER 31
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2011 2010
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REVENUE $114,124,699 $ 57,950,671
OPERATIONS
Operations (Note 16) 83,726,249 61,934,879
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INCOME (LOSS) FROM OPERATIONS 30,398,450 (3,984,208)
Exploration 24,498,550 12,146,690
General and administrative (Note 17) 16,394,578 14,069,492
------------ ------------
LOSS BEFORE OTHER INCOME AND EXPENSES 10,494,678 30,200,390
OTHER INCOME AND EXPENSES
Finance income - net (Note 18) 604,478 798,679
Finance costs (Note 18) (444,373) (265,944)
Equity loss of associate (Note 9) (483,350) (503,164)
Loss on disposal of property, plant and
equipment - (7,714)
------------ ------------
LOSS BEFORE INCOME TAX 10,817,923 30,178,533
Income tax recovery on flow-through shares (Note
19) 5,727,373 5,568,350
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LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD 5,090,550 24,610,183
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LOSS PER COMMON SHARE: (Note 22)
Basic $ 0.02 $ 0.09
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Diluted $ 0.02 $ 0.09
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Table 2: Financial Highlights (000's $CDN)
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YTD YTD
2011 2010
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Total and comprehensive income (loss) (000) ($5,091) ($24,610)
Items not affecting cash (000) $24,777 $12,051
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Cash provided (used) by operating activities before
changes in non-cash working capital (000) $19,687 ($12,559)
Net change in non-cash working capital (000) ($10,071) $2,579
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Cash provided by operating activities (000) $9,616 ($9,980)
Total and comprehensive income (loss) (000) ($5,091) ($24,610)
Earnings (loss) per share
- basic ($0.02) ($0.09)
- diluted ($0.02) ($0.09)
Weighted average number of common shares outstanding
- basic 309,069,325 284,660,396
- diluted 309,069,325 284,660,396
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Table 3: Production Summary and Statistics (1)
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Change Change
2011 2010 (#) (%)
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Ore milled (tons) 461,150 275,860 185,290 67%
Head grade (g/tonne Au) 5.93 5.85 0.08 1.4%
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Contained gold (ounces) 79,802 47,082 32,720 69%
Ounces of gold produced (2) 74,277 43,497 30,780 71%
Ore mined (tons) 486,579 282,553 204,026 72%
Ore milled per day (tons) 1,263 756 508 67%
Ore mined per day (tons) 1,333 774 559 72%
Mill recovery (%) 93% 92% 1% 0.7%
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(1) Certain numbers may not compute due to the effects of rounding and
truncation.
(2) Final refinery settlements may have resulted in increases or decreases
to reported gold production.
Table 4: Quarterly Production Summary and Statistics (1)
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Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
2011 2011 2011 2011 2010 2010 2010 2010
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Ore milled
(tons) 141,890 121,844 114,624 82,792 83,174 75,263 58,098 59,325
Head grade
(g/tonne Au) 5.36 5.83 6.35 6.47 4.29 6.12 5.90 7.65
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Contained gold
(ounces) 22,190 20,732 21,244 15,636 10,414 13,436 9,996 13,236
Ounces of gold
produced (2) 20,359 19,119 20,111 14,688 9,280 12,568 9,188 12,462
Ore mined (tons) 136,166 124,952 123,261 102,200 84,743 71,463 63,323 63,024
Ore milled per
day (tons) 1,542 1,324 1,260 920 904 818 638 659
Ore mined per
day (tons) 1,480 1,358 1,355 1,136 921 777 696 700
Mill recovery
(%) 92% 92% 95% 94% 89% 94% 93% 94%
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(1) Certain numbers may not compute due to the effects of rounding and
truncation.
(2) Final refinery settlements may have resulted in increases or decreases
to reported gold production.
Contacts:
San Gold Corporation
Tim Friesen
Communications Director
1(855) 585-4653
San Gold Corporation
Gestur Kristjansson
Chief Financial Officer
+1 (204) 772-9149
www.sangold.ca
