WINNIPEG, MANITOBA--(Marketwired - May 9, 2013) - San Gold Corporation (TSX:SGR)(OTCQX:SGRCF) today reported 2013 first quarter financial and operating results.

During the quarter, the Company produced 17,354 ounces of gold with an average milled grade of 4.15 grams per tonne and recognized a quarterly total and comprehensive loss of $9.7 million for the quarter. Included in this amount is the recognition of employee severance and other charges of approximately $2.5 million which are expected to result in annual cost savings of approximately $3.0 million.

The Company also moved forward with its capital plan for the Rice Lake mining complex during the quarter. This plan includes the development of operational access beneath the current mining areas within the 007 and Hinge mines while extending the 16 and 26 levels in order to accelerate access to the down dip extensions of these deposits to more than 1,200 metres below surface.

2013 First Quarter Highlights:

• Appointed Mr. Ian Berzins as President and CEO effective March 25, 2013.
• Produced 17,354 ounces of gold.
• Recognized quarterly revenue of $24.3 million on gold sales of 15,353 ounces at a realized price of $1,584 per ounce.
• Had a cash and cash equivalents balance of $33.7 million as at March 31, 2013.
• Achieved average mill throughput of 1,733 tons per day for the quarter.
• Recognized quarterly loss from operations of $0.04 million.
• Recognized quarterly total and comprehensive loss of $9.7 million
• Cash flow used by operating activities before changes in non-cash working capital of $2.2 million.
• Total cash costs of $1,113 per ounce of gold sold.
• Realized a cash operating margin of $471 per ounce of gold sold with a realized price of $1,584 per ounce through the quarter.
• Completed approximately 62,000 metres of exploration and definition diamond drilling.
• Initiated comprehensive review of operations with a mandate to improve performance.

"We have already made significant progress with our development efforts during the first quarter. Despite a temporary reduction in grade, our material handling capacity has been improved and we have managed to reduce our overall operating costs compared to the same period last year. This is consistent with our goal to optimize our Rice Lake operations and I expect significantly improved financial results as grades return to normalized levels," said Ian Berzins, President and Chief Executive Officer of San Gold. "The Company remains on track to produce 75,000 and 90,000 in 2013, at cash costs of between $800 and $900."

Review of 2013 First Quarter Results

The Company reports quarterly loss from operations of $0.04 million and a total and comprehensive loss of $9.7 million, compared to income from operations of $7.1 million and a total and comprehensive loss of $0.7 million in the first quarter of 2012. The decrease is primarily attributable to reduced gold sales in the quarter as well as severance and other charges of approximately $2.5 million incurred in the quarter associated with staff reductions and corporate administrative overhead. The Company expects these reductions will result in cost savings of approximately $3 million annually.

The Company earned quarterly revenue of $24.3 million, a 31% decrease over revenue of $35.5 million in the first quarter of 2012. This change was a result of lower gold sales and lower gold price. The Company sold 15,353 ounces of gold in the first quarter of 2013, a 28% decrease compared with sales of 21,322 ounces in the first quarter of 2012. The decrease in gold sales was a result of decreased production, a result of lower than planned grade from the Hinge, L10 and 007 mines and a smaller contribution of Rice Lake ore compared to the previous period. The Company expects that grade will return to more normalized levels as the year progresses. The Company realized $1,584 per ounce of gold sold in the first quarter of 2012, a 5% decrease compared to the $1,665 the Company realized per ounce in the first quarter of 2012.

The Company used $2.2 million of cash flow from operating activities before changes in non-cash working capital in the first quarter of 2013, compared with $10.0 million generated in the first quarter of 2012. After changes in non-cash working capital, operating activities used $6.5 million in the first quarter of 2013, compared to $14.2 million generated in the first quarter of 2012.

Capital spending in the first quarter of 2012 was focused on mine development, increasing mining capability, improving key infrastructure, and sustaining capital. The Company invested $15.6 million in mine development activities and recognized related depletion of $5.5 million compared with an investment of $14.6 million and related depletion of $7.8 million in the first quarter of 2012. The Company also capitalized $3.3 million of property, plant, and equipment during the first quarter of 2013 compared to $3.7 million in the first quarter of 2012. The Company is taking a critical review on all subsequent capital development and property, plant and equipment spending for the year and may elect to defer or cancel previously planned projects.

Outlook

The Company is in the process of implementing reductions to its operating, capital, corporate overhead, and exploration costs as well as evaluating investments that do not directly contribute to the Company's core operations. The focus will be to optimize margins per ounce and find the most direct path to achieving free cash flows.

For the balance of 2013, to combat lower than planned grade, the Company will concentrate on the 007 complex and bringing Rice Lake production back on stream at a more accelerated rate. Mining operations will continue in the Rice Lake mine alongside ongoing capital development projects to provide operational access beneath the current mining areas within the 007 and Hinge mines and extend the 16 and 26 levels in order to accelerate access to the down dip extensions of these deposits. The Company expects the changes to ultimately result in increased grade for the balance of the year, a further decrease in capital development spending and PPE spending requirements while maintaining the production guidance of 75,000 to 90,000 ounces.

Exploration activities for the remainder of the year will continue to focus on definition and extension drilling for both production planning and exploration purposes at the San Antonio Mining Unit, the Shoreline Basalt Unit, the Normandy Creek Shear Zone, and within the intermediate volcanic rock unit north of the Shoreline Basalt Unit. The objectives of the Company's exploration program is to develop a larger mine complex that can be exploited through existing infrastructure.

Underground drill bays constructed during the first quarter are providing better access for definition drilling of the 007 structures at depth. The Company has improved confidence about the resource potential at depth as recent drill results below 26 Level confirm continuity of the geological structures hosting the 007 and Hinge deposits.

2013 Q1 Financial Results Conference Call

The Company's senior management plans to host a conference call on May 10, 2013 at 10:00 am Eastern Standard Time to discuss the 2013 first quarter 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 (866) 225-2055 or 1 (416) 340-8410 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 26, 2013 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 8568217. 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 Rice Lake Mining Complex near Bissett, Manitoba. The Company employs more than 450 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, 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).

For further information on San Gold, please visit www.sangold.ca.

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

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: 2013 First Quarter Income Statement

Table 3: Production Summary and Statistics

Table 4: Quarterly Production Summary and Statistics

NOTE: Final refinery settlements, or the effects of rounding, may have resulted in increases or decreases to reported gold production.