SAS Reports 2009 Fourth Quarter and Year End Results

/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES/

TORONTO, Feb. 22 /CNW/ - St Andrew Goldfields Ltd. (TSX:SAS), ("SAS" or the "Company") is pleased to report net income of $0.5 million, or nil on a per share basis, in the fourth quarter of 2009. Adjusted net earnings for the quarter were $3.6 million or $0.01 per share. Net loss in 2009 was $22.0 million or $0.07 per share and the 2009 adjusted net loss was $18.5 million or $0.06 per share. As described below, adjusted net earnings and adjusted net loss, as well as cash cost per ounce, are measures not prepared in accordance with generally accepted accounting principles.

FOURTH QUARTER HIGHLIGHTS

  • Earned net income of $0.5 million, and generated cash flow from operations of $3.9 million.
  • Achieved gold production of 18,838 ounces and gold sales of 11,296 ounces at a total cash cost of US$456 per ounce.
  • Custom milled a total of 112,892 tonnes of ore at the Holt Mill in the second half of the year and realized revenue of $3.1 million, of which $1.4 million was earned in the fourth quarter.
  • Made a production decision to bring the Hislop Project into production, which is expected to occur during the second quarter of 2010.
  • Launched the first phase of exploration drilling on the Smoke Deep Zone at the Holloway Mine.

FULL YEAR 2009 HIGHLIGHTS

  • Completed US$20.2 million in financings in the second quarter to put the Holloway Mine into production and to advance the Hislop Project.
  • Incurred costs of $9.3 million to bring the Holloway Mine into production which was significantly below budgeted amounts.
  • Obtained a favourable decision from the Superior Court of Justice (Ontario) ("Court") in respect of the Company's rights and obligations under a royalty agreement entered into by Newmont Canada Limited ("Newmont") and Barrick Gold Corporation in respect of the Holt property ("Holt Royalty").

"We are proud of our achievements for the year, especially when the Holloway Mine commenced production in October on schedule and under budget. The operations at Holloway during the quarter have outperformed our expectations", said Jacques Perron, President and CEO of SAS. "We now look ahead to 2010 for a full year of gold production at Holloway; in addition to bringing our Hislop Project into production in the second quarter and then, the Holt Mine in the second half of the year. On the exploration front, we are progressing well with the second phase of drilling at the Smoke Deep Zone; and have recently commenced a surface drilling campaign at the Taylor Project. We look forward to reporting results from these programs in the near future".

Holloway Mine Operations Review


  2009 2008
        Note 1
Tonnes mined                                            97,418   15,463
         
Tonnes milled                                          101,941   9,207
Head grade (g/t Au)                                       6.57   4.10
Average mill recovery                                     86.9%   87.7%
         
Gold produced (ounces) Note 2                           18,712   1,490
         
Gold sold, including the delivery of 1,296 ounces of gold to Gold Note holders in 2009 (ounces)                                       11,296   2,810
         
Average realized gold price per ounce (US$)      US$ 1,143 US$ 917
Cost per tonne milled                              $ 86 $ N/A
Total cash cost per ounce sold (Canadian $ dollars)(Note 3)                       $ 479 $ N/A
Depreciation and depletion                                50    
Accretion of reclamation liability                         2    
Total production cost per ounce                    $ 531 $ N/A
Total cash cost per ounce sold (US$)             US$ 456 US$ N/A

Notes:

(1)   The net operating cost and expenses of the Company's Holloway Mine for the year ended December 31, 2008, was reclassified as site maintenance and mine development expenses.
(2)   Excludes 126 ounces of gold poured from the cleanup work performed at the Holt Mill during mine pre-production.
(3)   Includes credit for $1.4 million of custom milling revenue earned during mine production.

Following the completion of the Gold Notes and royalty financings in the second quarter of 2009, SAS began mine and mill pre-production activities, necessary to put the Holloway Mine into production. In 2009, the Company incurred $5.6 million in pre-production operating expenses and $3.7 million in capital expenditures, for a total of $9.3 million to bring the Holloway Mine into production, which was $10.2 million under the $19.5 million budgeted in the Company's technical report prepared in mid-2008, and modified for the restart of the Holloway Mine on a stand-alone basis.

Since October 2009, gold sales of 11,296 ounces of gold realized revenue of $13.6 million. This included 1,296 ounces of gold delivered to the Company's Gold Note holders as the initial repayment due under the Notes. At December 31, 2009, the Company had 4,699 ounces of gold bullion inventory and a further 2,843 ounces of in circuit gold inventory. In the fourth quarter, the Company also realized revenue of $1.4 million from the processing of custom ore at its Holt Mill from Apollo Gold Corporation's Black Fox Mine.

In a short start-up in 2009, the Holloway Mine achieved a cost of $86 per tonne milled, which was 3% better than the long-term cost estimate outlined in the 2008 technical report, with the lower cost being primarily the result of reduced milling and site administration costs. Total cash cost per ounce of gold sold during the quarter and for 2009 was US$456 per ounce. The lower than expected cash cost compared to the NI 43-101 pre-feasibility was the result of a lower royalty cost and the receipt of custom milling revenue. SAS continues to improve on the operational efficiencies at the mine and expects to further reduce its operating costs going forward.

The Holloway Mine is expected to produce 15,000 ounces of gold per quarter in 2010, which will be derived from three ore zones (Blacktop Footwall Upper, Blacktop Footwall Lower, and Lightning), with the majority of the 2010 production originating from the Blacktop Footwall Upper Zone.

Hislop Project Update

Following the completion of a positive NI 43-101 Pre-feasibility Study on September 28, 2009, and the decision to proceed with open-pit mining at the Hislop Project, all necessary permits are now in place. The Company commenced stripping and mine preparation activities in the first quarter of 2010, with the objective of beginning to transport ore feed during the second quarter of the year to the Holt Mill, which is located 45 km east of the property.

The Hislop Project is expected to produce approximately 25,000 ounces of gold in 2010. Ore from the Hislop Project will augment the mill feed being provided from underground production at the Holloway Mine. The Company is also currently optimizing the Hislop pit mining plan to better reflect the strong price of gold.

Holt Mine Update

In July 2009, the Court upheld the Company's position that its sole obligation in respect of the Holt Royalty is limited to a flat rate 0.013% NSR on production from the Holt property. The balance of the Holt Royalty remains the responsibility of Newmont. Newmont appealed the decision of the Court in August 2009. No date has been set for the appeal to be heard.

SAS is currently reviewing plans to start mining activities at the Holt Mine, with an objective to commence production in the second half of 2010. The project will be funded from cash flow from operations and following a positive outcome on the Holt Royalty appeal.

2010 Exploration Update

The planned 2010 exploration programs, which are to be more extensive than those completed by the Company in recent years, will focus on targets that lie near the Company's existing operations. The objectives of the 2010 exploration program are to (i) identify additional mineral resources near the Company's present mining operations and advanced projects that have a relatively short (less than 5 years) development time, particularly adjacent to the Holloway and Holt Mines, as well as the Taylor Project; (ii) better define the gold mineralization on the Company's projects where previous exploration has returned positive results; and (iii) defer early stage exploration projects or "grass roots" targets, which are considered to have lengthy development time, to subsequent years.

Holloway Mine - Smoke Deep Zone

The Company announced on February 8, 2010, the results from a follow-up drill program conducted on the Smoke Deep Zone towards the end of 2009. Continued drilling in this area is targeting the areas that remain open along strike to the east, and down dip and is expected to be completed by the end of the second quarter. Once the geometry of the Smoke Deep Zone has been confirmed and the distribution of gold is better defined, the Company may make a decision to drive a drift from the Lightning Zone into the Smoke Deep Zone.

Advanced Exploration - Taylor Project

In the fourth quarter of 2009, SAS acquired what it believes to be, an important mineral claim associated with its Taylor property that overlies the strike extension between the West Porphyry and Shoot Zones, where no previous exploration has been conducted. The Company has recently commenced a surface exploration drilling program on this property, which is expected to be completed in the second quarter.

Non-GAAP Measures

Adjusted net earnings (loss)

Adjusted net earnings or loss is a non-GAAP measure which does not have a standardized meaning and is not necessarily comparable to similarly titled measures of other companies due to potential inconsistencies on the methods of calculation. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, 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 GAAP. Please refer to the Company's 2009 Annual Management Discussion & Analysis for a reconciliation of non-GAAP measurements.

Total Cash cost per ounce

Total cash cost per gold ounce sold is a non-GAAP measure which does not have a standardized meaning prescribed by GAAP and is 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 GAAP, 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 GAAP. Please refer to the Company's 2009 Annual Management Discussion & Analysis for a reconciliation of non-GAAP measurements.

To review the complete Audited Consolidated Financial Statements for the year ended December 31, 2009 and 2009 Annual Management's Discussion and Analysis, please see SAS's SEDAR filings at www.sedar.com and on the Company's website at www.sasgoldmines.com.

Consolidated Financial Statements for the three months and for the year ended December 31, 2009, to follow at the end of this release.

Qualified Persons

Production at the Holloway Mine and processing at the Holt Mill is 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.

About SAS

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. 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. 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 and the targeted production levels for 2010; 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 of the Holloway Mine and at the Taylor Project and the timing thereof as well as the expansion of mineral resources and levels of production through successful exploration and development. 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.



St Andrew Goldfields Ltd.
Consolidated Statement of Operations
Expressed in thousands of Canadian Dollars


  Three months ended
December 31,
  Year ended
December 31,
  2009   2008    2009   2008
Revenue                              
Gold sales $   13,630   $   -   $   13,630   $   -
Custom milling     1,384       -       3,105       -
      15,014       -       16,735       -
Operating costs and expenses:                              
   Production     6,797       -       7,310       -
   Site maintenance, pre-production, and mine development     424       3,490       10,416       15,650
   Exploration     267       206       3,552       1,056
   Corporate administration     912       1,163       4,317       4,924
   Accretion of reclamation liability     196       450       758       883
   Depreciation and depletion     860       55       2,141       1,082
   Write-down of mining assets     -       -       339       -
   Loss on disposal of property, plant and equipment     -       -       -       25
   Foreign exchange (gain) loss     (7)       (9)       1,072       (9)
Operating income (loss)     5,565       (5,355)       (13,170)       (23,611)
Interest expense     (2,009)       (78)       (5,884)       (2,623)
Transaction cost     (44)       -       (1,053)       -
Net gain (loss) on disposal of non-core assets     -       (7,327)       (641)       16,317
Other income (expense)     (3,050)       826       (2,369)       (215)
Income (loss) from continuing operations before income taxes     462       (11,934)       (23,117)       (10,132)
Future income tax recovery     -       (385)       (830)       (385)
Income (loss) from continuing operations     462       (11,549)       (22,287)       (9,747)
Discontinued operation     -       (83)       314       (5,317)
Net income (loss) for the period $   462   $   (11,632)   $   (21,973)   $   (15,064)
Other comprehensive income (loss)                            
Unrealized gain (loss) on available for sale investments     (39)       7,039       119       (3,433)
Comprehensive income (loss) $   423   $   (4,593)   $   (21,854)   $   (18,497)
Basic and diluted loss per share Continuing operations $   0.00   $   (0.04)   $   (0.07)   $   (0.04)
Discontinued operation $   0.00   $   0.00   $   0.00   $   (0.02)
  $   0.00   $   (0.04)   $   (0.07)   $   (0.05)
Weighted average number of shares outstanding (in thousands)     325,468       313,269       324,508       274,319




St Andrew Goldfields Ltd.
Consolidated Statement of Cash Flow
Expressed in thousands of Canadian Dollars

  Three months ended
December 31,
  Year ended
December 31,
  2009   2008    2009    2008
Operating activities:                              
   Income (loss) from continuing operations $   462   $   (11,549)   $   (22,287)   $   (9,747)
   Items not affecting cash:                                  
      Future income taxes             (386)       (830)       (385)
      Net change in fair value of secured gold notes and
       advance minimum royalty payment obligation
    3,564       -       3,424       -
      Implicit interest on secured gold notes and
        advance minimum royalty payment obligation
    1,767       -       4,951       -
      Repayment of secured gold notes     (1,520)       -       (1,520)       -
      Write-down of mining assets     -       -       339       -
      Depreciation and depletion     860       55       2,141       1,082
      Loss on disposal of property, plant and
       equipment
    -       -       -       25
      Net (gain) loss on disposal of non-core assets     -       7,107       180       (20,515)
      Write-down of investment in Apollo Gold
        Corporation
    -       -       -       4,198
      Stock-based compensation expense     211       75       910       1,024
      Warrants issued pusuant to debt extension     -       -       186       -
      Fair value of derivative foreign exchange contracts     (442)       -       (628)       -
      Accretion of reclamation liability     196       450       759       883
      Foreign exchange (gain) loss     -       -       34       -
      Gain on payable due to contractor     -       (1,913)       -       (1,913)
      Equity loss in Glass Earth Gold Limited     -       -       -       954
      Indemnity to Technifund     -       2,892       -       2,892
      Change in non-cash operating working capital     (1,161)       (946)       (1,274)       (17,050)
Discontinued operation     -       (210)       188       (6,739)
      3,937       (4,425)       (13,427)       (45,291)
Financing activities:                              
      Common shares, options, and warrants issued     661       2,635       749       17,388
      Share issue costs     -       (234)       (5)       (1,206)
      Repayment of secured debentures     -       -       (445)       -
      Issuance of secured gold notes     -       -       19,832       -
      Royalty financing     -       -       4,663       -
      Participant contribution on share purchase plan     137       40       137       40
Payments on capital lease obligations     (27)       (18)       (94)       (115)
      771       2,423       24,837       16,107
Investing activities:                              
      Additions to property, plant and equipment     (1,600)       (32)       (4,226)       (331)
      Proceeds from sale of non-core assets, net of cash
        investment
    50       2,198       5,027       29,601
      Cash collateralized for letter of credit facility     (630)       -       (630)       (148)
      Interest earned on reclamation deposits     (10)       (164)       (10)       (374)
      Discontinued operation     -       (14)       (7)       (68)
      (2,190)       1,988       154       28,680
Increase (decrease) in cash and cash equivalents     2,518       (14)       11,564       (504)
Cash and cash equivalents, beginning of period     13,126       4,094       4,080       4,584
Cash and cash equivalents, end of period $   15,644   $   4,080   $   15,644   $   4,080




St Andrew Goldfields Ltd.
Consolidated Balance Sheet
Expressed in thousands of Canadian Dollars


  December 31,   December 31,
  2009     2008
Assets Current assets:                                                                                               
   Cash and cash equivalents $   15,644   $   4,080
   Accounts and settlements receivable             451       132
   Inventories                                              4,098       1,160
   Fair value of derivative contracts                         628       -
   Prepayments and other assets                             1,360       140
   Accounts receivable on Stock Mill  reclamation deposit       -       1,231
   Investment in Apollo Gold Corporation                        -       5,151
   Discontinued operation                                       -       3,233
      22,181       15,127
               
Property, plant and equipment                             77,346       75,381
Reclamation deposits                                       8,439       8,606
Restricted cash                                            1,258       630
Other assets                                                 298       140
  $   109,522   $   99,884
Liabilities and Shareholders' Equity              
Current liabilities:              
   Accounts payable and accrued liabilities    $   5,363   $   4,332
   Employee-related liabilities                             1,330       580
   Interest payable                                             -       11
   Current portion of long-term debt                       18,169       8,000
   Current portion of capital lease obligations                           90       68
   Discontinued operation                                       -       3,202
      24,952       16,193
               
Long-term debt                                            20,736       -
Capital lease obligations                                     21       44
Asset retirement obligations                               8,813       7,947
      54,522       24,184
               
Shareholders' equity:              
   Share capital                        178,203       177,027
   Contributed surplus                                     42,385       42,309
   Warrants                                                   361       314
   Stock options                                            4,345       3,654
   Deficit                                               (170,174)        (147,366)
   Accumulated other comprehensive loss                      (120)       (238)
      55,000       75,700
  $   109,522   $   99,884

SOURCE St Andrew Goldfields Ltd.

For further information: For further information:

St Andrew Goldfields Ltd.
Suzette N Ramcharan
Manager, Investor Relations
1-800-463-5139 or (416) 815-9855
sramcharan@sasgoldmines.com

or

St Andrew Goldfields Ltd.
Jacques Perron
President & CEO
1-800-463-5139 or (416) 815-9855
jperron@sasgoldmines.com

or

St Andrew Goldfields Ltd.
Ben Au
CFO, VP Finance & Administration
1-800-463-5139 or (416) 815-9855
(416) 815-9437 (FAX)
bau@sasgoldmines.com
www.sasgoldmines.com

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St Andrew Goldfields Ltd.

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