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First
Operational Profit
2009-11-13 15:19 ET
- News Release
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.
Operations
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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.
Exploration
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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.
Financial
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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 THREE MONTH PERIOD ENDED NINE MONTH PERIOD ENDED 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 Operations 6,525,833 6,518,694 22,578,703 23,789,430 Asset retirement accretion 37,910 34,396 113,728 103,188 Amortization of property, plant and equipment 487,732 507,996 1,394,932 1,732,119 Depletion of mineral properties 1,544,290 318,914 2,648,131 920,981 -------------- -------------- -------------- -------------- LOSS/(PROFIT) 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 convertible debentures 39,806 34,506 119,419 228,008 Amortization of financing fees 50,029 69,119 150,087 235,785 Royalty expense 2,446,795 1,967,700 6,382,211 5,903,099 Interest expense 284,014 150,562 874,119 800,264 Share-based compensation 1,111,060 893,765 3,204,793 2,289,008 -------------- -------------- -------------- -------------- LOSS BEFORE OTHER REVENUE 7,501,664 12,045,896 31,450,800 40,682,987 OTHER REVENUE Indemnification fee 63,788 63,788 191,364 191,364 Interest income 2,454,310 2,140,080 7,006,373 6,916,716 -------------- -------------- -------------- -------------- LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD 4,983,566 9,842,028 24,253,063 33,574,907 DEFICIT - BEGINNING OF THE PERIOD (141,442,383) (104,142,508) (121,011,395) (80,309,943) Share issue costs - - (1,236,701) (99,686) Expired warrants - - 75,210 - -------------- -------------- -------------- -------------- DEFICIT - END OF THE PERIOD $(146,425,949) $(113,984,536) $(146,425,949) $(113,984,536) -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- LOSS PER COMMON SHARE: Basic & diluted (Note 16) $ (0.02) $ (0.04) $ (0.10) $ (0.16) -------------- -------------- -------------- -------------- >>
Documents are
available for review at www.sedar.com, www.sangoldcorp.com
The TSX Venture
Exchange does not accept responsibility for the adequacy or accuracy of
this release. We seek safe harbour.
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