San Gold reports third quarter financial results

BISSETT, MB, Nov. 13 /CNW/ - (SGR: TSX-V) San Gold has released its financial results for the third quarter of 2009, which have been prepared on the basis of available information up to Nov. 13, 2009. To review the complete interim unaudited financial statements and associated management discussion and analysis, which should be read in conjunction with the most recent audited annual financial statements, please visit the company's website or SEDAR.

Mr. Dale Ginn, Chief Executive Officer reports record third quarter revenue of $8,844,634 and first ever operating profit.

The Company transitioned to commercial production in its accounting for activities at the Hinge mine this quarter. In part this was responsible for the net income from operations of $0.2 MM - this is the first time the Company has reported operating income which is a significant milestone for the Company and is the beginning of what management expects will be improved performance in the future. The increased level of Gold in process inventory of $7.5 MM compared to $4.7 MM at December 31, 2008 and $3.0 MM at the same time last year is a result of the increasing level of production activity through the period. The Company has 4,484 ounces of salable gold in inventory that was shipped in the period immediately subsequent so will be recorded as part of Q4 revenue.



On a year to date basis San Gold has achieved an LTA (lost time accidents) frequency of 1.44 representing an order of magnitude improvement year over year and is demonstrative of the operational focus on a safe and productive work environment. A new Company record for milling activity in a month was set in September with over 24,000 tons or 794 tons per day for the month and 582 tons per day for the quarter taken as a whole. Development continued at an aggressive pace at the Hinge and Rice Lake mines with 2,500 feet of level and decline development having been completed during the quarter. Projects completed during the quarter included the installation of a new transformer and power distribution upgrade, Hinge ventilation raise including surface building and heaters and the installation of a new 67 person camp, increasing current camp capacity to 180 persons.



The Company drilled 72,740 feet underground during the quarter and 55,364 feet from the surface. This significant surface and underground drilling continues to confirm the geologic model of the Hinge in what is proving to be a predictive model in identifying mineralization in the surrounding area; most notably at the Cohiba and L-13 areas where plans are underway to determine feasibility. The L-13 zone was discovered during the quarter and of special significance is its proximity to both the Rice Lake mine workings and to the Hinge decline. Within the Rice Lake mine, the Deep West zone was discovered - a zone containing a very high sulphide content that is not constrained by traditional mine unit diabase rocks, and was encountered while looking for hinge-like targets at depths below 5,000 feet. Drilling continues to focus on specific high grade targets within close proximity to existing infrastructure. Construction of a new core-handling facility began during the quarter and is expected to help alleviate a backlog of over 30,000 feet of unlogged drilled surface core.



The Company recognized record revenue during the quarter ended September 30th, 2009 of $8,844,634 on sales of 8,398 ounces of gold. This compares to revenue of $2,096,521 on sales of 2,276 ounces in the same quarter last year. For the year to date the Company has recognized revenue of $16,088,544 on sales of 15,004 ounces compared to sales of $5,490,621 on sales of 6,046 ounces in the same period last year. The Company reported a net loss of $4,983,566 ($0.02 per share) for the three months ended September 30th, 2009 compared to a loss of $9,842,028 ($0.04 per share) for the comparable period in the prior year. For the year to date, the Company reports a loss of $24,253,063 ($0.10 per share) in comparison to a loss of $33,574,907 ($0.16 per share) for the first nine months of the prior year. The improvement in performance over the same period last year is mostly attributable to increases in revenue as the cost structure has a high component of fixed expense. Of note during the quarter is an operational profit - signifying what management expects is an inflection point towards higher levels of performance. There is a significant level of fixed expense in the operation so that as production from the Hinge comes on-line and the historical Rice Lake mine is further developed the resultant top line gains should translate directly to bottom line improvement.

          Interim Consolidated Statements of Operations and Deficit

                      SEPT 30        SEPT 30        SEPT 30        SEPT 30
                        2009           2008           2009           2008
                  -------------- -------------- -------------- --------------
    REVENUE       $   8,844,634  $   2,096,521  $  16,088,544  $   5,490,621

      Operations      6,525,833      6,518,694     22,578,703     23,789,430
       accretion         37,910         34,396        113,728        103,188
       of property,
       plant and
       equipment        487,732        507,996      1,394,932      1,732,119
      Depletion of
       properties     1,544,290        318,914      2,648,131        920,981
                  -------------- -------------- -------------- --------------
     FROM OPERATIONS   (248,869)     5,283,479     10,646,950     21,055,097

      Exploration     2,646,155      2,302,189      5,375,503      6,038,348
      General and
       administrative 1,172,674      1,344,576      4,697,718      4,133,378
      Accretion of
       debentures        39,806         34,506        119,419        228,008
       of financing
       fees              50,029         69,119        150,087        235,785
       expense        2,446,795      1,967,700      6,382,211      5,903,099
       expense          284,014        150,562        874,119        800,264
       compensation   1,111,060        893,765      3,204,793      2,289,008
                  -------------- -------------- -------------- --------------
     OTHER REVENUE    7,501,664     12,045,896     31,450,800     40,682,987

       fee               63,788         63,788        191,364        191,364
      Interest income 2,454,310      2,140,080      7,006,373      6,916,716
                  -------------- -------------- -------------- --------------
     PERIOD           4,983,566      9,842,028     24,253,063     33,574,907

     THE PERIOD    (141,442,383)  (104,142,508)  (121,011,395)   (80,309,943)
      Share issue
       costs                  -              -     (1,236,701)       (99,686)
       warrants               -              -         75,210              -
                  -------------- -------------- -------------- --------------
     OF THE
     PERIOD       $(146,425,949) $(113,984,536) $(146,425,949) $(113,984,536)
                  -------------- -------------- -------------- --------------
                  -------------- -------------- -------------- --------------
     Basic &
     (Note 16)    $       (0.02) $       (0.04) $       (0.10) $       (0.16)
                  -------------- -------------- -------------- --------------

Documents are available for review at,

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release. We seek safe harbour.

SOURCE San Gold Corporation

For further information: For further information: Gestur Kristjansson, Chief Financial Officer of San Gold Corporation at 1-800-321-8564

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