May 06, 2010 SAS Reports Net Income of $6.7 Million for the First Quarter of 2010
St Andrew Goldfields Ltd. (T-SAS), ("SAS" or the "Company") is pleased to report it earned net income of $6.7 million, or $0.02 on a per share basis, in the first quarter of 2010. Adjusted net earnings (1) for the quarter were $4.7 million or $0.01 per share.
FIRST QUARTER HIGHLIGHTS
Produced 16,042 ounces of gold in the quarter and sold 17,930 ounces of gold at a total cash cost of US$520 per ounce.
Commenced stripping and mining activities at the Hislop Project with gold production expected to begin during the second quarter of 2010.
Results from second phase of drilling on the Smoke Deep Zone confirm the robustness of higher grade shoots with one hole returning 5.83 g/t Au over 80.3 metres, including 8.84 g/t over 31.3 metres.
Commenced surface exploration drilling program at the Taylor Project, and at the Holloway, Deep Thunder Zone.
"We are pleased to report such positive results from the first quarter of 2010. The operations at Holloway during the quarter have once again outperformed our expectations", said Jacques Perron, President and CEO of SAS. "We are on track to bring Hislop into production this quarter, and will look to develop Holt in the second half of the year. We are also encouraged with the ongoing positive results from the ever growing zone at Smoke Deep and are continuing our exploration efforts in this area. We recently commenced surface exploration drilling campaigns at the Taylor Project and at Deep Thunder. We look forward to reporting results from these programs going forward."
In the first quarter of 2010, the Holloway Mine exceeded the production target of 15,000 ounces by producing 15,929 ounces of gold from processing 85,842 tonnes of ore at a head grade of 6.50 g/t. Mill recovery during the quarter improved to 88.8% from 86.9% achieved in the previous quarter. Gold production for the quarter was 15% lower than the previous quarter due to a 16% lower ore feed. In the fourth quarter of 2009, the Holt Mill processed 22,847 tonnes of ore mined during the pre-production phase (May -- September 2009).
During the quarter, the Company earned additional cash margin from mining operations of approximately $4.2 million from the sale of 17,930 ounces of gold as compared to the sale of 11,296 ounces of gold in the previous quarter. Realized gold price during the quarter averaged US$1,123 per ounce, a decrease of US$20 an ounce when compared to the US$1,143 per ounce achieved in the previous quarter. The decrease in realized gold price was offset by the increase of 5,500 ounces of gold sold to third parties during the quarter.
Cash cost per ounce sold (1) during the quarter increased to US$520 an ounce from US$456 an ounce achieved in the fourth quarter of 2009, which is still below the cost estimate outlined in the technical report for the Holloway Mine. The increase in cash cost was due to no toll milling contracted during the quarter, the increase in mine site operating costs due to seasonal heating and equipment maintenance and inventory level changes, offset by the increase in gold sold during the quarter.
SAS anticipates the Holloway Mine will continue to produce 15,000 ounces of gold per quarter in 2010. The Company continues to look for opportunities to reduce operating costs and to improve the efficiencies of the mining operations.
Hislop Project Update
Stripping activities at the Hislop Project commenced in the beginning of 2010, waste rock drilling and blasting commenced in March 2010, and site preparation work performed during the quarter included the re-electrification of the Hislop site, site planning and office mobilization, as well as mobilization of the crusher, fuelling station and mobile equipment. As of March 2010, the crusher is fully operational and is connected to the power grid. Capital expenditures including pre-production costs incurred during the quarter were approximately $1.2 million.
Ore mining activities at the Hislop Project commenced in March 2010. Ore mined will be stockpiled and transported to the Holt Mill for processing at a reduced level until the half load restrictions on the highway is lifted. The volume of ore feed from the Hislop Project to the Holt Mill will increase throughput to the budgeted tonnage of 1,500 tpd by the end of the second quarter. Currently all facets of the pit mining activities are in place and performance has been satisfactory. The Company anticipates the Hislop Project will produce approximately 25,000 ounces of gold in 2010.
Holt Mine Update
In July 2009, the Company received a favourable decision from the Superior Court of Justice (Ontario) on the Holt Royalty. Newmont Canada Limited has appealed the Court's decision on the Holt Royalty but no date for the appeal to be heard has been set. The Company is currently performing the necessary work to maintain the asset in a condition that allows for an easy start up of mining activities once the Holt Royalty litigation is satisfactorily resolved. The Company is also evaluating its options in the event of any possible delay in the legal process.
2010 Exploration Update
Holloway Mine - Smoke Deep Zone
During the quarter, the Company continued exploration work with a second phase of the underground exploration drilling program at the Smoke Deep Zone, targeting the areas that remain open along strike to the east, and down dip. On April 12, 2010, results from this second phase of drilling were released confirming the robustness of higher grade shoots, with one hole returning 5.83 g/t Au over 80.3 metres, including 8.84 g/t over 31.3 metres (see press release dated April 12, 2010, for full list of results). The ongoing second phase of drilling is infilling areas of the Smoke Deep zone in order to better define the distribution of the gold mineralization, and although the assay results are pending, the alteration and mineralization intersected in the drilling is in agreement with results from previous drilling. The Company will use this information to better determine the potential of the zone and be able to make a decision on future exploration and possible development of this zone.
Holloway Mine -- Deep Thunder zone
Surface drilling at the Deep Thunder zone has commenced with one drill starting in early March 2010, and a second drill added in late March 2010, to permit the completion of the planned 9,200-metre drilling program this summer. Although no assays have been received from this zone as yet, the first several holes have identified the east-northeast ("ENE") trending high strain zones and bounding structures that are interpreted to be the controls on the location of the gold mineralization, similar to the Lightning, Smoke Deep and Blacktop zones located to the west. The focus of the remaining holes will be to the east where the ENE structure intersects the mafic-ultramafic contact, an area where the gold mineralization has been intersected by previous drilling.
Advanced Exploration - Taylor Project
In the fourth quarter of 2009, SAS acquired what it believes to be, an important mineral claim (the Bourgeois property) associated with its Taylor property that overlies the strike extension between the West Porphyry and Shoot Zones, where no previous exploration has been conducted. Previous drilling located proximal to the east and west extent of the Bourgeois property have returned assay intervals including 44.2 g/t Au over 1.5 metres, 9.2 g/t Au over 2.0 metres and 7.4 g/t Au over 4.5 metres.
Since mid-February, 9 holes totaling 3,200 metres of a planned 4,000 metres have been drilled on the Bourgeois property. Drilling along the western extent of the property has intersected extensive quartz carbonate alteration similar to the Shoot Zone immediately to the west and a limited amount of preliminary assays returned to date indicates that the geologic structure hosting the Shoot Zone extends onto the Bourgeois claim. Along the eastern margin of the claim, limited drilling to date has intersected several wide zones of quartz carbonate alteration and quartz veining similar to previous drilling results at the West Porphyry zone, and assay results for this portion of drilling are pending.
SAS has cash and cash equivalents of approximately $17.2 million as at March 31, 2010. The Company anticipates its obligation to retire approximately $7.6 million of secured debentures due on December 31, 2010, its commitment to deliver gold to the holders of the Gold Notes and to fund its capital and mine development programs at the Hislop Project and to restart the Holt Mine will be met from its cash reserves, cash flow, and budgeted gold production from mining operations.
(1) Non-GAAP Measures
Adjusted net earnings, as well as cash cost per ounce and mine-site cost per tonne are non-GAAP measures, which do not have standardized meanings prescribed by GAAP and are not necessarily comparable to other similarly titled measures of other companies due to potential inconsistencies in the method of calculation. The Company discloses these measures, which are based on its financial statements, to assist in the understanding of the Company's operating results and financial position. The Company believes that, in addition to conventional measures, prepared in accordance with GAAP, certain investors use this information to evaluate the Company's performance and ability to generate cash flow. Please refer to pages 8 - 10 of the Company's 2010 First Quarter Management Discussion & Analysis for a reconciliation of these non-GAAP measurements.
To review the complete Consolidated Financial Statements for the three months ended March 31, 2010, and the 2010 First Quarter Management's Discussion and Analysis, please see SAS's SEDAR filings at www.sedar.com or on the Company's website at www.sasgoldmines.com.
Operating Statistics for the Holloway Mine and Consolidated Financial Statements for the three months ended March 31, 2010, are included in the PDF version of this release.
Production at the Holloway Mine, processing at the Holt Mill, and mine development of the Hislop Project are being conducted under the supervision of Duncan Middlemiss, P.Eng, the Company's Vice President & General Manager, East Timmins Operations. The exploration programs on the Company's various mineral properties are under the supervision of Michael Michaud, P.Geo, the Company's Vice President of Exploration. Mr. Middlemiss and Mr. Michaud are SAS' qualified persons as defined by NI 43-101, and both have reviewed and approved this news release.
SAS (operating as "SAS Goldmines"), is a gold mining and exploration company with an extensive land package in the Timmins mining district, northeastern Ontario, , which lies within the Abitibi greenstone belt, the most important host of historical gold production in Canada. SAS is focussed on developing its assets in the Timmins Camp which includes current and near-term gold production, and exploration activities.
For further information about St Andrew Goldfields Ltd., please contact:
Tel: 1-800-463-5139 or (416) 815-9855; Fax: (416) 815-9437; Website: www.sasgoldmines.com
Suzette N Ramcharan
Manager, Investor Relations
President & CEO
CFO, VP Finance & Administration
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. Specifically this news release contains forward-looking information regarding the achievement of operational efficiencies and reduced operating costs and the planned 2010 production levels at the Holloway Mine; the development and commencement of production at the Hislop Project, the timing thereof, the targeted production levels for 2010 and the increase in throughput at the Holt Mill arising therefrom; the development and restart of the Holt Mine into a producing mine and the timing thereof; the completion of exploration drilling programs to be completed by the Company in 2010, including at the Smoke Deep Zone and Deep Thunder zone at the Holloway Mine and at the Taylor Project and the timing thereof and the sufficiency of the Company's financial resources to meet its 2010 commitments and objectives. 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, uncertainties relating to the interpretation of the geology, continuity, grade and size estimates of the mineral reserves and resources, unanticipated operational or technical difficulties which could escalate operating and/or capital costs and reduce anticipated production levels, fluctuations in gold prices and exchange rates, insufficient funding or delays or inability to raise additional financing as required on satisfactory terms, changes in laws or regulations, the risks of obtaining necessary licenses and permits, changes in general economic conditions, changes in conditions in the financial markets and an adverse Appeal Court decision on the Holt Royalty. Such forward looking information is based on a number of assumptions, including but not limited to the expected timeline to complete pre-production activities, the availability of adequate financing, the level and volatility of the price of gold, the accuracy of reserve and resource estimates and the assumptions on which such estimates are based, the ability to achieve capital and operating cost estimates, the sufficiency of the Company's cash flows and reserves to achieve its 2010 objectives, the ability to attract and maintain adequate skilled personnel to operate its mines and to conduct its exploration programs, a favourable Appeal Court decision on the Holt Royalty and no significant decline in general business and economic conditions. 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.
Full release attached in PDF
You can view the Next News Releases item: Tue Jun 22, 2010, Phase II Drilling at Smoke Deep Zone Confirms Higher Grade Gold Mineralization Intersected Previously, Initial Drilling Results at New Deep Thunder Zone Identifies Similar Style of Gold Mineralization
You can view the Previous News Releases item: Mon Apr 12, 2010, Drilling Program at Smoke Deep Intersects Significant Values of 5.83 g/t Au over 80.3 metres, Including 8.84 g/t Au over 31.3 metres
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