SAS Reports 2011 Third Quarter Results with Record Cash Flow and Gold Production

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

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

TORONTO, Nov. 11, 2011 /CNW/ - St Andrew Goldfields Ltd. (T-SAS), ("SAS" or the "Company") earned net income attributable to shareholders for the third quarter 2011 of $8.2 million or $0.02 per share as compared to a net income of $4.7 million, or $0.01 per share for the same period last year. Adjusted net earnings(1) for the quarter was $5.5 million, or $0.02 per share, as compared to adjusted earnings of $3.5 million, or $0.01 per share, for the same period last year.

THIRD QUARTER HIGHLIGHTS

  • Record production of 20,018 ounces of gold from three operations (Holt, Holloway and Hislop) with an increase in gold production by 32% over the previous quarter.
  • Gold sales of 19,260 ounces at an average realized price of US$1,715 per ounce of gold sold(1) for revenues of $33.3 million, a 51% increase over the previous quarter.
  • Cash costs of US$990 per ounce and a royalty cost of US$140 per ounce, for a total cash cost per ounce of gold sold(1) of US$1,130 per ounce; a 12% improvement over the previous quarter.
  • Cash margin from mine operations(1) during the quarter was $12.0 million, an increase of $8.6 million from the previous quarter.
  • Record cash flow from operations of $7.6 million since the re-start of mining operations in the fourth quarter of 2009, an increase of $9.8 million over the previous quarter. Generated $10.8 million in operating cash flow before repayment of the Gold Notes(1), or $0.03 on a per share basis, and after total exploration expenses of $2.0 million.
  • Completion of 200 metres of ramp development to the Smoke Deep Zone at the Holloway Mine, at a cost of $2.7 million, which will allow for development of the stope areas for production in November of this year.
  • Total capital expenditures incurred during the quarter of $8.6 million which included $2.8 million in stripping and waste removal costs at the Hislop Mine.
  • Mill throughput increased approximately 6%, with the Holt Mill averaging 2,829 tonnes per day ("tpd").
    • (1) Refer to pages 6-9 for non-GAAP Measures

"We are very happy to report a strong quarter both on production and on the improvement in our cash costs", said Jacques Perron, President and CEO of SAS. "The development and production at the Holt Mine saw significant improvements over the previous quarter, and Holt is on track to meet its production targets for 2011. Development of the Smoke Deep Zone at the Holloway Mine continued to progress, and Holloway's production for the quarter was satisfactory. Hislop continued to encounter difficult overburden conditions; however, all of the overburden stripping is expected to be completed during November. We remain confident that we will be able to meet our 2011 production target and that we will continue to see improvements in production in 2012".

Holt Mine, Operations and Financial Review (see Operating and Financial Statistics on page 10)

Gold production at the Holt Mine ("Holt") increased by 82% over the previous quarter as a result of improved development and production rates. This resulted in a 22% increase in throughput coupled with a 48% improvement in the mined ore grades during the third quarter. Production from Zone 4 commenced on the 925m Level at the beginning of the third quarter with concurrent development on the 925m Level up to the 900m sublevel. For the remainder of 2011, ramp, footwall access, stope development and long-hole mining will be the primary focus in this area. Development has also commenced on the 1075m Level with production anticipated to commence in November. The head grade at the Holt Mine saw a steady increase over the past few months mainly attributable to higher grade reserves in the remaining portion of the C-103 Zone and 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.

The mining rate during the third quarter continued to progress towards the anticipated steady state rate of production of 1,000tpd expected by the end of the first quarter of 2012, which will positively impact unit costs.

Cash margin from mine operations(1) for the quarter increased by $6.0 million over the previous quarter due to a stronger average realized price per ounce of gold sold(1), increased throughput, and improved ore grade.  The increase in throughput during the quarter has led to a decrease of $15 per tonne on mine-site cost per tonne milled(1) when compared to the previous quarter. In conjunction with the improvement in ore grade in the third quarter, total cash cost per ounce of gold sold(1) decreased by US$377 per ounce (in spite of a US$45 per ounce increase in royalty cost due to the higher gold price in the quarter). The Company expects operating cost at Holt will continue to decrease as the mining rate increases.

Production at Holt is on track to produce between 24,000 - 28,000 ounces of gold for 2011.

Holloway Mine, Operations and Financial Review (see Operating and Financial Statistics on page 11)

Production at the Holloway Mine ("Holloway") continued to be negatively impacted by the mining of the remnant pillar recovery area of the Lightning Zone and the lower grade Blacktop Footwall Lower Zone ("BFWL") which is winding down, while preparing the Smoke Deep Zone ("Smoke Deep") for production. Ramp development at Smoke Deep was completed during the third quarter of 2011. Results from the definition drilling program conducted on the western portion of the zone were recently released with additional drilling being conducted further to the east, and has returned values that are consistent with the previous drilling. Development is on track and production drilling commenced earlier this month.

Cash margin from mine operations(1) in the quarter increased by $1.1 million from the previous quarter as a result of the increase in the average realized price per ounce of gold sold(1), and a 12% increase in gold production during the quarter; offset slightly by the higher operating unit costs. Mine-site cost per tonne milled(1) in the quarter increased by 9% over the previous quarter due to the increased costs in mining equipment maintenance. The total cash cost per ounce of gold sold(1) in the quarter increased by US$44 per ounce over the previous quarter as a result of the increase in royalty costs due to the higher gold price. The Company expects the operating costs at the Holloway Mine will remain high until Smoke Deep is brought into steady state production and the ore grades improve.

Production at Holloway is on track to produce between 23,000 - 26,000 ounces of gold in 2011.

Hislop Mine, Operations and Financial Review (see Operating and Financial Statistics on page 12)

The head grade for the Hislop Mine ("Hislop") increased by approximately 10% over the previous quarter, but remains below the Company's expectation due to ore body continuity issues in the upper western portion of the pit. The operations at Hislop continued to be impacted by the additional overburden removal and waste rock mining activities as a result of overburden slope failures which continued to impact the third quarter, and have further delayed stripping of the eastern portion of the pit. The overburden removal is now expected to be completed for the entire pit, before the end of November. Waste rock mining was below the previous quarter, however, the fourth quarter may see a slight increase due to the change in the mining sequence required to accommodate the overburden stripping activities. An updated mine plan is being developed to optimize ore grades and throughput.

Cash margin from mine operations(1) improved by $1.4 million over the previous quarter as a result of a higher average realized price per ounce of gold sold(1) and slightly higher gold production due to increased throughput and better ore grade achieved in the quarter. Mine-site cost per tonne milled(1) increased by $4 per tonne, to $59 per tonne, from that incurred in the previous quarter as a result of the additional waste rock mining activities as mentioned above. The Company expects the remaining life-of-mine cost will remain around the $59 per tonne of ore milled range rather than the $45 per tonne as initially expected. The higher cost is primarily due to the complexity of the ore body, the rock hardness and the increased fuel costs.

Forecasted production for Hislop is between 18,000 - 21,000 ounces of gold for 2011.

Holt Mill Performance
At the beginning of July the Company installed a new SAG mill motor which coupled with some operational improvements resulted in an increase in mill throughput of approximately 6% over the previous quarter. Capital costs incurred during the quarter for these improvements were $0.9 million, and the Company believes the full impact of this capital improvement will be reflected in future periods.

Exploration Projects
The Company's planned $10.9 million exploration program for 2011, which focused on targets that lie near its existing operations, and/or where previous exploration identified anomalous zones of gold mineralization, has returned positive results from a number of targets. The Company has now completed its drilling programs for the year at: the Deep Thunder Zone in anticipation of a mineral resource estimate expected by year end; the Taylor Project, and is now preparing an updated mineral resource estimate for the West Porphry Zone and a prefeasibility study for the project, also expected by year end; and the Garrison Creek Project, where the focus is on compiling the data received to date and constructing a geological model to assist with future drilling. Drilling at the optioned Stroud Project has also been substantially completed and in light of the results received to date, the Company is in discussion with Stroud Resources to develop a plan for further exploration efforts.

Exploration for the remainder of 2011 will include continued surface drilling at the Ghost Zone, near the Holt Mine, and surface drilling at the Hislop North Project (northwest of the Hislop Mine and immediately south of Brigus Gold Corporation's 147 Zone). SAS currently has 3 drills turning and will provide additional drilling results before year end.

Capital Resources
SAS achieved a record quarter for cash flow from operations of $7.6 million since the restart of mining operations in the fourth quarter of 2009. The Company had cash of $15.3 million as at the end of the third quarter, however, working capital decreased during the 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. For the quarter, the Company generated $12.0 million in cash margin from mine operations(1) and $10.8 million in cash flow from operations before repayment of the Gold Notes(1), an improvement of $8.6 million and $10.3 million over the previous quarter, respectively.

Unusual Items
During the quarter, the Company incurred mark-to-market losses of $3.8 million on its gold-linked liabilities due to an increase in the gold price; and a mark-to-market loss of $6.8 million on its derivative foreign currency contracts which resulted from the strengthening of the United States dollar relative to the Canadian dollar.

For the quarter, the Company recorded a deferred tax asset of $16.1 million from the reversal of income tax valuation allowance previously recorded, as the Company expects that the previously unrecognized tax assets are more-likely-than-not to be realized. The Company has $90.3 million in tax losses and $107.4 million in tax deductions at the end of last year and, is currently utilizing these benefits to reduce taxes payable.

Conference Call Information
A conference call will be held on Monday morning, November 14, 2011 at 10:00 a.m. (EST) to discuss the third quarter 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 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. Messrs. Middlemiss and Michaud 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), cash flow from operations before repayments of Gold Notes, average realized price per ounce of gold sold and total cash costs 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 6-9 of this press release for a discussion and the reconciliation of these non-GAAP measurements to the Company's Unaudited Condensed Interim Financial Report for the three and nine months ended September 30, 2011.

(1) See pages 6-9 for non-GAAP Measures

The Balance Sheets, Statements of Operations and Statements of Cash Flows for the Company for the three and nine months ended September 30, 2011, can be found on pages 13-15.

To review the complete Unaudited Condensed Financial Report for the three and nine months ended September 30, 2011 and the Interim Management's Discussion and Analysis for the third quarter 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 targeted gold production levels at the Holt, Holloway and the Hislop mines for 2011; the commencement of production from the Smoke Deep Zone at Holloway and the 1075m Level in Zone 4 at Holt; the completion of overburden removal at the Hislop mine; the improvement in the ore grade at the Hislop and the Holt mines and the reduction of costs at the Holloway, Holt and Hislop mines; the increase in throughput at the Holt Mill; the continuance of the exploration program at the Ghost Zone, Hislop North and the Taylor Project and the completion of, an updated mineral resources estimate for the West Porphyry Zone, and prefeasibility study on the Taylor Project. 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; 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; 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.

NON-GAAP MEASURES

Adjusted net earnings (loss)

Adjusted net earnings (loss) 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 derivative contracts, one-time gains or losses on the disposition of non-core assets and expenses, and significant tax adjustment not related to current period's earnings, as detailed in the table below. Adjusted net earnings (loss) 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 per share amounts Three months ended       Nine months ended
September 30, September 30, June 30, September  30, September  30,
2011 2010 2011 2011 2010
           
Net income (loss) per Financial Reports $8,238       $4,660 $(1,233) $4,252       $2,325
Reversal of income and mining tax asset valuation allowance (13,668) - (4,354) (18,022) -
Mark-to-market adjustments on the  Gold Notes 2,837 (53) 782 3,417 3,839
Mark-to-market adjustments on  the Advance royalty payment obligation 998 211 155 1,344 781
Mark-to-market adjustment on derivative foreign exchange contracts 6,763 (1,358) 635 7,305 (531)
Proceeds from insurance claim - - (338) (338) -
Loss on the divestiture of the non-core asset - - 1,353 1,353 -
Write down of mining assets 300 - - 300 263
Secured debenture participation fee - - - - 756
Total adjusted net earnings (loss) $5,468 $3,460 $(3,000) $(389) $7,433
           
Weighted average number of shares outstanding (000s)      
Basic 368,004 352,015 367,858 367,798 333,985
Diluted 369,777 359,669 370,257 370,280 340,223
                            
Adjusted net earnings (loss) per share          
Basic and diluted $0.02 $0.01 $(0.01) $0.00       $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. The Company's 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 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 Three months ended       Nine months ended
  September  30, September 30, June 30, September 30, September 30,
  2011 2010 2011 2011 2010
Operating cash flow per Financial Reports $7,647       $1,774       $(2,209) $9,465 $8,156
Repayments of Gold Notes 3,148 2,468 2,718 8,439 8,450
Operating cash flow before repayments of Gold Notes $10,795 $4,242 $509 $17,904 $16,606
           
Per share amounts (1) $0.03       $0.01       $0.00 $0.05 $0.05
           

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 nine months ended September 30, 2011.

Amounts in thousands of Canadian dollars, except where indicated Three months ended Nine months ended
September 30, September 30, June 30, September 30, September 30,
2011 2010 2011 2011 2010
           
Mine-site costs per Financial Reports $18,699 $11,695 $17,282 $47,646 $27,480
Production royalties per Financial Reports 2,659 1,620 1,449 4,937 4,026
Total cash costs $21,358 $13,315 $18,731 $52,583 $31,506
           
Divided by gold ounces sold 19,260 19,760 15,160 46,160 52,509
Total cash cost per ounce of gold sold (Canadian dollars) $1,109 $674 $1,236 $1,139 $600
           
Average CAD:USD exchange rate 0.98 1.04 0.97 0.98 1.03
           
Total cash cost per gold ounce sold (US$) $1,130 $648 $1,277 $1,165 $579
           
           
Breakdown of total cash cost per ounce of gold sold (US$)          
      Holt Mine(2)          
        Production costs $833 $- $1,255 $985 $-
        Production royalties 181 - 136 165 -
  $1,014 $- $1,391 $1,150 $-
      Holloway Mine(1)(2)          
        Production costs $960 $442 $964 $908 $456
        Production royalties 212 97 164 158 82
  $1,172 $539 $1,128 $1,066 $538
      Hislop Mine          
        Production costs $1,286 $1,114 $1,311 $1,299 $1,114
        Production royalties - - - - -
  $1,286 $1,114 $1,311 $1,299 $1,114
      Total          
        Production costs $990 $569 $1,178 $1,056 $503
        Production royalties 140 79 99 109 76
  $1,130 $648 $1,277 $1,165 $579
           

Notes:

(1)  Commencing the first quarter of 2011, the Company reports the implicit interest on the Advanced royalty payment obligation as a financecost. For periods since January 1, 2011, the production royalty recorded for the Hislop Mine when gold is produced has been reclassified as a finance cost accordingly.
(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 per tonne amounts Three months ended Nine months ended
September 30, September 30, June 30, September 30, September 30,
2011 2010 2011 2011 2010
           
Holt Mine (2)(3)          
Mine-site costs $7,242 N/A $6,045 $13,287 N/A
Inventory adjustments (1) (168)   528 359  
Mine-site operating costs $7,074 N/A $6,573 $13,646 N/A
           
Divided by tonnes of ore milled (3) 66,556 N/A 54,538 121,094 N/A
           
Mine-site cost per tonne milled $106 N/A $121 $113 N/A
           
Holloway Mine          
Mine-site costs $4,821 $7,345 $4,658 $15,531 $23,130
Inventory adjustments (1) 10 (986) (334) (763) (303)
Mine-site operating costs $4,831 $6,359 $4,324 $14,768 $22,827
           
Divided by tonnes of ore milled 49,437 87,162 47,971 148,033 257,934
           
Mine-site cost per tonne milled $98 $73 $90 $100 $89
           
Hislop Mine (2)(3)          
Mine-site  costs $6,636 $4,350 $6,579 $18,828 $4,350
Inventory adjustments (1) (326) 1,022 14 832 1,022
Mine-site operating costs $6,310 $5,372 $6,593 $19,660 $5,372
           
Divided by tonnes of ore milled 107,741 110,587 120,677 339,293 110,587
           
Mine-site cost per tonne milled $59 $49 $55 $58 $49
           

Notes:

(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)      Exclude 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 Three months ended Nine months ended
  September 30, June 30, March 31, December 31, September 30, September 30, September 30,
Holt Mine (1) 2011 2011 2011 2010 2010 2011 2010
               
Tonnes mined 66,082 55,004 43,804 23,406 N/A 121,086 N/A
               
Tonnes milled 66,556 54,538 43,458 23,257 N/A 121,094 N/A
Head grade (g/t Au) 5.01 3.39 4.15 2.92 N/A 4.27 N/A
Average mill recovery 93.4% 92.5% 93.6% 92.5% N/A 93.0% N/A
               
Gold produced (ounces) 10,012 5,508 5,435 2,022 N/A 15,520 N/A
Gold sold (1) (ounces) 8,870 4,979 5,044 1,408 N/A 13,849 N/A
               
Gold sales (from production) $15,449 $7,284 N/A N/A N/A $22,733 N/A
               
Cash margin from mine operations (2) $6,625 $581 N/A N/A N/A $7,206 N/A
               
Mine-site cost per tonne milled (2) $106 $121 N/A N/A N/A $113 N/A
               
Total cash cost per ounce of gold sold (2) (US dollars):              
Production costs $833 $1,255 N/A N/A N/A $985 N/A
Production royalties 181 136 N/A N/A N/A 165 N/A
Total cash cost per ounce of gold sold (2) 1,014 1,391 N/A N/A N/A 1,150 N/A
Depreciation and depletion 134 130 N/A N/A N/A 133 N/A
Total production cost per ounce of gold sold(2) (US dollars) $1,148 $1,521 N/A N/A N/A $1,283 N/A
               
Average CAD:USD exchange rate 0.98 0.97 0.99 1.01 1.04 0.98 1.03
               
Capital expenditures $1,841 $1,963 $1,740 $6,519 $2,027 $5,544 2,027
               

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 6-9 for non-GAAP measurements.

Operating and Financial Statistics - Holloway Mine

Amounts in thousands of Canadian dollars, except where indicated Three months ended Nine months ended
  September 30,
June 30,
March 31,
December 31,
September 30,
September 30,
September 30,
Holloway Mine (1) 2011 2011 2011 2011 2011 2011 2011
               
Tonnes mined 49,438 47,972 49,666 84,987 88,369 147,076 258,866
               
Tonnes milled 49,437 47,971 50,625 82,659 87,162 148,033 257,934
Head grade (g/t Au) 3.71 3.43 4.13 4.85 5.99 3.76 6.42
Average mill recovery 85.2% 85.0% 86.4% 85.9% 84.7% 85.6% 87.1%
               
Gold produced (ounces) 5,026 4,497 5,813 11,069 14,230 15,336 46,390
Gold sold (2) (ounces) 5,130 4,996 7,364 12,694 16,004 17,490 48,753
               
Gold sales $8,828 $7,272 $9,996 $17,508 $20,385 $26,096 $59,625
               
Cash margin from mine operations (3) $2,931 $1,822 $3,115 $8,450 $11,420 $7,868 $32,374
               
Mine-site cost per tonne milled  (3) $98 $90 $111 $80 $73 $100 $89
               
Total cash cost per ounce of gold sold (US dollars) (3):              
Production costs $960 $964 $834 $596 $442 $908 $456
Production royalties 212 164 114 108 97 158 82
Total cash cost per ounce of gold sold (3) 1,172 1,128 948 704 539 1,066 538
Depreciation and depletion 540 462 345 263 189 436 159
Total production cost per ounce of gold sold (US dollars) (3) $1,712 $1,590 $1,293 $967       $728 $1,502 $697
               
Average CAD:USD exchange rate 0.98 0.97 0.99 1.01 1.04 0.98 1.03
               
Capital expenditures $2,938 $2,986 $2,779 $2,333       $1,794 $8,703 $2,737
               

Notes:

(1)      The Holloway Mine commenced production in October 2009.
(2)      Includes 1,860 ounces of gold delivered to the Gold Note holders in each of the quarters.
(3)      See pages 6-9 for non-GAAP measurements.

Operating and Financial Statistics - Hislop Mine

Amounts in thousands of Canadian dollars, except where indicated Three months ended Nine months ended
  September 30, June 30, March 31, December 31, September 30, September 30, September 30,
Hislop Mine (1) 2011 2011 2010 2010 2010 2011 2010
               
Overburden stripped (m3) 300,249 472,214 291,307 66,477 222,883 1,063,770 514,810
               
Tonnes mined (ore) 109,457 114,849 117,138 101,425 107,461 341,444 192,199
                             (waste) 738,054 1,303,072 927,216 1,013,011 599,790 2,968,342 1,001,530
  847,511 1,417,921 1,044,354 1,114,436 707,251 3,309,786 1,193,729
               
Waste-to-Ore Ratio 6.7 11.3 7.9 10.0 5.6 8.7 5.2
               
Tonnes milled 107,741 120,677 110,875 98,333 110,587 339,293 166,517
Head grade (g/t Au) 1.68 1.53 1.66 1.54 1.51 1.62 1.46
Average mill recovery 85.4% 87.2% 88.0% 86.3% 87.5% 86.9% 86.4%
               
Gold produced (ounces) 4,980 5,192 5,209 4,195 4,682 15,381 6,757
Gold sold (2) (ounces) 5,260 5,185 4,376 5,258 3,756 14,821 3,756
               
Gold sales (2) $9,068 $7,579 $5,947 $7,253 $4,799 $22,594 $4,799
               
Cash margin from mine operations (3) $2,432 $1,000 $334 $609 $176 $3,766 $449
               
Mine-site cost per tonne milled (3) $59 $55 $61 $53 $49 $58 $49
               
Total cash cost per ounce of gold sold (US dollars) (3)  $1,286 $1,311 $1,301       $1,192       $1,114 $1,299 $1,118
Depreciation and depletion 150 104 95 46 29 118 29
Total production cost per ounce of gold sold (US dollars) (3) $1,436 $1,415 $1,396       $1,238       $1,143 $1,417 $1,147
               
Average CAD:USD exchange rate 0.98 0.97 0.99 1.01 1.04 0.98 1.03
               
Capital expenditures $2,822       $5,244       $1,885       $1,944       $900 $9,951 $4,190
               

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)      Incidental gold sales during the mine pre-production period were recorded as a component of pre-production expenditures.
(3)      See pages 6-9 for non-GAAP measurements.
(4)      Commencing the first quarter of 2011, the Company reports the implicit interest on the Advance royalty payment obligation as a finance cost. For periods since January 1, 2011, a production royalty cost was recorded for the Hislop Mine when gold is produced with a corresponding decrease in interest expense. These amounts have been reclassified as finance costs to conform to the presentation adopted for the current period.

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

      Three months ended September 30,    Nine months ended September 30, 
      2011   2010   2011   2010
                   
Gold sales $ 33,345 $ 25,184 $  $ 71,423 $ 64,424
                   
Operating costs and expenses:                
  Mine site operating   18,699   11,695   47,646   27,480
  Production royalty   2,659   1,620   4,937   4,121
  Site maintenance and pre-production   220   146   84   1,914
  Exploration   1,992   1,765   6,924   4,735
  Corporate administration   1,461   1,525   4,926   5,250
  Depreciation and depletion   4,807   3,685   11,651   8,849
  Write-down of mining assets   300   -   300   263
      30,138   20,436   76,468   52,612
Operating income (loss)   3,207   4,748   (5,045)   11,812
                     
Finance costs   (1,220)   (1,639)   (3,192)   (6,485)
Other income (expense)   (10,146)   1,397   (10,520)   (3,156)
Income (loss) before taxes   (8,159)   4,506   (18,757)   2,171
Deferred taxes   16,397   154   23,009   154
Net income for the period   8,238   4,660    $ 4,252   2,325
                   
Other comprehensive income (loss)                
Unrealized gain (loss) on available for sale investments, net of tax (nil for all periods)   (78)   50   (301)   35
Comprehensive income for the period $ 8,160 $ 4,710 $ 3,951 $ 2,360
                   
Basic and diluted net income per share  $ 0.02 $ 0.01 $ 0.01 $ 0.01
                   
Weighted average number of shares outstanding (000's)                
Basic   368,004   352,015   367,798   333,985
Diluted     369,777   359,669   370,280   340,223

 

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

        Three Months Ended September 30,   Nine Months Ended September 30,
        2011   2010   2011   2010
Cash provided by (used in):                
                     
Operating activities:                
  Net income for the period $ 8,238 $ 4,660 $ 4,252 $ 2,325
  Items not affecting cash:                
    Deferred taxes   (16,397)   (154)   (23,009)   (154)
    Mark-to-market adjustment on the secured gold notes and advance royalty payment obligation   3,835   158   4,761   4,620
    Implicit interest on secured gold notes and advance minimum royalty payment obligation   1,077   1,390   2,764   4,743
    Mark-to-market adjustment on the foreign currency derivative contracts   6,763   (1,358)   7,305   (531)
    Repayment of gold notes   (3,148)   (2,468)   (8,439)   (8,450)
    Depreciation and depletion   4,807   3,685   11,651   8,849
    Write-down of mining assets   300   -   300   263
    Loss on the divestiture of non-core assets   -   -   1,353   -
    Share-based payments   349   343   1,203   958
    Accretion of asset retirement obligation   131   125   391   375
  Change in non-cash operating working capital and other   1,692   (4,607)   6,933   (4,842)
        7,647   1,774   9,465   8,156
Investing activities:                
    Additions to exploration and evaluation assets   (748)   (7)   (2,821)   (451)
    Additions to producing properties and mine development   (6,152)   (3,989)   (19,127)   (7,994)
    Additions to plant and equipment   (1,745)   (1,045)   (5,951)   (2,240)
    Amounts payable on capital additions   (1,756)   -   2,872   -
    Proceeds from sale of non-core assets   -   -   50   75
    Interest earned on reclamation deposits   (17)   -   (50)   -
    Cash collateralized for banking facilities   (265)   -   (265)   (1,322)
        (10,683)   (5,041)   (25,292)   (11,932)
Financing activities:                
    Share purchase warrants and stock options exercised   -   305   102   3,235
    Private placements of common share units   -   28,938   -   28,938
    Share issue costs   -   (1,704)   -   (1,704)
    Share purchase plan contributions   -   -   -   203
    Repayment of secured debentures   -   (7,555)   -   (7,555)
    Advance minimum royalty payments   (479)   (376)   (1,314)   (960)
    Capital lease payments   (7)   (21)   (24)   (71)
        (486)   19,587   (1,236)   22,086
                     
Increase (decrease) in cash and cash equivalents for the period   (3,522)   16,320   (17,063)   18,310
Cash and cash equivalents, beginning of period   18,871   17,634   32,412   15,644
Cash and cash equivalents, end of period $ 15,349 $ 33,954  $ 15,349 $ 33,954

 

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

      September 30, 2011   December 31, 2010
           
Assets        
Current assets:        
  Cash and cash equivalents  $ 15,349 $   32,412
  Restricted cash   1,358   1,093
  Accounts and settlements receivable   2,278   10,694
  Inventories   7,142   5,081
  Fair value of derivative contracts   -   1,955
  Prepayments and other assets   1,710   1,694
      27,837   52,929
           
Exploration and evaluation assets   24,474   23,309
Producing properties and mine development   56,996   46,357
Plant and equipment   44,945   42,401
Reclamation deposits   8,521   8,471
Restricted cash   1,641   1,641
Deferred tax assets   21,502   -
Other assets   766   996
     $ 186,682  $ 176,104
           
Liabilities and Shareholders' Equity        
Current liabilities:        
  Accounts payable and accrued liabilities  $ 16,425  $ 15,885
  Employee-related liabilities   3,370   2,535
  Fair value of derivative contracts   5,350   -
  Current portion of long-term debt   14,683   10,623
  Current portion of capital lease obligations    29   18
      39,857   29,061
           
Long-term debt   9,058   14,838
Capital lease obligations   45   5
Asset retirement obligations    10,547   10,156
Deferred taxes   -   125
      59,507   54,185
           
Shareholders' equity:        
  Share capital    98,417   218,482
  Share capital to be issued   -   832
  Contributed surplus   17,112   42,972
  Warrants   878   878
  Stock options    4,708   3,724
  Retained earnings (deficit)   6,655   (144,675)
  Accumulated other comprehensive loss   (595)   (294)
      127,175   121,919
     $ 186,682  $ 176,104

 

 

 

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

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