SAS reports 2011 fourth quarter and year end results with a record fourth quarter and year of, production, income and cash flow

All dollar amounts are stated in Canadian dollars, unless otherwise indicated

TORONTO, Feb. 16, 2012 /CNW/ - St Andrew Goldfields Ltd. (T-SAS), ("SAS" or the "Company") earned net income attributable to shareholders for the fourth quarter of 2011 of $12.9 million or $0.04 per share as compared to a loss of $0.2 million, or nil on a per share basis, for the same period last year. Operating cash flow before repayment of the Gold Notes(1) in the quarter was $17.1 million or $0.05 per share, compared to $9.3 million, or $0.03 per share for the same period last year. For the full year in 2011, SAS earned net income attributable to shareholders of $17.2 million or $0.05 per share as compared to a net income of $2.1 million, or $0.01 per share for the same period in 2010.

"We had a great fourth quarter achieving record production, record earnings and record cash flow," said Jacques Perron, President and CEO of SAS. "We saw a steady increase in production and as expected, our mine cash costs in the fourth quarter reduced to under US$800 per ounce. Holt continues to perform well, and we are on track to reach 1,000 tpd by the end of the first quarter. We are committed to continue to improve at each operation. We will grow our production on a quarterly basis to achieve our 2012 objective of 90,000 to 100,000 ounces of gold production while reducing our cash cost per ounce. I want to thank our dedicated employees for their commitment to achieving success, and look forward to a promising 2012."

Q4 and ANNUAL 2011 HIGHLIGHTS

ACHIEVEMENTS  
Net income attributable to shareholders for the fourth quarter and 2011, of $12.9 million, or $0.04 per share, and $17.2 million, or $0.05 per share, respectively. Adjusted net earnings(1) for the fourth quarter and 2011 of $6.6 million or, $0.02 per share and $6.2 million, or $0.02 per share, respectively. Record year of earnings with net income increasing by 56% over the previous quarter.
Produced 22,350 ounces of gold in the fourth quarter and 74,022 ounces during 2011, from three operations (Holt, Holloway and Hislop). A record year of production representing a 12% increase in gold production over the previous quarter, and a 5% increase over 2010.
Sold 23,368 ounces of gold during the quarter, at an average realized price(1) of US$1,690, and a total of 69,528 ounces of gold during 2011, at an average realized price(1) of US$1,592. Earned revenues in the fourth quarter and 2011 of $40.4 million and $111.9 million, respectively. An increase in gold sales revenues by 21% over the previous quarter, and 25% over the previous year.
Mine cash costs of US$772 per ounce and a royalty cost of US$137 per ounce, for a total cash cost per ounce of gold sold(3) of US$909 per ounce in the fourth quarter.
Mine cash costs for 2011 were US$960 per ounce with a royalty cost of US$120 per ounce, for a total cash cost per ounce of gold sold(3) of US$1,080.
Mine cash costs increased in 2011 due to the delay in start up at the Holt Mine and the transition in mining areas at the Holloway Mine, compounded by a high royalty cost due to the increase in the price of gold. However, cash costs improved by 20% over the previous quarter in 2011, and are expected to reduce further throughout 2012.
Earned cash margin from mine operations(1) of $18.7 million in the fourth quarter, and $37.5 million for 2011. An increase of $6.7 million or 56% in cash margin from mine operations(1) when compared to previous quarter in 2011, as a result of the increase in throughput and an increase in ore grade. 
Operating cash flow before repayment of the Gold Notes(1) of $17.1 million, or $0.05 on a per share basis, for the fourth quarter, and $35.0 million, or $0.10 on a per share basis, for annual 2011. A record year of operating cash flow since the restart of mine operations in 2009, an increase of 58% over the previous quarter, and an increase by $9.1 million over the previous year.
Holt achieved commercial production at the beginning of the second quarter of 2011. Commenced commercial production at our flag ship mine, which saw progressive ramp up throughout 2011, from the initial 500 tonnes per day ("tpd").
Smoke Deep Zone at the Holloway Mine commenced production in October. Production commenced in the western portion of the zone and contributed approximately 18% of the Holloway mine's throughput for the year. Development continues towards the eastern portion of the zone and production rates and ore grade are anticipated to increase in 2012.
Incurred total capital expenditures at the three operations of $8.6 million in the quarter, and $33.8 million for 2011. At Hislop, the Company spent capital expenditures of $10.7 million in 2011 and $0.7 million during the fourth quarter as the overburden stripping was substantially complete. Ongoing mine capital is expected to be minimal.

Mine development and capital expenditures for the Holt Mine and Mill, and the Holloway Mine during the fourth quarter and 2011 were $7.9 million and $23.1 million, respectively.   
Finalized an updated resource estimate for the Taylor Project which was utilized as part of a pre-feasibility study outlining 173,000 ounces of probable reserves at the West Porphyry Zone Incurred $2.7 million in 2011 to advance the Taylor Project towards the pre-feasibility stage. The Taylor pre-feasibility study outlines 985,000 tonnes at an average grade of 5.01 g/t Au for 173,000 ounces of contained gold in the West Porphyry Zone. The results of the pre-feasibility study are being released concurrently with this press release.
In May 2011, the Company received a favourable ruling from the Ontario Court of Appeal concerning the Holt Royalty. Receiving this final judgement successfully removes the contingent liability which significantly improves the economics of the Holt Mine and the Company's value.
In May 2011, SAS employees celebrated 1 million hours worked without a lost time accident. The Company achieved a mine safety record, and continues to operate without a Lost Time Accident.

A summary of the 2011 Mineral Resources and Mineral Reserves estimate as at December 31, 2011, are included as part of the Company's Management Discussion and Analysis for 2011, which is being filed today, February 16, 2012, and is available under the Company's profile on SEDAR at www.sedar.com, and on the Company's website at www.sasgoldmines.com.

Holt Mine, Operations and Financial Review (see Operating and Financial Statistics on page 12)
In the fourth quarter, the Holt Mine ("Holt") produced 11,421 ounces of gold from processing 67,778 tonnes of ore at a head grade of 5.57 g/t Au, which was substantially derived from Zone 4. Since the commencement of commercial production at the beginning of the second quarter in 2011, Holt produced 26,941 ounces of gold from a throughput of 188,872 tonnes at a grade of 4.74 g/t Au. Mill recoveries in the fourth quarter and in 2011 of 94.1% and 93.5%, respectively, were at the expected level.

Mine development in the first half of 2011 was negatively impacted by a four month delay in ramp up of operations due to the limited availability of skilled manpower and equipment issues. The implementation of an underground employee training program in the second quarter of 2011, coupled with improved equipment availability, resulted in a 36% increase in development productivity over the first half of 2011, and the mine currently has its full complement of skilled workers. The mining rate during 2011 ramped up from the initial 500 tonnes per day ("tpd") in the second quarter, and continued to progress towards the anticipated steady state rate of production of 1,000 tpd expected by the end of the first quarter of 2012, which will positively impact unit costs.

During the second and third quarter of 2011, most of the production ore was derived from the C-103 Zone, which achieved lower than expected grade. The head grade saw a steady increase during the last few months of 2011, as the C-103 Zone was depleted at the end of the third quarter, and the mine saw better development grade ore from Zone 4 coupled with production ore which was in line or better than the reserve grade of 4.34 g/t Au (as of December 31, 2010).

Holt achieved a cash margin from mine operations(1) of $12.1 million during the fourth quarter. The mine saw a steady increase in throughput quarter over quarter; which led to consecutive decreases in mine-site cost per tonne milled(1) of $15 per tonne from the second quarter of 2011 to the third quarter, and another $11 per tonne in the fourth quarter. In conjunction with the improvement in ore grade in the third and fourth quarters, total cash cost per ounce of gold sold(1) decreased by US$377 per ounce and US$292 per ounce, respectively. The Company expects operating costs at Holt will continue to decrease as the mining rate increases towards its steady state levels.

Holt is expected to contribute approximately 50% of the annual gold production for 2012.

Holloway Mine, Operations and Financial Review (see Operating and Financial Statistics on page 13)
The Holloway Mine ("Holloway") produced 6,126 ounces of gold in the fourth quarter from three areas, the Lightning Zone ("Lightning Zone"), Blacktop Footwall Lower Zone ("BFWL"), and the Smoke Deep Zone ("Smoke Deep"). During 2011, approximately 45% of production was derived from Lightning, 37% from the BFWL, and in the fourth quarter, 18% from Smoke Deep. Production was negatively impacted throughout 2011 due to the shift in mining from the BFWL and Lightning zones, while preparing Smoke Deep for production. Ramp development at Smoke Deep was completed during the third quarter of 2011, and production commenced at the end of October 2011. Mill recovery of 84.1% in the fourth quarter was slightly lower than anticipated due to the processing of graphitic ore from the BFWL and the slower leach kinetics associated with ore from the western portion of Smoke Deep, where initial production was derived from.

Gold sales for 2011 were 23,698 ounces or 61% lower than the 61,447 ounces of gold sold in 2010 due to the reasons mentioned above. Cash margin from mine operations(1) for the fourth quarter and for 2011 were $4.1 million and $12.0 million, respectively. Mine site cost per tonne milled increased by 14% from $86 per tonne in 2010 to $98 per tonne in 2011, which was attributable to a 40% decrease in throughput when compared to 2010, partially offset by the improved efficiencies in operating activities at the mine. The Company expects mine site cost per tonne in 2012 will reduce as production rates at Smoke Deep continue to increase, and the mined ore grade improves.

Holloway is expected to contribute approximately 30% of the annual gold production for 2012.

Hislop Mine, Operations and Financial Review (see Operating and Financial Statistics on page 14)
The Hislop Mine ("Hislop") produced 4,803 ounces of gold in the fourth quarter of 2011. The head grade for the Hislop Mine in the fourth quarter increased by approximately 15% from the previous quarter and 13% over 2010. The ore grade mined continued to improve in the fourth quarter as mining progressed deeper and into the eastern portion of the pit. Mill recovery in the fourth quarter of 83.0% was negatively impacted by processing a higher portion of ore that requires a finer grind.

Operations at Hislop were impacted since the second quarter of 2011, by the additional overburden removal and waste rock mining activities as a result of overburden slope failures during the year, and delayed stripping of the eastern portion of the pit. Rehabilitation activities commenced in the third quarter and are now complete, and all overburden has been stripped. Waste rock mining was reduced in the second half of 2011 but remained higher than expected due to the change in mining sequence required to accommodate overburden stripping activities. The strip ratio for 2012 is expected to decrease to 3.8, which is lower than the life-of-mine strip ratio of 4.8.

Gold sales in the fourth quarter were 4,985 ounces, and 19,806 ounces for 2011, 87% higher than the 10,592 ounces of gold sold in 2010 (as the mine only commenced commercial mining operations in the second half of 2010). Hislop contributed gold sales revenue of $31.2 million in 2011 as compared to $12.1 million in 2010, a 150% increase due to the increase in throughput and the improvement in ore grade as mentioned above, as well as a 39% increase in the average realized price per ounce of gold sold(1). Mine site costs per tonne milled increased by 14% from $51 per tonne in 2010 to $58 per tonne in 2011, which was attributable to the additional waste rock mining activities mentioned above. The Company expects the remaining life‐of‐mine mine site cost per tonne milled to remain closer to $59 per tonne. The higher cost is primarily due to the complexity of the ore body, the rock hardness and the increased fuel costs.

Production cash cost per ounce of gold sold in the fourth quarter and 2011 was US$1,196 per ounce and US$1,272 per ounce, respectively. The Company anticipates the cash cost per ounce of gold sold for the Hislop Mine during 2012, will remain at the level experienced in the fourth quarter of 2011, despite a lower strip ratio, as a consequence of the increase in mine operating costs mentioned above.

Hislop is expected to contribute approximately 20% of the annual gold production for 2012.

Taylor Project
As of December 31, 2011, the Company completed an updated resource estimate and calculation of mineral reserves for the Taylor Project ("Taylor"), as part of preparation for a Pre-feasibility study. The study outlined mineral reserves for the West Porphyry Zone ("WPZ") of approximately 1.0 million tonnes at a grade of 5.45 g/t Au containing approximately 173,000 ounces of gold, included within measured and indicated mineral resources (which include the West Porphyry and Shoot Zone) totalling 2.6 million tonnes grading 5.42 g/t Au for 457,000 ounces of contained gold in the indicated category, and 1.9 million tonnes grading 3.96 g/t Au for 246,000 million ounces of contained gold in the inferred category.

Results of the Pre-feasibility study are being released concurrently with the financial information on February 16, 2012. A National Instrument 43-101 compliant technical report will be available under the Company's profile on SEDAR at www.sedar.com and on the Company's website at www.sasgoldmines.com on or before March 30, 2012.

Exploration Programs
The Company recently released its plans for its 2012 exploration program which will focus on targets that lie near the Holloway-Holt and Hislop Mines and which has an initial budget of $7.0 million. Drilling has resumed on two targets, the Ghost Zone near Holt, and the Hislop North Project, and results will be released as they become available.

Capital Resources
SAS achieved a record year for cash flow from operations of $23.4 million since the restart of mining operations in the fourth quarter of 2009. The Company ended the year with cash of $17.6 million, however, working capital decreased during the third quarter, and in the first nine months of the year, as a result of a four-month delay in the development of Holt, and the additional overburden and waste rock removal activities at Hislop. These operational issues are now resolved, and cash flow from operations in the future periods is expected to improve. The Company generated $37.5 million in cash margin from mine operations(1) and $35.0 million in operating cash flow before repayment of Gold Notes(1).

Conference Call Information
A conference call will be held on Friday morning, February 17, 2011 at 10:00 a.m. (EST) to discuss the fourth quarter and annual 2011 results. Participants may join the call by dialling toll free 1-866-212-4491 or 1-416-800-1066 for calls from outside Canada and the US. The Company will post accompanying power point slides for the call, please visit the website for more detailed information and any webcast links (www.sasgoldmines.com).

A recorded playback of the call will also be available via the website and will be posted within 24 hours of the call.

Qualified Person
Production at the Holt, Holloway and Hislop mines, and processing at the Holt Mill are being conducted under the supervision of Duncan Middlemiss, P.Eng, the Company's Vice President & General Manager, East Timmins Operations. The calculation of Mineral Reserves and the Taylor pre-feasibility study was completed by the Company under the supervision of Pierre Rocque, P.Eng, the Company's Director of Engineering. The exploration programs on the Company's various mineral properties are under the supervision of Craig Todd, P.Geo, the Company's Exploration Manager. Messrs. Middlemiss, Rocque and Todd are qualified persons as defined by National Instrument 43-101, and have reviewed and approved this news release.

Non-GAAP Measures
The Company has included the non-GAAP performance measures: adjusted net earnings (loss); operating cash flow before repayments of Gold Notes; average realized price per ounce of gold sold; total cash cost per ounce of gold sold; cash margin from mine operations; and mine-site cost per tonne milled throughout this press release, which do not have standardized meanings prescribed by International Financial Reporting Standards ("IFRS") and are 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 IFRS, 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 IFRS. Refer to pages 8-11 of this press release for a discussion and the reconciliation of these non-GAAP measurements to the Company's 2011 Annual Financial Statements.

(1) See pages 8-11 for non-GAAP Measures

The unaudited Balance Sheets, Statements of Operations and Statements of Cash Flows for the Company for the three and twelve months ended December 31, 2011, can be found on pages 15-17.

To review the complete 2011 Annual Financial Statements and the Annual Management's Discussion and Analysis for 2011, please see SAS's SEDAR filings under the Company's profile at www.sedar.com or the Company's website at www.sasgoldmines.com.

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 with three producing mines and aggressive exploration activities across 120km of land straddling the Porcupine-Destor Fault Zone.

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, including the Company's production budgets, and planned gold production levels at the Holt, Holloway and the Hislop mines in 2012; the improvement in throughput and reduction in unit costs at the Holt Mine; the improvement in the ore grade and production rates, and reduction in costs at the Holloway Mine; the improvement in the ore grade and the stabilization in costs at the Hislop Mine; the anticipated manpower levels at the Company's mining operations (and the ability to achieve same); the extent of exploration programs in 2012; the improvement in the Company's cash flow from operations; and the availability of a NI 43-101 technical report on the Taylor Project, and the timing thereof.

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; the Company's dependence on key employees and changes in the availability of qualified personnel; fluctuations in gold prices and exchange rates; insufficient funding or delays or inability to raise additional financing on satisfactory terms if required; operational hazards and risks, including the inability to insure against all risks; changes in laws, regulations and the risks of obtaining necessary licenses and permits; changes in general economic conditions and changes in conditions in the financial markets. Such forward looking information is based on a number of assumptions, including but not limited to 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 ability of the Company to retain and attract qualified personnel, the sufficiency of the Company's cash reserves and operating cash flow to complete planned development and exploration activities, the availability of additional financing on acceptable terms if and as required and the level of stability of 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. A description of these risks and uncertainties are can also be found in the Company's Annual Information Form obtained on SEDAR at www.sedar.com.

NON-GAAP MEASURES

Adjusted net earnings (loss)
Adjusted net earnings are calculated by removing the gains and losses, resulting from the mark-to-market revaluation of the Company's gold-linked liabilities and foreign currency price protection derivatives, one-time gains or losses on the disposition of non-core assets and expenses and significant tax adjustments not related to current period's earnings, as detailed in the table below. Adjusted net earnings does not constitute a measure recognized by IFRS and does not have a standardized meaning defined by IFRS and may not be comparable to information in other gold producers' reports and filings. The Company discloses this measure, which is based on its Financial Statements, to assist in the understanding of the Company's operating results and financial position.

                                           
Amounts in thousands of Canadian dollars, except     Three months ended December 31,     Year ended December 31,
per share amounts           2011       2010           2011         2010
                                           
Net income (loss) per Financial Statements       $   12,921    $   (235)     $     17,173     $   2,090
Reversal of income and mining tax asset valuation
allowance
          (433)       -           (18,455)         -
Mark-to-market loss (gain) on gold-linked liabilities           (1,414)       2,010           3,347         6,630
Mark-to-market loss (gain) on foreign currency
derivatives
          (3,436)       (796)           3,869         (1,327)
Proceeds from insurance claim           -       -           (338)         -
Loss (gain) on the divestiture of non-core assets           (1,049)       -           304         -
Write-down of mining assets           -       -           300         263
Secured debenture participation fee           -       -           -         756
Adjusted net earnings       $   6,589    $   979     $     6,200     $   8,412
                                           
Weighted average number of shares outstanding
(000s)
                                         
  Basic           368,067       362,311           367,912         343,082
  Diluted           368,739       366,645           369,945         345,854
                                           
Adjusted net earnings per share - basic and diluted       $   0.02   $   0.00     $     0.02     $   0.02
                                           
                                           

Operating cash flow before repayment of Gold Notes
SAS uses the financial measure operating cash flow before repayment of Gold Notes to supplement the information included in its Financial Statements. The presentation of operating cash flow before repayment of Gold Notes does not constitute a measure recognized by IFRS and is not meant to be a substitute for cash flow from operations or cash flow from operating activities presented in accordance with IFRS, but rather should be evaluated in conjunction with such IFRS measures. Operating cash flow before repayment of Gold Notes excludes the non-cash value of gold delivered to the Company's Gold Note holders.

The term operating cash flow before repayment of Gold Notes does not have a standardized meaning prescribed by IFRS, and therefore the Company's definitions are unlikely to be comparable to similar measures presented by other companies. Management believes that the presentation of operating cash flow before repayment of Gold Notes provides useful information to investors because it excludes the repayment of Gold Notes (which will be retired at the end of 2012) in working capital items, and is a better indication of the Company's cash flow from operations and is considered by Management to be meaningful in evaluating the Company's past financial performance and its future prospects. The Company believes that conventional measures of performance prepared in accordance with IFRS do not fully illustrate the ability of the Company's operating mines to generate cash flow.

                                             
Amounts in thousands of Canadian dollars, except      Three months ended December 31,     Year ended December 31,
per share amounts           2011       2010           2011           2010
                                             
Operating cash flow per Financial Statements       $   13,981   $   6,697     $     23,446     $     14,853
Repayment of Gold Notes           3,083       2,585           11,522           11,035
Operating cash flow before repayment of
Gold Notes
      $   17,064   $   9,282     $     34,968     $     25,888
                                             
Weighted average number of shares outstanding
(000s)
          368,067       362,311           367,912           343,082
                                             
Per share amounts       $   0.05   $   0.03     $     0.10     $     0.08
                                             
Notes:
(1)      Per share amounts are calculated by dividing the operating cash flow before repayments of Gold Notes by the weighted
average number of shares outstanding for each period
       

Total cash cost per ounce of gold sold
Total cash cost per ounce of gold sold is a non-GAAP performance measure and may not be comparable to information in other gold producers' reports and filings. The Company has included this non-GAAP performance measure throughout this document as the Company believes that this generally accepted industry performance measure provides a useful indication of the Company's operational performance. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company's performance and ability to generate cash flow. 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 IFRS. The following table provides a reconciliation of total cash costs per ounce of gold sold to production expenses per the Financial Statements for the three months and year ended 2011:

                                             
Amounts in thousands of Canadian dollars, except     Three months ended December 31,     Year ended December 31,
where indicated           2011       2010           2011           2010
                                             
Mine-site costs per Financial Statements       $   18,452   $   14,017     $     66,098     $     41,497
Production royalties per Financial Statements (2)           3,285       1,392           8,222           5,418
Total cash costs       $   21,737   $   15,409     $     74,320     $     46,915
                                             
Divided by gold ounces sold (1)           23,368       17,952           69,528           70,461
                                             
Total cash cost per ounce of gold sold
(Canadian dollars)
      $   930   $   858     $     1,069     $     666
                                             
Average CAD:USD exchange rate       $   1.02   $   1.01     $     0.99     $     1.03
                                             
Total cash cost per ounce of gold sold (US$)       $   909   $   850     $     1,080     $     646
                                             
Breakdown of total cash cost per ounce of
gold sold (US$)
                                           
Holt Mine(2)                                            
  Mine cash costs       $   556        N/A     $     785            N/A
  Royalty costs           166        N/A           167            N/A
        $   722        N/A     $     952            N/A
Holloway Mine                                            
  Mine cash costs       $   853   $   596     $     894     $     485
  Royalty costs           192       108           167           87
        $   1,045   $   704     $     1,061     $     572
Hislop Mine(2)                                            
  Mine cash costs       $   1,196   $   1,192     $     1,272     $     1,152
  Royalty costs           -       -           -           -
        $   1,196   $   1,192     $     1,272     $     1,152
Total                                            
  Mine cash costs       $   772   $   772     $     960     $     570
  Royalty costs           137       78           120           76
        $   909   $   850     $     1,080     $     646
                                             
Notes:
(1)     Includes gold ounces delivered to Gold Note holders; and after deducting 1,578 ounces of gold from the Hislop Mine and
1,408 ounces from the Holt Mine while the operations were in pre-production.
(2)     The Hislop Mine commenced commercial operations on July 1, 2010, and the Holt Mine commenced commercial operations
on April 1, 2011.
     

Mine-site cost per tonne milled
Mine-site cost per tonne milled is a non-GAAP performance measure and may not be comparable to information in other gold producers' reports and filings. As illustrated in the table below, this measure is calculated by adjusting Production Costs, as shown in the statements of operations for inventory level changes and then dividing by tonnes processed through the mill. Since total cash cost per ounce of gold sold data can be affected by fluctuations in foreign currency exchange rates, Management believes that mine-site cost per tonne milled provides additional information regarding the performance of mining operations and allows Management to monitor operating costs on a more consistent basis as the per tonne milled measure eliminates the cost variability associated with varying production levels. Management also uses this measure to determine the economic viability of mining blocks. As each mining block is evaluated based on the net realizable value of each tonne mined, in order to be economically viable, the estimated revenue on a per tonne basis must be in excess of the mine-site cost per tonne milled. Management is aware that this per tonne milled measure is impacted by fluctuations in production levels and thus uses this evaluation tool in conjunction with production costs prepared in accordance with IFRS. This measure supplements production cost information prepared in accordance with IFRS and allows investors to distinguish between changes in production costs resulting from changes in production versus changes in operating performance.

                                             
Amounts in thousands of Canadian dollars, except     Three months ended December 31,     Year ended December 31,
per tonne amounts           2011       2010           2011           2010
                                             
Holt Mine(2)(3)                                            
Mine-site costs       $   6,936        N/A     $     20,223            N/A
Inventory adjustments(1)           (483)        N/A           (124)            N/A
Mine-site operating costs       $   6,453        N/A     $     20,099            N/A
                                             
Divided by tonnes of ore milled           67,778        N/A           188,872            N/A
                                             
Mine-site cost per tonne milled       $   95        N/A     $     106            N/A
                                             
Holloway Mine                                             
Mine-site costs       $   5,418   $   7,667     $     20,949     $     30,797
Inventory adjustments (1)           (181)       (1,048)           (944)           (1,351)
Mine-site operating costs       $   5,237   $   6,619     $     20,005     $     29,446
                                             
Divided by tonnes of ore milled           56,225       82,659           204,258           340,593
                                             
Mine-site cost per tonne milled       $   93   $   80     $     98     $     86
                                             
Hislop Mine (2)(3)                                            
Mine-site costs       $   6,098   $   6,351     $     24,926     $     10,700
Inventory adjustments (1)           (563)       (1,117)           269           (95)
Mine-site operating costs       $   5,535   $   5,234     $     25,195     $     10,605
                                             
Divided by tonnes of ore milled           92,794       98,333           432,087           208,920
                                             
Mine-site cost per tonne milled       $   60   $   53     $     58     $     51
                                             
Note:
(1)   This inventory adjustment reflects production costs associated with unsold bullion and in-circuit inventory.
(2)   The Hislop Mine commenced commercial operations on July 1, 2010 and the Holt Mine commenced commercial operations on
April 1, 2011.
(3)   Excludes 43,458 tonnes of development ore processed while the Holt Mine was in pre-production producing 5,435 ounces of
gold in 2011; and 55,930 tonnes of development ore processed while the Hislop Mine was in pre-production producing
2,075 ounces of gold in 2010.
     

Cash margin from mine operations
Cash margin from mine operations is a non-GAAP measure which may not be comparable to information in other gold producers' reports and filings. It is calculated as the difference between gold sales and production costs (comprised of mine-site operating costs and production royalties) per the Company's Financial Statements. The Company believes it illustrates the performance of the Company's operating mines and enables investors to better understand the Company's performance in comparison to other gold producers who present results on a similar basis.

Average realized price per ounce of gold sold
Average realized price per ounce of gold sold is a non-GAAP measure and is calculated by dividing gold sales as reported in the Company's Financial Statements by the gold ounces sold. It may not be comparable to information in other gold producers' reports and filings.

Operating and Financial Statistics - Holt Mine

                                                           
Amounts in thousands of Canadian dollars, except
where indicated
          Q4 2011         Q3 2011         Q2 2011         Q1 2011     Annual 2011     Annual 2010
                                                           
Tonnes milled           67,778         66,556         54,538         43,458       232,330       23,257
Head grade (g/t Au)           5.57         5.01         3.39         4.15       4.63       2.92
Average mill recovery           94.1%         93.4%         92.5%         93.6%       93.5%       92.5%
                                                           
Gold produced (ounces)           11,421         10,012         5,508         5,435       32,376       2,022
Commercial gold production sold (ounces) (1)           12,175         8,870         4,979          -        26,024       1,408
                                                           
Gold sales        $   21,060     $   15,449     $   7,284          N/A     $ 43,793        N/A
                                                           
Cash margin from mine operations (2)       $   12,054     $   6,625     $   581          N/A     $ 19,260        N/A
                                                           
Mine-site cost per tonne milled (2)       $   95      $   106     $   121          N/A     $ 106        N/A
                                                           
Total cash cost per ounce of gold sold (US dollars)(2):                                                          
  Mine cash costs       $   556     $   833     $   1,255          N/A     $ 785        N/A
  Royalty costs           166         181         136          N/A       167        N/A
Total cash cost per ounce of gold sold (2)           722         1,014         1,391          N/A       952        N/A
  Depreciation and depletion           129         134         130          N/A       132        N/A
Total production cost per ounce of gold sold
(US dollars)
      $   851     $   1,148     $   1,521          N/A     $ 1,084        N/A
                                                           
Average CAD:USD exchange rate           1.02         0.98         0.97         0.99       0.99       1.03
                                                           
Capital expenditures       $   4,250     $   1,841     $   1,963     $   1,740     $ 9,794     $ 8,546
                                                           
Notes:
(1)   The Holt Mine commenced pre-production activities in the second half of 2010 and was put into commercial production on April 1, 2011. The operating
results for the Holt Mine prior to April 1, 2011, were classified as site maintenance and pre-production expenditures.
(2)    See pages 8-11 for non-GAAP measurements.
 

Operating and Financial Statistics - Holloway Mine

                                                           
Amounts in thousands of Canadian dollars, except
where indicated
          Q4 2011         Q3 2011         Q2 2011         Q1 2011     Annual 2011     Annual 2010
                                                           
Tonnes milled           56,225         49,437         47,971         50,625       204,258       340,593
Head grade (g/t Au)           4.03         3.71         3.43         4.13       3.84       6.04
Average mill recovery           84.1%         85.2%         85.0%         86.4%       85.2%       86.9%
                                                           
Gold produced (ounces)           6,126         5,026         4,497         5,813       21,462       57,459
Commercial gold production sold (ounces) (1)           6,208         5,130         4,996         7,364       23,698       61,447
                                                           
Gold sales       $   10,750     $   8,828     $    7,272     $    9,996     $ 36,846      $ 77,133
                                                           
Cash margin from mine operations (2)       $   4,116     $   2,931     $    1,822     $    3,115     $ 11,984      $ 40,824
                                                           
Mine-site cost per tonne milled (2)       $   93     $   98     $    90     $    111     $ 98      $ 86
                                                           
Total cash cost per ounce of gold sold (US dollars)(2):                                                          
  Mine cash costs       $   853     $   960     $    964     $    834     $ 894      $ 485
  Royalty costs           192         212         164         114       167       87
Total cash cost per ounce of gold sold (2)           1,045         1,172         1,128         948       1,061       572
  Depreciation and depletion           368         540         462         345       418       180
Total production cost per ounce of gold sold
(US dollars)
      $   1,413     $   1,712     $    1,590     $    1,293     $ 1,479      $ 752
                                                           
Average CAD:USD exchange rate           1.02         0.98         0.97         0.99       0.99       1.03
                                                           
Capital expenditures       $   3,666      $   2,938     $    2,986     $    2,779     $ 12,369      $ 5,070
                                                           
Notes:
(1)   The Holloway Mine commenced production in October 2009.
(2)    See pages 8-11 for non-GAAP measurements.
     

Operating and Financial Statistics - Hislop Mine

                                                           
Amounts in thousands of Canadian dollars, except
where indicated
          Q4 2011         Q3 2011         Q2 2011         Q1 2011     Annual 2011     Annual 2010
                                                           
Overburden stripped (m3)           103,346         300,249         472,214         291,307       1,167,116       581,287
                                                           
Tonnes mined (ore)           107,827         109,457         114,849         117,138       449,271       293,624
                  (waste)           599,330         738,054         1,303,072         927,216       3,567,672       2,014,541
            707,157         847,511         1,417,921         1,044,354       4,016,943       2,308,165
                                                           
Waste-to-Ore Ratio           5.6         6.7         11.3         7.9       7.9       6.9
                                                           
Tonnes milled           92,794         107,741         120,677         110,875       432,087       264,850
Head grade (g/t Au)           1.94         1.68         1.53         1.66       1.69       1.49
Average mill recovery           83.0%         85.4%         87.2%         88.0%       86.0%       86.4%
                                                           
Gold produced (ounces)           4,803         4,980         5,192         5,209       20,184       10,952
Commercial gold production sold (ounces) (1)           4,985         5,260         5,185         4,376       19,806       10,592
                                                           
Gold sales       $   8,625     $    9,068     $    7,579     $    5,947     $ 31,219     $  12,052
                                                           
Cash margin from mine operations (2)       $   2,527     $    2,432     $    1,000     $    334     $ 6,293     $  1,351
                                                           
Mine-site cost per tonne milled (2)       $   60     $    59     $    55     $    61     $ 58     $  51
                                                           
Mine cash cost per ounce of gold sold (2)       $   1,196     $    1,286     $    1,311     $    1,301     $ 1,272     $  1,152
  Depreciation and depletion           177         150         104         95       134       39
Total production cost per ounce of gold sold (US dollars)       $   1,373     $    1,436     $    1,415     $    1,396     $ 1,406     $  1,191
                                                           
Average CAD:USD exchange rate           1.02         0.98         0.97         0.99       0.99       1.03
                                                           
Capital expenditures       $   701     $    2,822     $    5,244     $    1,885     $ 10,652     $  6,134
                                                           
Notes:
(1)   Pre-production activities to prepare the Hislop Mine commenced in early 2010 and were completed at the end of the second quarter. The Hislop Mine
began production on July 1, 2010. The operating results for the Hislop Mine prior to June 30, 2010, were classified as exploration or site maintenance
and pre-production expenditures where appropriate.
(2)   See pages 8-11 for non-GAAP measurements.
     

Balance Sheets (unaudited)
St Andrew Goldfields Ltd.
Expressed in thousands of Canadian dollars

            December 31, 2011       December 31, 2010
                     
Assets                  
Current assets:                  
  Cash and cash equivalents       $ 17,617      $ 32,412
  Restricted cash         1,739       1,093
  Accounts receivable         1,717       10,694
  Inventories         6,369       5,081
  Derivative assets         103       1,955
  Prepayments and other assets         900       1,694
            28,445       52,929
                     
Exploration and evaluation assets         24,658       23,309
Producing properties         60,067       46,357
Plant and equipment         45,737       42,401
Reclamation deposits         8,538       8,471
Restricted cash         1,641       1,641
Deferred tax assets         20,365       -
Other assets         716       996
          $ 190,167     $ 176,104
                     
Liabilities and Shareholders' Equity                  
Current liabilities:                  
  Accounts payable and other liabilities       $ 12,754      $ 15,885
  Employee-related liabilities         4,057       2,535
  Derivative liabilities         1,914       -
  Current portion of long-term debt         14,413       10,623
  Current portion of capital lease obligations          32       18
            33,170       29,061
                     
Long-term debt         5,356       14,838
Capital lease obligations         67       5
Asset retirement obligations          10,678       10,156
Deferred tax liabilities         -       125
            49,271       54,185
                     
Shareholders' equity:                  
  Share capital          98,556       218,482
  Share capital to be issued         -       832
  Contributed surplus         18,968       42,972
  Warrants         878       878
  Stock options          3,128       3,724
  Retained earnings (deficit)         20,011       (144,675)
  Accumulated other comprehensive loss         (645)       (294)
            140,896       121,919
          $ 190,167      $ 176,104
       

 

Statements of Operations (unaudited)
St Andrew Goldfields Ltd.
Expressed in thousands of Canadian dollars except per share information or otherwise indicated

        Three months ended December 31,     Year ended December 31,
          2011     2010     2011     2010
                             
Gold sales     $ 40,435    $ 24,761   $ 111,858   $ 89,185
                             
Operating costs and expenses:                          
  Mine site operating       18,452     14,017     66,098     41,497
  Production royalty       3,285     1,392     8,222     5,513
  Site maintenance and pre-production       180     315     264     2,229
  Exploration       1,443     2,419     8,367     7,154
  Corporate administration       1,277     1,362     6,203     6,612
  Depreciation and depletion       5,014     4,142     16,665     12,991
  Write-down of mining assets       -     -     300     263
          29,651     23,647     106,119     76,259
Operating income        10,784     1,114     5,739     12,926
                             
Finance costs       (1,112)     (892)     (4,304)     (7,377)
Mark-to-market gain (loss) on gold-linked liabilities       1,414     (2,010)     (3,347)     (6,630)
Mark-to-market gain (loss) on foreign currency derivatives       3,436     796     (3,869)     1,327
Foreign exchange gain (loss)       (1,120)     311     1,134     1,179
Gain (loss) on divestiture of non-core assets       1,049     -     (304)     -
Finance income and other       42     107     687     172
Income (loss) before taxes       14,493     (574)     (4,264)     1,597
Deferred taxes       (1,572)     339     21,437     493
Net income (loss) for the period     $ 12,921    $ (235)   $ 17,173    $ 2,090
                             
Other comprehensive income (loss)                          
Unrealized loss on available for sale investments, net of tax of nil for
all periods
      (50)     (209)     (351)     (174)
Comprehensive income (loss) for the period     $ 12,871    $ (444)   $ 16,822    $ 1,916
                             
Basic and diluted earnings per share attributable to shareholders     $ 0.04    $ (0.00)   $ 0.05    $ 0.01
                             
Weighted average number of shares outstanding (000's)                          
Basic       368,067     362,311     367,912     343,082
Diluted         368,739     366,645     369,945     345,854
                 

 

Statements of Cash Flows (unaudited)
St Andrew Goldfields Ltd.
Expressed in thousands of Canadian dollars

          Three months ended December 31,       Year ended December 31,
            2011     2010       2011     2010
Cash provided by (used in):                            
                               
Operating activities:                            
  Net income (loss) for the period     $ 12,921    $ (235)      $ 17,173   $ 2,090
  Items not affecting cash:                            
    Deferred taxes       1,572     (339)       (21,437)     (493)
    Mark-to-market (gain) loss on gold-linked liabilities       (1,414)     2,010       3,347     6,630
    Implicit interest on gold-linked liabilities       956     762       3,720     5,505
    Mark-to-market (gain) loss on foreign currency derivatives       (3,436)     (796)       3,869     (1,327)
    Repayment of Gold Notes       (3,083)     (2,585)       (11,522)     (11,035)
    Depreciation and depletion       5,014     4,142       16,665     12,991
    Write-down of mining assets       -     -       300     263
    Loss (gain) on the divestiture of non-core assets       (1,049)     -       304     -
    Share-based payments       327     337       1,530     1,295
    Finance costs       131     125       522     500
  Change in non-cash operating working capital and other       2,042     3,276       8,975     (1,566)
          13,981     6,697       23,446     14,853
Investing activities:                            
    Additions to exploration and evaluation assets       (184)     (542)       (3,005)     (993)
    Mine development expenditures       (8,544)     (6,911)       (24,799)     (14,905)
    Additions to plant and equipment       (2,134)     (4,001)       (8,085)     (6,241)
    Proceeds from the divestiture of non-core assets       -     -       50     75
    Interest earned on reclamation deposits       (17)     (32)       (67)     (32)
    Cash collateralized for banking facilities       (381)     (153)       (646)     (1,475)
          (11,260)     (11,639)       (36,552)     (23,571)
Financing activities:                            
    Share purchase warrants and stock options exercised       88     3,820       190     7,055
    Private placements of common share units       -     -       -     28,938
    Share issue expense       -     -       -     (1,704)
    Share purchase plan contributions       -     -       -     203
    Repayment of secured debentures       -     -       -     (7,555)
    Advance royalty payments       (534)     (403)       (1,848)     (1,363)
    Capital lease payments       (7)     (17)       (31)     (88)
            (453)     3,400       (1,689)     25,486
                                 
Increase (decrease) in cash and cash equivalents for the period       2,268     (1,542)       (14,795)     16,768
Cash and cash equivalents, beginning of period       15,349     33,954       32,412     15,644
Cash and cash equivalents, end of period      $ 17,617    $ 32,412     $ 17,617   $ 32,412

 

 

 

 

SOURCE St Andrew Goldfields Ltd.

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
Email: sramcharan@sasgoldmines.com

Jacques Perron
President & CEO
Email: jperron@sasgoldmines.com

Ben Au
CFO, VP Finance & Administration
Email: bau@sasgoldmines.com

Organization Profile

St Andrew Goldfields Ltd.

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