Yukon-Nevada Gold Corp. reports on second quarter results and progress at Jerritt Canyon

    VANCOUVER, Aug. 15 /CNW/ - Yukon-Nevada Gold Corp. (Toronto Stock
Exchange: YNG; Frankfurt Xetra Exchange: NG6) announces results of its
operations in the second quarter and progress in cost reductions at its wholly
owned, gold production Jerritt Canyon property in Nevada, USA. All amounts are
stated in US dollars, unless otherwise indicated.
    Early in Q2 2007, the Company's Board of Directors approved the Plan of
Arrangement (see Information Circular on www.sedar.com) to combine the
operations of YGC Resources Ltd. (previous corporate name of the Company) and
Queenstake Resources Ltd. ("Queenstake"). Subsequent to Board approval, the
shareholders of the Company and of Queenstake both approved the Plan of
Arrangement on May 18, 2007 at the respective Annual General Meeting of each
company. Pursuant to the Plan of Arrangement, YGC Resources Ltd. issued one
share in the Company for every 10 shares of Queenstake outstanding, acquiring
100% of the outstanding shares of Queenstake. This business combination has
been accounted for as a purchase transaction, with the Company being
identified as the acquirer and Queenstake as the acquiree in accordance with
CICA Handbook 1581 - Business Combinations. The effective date of this
business combination was June 20, 2007. Subsequent to this share exchange,
Queenstake was de-listed from the TSX and the AMEX and YGC Resources Ltd.
changed its name from YGC Resources Ltd. to Yukon-Nevada Gold Corp. and
commenced trading on the TSX under this name on June 25, 2007 (TSX symbol
    One of the terms of the Plan of Arrangement was that Yukon-Nevada Gold
Corp. completes a financing for the benefit of the Company. A private
placement was closed on June 20, 2007 that yielded proceeds, net of share
issue costs, of approximately $65.57 million.
    The consolidated financial statements of Yukon-Nevada Gold Corp. have
been materially impacted by the business combination with Queenstake on
June 20, 2007. The impact on the balance sheet of this transaction is that the
Company includes the fair value of the Queenstake assets and liabilities as of
June 20, 2007 and all subsequent changes to these accounts to June 30, 2007.
The Company's statement of operations includes Queenstake's operations from
June 20 to June 30, 2007. The Company's statement of cash flows includes all
activity in Queenstake that impacts the cash balance from June 20 to June 30,
    In the business combination, the purchase price of Queenstake to the
Company was determined to be the aggregate of the following items:

    -  the closing price of the Company's stock on June 19, 2007 ($1.76 CAD)
       multiplied by the number of shares issued to Queenstake shareholders
       (58,436,531) per the terms of the Plan of Arrangement;
    -  the fair value of the warrants and stock options issued to Queenstake
       warrant and stock option holders as of June 20, 2007;
    -  incremental costs to the Company associated with the investigation and
       closing of the transaction.

    The purchase price exceeded the net book value of the Queenstake assets
by $66.29 million. Management based the allocation of the excess of purchase
price over book value to the mineral properties using information currently
available. During the remainder of 2007, management will engage independent
experts to assess the valuation of certain assets and liabilities of
Queenstake and adjustment to the allocation of the purchase price may be
required based on the results of the valuation work and the associated tax
    In light of the business combination with Queenstake, the Company has
determined that the U.S. dollar is the functional currency of the Company. The
majority of the Company's assets are now in the U.S.A., the majority of the
Company's liabilities are denominated in US funds, the Company's main revenue
stream, revenue from the sale of gold, will be in US dollars and the majority
of the Company's expenses are now in US dollars. As the Company's functional
currency has been determined to be the US dollar, management has adopted the
US dollar as its financial reporting currency.
    As a result of the change in the reporting currency of the Company,
comparative financial information has been restated in US dollars. Canadian
dollar denominated assets and liabilities have been translated into US dollars
using the Bank of Canada closing exchange rate at the date of the balance
sheet. Shareholders' equity amounts have been translated at the historical
exchange rate with increases or decreases translated at the average exchange
rate for the period. With the exception of the June 20, 2007 shares issued
associated with the private-placement financing and the plan of arrangement
with Queenstake, these two capital stock transactions were translated at the
spot rate on June 20, 2007. Amounts in the statements of operations and
statements of cash flows have been translated at the average exchange rate for
the period.

    Statement of Operations

    The Company had a net loss in Q2 2007 of $2.49 million. There was no gold
revenue in Q2 2007 as there was no gold sold in the 10 days from June 20 to
June 30, 2007. The ore processing facilities were not producing gold due to a
shut down for the last half of June 2007 for annual maintenance and the
installation of a new bull gear that will increase the ore processing rate of
the mill going forward. There was approximately $926,000 in operating expenses
and $536,000 in exploration expenses for the final 10 days of June 2007 in
Jerritt Canyon that was consolidated into the Company's statement of
    The Company incurred approximately $545,000 of general administrative
expenses in Q2 2007. The major components of this are professional fees,
part XII.6 taxes on flow-through shares issued in 2006, salaries and
management fees.
    The Company incurred a foreign exchange loss of approximately $359,000
during Q2 2007. The Company closed a financing on June 20, 2007 that was
associated with the acquisition of Queenstake. In the period from June 20 to
June 30, 2007 a portion of the Company's treasury was invested in $US
denominated investments. The weakening of the $US in this timeframe resulted
in a foreign exchange loss in the accounts of the Yukon-Nevada Gold Corp.
(unconsolidated) as this entity maintains its accounting records in Canadian
    The Company earned interest income on investments of approximately
$379,000 in Q2 2007. This is an increase over prior periods, which was a
direct result of a larger average treasury balance due to the June 20, 2007
financing which injected approximately $65.57 million (net of share issue
costs), into the Company's treasury. A secondary factor driving the increase
in the interest revenue earned by the Company was the receipt of approximately
$4.16 million in Q2 2007 from equity instrument holders as they exercised
their warrants and options to acquire common shares. The positive impact on
the Company's treasury from these events yielded higher interest revenue than
what was received in previous quarters by the Company.

    Jerritt Canyon, Nevada

    Cost reductions at the Jerritt Canyon property have focused on three main
areas; increasing workforce productivity by reducing numbers and by keeping
production at the same levels or higher; reducing unit costs through the
processing plant by increasing throughput above that achieved in 2006;
increasing mining productivity and production by investing in mine development
and near mine exploration.
    The reduction in workforce and the increased throughput of the combined
Jerritt Canyon and Newmont ores seems to be having the desired effect of
reducing unit costs through the milling circuit. However the impact of
investment in mine development and near mine exploration will not be fully
realized until 2008. Significant investments are planned in exploration, mine
development and the mill in 2007 and 2008.
    The Company expects that gold production will stabilize but at a reduced
rate from the 2006 level before rising in late 2008 as the positive effects of
investment in the mine are realized.
    Ore stockpiles purchased from Newmont existing as of March 31, 2007
should be processed by the year end.

    Ketza River, Yukon

    The Company is continuing the process of permitting the re-opening of the
mining and milling operations at Ketza River. The Company was recently awarded
a Class A Water Use license for the mine site. A further Class A Water Use
license will be required to allow the Company to re-open the mining and
milling facilities.


    Exploration expenditures on near mine (SSX and Smith) and other areas of
the Jerritt Canyon property will be averaging approximately $1,000,000 per
month for the next year. We expect to see a significant increase in reserves
and resources as the effect of these aggressive exploration programs are felt.
    Exploration will continue at both the Ketza River project and at Silver


    The Company has sufficient funds on hand as of June 30th 2007 to finance
all planned capital, exploration and development activity at the Jerritt
Canyon property as well as all exploration and permitting activity associated
with the Ketza River property in the years 2007 and 2008. The funds are also
sufficient for all expected activities at Silver Valley for 2007.

    If you would like to receive press releases via email please contact
nicole@yngc.ca and specify "Yukon-Nevada Gold Corp. releases" in the subject

    The TSX Exchange has not reviewed and does not accept responsibility for
    the adequacy or accuracy of this release.

    WARNING: The Company relies upon litigation protection for "forward-
    looking" statements.

    This news release does not constitute an offer to sell or a solicitation
of an offer to buy any of the securities in the United States. The securities
have not been and will not be registered under the United States Securities
Act of 1933, as amended (the "U.S. Securities Act") or any state securities
laws and may not be offered or sold within the United States or to U.S.
Persons unless registered under the U.S. Securities Act and applicable state
securities laws or an exemption from such registration is available.

    %SEDAR: 00004098E

For further information:

For further information: Yukon-Nevada Gold Corp.: Nicole Sanches,
Manager, IR, Tel: (604) 688-9427, Email: nicole@yngc.ca, www.yngc.ca; CHF
Investor Relations: Jeanny So, Broker Specialist, Tel: (416) 868-1079 ext.
225, Email: jeanny@chfir.com, www.chfir.com

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