San Gold loses $690,198 in Q1

San Gold Corp (C:SGR)
Shares Issued 323,641,841
Last Close 5/8/2012 $1.33
Tuesday May 08 2012 - News Release

Mr. George Pirie reports

SAN GOLD REPORTS 2012 Q1 RESULTS

San Gold Corp., with greatly improved operating cash flow and cash costs, and record gold production, is releasing 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.

  INTERIM CONDENSED CONSOLIDATED STATEMENTS OF NET LOSS AND COMPREHENSIVE   

               LOSS FOR THE THREE MONTH PERIOD ENDED MARCH 31               

                                                                            

                                                        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 

We seek Safe Harbor.

© 2012 Canjex Publishing Ltd.