SAS reports positive 2013 first quarter results, beating cash cost guidance and generating net cash flow

CNW Group

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

(1) See "non-GAAP measures" for an explanation of non-GAAP

TORONTO, May 9, 2013 /CNW/ - St Andrew Goldfields Ltd. (T-SAS) (OTCQX-STADF), ("SAS" or the "Company") earned net income attributable to shareholders for Q1 2013 of $1.0 million, or nil on a per share basis, compared to net income of $2.7 million, or $0.01 per share, for Q1 2012. For the Q1 of 2013, adjusted net earnings (1) were $1.1 million, or nil on a per share basis, compared to adjusted net earnings of $2.0 million, or $0.01 per share, for Q1 2012.

Net income for the quarter was negatively impacted by an increase in non-cash depreciation and depletion expense of $3.9 million over Q1 2012, and $1.2 million mark-to-market loss in foreign currency derivatives. Compared to Q1 2012, adjusted net earnings (1) for the quarter were also negatively impacted by the increase in depreciation and depletion expenses.

Cash provided by operating activities for Q1 2013 was $14.1 million, compared to $8.3 million in Q1 2012. Net cash flow (1) for the quarter was $4.1 million as compared to net cash out flows of $1.0 million in Q1 2012.

"We are happy to report strong first quarter results and another consecutive quarter of net cash flow generation," said Jacques Perron, President & CEO of SAS. "Our operating mines are performing well and our production guidance for 2013 remains unchanged. The Company expects to produce between 95,000 and 105,000 ounces from the three operations with mine cash costs of between US$800-US$850 per ounce, before royalties. In recent weeks, we have witnessed a significant decline in the gold price to as low as US$1,378 per ounce. In light of the recent gold price volatility, we have reviewed our capital expenditure programs and deferred some expenditures in order to ensure we can meet our near-term objectives while maintaining a strong financial position."

Q1 2013 Conference Call Information
A conference call and webcast is scheduled for 10:00am EDT, Friday, May 10, 2013 to discuss the Q1 2013 results. Participants are invited to join via webcast from the Company's website under the section titled "Events", at 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.

Q1 2013 Highlights

Produced 24,461 ounces of gold from three operations (Holt, Holloway and Hislop). An increase of 16% when compared to Q1 2012 as a result of the increased production at Holt.
Sold 23,009 ounces of gold at an average realized price per ounce of gold sold (1) of US$1,632 per ounce for revenues of $38.2 million. Gold sales revenue increased by 11% from Q1 2012 despite a US$63 per ounce decrease in the average realized price per ounce of gold sold (1).
Mine cash costs of US$794 per ounce and a royalty cost of US$145 per ounce, for a total cash cost per ounce of gold sold (1) of US$939 per ounce. Achieved an overall unit cost reduction of US$57 per ounce of gold sold when compared to Q1 2012. Mine cash cost per ounce of gold sold for Q1 2013 of US$794 per ounce is lower than the Company's base 2013 cost guidance.
Earned cash margin from mine operations (1) of $16.4 million and operating cash flow of $14.1 million or $0.04 per share. An 18% increase in cash margin from mine operations (1) and an improvement of 70% on operating cash flowover Q1 2012.
Invested $4.7 million in mine capital expenditures. Mine capital expenditures reduced by $3.3 million or 42% when compared to Q1 2012.
Incurred $4.0 million in exploration and project development expenditures at the Taylor Project. During Q1 2013, SAS generated representative samples from the material that was extracted in December, through a sampling tower. These samples were assayed and further geological assessment and drilling was conducted in the bulk sample area to enhance knowledge of the upper lens of the West Porphyry Zone. (see "Taylor Project Update")


Summarized Operating and Financial Data

                     
Amounts in thousands of Canadian dollars, except per unit amounts           Q1 2013       Q1 2012
                     
SAS Operating Results                    
Gold production (ounces)            24,461       21,018
Commercial gold production sold(ounces)           23,009       20,325
                     
Per ounce data (US$)                    
  Average realized price per ounce of gold sold (1)       $   1,632     $ 1,695
                     
  Mine cash costs        $   794     $ 858
  Royalty costs            145       138
  Total cash cost per ounce of gold sold (1)       $   939     $ 996
                     
SAS Financial Results                     
Gold sales and total revenue       $   38,190     $ 34,296
Cash margin from mine operations (1)       $   16,409     $ 13,923
Net income for the period       $   1,039     $ 2,734
Adjusted net earnings (1)       $   1,070     $ 2,034
Cash from operations       $   14,053     $ 8,256
Net cash flow (1)       $   4,064     $ (511)
                     
Per share information:                    
  Net income       $   0.00     $ 0.01
  Adjusted net earnings (1)       $   0.00     $ 0.01
  Operating cash flow (1)       $   0.04     $ 0.02
                     
SAS Financial Position           March 31,
2013
      December 31,
2012
Cash and cash equivalents       $   32,103     $ 30,656
Working capital       $   15,226     $ 18,210
Total assets       $   223,807     $ 219,748
Long-term debt       $   16,338     $ 18,581
                     
                     

Financial Performance
Gold sales revenues for Q1 2013 increased by $3.9 million over Q1 2012 as a result of increased production from the Holt Mine, despite a US$63 per ounce decrease in the average realized price per ounce of gold sold (1). The increase in production for Q1 2013 resulted in a decrease in total cash cost per ounce of gold sold (1) of US$57 per ounce when compared to Q1 2012. The increase in gold sales during the quarter coupled with the decrease in unit cost has led to an 18% increase in cash margin from mine operations (1).

When compared to the previous quarter, commercial gold production sold decreased by 12% or approximately 3,000 ounces which together with a US$78 per ounce decrease in the average realized price per ounce of gold sold (1), which led to a decrease in gold sales revenue of $6.1 million. The decline in revenue together with a US$49 per ounce increase in mine cash cost over the previous quarter, (as a result of the additional heating requirements during the winter season), led to a decrease in cash margin from mine operations (1) of $5.1 million.

Depreciation and depletion expenses for the quarter increased by $3.9 million and $1.2 million when compared to Q1 2012, and Q4 2012, respectively. The increase resulted from the depletion of mineral reserves and resources at the operations, and the loss of approximately 26,000 contained ounces in mineral reserves at Hislop as a result of the updated mineral reserves and resource model and pit optimization completed at year end 2012.

For Q1 2013, the Company incurred $1.2 million in mark-to-market loss on foreign currency derivatives for the quarter due to the strengthening of the US dollar relative to Canadian dollar, which negatively impacted earnings.

Holt Mine, Operations and Financial Review (see "Operating and Financial Statistics Holt")
During Q1 2013, the Holt Mine ("Holt") produced 14,806 ounces of gold, a decrease of 2% over Q4 2012. As a result of the slight decrease in production, gold sales also decreased slightly over Q4 2012.

Total cash cost per ounce of gold sold (1) increased by US$44 per ounce or 6% over the previous quarter mainly due to an 8% increase in mine cash costs, which is attributable to the increase in heating costs for the mine due to the winter season.

The decrease in gold sales and a slight increase in operating costs lead to a $2.7 million decrease in cash margin from mine operations (1) over Q4 2012. Holt contributed 72% of the total cash margin from mine operations (1) earned during the quarter.

Holt is expected to contribute approximately 55% of the Company's total gold production for 2013.

Holloway Mine, Operations and Financial Review (see "Operating and Financial Statistics Holloway")
The Holloway Mine ("Holloway") produced 5,140 ounces of gold for Q1 2013, which is consistent with the production level achieved in Q4 2012. For the quarter, ore grade improved slightly while the mill recovery rate of approximately 92% exceeded the Company's forecast recovery due to improved mineralogical conditions in the areas mined during the quarter. Development crews continue to provide access for additional areas within the Smoke Deep Zone ("Smoke Deep") in order to sustain the production profile for the mine.

Gold sales revenues for the quarter were in line with the previous quarter, despite a decrease in the average realized price per ounce of gold sold (1).

Total cash cost per ounce of gold sold (1) during the quarter increased by US$131 per ounce when compared to the previous quarter, mainly due to a 7% decrease in throughput and the additional heating costs in the winter season. These factors, in conjunction with a lower average realized price per ounce of gold sold (1), led to a $0.9 million decrease in cash margin from mine operations (1) over the previous quarter.

Holloway is expected to contribute approximately 25% of the Company's total gold production for 2013.

Hislop Mine, Operations and Financial Review (see "Operating and Financial Statistics Hislop")
The Hislop Mine ("Hislop") produced 4,515 ounces of gold during Q1 2013. The head grade averaged 2.14 g/t Au, with lower than expected mill recoveries of 82%, which was affected by the challenging winter conditions.

Commercial gold production sold decreased by 31% or approximately 2,000 ounces for Q1 2013 compared to Q4 2012, due to the decrease in throughput.

Total cash cost per ounce of gold sold (1) was 4% higher than the previous quarter as a result of the decrease in throughput, and lower head grade and mill recoveries.

Hislop is expected to contribute approximately 20% of the Company's total gold production for 2012.

Taylor Project Update ("Taylor")
A stepped approach was implemented in order to improve the quality of information prior to allocating total capital expenditures for the development activities at the West Porphyry Zone ("WPZ"). During 2012, SAS conducted ramp dewatering and rehabilitation, and accessed the area at the top of the WPZ, near surface, in order to, extract a 15,000 tonne bulk sample, test the proposed mining method, and gather more information from an area that had limited information.

During Q1 2013, activities at Taylor included: the completion of the tower sampling program and subsequent assaying of the generated representative samples; a campaign of diamond drilling in the bulk sample area (approximately 700 metres of drilling); an extensive geological structural analysis by a leading expert in the field; a comprehensive geochemical analysis performed by a reputable outside third party; as well as the continuation of lateral development within the ramp system.

Based on the results of the sampling program and the additional structural and geochemical analysis, the Company has concluded that it needs additional geological information to further improve the accuracy of the geological model. In addition, in light of the revised capital expenditure program for 2013, SAS has revised the program at Taylor to include additional diamond drilling on the area identified for the second bulk sample, to confirm its knowledge of the ore grade distribution within the main lens of the WPZ. SAS has advanced ramp development and commenced underground diamond drilling on this part of the WPZ and will utilize this additional information in order to optimize the future development and mining plan for Taylor. The rescheduling of the main ramp infrastructure does not have a material impact on net cash flow for 2014 and 2015.

Exploration Projects
Exploration activities during Q1 2013 remained focused on drilling at Holloway and Hislop. Drilling to test the easterly strike and up-dip and down-dip component at Smoke Deep returned encouraging results, and identified a new zone, the Sediment Zone. Additional drilling on these two zones is planned for Q2 2013 with one surface drill, and one underground drill set up on the 550m Level drift, to follow up on results released on March 4, 2013 (see press release available under the Company's profile on www.sedar.com or on the Company website at www.sasgoldmines.com).

Drilling on the Hislop Property, namely the Hislop North Project, also returned encouraging results and is situated directly along strike from the 147 and Grey Fox South mineralized trends. As well, drilling beneath the West Pit at Hislop, returned significant grades and width, with hole HP12-002 returning 94.56 g/t Au over 9.6 metres (uncut), including 120.60 g/t Au over 7.5 metres (uncut) (see press release dated March 4, 2013, available under the Company's profile on www.sedar.com or on the Company website at www.sasgoldmines.com).

For the remainder of 2013, the exploration programs will continue to concentrate on targets situated near the existing mining operations. The priorities will include the Hislop North and Hislop Pit targets located near Hislop, as well as the Smoke Deep and Sediment targets at Holloway. There are currently three surface drills active with two drills focused on the Hislop Property and one drill at Holloway.

Capital Resources
Working capital at the end of the quarter was $15.2 million compared to working capital of $18.2 million in the previous quarter. SAS generated cash flow from operations in Q1 2013 of $14.1 million, a decrease of $7.7 million over Q4 2012, primarily as a result of the reduction in gold sold for the quarter. This resulted in a decrease in cash margin from mine operations(1) of $5.1 million, coupled with a decrease in net change in working capital of $2.5 million. At the end of Q1 2013, the Company had cash and cash equivalents of $32.1 million. The Company also has access to additional cash resources by way of an undrawn US$10.0 million revolving credit facility.

The price of gold has declined significantly to a level that will impact the Company's cash flow and operating results. There is no certainty that the price of gold will increase in the near term or return to levels attained in FY 2012 and in Q1 2013. With this in mind, the Company has revised its capital expenditure programs as well as exploration and evaluation assets with the objective to maintain a strong financial position.

Under SAS' revised expenditure program, exploration programs for FY 2013 have been prioritized and expenditures were reduced by $1.5 million, a reduction of 19% from the amount initially forecasted. The core programs are to focus on near mine exploration with the objectives to increase the mineral resource base at Holloway and Hislop. Mine sustaining and development capital, in conjunction with the Taylor advanced stage exploration program, have also been revised to reschedule mid and long-term development programs and/or curtail non-essential equipment procurement and infrastructure upgrades. As a result, the Company's forecast for the remainder of 2013 has been reduced by $20.8 million, a reduction of 40% from the initial amount planned.

                                 
Amounts in thousands of Canadian dollars       2013 Forecast       Incurred in
Q1 2013
      Deferred
Capital
Expenditures
      Revised 2013
Forecast Q2
2013 - Q4 2013
Mine capital and Exploration and evaluation asset additions in Q1 2013                              
  Holt   $ 22.0     $ 3.4     $ 5.8       12.8
  Holloway     7.0       0.9       2.0       4.1
  Holt Mill     1.4       0.4       -       1.0
      $ 30.4     $ 4.7     $ 7.8     $ 17.9
                                 
  Taylor   $ 21.0     $ 4.3     $ 13.0     $ 3.7
        51.4       9.0       20.8       21.6
                                 

The Company believes that it is able to sustain operations at an average gold price of US$1,300 per ounce without any significant reduction or curtailment of its current operating plans. The Company continues to monitor this risk and will revise its operating plans accordingly in order to ensure its near-term and long-term cash flow objectives are met.

Qualified Person
Production and ongoing development programs at the Holt, Holloway and Hislop mines, and processing at the Holt Mill, as well as activities at the Taylor Project are being conducted under the supervision of Duncan Middlemiss, P.Eng, the Company's COO and Vice-President of Operations. The exploration programs on the Company's various mineral properties are under the supervision of Doug Cater, P.Geo, the Company's Vice-President, Exploration. Both Messrs. Middlemiss and Cater 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 following non‐GAAP performance measures: adjusted net earnings; operating cash flow per share; net cash flow; average realized price per ounce of gold sold; total cash cost per ounce of gold sold; cash margin from mine operations; cash margin per ounce of gold sold; 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. Refer to pages the non-GAAP section of this news release for a discussion and the reconciliation of these non-GAAP measurements to the Company's Unaudited Condensed Interim Financial Report for Q1 2013.

The Unaudited Balance Sheets, Statements of Operations and Statements of Cash Flows for the Company for the three months ended March 31, 2013, can be found at the end of this release.

To review the complete Unaudited Condensed Financial Report for Q1 2013, and the Interim Management's Discussion and Analysis for Q1 2013, please see SAS's SEDAR filings under the Company's profile at www.sedar.com or the Company's website at www.sasgoldmines.com.

The following abbreviations are used to describe the periods under review throughout this release

                         
Abbreviation       Period       Abbreviation       Period
FY 2013        January 1, 2013 - December 31, 2013       Q3 2012       July 1, 2012 - September 30, 2012
Q4 2013       October 1, 2013 - December 31, 2013       Q2 2012       April 1, 2012 - June 30, 2012
Q3 2013       July 1, 2013 - September 30, 2013       Q1 2012       January 1, 2012 - March 31, 2012
Q2 2013       April 1, 2013 - June 30, 2013       Q4 2011       October 1, 2011 - December 31, 2011
Q1 2013       January 1, 2013 - March 31, 2013       Q3 2011       July 1, 2011 - September 30, 2011
FY 2012       January 1, 2012 - December 31, 2012       Q2 2011       April 1, 2011 - June 30, 2011
Q4 2012       October 1, 2012 - December 31, 2012                

About SAS
SAS (operating as "SAS Goldmines"), is a gold mining and exploration company with an extensive land package in the Timmins mining district, north-eastern Ontario, which lies within the Abitibi greenstone belt, the most important host of historical gold production in Canada.

SAS owns and operates the Holt, Holloway and Hislop mines, which contribute approximately 100,000 ounces of annual gold production. The Company is also advancing the Taylor Project and is conducting exploration 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 in respect of the targeted gold production levels at the Company's three operating mines for 2013; the revised advanced exploration program at Taylor, and the timing thereof; and the level of capital expenditures required at the three operations, development and exploration projects; the extent and objectives of the Company's exploration programs for the balance of 2013; the impact of significant declines in the gold price; and the sufficiency of the Company's cash flow and existing cash resources to finance its capital programs and the further development of its advanced stage exploration projects.

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, unanticipated operational or technical difficulties which could increase the time necessary to complete the development initiatives, escalate operating and/or capital costs and reduce anticipated production levels; uncertainties relating to the interpretation of the geology, continuity, grade and size estimates of the mineral reserves and resources; the Company's dependence on key employees and changes in the availability of qualified personnel; fluctuations in gold prices and exchange rates; operational hazards and risks, including the inability to insure against all risks; changes in laws and regulations; and changes in general economic conditions. Such forward looking information is based on a number of assumptions, including in respect of the ability to achieve operating cost estimates, 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 and 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. 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. A further description of the risks and uncertainties facing the Company may also be found in the Company's Annual Information Form available on SEDAR at www.sedar.com.

NON-GAAP MEASURES

Adjusted net earnings
Adjusted net earnings 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, periodic adjustments to the Company's asset retirement obligations, and expenses, asset impairment gains or losses and significant tax adjustments not related to current period's earnings, as detailed in the table below.  Adjusted net earnings 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 Reports, to assist in the understanding of the Company's operating results and financial position.

                           
Amounts in thousands of Canadian dollars, except per share amounts         Q1 2013       Q4 2012       Q1 2012
                           
Net income per Financial Reports       $ 1,039     $ 12,632     $ 2,734
Reversal of unrecognized deferred income tax assets         (1,256)       (8,312)       -
Mark-to-market loss (gain) on gold-linked liabilities         (191)       (151)       822
Mark-to-market loss (gain) on foreign currency derivatives         1,240       333       (1,755)
Loss on the divestiture of non-core assets         -       272       -
Impairment loss on available-for-sale investment         500       825       -
Tax effect of above items         (262)       (114)       233
Adjusted net earnings       $ 1,070     $ 5,485     $ 2,034
                           
Weighted average number of shares outstanding (000s)                          
  Basic         368,246       368,246       368,246
  Diluted         368,801       368,691       368,782
                           
Adjusted net earnings per share - basic and diluted       $ 0.00     $ 0.01     $ 0.01
                           

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 Report for Q1 2013:

                           
Amounts in thousands of Canadian dollars, except where indicated         Q1 2013       Q4 2012       Q1 2012
                           
Mine site operating costs per Financial Reports       $ 18,411     $ 19,242     $ 17,451
Production royalties per Financial Reports         3,370       3,590       2,922
Adjustments (1)         -       -       (99)
Total cash costs       $ 21,781     $ 22,832     $ 20,274
                           
Divided by gold ounces sold         23,009       26,050       20,325
                           
Total cash cost per ounce of gold sold (Canadian dollars)       $ 947     $ 876     $ 996
                           
Average USD:CAD exchange rate       $ 1.01     $ 0.99     $ 1.00
                           
Total cash cost per ounce of gold sold (US$)       $ 939     $ 884     $ 996
                           
Breakdown of total cash cost per ounce of gold sold (US$)                          
Holt Mine                          
  Mine cash costs       $ 619     $ 573     $ 670
  Royalty costs         166       168       168
        $ 785     $ 741     $ 838
Holloway Mine                          
  Mine cash costs       $ 977     $ 834     $ 948
  Royalty costs         209       221       209
        $ 1,186     $ 1,055     $ 1,157
Hislop Mine                          
  Mine cash costs       $ 1,139     $ 1,100     $ 1,185
  Royalty costs         -       -       -
        $ 1,139     $ 1,100     $ 1,185
Total                          
  Mine cash costs       $ 794     $ 745     $ 858
  Royalty costs         145       139       138
        $ 939     $ 884     $ 996
                           
                           
Notes:
(1)     In Q1 2012, the Company accrued a royalty liability of $99 at Holloway which was incurred during the period
from August 2011 to December 2011. This amount has been retroactively applied to the calculation of the
total cash cost per ounce of gold sold for each of these quarters, respectively.


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, the estimated revenue on a per tonne basis must be in excess of the mine-site cost per tonne milled in order to be economically viable. Management is aware that this per tonne milled measure is impacted by fluctuations in throughput 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         Q1 2013       Q4 2012       Q1 2012
                           
Holt Mine                           
Mine-site costs       $ 8,563     $ 8,546     $ 7,163
Inventory adjustments (1)         1,017       (230)       611
Mine site operating costs       $ 9,580     $ 8,316     $ 7,774
                           
Divided by tonnes of ore milled         89,985       89,901       67,937
                           
Mine-site cost per tonne milled       $ 106     $ 93     $ 114
                           
Holloway Mine                           
Mine-site costs       $ 5,059     $ 4,119     $ 4,659
Inventory adjustments (1)         320       277       281
Mine site operating costs       $ 5,379     $ 4,396     $ 4,940
                           
Divided by tonnes of ore milled         43,252       46,606       47,151
                           
Mine-site cost per tonne milled       $ 124     $ 94     $ 105
                           
Hislop Mine                          
Mine-site costs       $ 4,788     $ 6,577     $ 5,629
Inventory adjustments (1)         537       (391)       167
Mine site operating costs       $ 5,325     $ 6,186     $ 5,796
                           
Divided by tonnes of ore milled         79,771       95,516       94,660
                           
Mine-site cost per tonne milled       $ 67     $ 65     $ 61
                           
                           
Notes:
(1)      Inventory adjustment reflects production costs associated with unsold bullion and in-circuit inventory.
       

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 Reports. 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.

                                   
Amounts in thousands of Canadian dollars                 Q1 2013       Q4 2012       Q1 2012
                                   
Gold sales per Financial Reports       [A]       $ 38,190     $ 44,332     $ 34,296
                                   
Mine site operating costs per Financial Reports                 18,411       19,242       17,451
Production royalties per Financial Reports                 3,370       3,590       2,922
        [B]         21,781       22,832       20,373
Cash margin from mine operations       [A] - [B]       $ 16,409     $ 21,500     $ 13,923
                                   
Breakdown of cash margin from mine operations by mines:                                  
  Holt Mine               $ 11,887     $ 14,538     $ 9,054
  Holloway Mine                 2,391       3,262       2,492
  Hislop Mine                 2,131       3,700       2,377
                $ 16,409     $ 21,500     $ 13,923
                                   

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 Reports by the gold ounces sold. It may not be comparable to information in other gold producers' reports and filings.

Cash margin per ounce of gold sold
Cash margin per ounce of gold sold is a non-GAAP measure, and is calculated by subtracting the total cash cost per ounce of gold sold from the average realized price per ounce of gold sold.

                                   
Amounts in United Sates dollars                                  
                  Q1 2013       Q4 2012       Q1 2012
                                   
Per ounce of gold sold:                                  
  Average realized price per ounce of gold sold       [A]       $ 1,632     $ 1,710     $ 1,695
  Total cash cost per ounce of gold sold       [B]       $ 939     $ 884     $ 996
Cash margin per ounce of gold sold       [A] - [B]       $ 693     $ 826     $ 699
                                   

Net cash flow
Net cash flow is a non-GAAP measure and is calculated by taking cash flow from operating activities less cash used in investing activities as reported in the Company's Financial Reports. It may not be comparable to information in other gold producers' reports and filings.

                           
Amounts in thousands of Canadian dollars         Q1 2013       Q4 2012       Q1 2012
                             
Cash flow from operating activities per Financial Reports       $ 14,053     $ 21,737     $ 8,256
Less:                          
  Cash used in investing activities per Financial Reports         9,989       11,282       8,767
          $ 4,064     $ 10,455     $ (511)
                             

Operating cash flow per share
Operating cash flow per share is a non-GAAP measure and is calculated by dividing cash flow from operating activities in the Company's Financial Reports by the weighted average number of shares outstanding for each period.  It may not be comparable to information in other gold producers' reports and filings.

                           
Amounts in thousands of Canadian dollars, except per share amounts         Q1 2013       Q4 2012       Q1 2012
                           
Cash flow from operating activities per Financial Reports       $ 14,053     $ 21,737     $ 8,256
                           
Weighted average number of shares outstanding (000s)         368,246       368,246       368,246
                           
Operating cash flow per share       $ 0.04     $ 0.06     $ 0.02
                           

Operating and Financial Statistics - Holt Mine

                                                                 
Amounts in thousands of Canadian dollars, except where indicated       Q1 2013       Q4 2012       Q3 2012       Q2 2012       Q1 2012       Q4 2011       Q3 2011       Q2 2011
                                                                 
Tonnes milled       89,985       89,901       80,219       78,429       67,937       67,778       66,556       54,538
Head grade (g/t Au)       5.40       5.51       5.40       4.71       5.36       5.57       5.01       3.39
Average mill recovery       94.8%       94.7%       94.4%       94.2%       94.1%       94.1%       93.4%       92.5%
                                                                 
Gold produced (ounces)       14,806       15,082       13,145       11,193       11,025       11,421       10,012       5,508
Commercial gold production sold (ounces) (1)       13,715       15,043       12,373       11,073       10,674       12,175       8,870       4,979
                                                                 
Gold sales revenue  (1)     $ 22,750     $ 25,584     $ 20,000     $ 18,250     $ 18,015     $ 21,060     $ 15,449     $ 7,284
                                                                 
Cash margin from mine operations (2)     $ 11,887     $ 14,538     $ 9,250     $ 8,886     $ 9,054     $ 12,054     $ 6,625     $ 582
                                                                 
Mine-site cost per tonne milled (2)     $ 106     $ 93     $ 112     $ 96     $ 114     $ 95     $ 106     $ 121
                                                                 
Total cash cost per ounce of gold sold (US dollars)(2):                                                                
  Mine cash costs     $ 619     $ 573     $ 708     $ 671     $ 670     $ 556     $ 833     $ 1,255
  Royalty costs       166       168       165       166       168       166       181       136
Total cash cost per ounce of gold sold (2)       785       741       873       837       838       722       1,014       1,391
  Depreciation and depletion       196       200       186       161       145       129       134       130
Total production cost per ounce of gold sold (US dollars)     $ 981     $ 941     $ 1,059     $ 998     $ 983     $ 851     $ 1,148     $ 1,521
                                                                 
Average USD:CAD exchange rate       1.01       0.99       0.99       1.01       1.00       1.02       0.98       0.97
                                                                 
Capital expenditures     $ 3,383     $ 4,536     $ 4,990     $ 5,036     $ 3,177     $ 4,250     $ 1,841     $ 1,963
                                                                 
                                                                 
Notes:
(1)     Holt commenced commercial production on April 1, 2011. The operating results for the mine prior to April 1, 2011, were classified as site maintenance and pre-production
expenditures.    
(2)     Total cash cost per ounce of gold sold, mine-site cost per tonne milled and cash margin from mine operations are non-GAAP measures and are not necessarily comparable
to similarly titled measures of other companies due to potential inconsistencies in the method of calculation (see pages 9-12 for an explanation of non-GAAP measurements).
       

Operating and Financial Statistics - Holloway Mine

                                                                 
Amounts in thousands of Canadian dollars, except where indicated       Q1 2013       Q4 2012       Q3 2012       Q2 2012       Q1 2012       Q4 2011       Q3 2011       Q2 2011
                                                                 
Tonnes milled       43,252       46,606       44,546       53,169       47,151       56,225       49,437       47,971
Head grade (g/t Au)       4.04       3.90       4.15       3.80       3.77       4.03       3.71       3.43
Average mill recovery       91.5%       89.7%       91.0%       91.2%       88.6%       84.1%       85.2%       85.0%
                                                                 
Gold produced (ounces)       5,140       5,240       5,408       5,923       5,058       6,126       5,026       4,497
Commercial gold production sold (ounces) (1)       5,126       4,981       5,749       5,744       4,907       6,208       5,130       4,996
                                                                 
Gold sales revenue      $ 8,521     $ 8,473     $ 9,267     $ 9,467     $ 8,275     $ 10,750     $ 8,828     $ 7,272
                                                                 
Cash margin from mine operations (2)     $ 2,391     $ 3,262     $ 3,835     $ 3,805     $ 2,492     $ 4,116     $ 2,931     $ 1,822
                                                                 
Mine-site cost per tonne milled (2)     $ 124     $ 94     $ 92     $ 82     $ 105     $ 93     $ 98     $ 90
                                                                 
Total cash cost per ounce of gold sold (US dollars) (2):                                                                
  Mine cash costs     $ 977     $ 834     $ 746     $ 771     $ 948     $ 853     $ 960     $ 964
  Royalty costs (3)       209       221       204       205       209       203       218       164
Total cash cost per ounce of gold sold (2)       1,186       1,055       950       976       1,157       1,056       1,178       1,128
  Depreciation and depletion       415       399       410       376       368       368       540       462
Total production cost per ounce of gold sold (US dollars)     $ 1,601     $ 1,454     $ 1,360     $ 1,352     $ 1,525     $ 1,424     $ 1,718     $ 1,590
                                                                 
Average USD:CAD exchange rate       1.01       0.99       0.99       1.01       1.00       1.02       0.98       0.97
                                                                 
Capital expenditures     $ 912     $ 1,443     $ 1,794     $ 2,539     $ 4,342     $ 3,666     $ 2,938     $ 2,986
                                                                 
                                                                 
Notes:
(1)     Holloway commenced production in October 2009.
(2)     Total cash cost per ounce of gold sold, mine-site cost per tonne milled and cash margin from mine operations, are non-GAAP measures and are not necessarily comparable
to similarly titled measures of other companies due to potential inconsistencies in the method of calculation (see pages 9-12 hereof for a reconciliation of non-GAAP measurements).
(3)     In Q1 2012, the Company accrued a royalty liability of $99 at Holloway, which was incurred during the period from August 2011 to December 2011.  This amount has been
retroactively applied to the calculation of the total cash cost per ounce of gold sold for each of these quarters, respectively.
       

Operating and Financial Statistics - Hislop Mine

                                                                 
Amounts in thousands of Canadian dollars, except where indicated       Q1 2013       Q4 2012       Q3 2012       Q2 2012       Q1 2012       Q4 2011       Q3 2011       Q2 2011
                                                                 
Overburden stripped (m3)       -       -       (32,205)       29,236       4,212       103,346       300,249       472,214
                                                                 
Tonnes mined (ore)       82,361       101,617       99,287       76,764       118,918       107,827       109,457       114,849
  (waste)       267,906       453,629       513,988       536,015       680,221       599,330       738,054       1,303,072
        350,267       555,246       613,275       612,779       799,139       707,157       847,511       1,417,921
                                                                 
Waste-to-Ore Ratio       3.3       4.5       5.2       7.0       5.7       5.6       6.7       11.3
                                                                 
Tonnes milled       79,771       95,516       102,191       97,183       94,660       92,794       107,741       120,677
Head grade (g/t Au)       2.14       2.22       2.53       2.21       1.88       1.94       1.68       1.53
Average mill recovery       82.1%       80.8%       86.5%       85.6%       86.4%       83.0%       85.4%       87.2%
                                                                 
Gold produced (ounces)       4,515       5,507       7,189       5,899       4,935       4,803       4,980       5,192
Commercial gold production sold (ounces) (1)       4,168       6,026       7,075       5,678       4,744       4,985       5,260       5,185
                                                                 
Gold sales revenue     $ 6,919     $ 10,275     $ 11,423     $ 9,356     $ 8,006     $ 8,625     $ 9,068     $ 7,579
                                                                 
Cash margin from mine operations (2)     $ 2,131     $ 3,700     $ 5,165     $ 3,505     $ 2,377     $ 2,528     $ 2,432     $ 1,000
                                                                 
Mine-site cost per tonne milled (2)     $ 67     $ 65     $ 62     $ 61     $ 61     $ 60     $ 59     $ 55
                                                                 
Total cash cost per ounce of gold sold (2)(3)     $ 1,139     $ 1,100     $ 889     $ 1,020     $ 1,185     $ 1,196     $ 1,286     $ 1,311
  Depreciation and depletion       767       332       234       238       186       177       150       104
Total production cost per ounce of gold sold (US dollars)     $ 1,906     $ 1,432     $ 1,123     $ 1,258     $ 1,371     $ 1,373     $ 1,436     $ 1,415
                                                                 
Average USD:CAD exchange rate       1.01       0.99       0.99       1.01       1.00       1.02       0.98       0.97
                                                                 
Capital expenditures     $ -     $ (39)     $ 390     $ 970     $ 463     $ 701     $ 2,822     $ 5,244
                                                                 
                                                                 
Notes:
(1)     Hislop commenced commercial production on July 1, 2010.
(2)      Total cash cost per ounce of gold sold, mine-site cost per tonne milled and cash margin from mine operations are non-GAAP measures and are not necessarily comparable
to similarly titled measures of other companies due to potential inconsistencies in the method of calculation (see pages 9-12 hereof for reconciliation of non-GAAP measurements).
(3)      Hislop is subject to a 4% net smelter return royalty ("NSR") which includes a minimum Advance royalty payment obligation (see "Gold-linked Liabilities").
       

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

                   
                     
        Three months ended March 31,
            2013       2012
                     
                     
Gold sales       $ 38,190     $ 34,296
                     
Operating costs and expenses:                  
  Mine site operating         18,411       17,451
  Production royalty         3,370       2,922
  Site maintenance and pre-production         121       148
  Exploration         2,511       1,816
  Corporate administration         2,265       2,090
  Depreciation and depletion         8,284       4,406
            34,962       28,833
Operating income         3,228       5,463
                     
Finance costs         (504)       (969)
Mark-to-market gain (loss) on gold-linked liabilities         191       (822)
Mark-to-market gain (loss) on foreign currency derivatives         (1,240)       1,755
Foreign exchange loss         (4)       (258)
Impairment loss on available-for-sale investments         (500)       -
Finance income and other         77       38
Income before taxes         1,248       5,207
Deferred taxes         (209)       (2,473)
Net income for the period       $ 1,039     $ 2,734
                     
Other comprehensive income                   
Unrealized loss on available-for-sale investments, net of tax of nil for all periods         (95)       (266)
Impairment loss on available-for-sale investments         500       -
Mark-to-market loss on foreign currency and gold derivatives (net of tax
of $154 in 2013, 2012, nil)
        (463)       -
            (58)       (266)
Comprehensive income for the period       $ 981     $ 2,468
                     
Basic and diluted income per share attributable to shareholders       $ 0.00     $ 0.01
                     
Weighted average number of shares outstanding (000's)                  
Basic           368,246       368,246
Diluted           368,801       368,782
                     
                   
                   

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

                       
                       
            Three months ended March 31,
              2013       2012
Cash provided by (used in):                  
                       
Operating activities:                  
  Net Income for the period       $ 1,039     $ 2,734
  Items not affecting cash:                  
    Deferred taxes         209       2,473
    Mark-to-market loss (gain) on gold-linked liabilities         (191)       822
    Implicit interest and amortization of transaction costs         215       815
    Mark-to-market loss (gain) on foreign currency derivatives         1,240       (1,755)
    Depreciation and depletion         8,284       4,406
    Impairment loss on available-for-sale investments         500       -
    Share-based payments         323       189
    Accretion of asset retirement obligation         151       138
    Change in non-cash operating working capital and other         2,409       (1,566)
    Interest paid         (126)       -
              14,053       8,256
Investing activities:                  
    Additions to exploration and evaluation assets         (4,010)       (44)
    Mine development expenditures         (2,987)       (6,492)
    Additions to plant and equipment         (2,233)       (1,634)
    Amounts payable on capital additions         (416)       (638)
    Net change in cash collateralized for banking facilities         -       58
    Reclamation costs and other         (343)       (17)
              (9,989)       (8,767)
Financing activities:                  
    Repayment of term credit facility         (2,032)       -
    Advance royalty payments         (508)       (504)
    Capital lease payments         (77)       (11)
    Repayment of Gold Notes         -       (3,673)
              (2,617)       (4,188)
                       
Increase (decrease) in cash and cash equivalents for the period         1,447       (4,699)
Cash and cash equivalents, beginning of period         30,656       17,617
Cash and cash equivalents, end of period       $ 32,103     $ 12,918
                       
                       
                       

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

                     
                     
            March 31, 2013       December 31, 2012
                     
Assets                  
Current assets:                  
  Cash and cash equivalents       $ 32,103     $ 30,656
  Accounts receivable         1,652       4,475
  Inventories         10,406       8,568
  Derivative assets         62       725
  Prepayments and other assets         424       237
            44,647       44,661
                     
Exploration and evaluation assets         35,369       31,382
Producing properties         61,355       64,363
Plant and equipment         52,917       50,537
Reclamation deposits         8,323       8,307
Restricted cash         1,695       1,695
Deferred tax assets         18,832       18,064
Investment in joint venture         374       374
Other assets         295       365
          $ 223,807     $ 219,748
                     
Liabilities and Shareholders' Equity                  
Current liabilities:                  
  Accounts payable and other liabilities       $ 15,468     $ 15,296
  Employee-related liabilities         5,334       4,613
  Provisions         777       669
  Derivative liabilities         1,194       -
  Current portion of long-term debt         5,894       5,822
  Current portion of capital lease obligations          754       51
            29,421       26,451
                     
Long-term debt         10,444       12,759
Capital lease obligations         1,589       137
Asset retirement obligations         11,568       11,743
Deferred tax liabilities         1,578       721
            54,600       51,811
                     
Shareholders' equity:                  
  Share capital          98,556       98,556
  Contributed surplus         20,138       19,892
  Stock options          3,753       3,676
  Retained earnings          46,801       45,796
  Accumulated other comprehensive income (loss)         (41)       17
            169,207       167,937
          $ 223,807     $ 219,748
                     

  

 

 

 

SOURCE: St Andrew Goldfields Ltd.

Contact:

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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