San Gold Releases Year End Results and 2011 Outlook

March 28, 2011


BISSETT, MB, March 28 /PRNewswire-FirstCall/ – George Pirie, President and CEO of San
Gold Corporation, (Bissett, Manitoba) (TSX:SGR) (OTCQX:SGRCF) has
released the Company’s 2010 year-end financial statements.

“2010 was a remarkable year for San Gold on both the exploration and
production fronts.  The Company achieved unparalleled exploration
success and produced a record number of ounces and tons in the year. 
By year end, a new mineralized corridor was identified in a mafic
volcanic unit which has been called the Shoreline Basalt.  This unit is
a system of stacked lenses, including the L10, 007 complex and
Emperor.  The unit now has a strike length of two kilometres and the
plunge has been traced to over 1,400 metres (4,900 feet) from surface.
It continues to be open along strike and to depth. The zones are
currently being exploited by ramp from surface and can be developed
from the 10, 16, and 26 Levels in the Rice Lake Mine. This development
presents the opportunity of a totally new mine complex for San Gold
which can be exploited through existing infrastructure. The 2011
exploration plan is designed to continue to test the strike and plunge
extension of this new mineralized corridor,” said Mr. Pirie.

“Production continued to ramp up and the operation achieved both record
production tons and ounces during the year. The Company continued to
transition into a steady state producer as the capital deployed into
the operation has resulted in the elimination of bottlenecks in
material flow and additions to processing capacity. The success of
these projects results in continued downward pressure on the cost curve
through an increasing production profile.  This allows San Gold to
forecast production of 80,000 ounces at cash costs approaching $650 per
ounce by year end. With a strong operational team in place, San Gold
enters 2011 in an excellent position to take advantage of a strong
global market for gold,” said Mr. Pirie.

2010 Results:

        --  Gold production of  43,498 oz
        --  Diamond drilling of 200,000 m (657,000 feet)
        --  Capital Development of 5,681 m (18,638 feet)
        --  Graduated to Listing on Toronto Stock Exchange (TSX)
        --  Identification of a new mineralized corridor and mine trend
            contained in a mafic volcanic unit called the Shoreline Basalt
        --  Integrated Technical Report for Rice Lake Project Resources and
            Reserves (October)
        --  Equity financing during the year of $108 MM
        --  Year-end working capital surplus of $59 MM

2011 Outlook:

        --  Gold production of 80,000 oz (2,488 kg), starting at 15,000 oz
            in Q1 and increasing to 25,000 oz in Q4
        --  Increase in production to an average of 1,200 tons per day,
            exiting the year at 1,400 tons per day and cash cost
            approaching $650 per ounce.
        --  Exploration expenditures in excess of $20 MM near surface along
            Shoreline Basalt and at depth along projections of existing
        --  Significant Capital Development planned to access new faces at
            007, 007 East, Cohiba, L10, and L13 zones

The Company recognized revenue of $58.0 MM for the year and experienced
an operating loss from operations of $4.0 MM. The comprehensive loss
from operations for the year was $22.2 MM.  These figures compare to
revenue in the prior year of $27.8 MM, an operating loss of $11.8 MM
and a comprehensive loss of $29.5 MM.

In cash terms, the year was therefore close to breakeven from an
operating perspective. Overall cash cost was $1,105 per ounce and $175
per ton.  This compares to 2009 cash costs of $1,221 per ounce and $220
per ton. While this represents a 25% reduction in cash cost per ton in
comparison to last year and a 12% reduction in the cash cost per ounce,
management expects significant cost reductions in the coming year as
operations get closer to efficient levels of production. Cash costs are
budgeted to start the year at about $1,060 per ounce and end the year
approaching $650 per ounce for an average cost of about $825 for the
year. (Please see discussion on Non-GAAP financial measures for a detailed
calculation and reconciliation of these figures to our GAAP financial

In 2010, San Gold carried out 200,000 metres (657,000 feet) of diamond
drilling from stations located at surface and underground. 91,000
metres (300,000 feet) of drilling occurred underground with another
109,000 metres (357,000 feet) carried out from surface. 56,000 metres
(185,000 feet) of underground drilling occurred in the Rice Lake Mine,
with the remainder carried out from surface. About one quarter of the
2010 drilling program was definition drilling with the remainder
targeted for new exploration. While the rate of new discoveries in 2010
provided substantial optimism about the potential of the Rice Lake
Project, 2011′s exploration program will shift closer to identified
deposits to improve production planning.

San Gold capitalized expenditures associated with mining properties and
related equipment during the year to date in the amount of $39.7 MM
(2009 – $24.2 MM).  This contributed to 18,638 feet (5,681 m) of
Capital Development and $14.5 MM (2009 – $4.5 MM) of property, plant
and equipment during the year. This Capital investment positions San
Gold well going into 2011, providing many new faces with ore potential.

As at December 31, 2010, the Company had a working capital surplus of
$59.0 MM compared to a working capital surplus of $25.5 MM at December
31, 2009. In the subsequent period, the Company has further enhanced
its liquidity through a Flow-Through financing designed to fund
exploration expenditure through 2011 and into 2012. Liquidity is
currently very strong and the Company continues to have sufficient cash
reserves to meet currently planned exploration and development
activities and to fund operational activities in the short and medium

The information in this release may contain forward-looking information
under applicable securities laws. 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 implied
in the forward-looking information. The TSX Exchange does not accept
responsibility for the adequacy or accuracy of this release.

                                          SAN GOLD CORPORATION


                                  FOR THE YEARS ENDED DECEMBER 31

                                         2010                   2009

    REVENUE                 $        57,950,671   $        27,808,071


      Operations                     50,598,703            32,193,830

      Asset retirement                    167,122               151,637

      Amortization of
      property, plant and              2,937,975             1,908,244

      Depletion of                     8,278,651             5,394,763
      mineral properties

    LOSS FROM OPERATIONS               4,031,780           11,840,403

      Exploration                    12,146,690              6,534,754

      General and                      8,036,350             6,844,830

      Accretion of
      convertible             -                                 134,157

      Amortization of                                           152,423
      financing fees          -  

      Royalty expense                  7,870,825             7,870,839

      Interest expense                    237,444               966,389

      Share-based                      6,033,142             3,952,219

    LOSS BEFORE OTHER                38,356,231            38,296,014


      Indemnification fee                 255,153               255,153

      Interest income                  8,414,351             8,582,135

      Equity loss of SGX
      Resources Inc.          (503,164)                         (18,033)
      (Note 7)

      Loss on disposal of
      property, plant and     (7,714)               -

    LOSS BEFORE INCOME               30,197,605            29,476,759

      Future income tax
      recovery on                      7,959,465    -
      flow-through shares

    COMPREHENSIVE LOSS               22,238,140            29,476,759

    DEFICIT, BEGINNING OF          152,254,876           121,011,395

    Share issue costs                  6,174,867             1,696,224

    Expired warrants                                            (75,210)

    Expired options                                             (71,734)

    Forfeited options                   (134,555)

    Share issue costs of                                        217,442
    SGX Resources Inc.        -  

    Future income tax on               7,959,465
    flow-through shares                             -  

    DEFICIT, END OF THE     $      188,484,411    $      152,254,876

    COMMONSHARE:  Basic &   $ 0.08                $                 0.12
    diluted (Note 17)





SOURCE San Gold Corporation

Source: newswire

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