Thistle announces results for the first quarter ending March 31, 2007



    TORONTO, June 27 /CNW/ - Thistle Mining Inc. (AIM: TMG )

    Overview

    Thistle Mining Inc ("Thistle" or the "Company") (AIM:TMG) wishes to
announce that the Company's unaudited Consolidated Financial Statements and
Managements Discussion and Analysis ("MD&A") for the three month period ended
March 31, 2007 will be filed on SEDAR today. All dollar references in this
announcement are in US $. A full copy of the Company's 2007 first quarter
report can be obtained from the Company's website: www.thistlemining.com.
    On March 19, 2007 the Company disposed of its interest in the Masbate
Gold project located in the Philippines to CGA Mining Limited ("CGA") (ASX:
CGX) for a consideration of $51 million of which $30 million represents a cash
consideration and US$21 million being payable in ordinary shares of CGA. This
transaction resulted in an extraordinary gain of $23.9 million or $0.52 per
share and has allowed the Company to repay $26.7 million of the purchase
consideration to MC Resources Limited ("MC") and Casten Holdings Limited
("Casten") as part payment of short term debt owing. Following this payment,
the amount of principal, interest and withholding taxes outstanding on April
1, 2007 amounted to $54.3 million. For the quarter Philippine Gold Ltd, a
wholly owned UK subsidiary of the Company, and the Company's other interests
in the Masbate Gold project have been classified as a discontinued operation
with its financial results separately disclosed. Following the CGA transaction
Thistle's only remaining principal asset (other than the CGA Shares) is
President Steyn Gold Mines (Free State) (Pty) Limited ("PSGM") which owns and
operates the President Steyn Gold Mine in the Republic of South Africa.
    Gold production at PSGM continues to be challenging due to a lack of
operational flexibility compounded by infrastructure problems. Sales of gold
for the second, third and fourth quarters of 2007 are forecast at
approximately 31,200, 39,800 and 37,000 oz's at cash costs of approximately
$670, $564 and $558 per oz respectively assuming an exchange rate of 7.25
ZAR:US$ for the second half of 2007. Traditionally the second half of the year
is more productive than the first half. Gold production from PSGM in 2007 is
anticipated to be approximately 137,200 oz, at a cash cost and total cost of
approximately $605 to $615 and $645 to $655 per oz respectively assuming an
average exchange rate of 7.20 ZAR:US $ for 2007.
    In April and May, 2007 a framework was laid down for restructuring the
remaining debt owing to MC and Casten (refer to Highlights for the quarter
ending March 31, 2007 and subsequent events). The Board has also decided to
embark on a process to consider the future of PSGM. This could lead to the
divestiture of PSGM. The high risk nature of operating a single gold mine on a
stand-alone basis and inability at present of PSGM to self-fund all the
capital expenditure needed to upgrade infrastructure, create more operational
flexibility, develop the Golden Triangle and explore the Eldorado reefs
indicates that it could be appropriate to integrate PSGM into a diversified
South African gold mining company. The Company is in the process of finalising
arrangements with a South African based investment banker to act as its
financial advisor in this process and is currently in early stage discussions
with an interested third party. The Company hopes to conclude agreements
relating to the future of PSGM by September 2007. These agreements would
however be subject to shareholder approval.
    On June 27, 2007, MC and Casten agreed to provide a credit line of up to
$666,600 per month for the three month period to September 2007 during which
period management hope to conclude divestiture or other agreements for PSGM.
The credit line will be available for the purpose of funding corporate costs
including the cost of strategic initiatives relating to PSGM and to provide a
contingency in the event of below forecast performance by PSGM. The credit
line is contingent on improved performance at PSGM to levels of production of
not less than 396, 396 and 384 kg's of gold for the months of July, August and
September 2007 respectively, adequate progress in strategic initiatives
relating to PSGM and certain other conditions. Given recent production
problems experienced by PSGM there can be no assurance that these conditions
will be satisfied. Without the line of credit there may be a material
uncertainty which will cast doubt on the ability of the Company and its
subsidiaries to continue as going concerns.
    Having reviewed the cash flow forecasts of the Company and its
subsidiaries, given agreement to move forward with the Plan or Standstill
Agreement whichever is applicable and given the credit line entered into with
MC and Casten on June 27, 2007 for $666,600 per month for the three month
period up to September 2007 during which period management expect to conclude
divestiture or other agreements for PSGM, it is management's belief that
existing cash resources, net cash to be generated from operations and the sale
of assets and the credit line provided, will be sufficient to meet the
Company's anticipated requirements.
    In making this statement management has assumed that current market
prices will prevail, that the revised production forecasts for the year will
be met and that the restructuring under the Plan will be successful or the
divestiture or other agreements for PSGM will be concluded by the end of
September 2007. Accordingly the financial statements have been prepared on the
basis of accounting policies applicable to a going concern.
    Should PSGM not be successful in achieving sufficient levels of
profitable operations within the contingency provided in the credit line
entered into with MC and Casten on June 27, 2007, and/or there be a material
award adverse to PSGM under the M Hall and Associates claim, and/or either the
restructuring under the Plan not be successful or the divestiture or other
agreements for PSGM not be concluded by the end of September 2007, there is a
material uncertainty which may cast doubt on the ability of the Company and
its subsidiaries to continue as going concerns and, therefore, that they may
be unable to realise their assets and discharge their liabilities in the
normal course of business.

    Retirement of an officer of the Company

    After two years of dedicated service Andy Graetz the CFO will be retiring
as an officer of the Company on June 30, 2007. The Company would like to thank
him for his valued contribution. The Board are grateful that Andy has agreed
to continue to serve the Company on an ad hoc basis as an independent
contractor. Anton Kakavelakis, the Company's current Controller, will assume
the role of CFO with effect from July 1, 2007.

    Highlights for the quarter ending March 31, 2007 and subsequent events.

    
    -------------------------------------------------------------------------
    For the three months ended March 31 (in thousands of dollars, except per
    share amounts)
    -------------------------------------------------------------------------
                                                               2007     2006
    -------------------------------------------------------------------------
    Sales                                                    18,940   19,837
    -------------------------------------------------------------------------
    Gross loss                                               (1,121)  (1,440)
    -------------------------------------------------------------------------
    Net loss before discontinued operations                  (4,370)  (4,551)
    -------------------------------------------------------------------------
    Net loss per share before discontinued operations -
     basic and diluted                                        (0.10)   (0.10)
    -------------------------------------------------------------------------
    Net gain on the sale of the Company's interest in
     the Masbate Project                                     23,871        -
    -------------------------------------------------------------------------
    Net earnings / (loss)                                    19,457   (4,639)
    -------------------------------------------------------------------------
    Net earnings / (loss) per share - basic and diluted        0.42    (0.10)
    -------------------------------------------------------------------------
    Cash used in operating activities                        (5,446)    (963)
    -------------------------------------------------------------------------
    Total assets                                             78,629   77,532
    -------------------------------------------------------------------------
    Total long term financial liabilities                    37,124   69,947
    -------------------------------------------------------------------------
    Cash dividends declared per share                           Nil      Nil
    -------------------------------------------------------------------------

    -  Cash flow used in continuing operations was $5.4 million in the first
       quarter of 2007 compared to $1.0 million in the first quarter of 2006.
       Although the gross loss in the first quarter of 2007 is comparable to
       that of the first quarter of 2006, the decrease in cash generated
       reflects an increase in working capital of $4.2 million following an
       increase in receivables

    -  Investment in property, plant and equipment of continuing operations,
       increased in the first quarter of 2007 relative to the first quarter
       of 2006. Total funds invested amounted to $1.4 million in the first
       quarter of 2007 and $1.1 million in the first quarter of 2006.

    -  Financing raised was more in the first quarter of 2007 relative to the
       corresponding quarter in 2006. Casten and MC advanced $3.8 million for
       the first quarter of 2007 compared to $0.68 million in the first
       quarter of 2006. For the quarter $0.7 million was applied to funding a
       cash deficit at PSGM, with the balance applied to funding the
       Philippine operations and corporate overheads.

    -  The net loss before discontinued operations for the first quarter of
       2007 was $4.4 million, or $0.10 per share, compared to $4.6 million,
       or $0.10 per share, in the first quarter of 2006. The total net
       earnings for the first quarter of 2006 was $19.5 million, or $0.42 per
       share compared to a total net loss of $4.6 million, or $0.10 per
       share, in the first quarter of 2006. This reflects a $23.9 million
       gain on the sale of the Company's interest in the Masbate Project in
       the Philippines.

    -  Gold sold in the first quarter of 2007 was 29,126 oz, a decrease of
       16.5% compared to the same period in 2006. Production was adversely
       affected by a number of issues including major electrical
       infrastructure failures at Number 3 Shaft; problems at Number 2 shaft
       related to movement in the shaft and shaft sub incline arising from
       the commencement of limited mining of the Number 2 shaft pillar; a
       decline in grade of the "A" reef working places at Number 2 shaft and
       a fire in the 71C45 working place also at Number 2 shaft on 5 January
       2007. This stope was sealed off and the fire contained. The affected
       crews were relocated to open other working places. During the quarter
       a second shaft feeder cable was installed at Number 3 shaft and
       distribution infrastructure upgraded.

    -  The underground gold yield for the first quarter of 2007 averaged
       5.44 g/tonne compared to an average yield of 5.92 g/tonne in the first
       quarter of 2006 and 5.70 g/tonne and 5.43 g/tonne for calendar years
       2006 and 2005 respectively. The drop off in the underground yield
       reflects the lack of flexibility that PSGM has to absorb the
       production shocks experienced in the first quarter of 2007.

    -  Compared to the first quarter of 2006, PSGM's unit cash(1) costs
       increased by 16% to $648 per ounce and total costs increased by 12% to
       $681 per ounce of gold, respectively. The relative increase in unit
       cash cost occurred mainly due to reduction in gold sales by 16.5%,
       expenditure on upgrading electrical infrastructure at Number 3 shaft
       and increases in the cost of labour of 12.7 % which took effect at the
       June 2006 month end. These cost increases were partly offset by a
       weaker US $. Relative to the prior year's quarter the US $ exchange
       rate has weakened from ZAR 6.12 to ZAR7.22 to the US $.

    -  The Company realized an average price of $648 per ounce of gold in the
       first quarter of 2007, slightly lower than the market average spot
       price of $649 for quarter. The price realized is $96 per ounce higher
       than that realized in the first quarter of 2006.

    -  On January 31, 2007, the Company and CGA entered into a Sale and
       Purchase Agreement ("SPA") for the sale to a wholly-owned subsidiary
       of CGA (the "Purchaser") of 100% of Thistle's shareholding in
       Philippine Gold Ltd ("PGO"), a wholly-owned subsidiary of the Company,
       and its other interests in the Masbate Project. The transaction closed
       on March 19, 2007. The Purchase consideration has been and will be
       satisfied by:
           -  the issue by CGA to Toowong Mining BV, a new wholly-owned
              subsidiary of Thistle registered in the Netherlands, of
              40,985,538 fully paid ordinary shares representing an
              approximate 25.4% of CGA's paid up capital (the "CGA Shares");
           -  the payment by the Purchaser to Thistle on March 19, 2007, of
              US$25 million in cash, less the deposit of US$500,000 that has
              already been paid by the Purchaser to Thistle; and
           -  the payment by the Purchaser into escrow within six months of
              US$5 million required to meet any substantiated warranty and
              indemnity claims that may have been made by the Purchaser, on a
              date not later than twelve months from the date of Completion.
           The gain on the sale of the Company's interest in the Masbate
           Project amounted to $23.9 million or $0.52 per share. Following
           this transaction, the Company's total assets exceeded its total
           liabilities by $1.6 million.

    -  Pursuant to the SPA, Thistle has provided a number of warranties to
       the Purchaser and CGA and will remain subject to possible Purchaser
       Claims (as defined therein) for a minimum period of 12 months.
       Although no formal claims or actions related to the sale of the
       interest in the Masbate gold project have been received, CGA and the
       Purchaser have reserved their rights in connection with the SPA and
       the events leading up to the completion of the sale. The Company
       believes that it has a good defence against possible claims that might
       be made in this regard. Should proceedings be instituted against the
       Company and this interpretation prove not to be the case, the matter
       could have a material adverse effect on the Company.

    -  On March 29, 2007 following an unwillingness of Casten and MC to defer
       short term debt and interest due and payable on April 1, 2007 in terms
       of the Memorandum of Agreements entered into on March 28, 2006 and the
       realization that PSGM would not be able to generate sufficient free
       cash flows to allow Thistle to meet its financial obligations, Thistle
       announced that it was in financial hardship and suspended trading on
       the AIM market of the London Stock Exchange Plc pending satisfactory
       resolution of this matter.

    -  On April 11, 2007, Thistle entered into a non-binding memorandum of
       agreement with its major creditors, MC and Casten, on the
       restructuring of debt owing to them (the "Plan"). The Plan
       contemplates two private placements to be supported by MC and Casten
       and is conditional on the transfer of Thistle's ownership interest in
       the CGA Shares to MC and Casten. Should the performance of PSGM not
       improve to a level where the Company is self sufficient, the Plan is
       unlikely to be implemented. Furthermore should the Company divest
       itself of PSGM for cash there will be no need to proceed with the
       private placements.

    -  On May 11, 2007, Thistle entered into a debt standstill agreement with
       MC and Casten (the "Standstill Agreement") pursuant to which MC and
       Casten agreed (amongst other matters) that should CGA's consent to the
       transfer of Thistle's ownership interest in the CGA Shares to MC and
       Casten not be obtained by August 11, 2007, the Plan will lapse and MC
       and Casten will continue to defer repayment of interest and principal
       on the loans they have advanced to Thistle until the end of May 2008.
       Should such consent be obtained by August 11, 2007, the Plan may be
       implemented. However in certain circumstances the agreement will be of
       no force and effect. These relate mainly to economic circumstances of
       Thistle, a material adverse change in the financial position or
       prospects of Thistle or its subsidiaries or any material legal claims
       being made against Thistle or its subsidiaries.

    -  The Plan contemplates that the Company's 25.4% interest in CGA is to
       be transferred and deferred payments in terms of the CGA Transaction
       are to be assigned to MC and Casten for a total of approximately
       $25.5 million. In addition, MC and Casten have agreed to fully
       underwrite a private placement of approximately 44.45 million shares
       at a share price of (pnds stlg)0.20 (Great British Pound) per share
       ("First Private Placement"). The proceeds of this private placement
       are to be applied in paying down in full the outstanding principal of
       outstanding debt, assume certain bank guarantees in respect of PSGM
       and provide working capital of $1.75 million. Following the credit
       line entered into on June 27, 2007, the quantum of the private
       placement will be adjusted to reflect any increase in the indebtedness
       owed to MC and Casten. In addition the $1.75 million working capital
       provision will be withdrawn. The First Private Placement is to be made
       to MC and Casten, pro rata to their existing shareholdings, and select
       qualified investors. MC and Casten will satisfy their payment
       obligations for the subscription of Thistle shares by converting their
       principal debt outstanding into such shares, except that MC and Casten
       may pay cash to replace cash held on deposit to assume certain bank
       guarantees of approximately $1.58 million.

    -  Should the First Private Placement proceed as planned the outstanding
       debt owing to MC and Casten will consist only of deferred interest
       which on April 1, 2007 amounted to CAD $6.90 million and
       US $6.54 million respectively ("Remaining Indebtedness"). A second
       private placement (the "Second Private Placement") is contemplated
       under the Plan whereby the consideration for shares shall be paid by
       MC and Casten by way of set-off against the Remaining Indebtedness.
       The Second Private Placement is however subject to certain conditions,
       including the change in the country domicile of Thistle.

    -  Under the Plan the payment of the interest on the Remaining
       Indebtedness is to be deferred until the earlier of the change in
       domicile and the Second Private Placement has been effected or
       April 1, 2008. The payment of the Remaining Indebtedness is to be
       deferred until the earliest of April 1, 2010, the conclusion of the
       Second Private Placement or the occurrence of certain events.

    -  Following the execution of the Standstill Agreement the suspension of
       the Company's shares to trading on AIM was restored on May 22, 2007.

    -  As at December 31, 2006, the Company has 46,152,060 common shares
       outstanding.

    ------------------------
    (1)  Cash cost per ounce sold is not a recognized measure under Canadian
         GAAP. A reconciliation to the cost of sales per ounce is included
         under South African Operations.
    

    This news release contains forward-looking statements with the meaning of
applicable securities laws including amongst others, statements made or
implied under the headings "Overview", and "Highlights for the quarter ending
March 31, 2007 and subsequent events" above relating to the Company's
objectives, strategies to achieve these objectives, future cash flow and
financing requirements, and similar statements concerning anticipated future
events, results, circumstances, performance or expectations that are not
historical facts. Such forward-looking statements reflect the Company's
current beliefs and are based on information currently available to
management. These statements are not guarantees of future performance and are
based on the Company's estimates and assumptions that are subject to risk and
uncertainties inherent in the business of the Company including those
discussed in the Company's materials filed with the Canadian securities
regulatory authorities from time to time, which could cause the actual results
and performance of the Company to differ materially from the forward-looking
statements contained in this news release. Those risks and uncertainties
include, among other things, risks related to: the mining industry (including
operational risks in exploration development and production; delays or changes
in plans with respect to exploration or development projects or capital
expenditures; the uncertainties involved in the discovery and delineation of
mineral deposits, resources or reserves; the uncertainty of mineral resource
and mineral reserve estimates and the ability to economically exploit mineral
resources and mineral reserves; the uncertainty of estimates and projections
in relation to production, costs and expenses; the uncertainty surrounding the
ability of the Company to obtain all permits, consents and authorizations
required for its operations and activities; competition for the acquisition,
exploration and development of mineral interests; and health and safety and
environmental risks), the risk of gold and other commodity price and foreign
exchange rate fluctuations; the ability of the Company to fund the capital and
operating expenses necessary to achieve the business objectives of the
Company; the uncertainty associated with commercial negotiations and
negotiating with foreign governments; the risks associated with international
business activities; the dependence on key personnel; the ability to access
capital markets; the indebtedness of the Company; and labour relations
matters. Material factors or assumptions that were applied in drawing a
conclusion or making an estimate set out in the forward-looking statements
include that the general economy remains stable, the demand and price of gold
continues to increase and the Rand remains strong against the US$. It is also
assumed that there will be no major disruptions in production including
failure of infrastructure, seismic activity, underground fires and labour
unrest. The Company cautions that this list of factors is not exhaustive.
    Although the forward-looking statements contained in this news release
are based upon what the Company believes are reasonable assumptions, there can
be no assurance that actual results will be consistent with these
forward-looking statements. All forward-looking statements in this news
release are qualified by these cautionary statements. These forward-looking
statements are made as of the date hereof and the Company, except as required
by applicable law, assumes no obligation to update or revise them to reflect
new information or the occurrence of future events or circumstances.





For further information:

For further information: Anton Kakavelakis, Group Financial Controller,
+ 27 57 391 9026 or email to anton.kakavelakis@thistlemining.com; Gerry
Beaney, Grant Thornton Corporate Finance at +44 (0) 207 383 5100

Organization Profile

THISTLE MINING INC.

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