San Gold Corporation (TSX:SGR)(OTCQX:SGRCF) ("San Gold" or the
"Company") reports preliminary operating results for the third
quarter of 2011 and is providing drilling results from its SG1 Mine
Area and from a portion of the Shoreline Basalt. The Company is
also announcing that it plans to report third quarter 2011
financial results before market open on Tuesday, November 15, 2011,
and that senior management will host a conference call that day at
11:00 am Eastern Standard Time.
Third Quarter 2011 Preliminary Operating Results
In the third quarter of 2011, the Company's Rice Lake, Hinge,
and 007 mines (the "Rice Lake Complex") produced 19,119 ounces of
gold at a total cash operating cost that is expected to be in-line
with the Company's full-year guidance of $825 per ounce of gold
sold. Year-to-date production of 53,918 ounces is consistent with
the Company's full-year production forecast of 80,000 ounces.
Commenting on these results, George Pirie, President and Chief
Executive Officer of San Gold, stated, "We continue to execute on
our plan of growing the production profile, as evidenced by our
greatly improved year-over-year performance. With the crushing and
milling circuit upgrades approaching completion, we expect to post
record operating results in the fourth quarter and to achieve our
full-year production guidance."
Gold production in the third quarter of 2011 was 52% higher than
production of 12,568 ounces in third quarter of 2010. Gold
production of 53,918 ounces in the first nine months of the 2011
was 58% higher than production of 34,217 ounces in the same period
of 2010. Higher gold production in 2011 is a result of increased
mill throughput relative to the comparable periods of 2010.
During the third quarter of 2011, the Company milled ore at a
record quarterly rate of approximately 1,324 tons per day ("tpd")
for a total of 121,844 tons, an increase of 62% compared to 818 tpd
in the same period of 2010. Milling rates have increased relative
to prior periods as a result of crusher and milling system
expansion initiatives implemented over the past year. The benefits
of increased crushing and milling rates during the quarter were
partially offset by four days of unscheduled downtime in July
related to power supply issues that have since been resolved.
The Rice Lake Mill processed ore at an average head grade of
5.83 grams of gold per tonne of ore ("g/t Au") in the third quarter
of 2011, a decrease of 5% relative to the head grade of 6.12 g/t Au
in the same period of 2010. The decrease in head grade is a result
of substantially less than budgeted ore being mined from the
higher-grade 007 Mine during the month of July.
Gold recovery from the mill was 92% in the third quarter of
2011, 2-percentage points lower than the 94% achieved during the
comparable period of last year, and below the budgeted rate of 93%.
The lower than budgeted gold recovery is a result of the ongoing
installation of new flotation cells in the milling circuit, which
has not required any mill downtime. Commissioning of the new
flotation cells is planned to be completed near the middle of
October, after which, gold recovery is expected to return to the
budgeted rate.
During the third quarter of 2011, the Company mined ore at a
record quarterly rate of approximately 1,358 tpd for a total of
124,952 tons, an increase of 75% compared to 777 tpd in the same
period of 2010. The increase in mining rates is attributable to a
larger mechanized mining fleet, improved safety performance, and an
increased number of active mining areas. During the quarter,
approximately 78% of the tons mined were sourced from the generally
lower cost and higher grade Hinge and 007 mines. Currently, ore
from the 007 Mine contributes approximately 50% of the ore being
mined and milled. The Company has a surface stockpile of
approximately 26,000 tons of ore ahead of the crushing circuit.
Commenting on the improved quarterly operating results, Ian
Berzins, Chief Operating Officer of San Gold, stated "I am very
pleased that we have delivered another strong quarter of gold
production, further demonstrating that we are executing on our
strategy of debottlenecking the operation and improving safety
performance as a result of investing in new infrastructure and
equipment. Mill throughput increased steadily throughout the third
quarter, and we are currently processing ore at a rate of 1,500
tons per day. When we complete the commissioning of the flotation
cell upgrade later this month, we expect mill throughput to
increase to a rate of at least 1,600 tons per day. With the mill
expansion ahead of schedule, I am confident that we will achieve
our full-year production guidance of 80,000 ounces."
Key operational metrics and production statistics for the third
quarter of 2011 compared to the third quarter of 2010 and on
year-to-date bases are presented in tables 1 and 2 at the end of
this press release, respectively.
Exploration Update
San Gold is currently undertaking its largest ever exploration
program, which includes more than 300,000 metres ("m") of drilling
utilizing up to 14 rigs, making it one of Canada's largest drill
programs by a gold producer in 2011. The goals of this aggressive
exploration program are to upgrade existing mineral resources,
extend areas of known mineralization to depths of 1,000 m or more,
and discover new mineral resources in preparation for an updated
mineral reserve and resource statement in 2012.
This exploration update primarily discusses drilling activities
that were targeting down-dip extensions to mineralized zones at the
SG-1 Mine Area and along the Shoreline Basalt. The general
locations of these exploration areas are presented in Figure 1 at
the end of this press release.
The Company is awaiting a significant number of assay results,
as laboratory turn-around-times are currently in excess of one
month, due to the recent conclusion of the Canadian summer drilling
season.
SG1 Mine Area
The Company recently received assay results from a drilling
program in the vicinity of its 100%-owned SG1 Mine, located
approximately 4.5 km northeast of the Company's Rice Lake Mill. The
SG1 Mine has a dedicated decline, was brought into production
during 2006, and was placed on care-and-maintenance in October of
2008 when the Company reallocated mining and exploration resources
to the higher grade and lower cost Hinge Mine. The gold
mineralization in the SG1 Mine Area is interpreted to be associated
with the Normandy Creek Shear and, potentially, an eastern limb of
the Shoreline Basalt.
Prior to the initiation of this drilling program, the
drill-indicated mineralized envelope extended from surface to a
depth of approximately 200 m. Selected results are shown in the
table below, with the pierce points of these drill holes shown in
Figure 1.
--------------------------------------------------------------
Interval(1) Uncut Grade
Drill Hole From (m) To (m) (m) (g/t Au)
--------------------------------------------------------------
SG-11-013 296.4 301.9 5.5 6.56
including 296.4 299.2 2.7 11.13
--------------------------------------------------------------
SG-11-016 468.5 477.6 9.1 6.48
including 473.9 477.6 3.7 10.59
--------------------------------------------------------------
SG-11-017 472.9 491.1 18.3 6.48
including 474.9 480.7 5.8 10.32
--------------------------------------------------------------
(1)- May not represent true width
These drill holes have located gold mineralization outside of
the mineral resource envelope in between depths of 290 m and 475 m
below surface over potentially economic widths and grades beneath
existing mine infrastructure. The initial success of the SG1 Mine
Area drilling program outside of the existing mineral resource
envelope has the potential to significantly increase mineral
resources and reserves.
Additional assays are pending and drilling is ongoing to
drill-test outside of the mineral resource envelope for extensions
of the zone along strike and at depth.
Shoreline Basalt
Along the Shoreline Basalt Unit, a system of stacked lenses that
includes the 007 Trend, L10, and Emperor zones, drilling continues
to expand the mineralized envelope both along strike and at depth.
This unit has a strike length of more than 2,000 m, a plunge that
has been traced to over 1,400 m from surface, and remains open
along strike and to depth. Geological and geophysical evidence
suggest that the Shoreline Basalt may extend 5 kilometres eastward
to the SG1 Mine Area.
The Company has received assay results from initial deep
drilling below the L10 zone that has located a down-dip extension
within 200 m of the Company's existing Rice Lake Mine's underground
infrastructure. Selected results are shown in the table below, with
the pierce points of these drill holes shown on Figure 1.
--------------------------------------------------------------
Interval
Drill Hole From To (1) Uncut Grade
(m) (m) (m) (g/t Au)
--------------------------------------------------------------
DX-11-009 595.6 601.1 5.4 22.86
including 598.8 599.0 0.2 310.62
and 611.3 614.3 3.0 5.08
including 612.0 612.6 0.5 17.97
--------------------------------------------------------------
(1)- May not represent true width
Drill holes DX-11-009 located the L10 zone at depths of up to
575 m below surface, suggesting a potential 200 m down dip
extension to depth from the limits of previous drilling. The L10
zone has a drill-indicated strike of at least 100 m, begins 250 m
below surface, and typically varies in width from 2 to 5 m. The L10
zone remains open along strike and down-dip, and additional assays
are pending.
The Company has also received assay from a previously undrilled
500 m section along the Shoreline Basalt between the L10 and 007
Trend zones. Drilling encountered near surface, high-grade gold
mineralization along the hanging wall contact of the Shoreline
Basalt at a depth of approximately 200 m below surface and within
100 m of the 007 decline. Selected results are shown in the table
below, with the pierce points of these drill holes shown on Figure
1. Additional assays are pending.
--------------------------------------------------------------
Interval
Drill Hole From To (1) Uncut Grade
(m) (m) (m) (g/t Au)
--------------------------------------------------------------
S936-11-001 424.7 129.6 0.2 338.91
S936-11-002 333.1 353.2 20.1 13.44
--------------------------------------------------------------
(1)- May not represent true width
The Company is very encouraged by these results as it
demonstrates the potential for the expansion of existing
mineralized zones and the discovery of new zones along the
Shoreline Basalt.
Commenting on these results, George Pirie, stated, "I am very
impressed with the initial results from the drilling beneath SG1,
due to both grades and widths encountered and because of the
proximity to existing mine infrastructure. I am also excited about
the initial deep drilling results from the L10 zone, which supports
our interpretation that the Shoreline Basalt zones are likely to
exceed to depths exceeding 1,000 m. The implications from all of
these are tremendous with respect to how the future development of
the Rice Lake Complex may unfold."
Exploration Activities for the Remainder of 2011
Year-to-date, San Gold has drilled approximately 275,000 m in
925 holes and will achieve its target of drilling 300,000 m in
2011. For the remainder of the year, drilling will continue to
focus on in-fill and step-out drilling at areas of known
mineralization, plus drill-testing grassroots exploration targets,
albeit at a slightly slower pace until the 2012 exploration season
commences.
In addition to its Rice Lake Project exploration programs, the
Company recently completed a 3,600 line-km high-resolution airborne
geophysical survey on its 100%-owned projects and on a portion of
the projects that it has under option agreement. The Company is
awaiting the preliminary interpretation and expects geophysical
anomalies identified from the survey to help guide the Company's
first regional exploration program in the Rice Lake area.
QA/QC Programs
Surface drill programs are carried out under the supervision of
William Ferreira, B.Sc. Geology, Registered Professional Geologist.
Underground drill programs are carried under the supervision of
Dale Ginn, B.Sc. Geology and Registered Professional Geologist. Mr.
Ferreira and Mr. Ginn are Qualified Persons as defined by National
Instrument 43-101 of the Canadian Securities Administrators.
Strict sampling and QA/QC protocol are followed, including the
insertion of standards, blanks, and duplicates on a regular basis,
plus the retention of pulps and rejects. Surface drilling core
samples are sent to TSL Laboratories in Saskatoon, Saskatchewan
("TSL") for sample preparation and analysis. Analytical method is
fire assay with atomic adsorption finish and gravimetric finish.
Whole metallic assays are performed on samples containing visible
gold. Additional QA/QC testing is provided by Accurassay
Laboratories of Thunder Bay, Ontario ("Accurassay") on a routine
basis.
Underground drill core samples are prepared and assayed on site
in the Company's assay lab using the fire assay method with an
atomic adsorption finish and gravimetric finish. Strict sampling
and QA/QC protocol are followed, including the insertion of
standards, blanks, and duplicates on a regular basis, plus the
retention of pulps and rejects, and spot checks utilizing
independent labs including TSL and Accurassay.
Due to the exploratory nature of this exploration program and
the variable orientations of the high-grade mineralized zones,
drill intersections reported in this press release may not
necessarily represent the true width of mineralization. All assays
reported in this press release are uncut.
Notice of Third Quarter 2011 Financial Results Conference
Call
The Company's senior management plans to host a conference call
on Tuesday, November 15, 2011 at 11:00 am Eastern Standard Time to
discuss the 2011 third quarter financial results, and to provide an
update of the Company's operating, exploration, and development
activities.
Participants may join the conference call by dialing 1 (877)
240-9772 or 1 (416) 340-8530 for participants outside of Canada and
the United States. The conference call will also be available by
webcast on the Company's website at www.sangold.ca.
A recorded playback of the conference call can be accessed after
the event until November 22, 2011 by dialing 1 (800) 408-3053 or 1
(905) 694-9451 for calls outside Canada and the United States. The
pass code for the conference call playback is 2825740. The archived
audio webcast will also be available on the Company's website at
www.sangold.ca.
About San Gold
San Gold is an established Canadian-based gold producer,
explorer, and developer that owns and operates the Hinge, 007, and
Rice Lake mines near Bissett, Manitoba. The Company employs over
400 people and is committed to the highest standards of safety and
environmental stewardship. The Company has over $40 million in cash
and equivalents and is unhedged to the price of gold. As of October
1, 2011, San Gold has 312,509,841 common shares outstanding
(327,201,851 shares fully diluted), which are traded on the Toronto
Stock Exchange under the symbol "SGR" and on the OTCQX under the
symbol "SGRCF".
For further information on San Gold, please visit
www.sangold.ca.
Cautionary Non-IFRS Statements
The Company believes that investors use certain indicators to
assess gold mining companies. They are intended to provide
additional information and should not be considered in isolation or
as a substitute for measures of performance prepared with
International Financial Reporting Standards ("IFRS"). "Total cash
operating costs" as used in this analysis is a non-IFRS term
typically used by gold mining companies to assess the level of
gross margin available to the Company per ounce of gold by
subtracting these costs from the unit price realized during the
period. This non-IFRS term is also used to assess the ability of a
mining company to generate cash flow from operations. There may be
some variation in the method of computation of "total cash
operating costs" as determined by the Company compared with other
mining companies. In this context, "total cash operating costs"
reflects the per ounce cash costs allocated from in-process and
dore inventory associated with ounces of gold sold in the period
and net royalties. "Total cash operating costs" may vary from one
period to another due to operating efficiencies, quantity of ore
processed, grade of ore processed, and gold recovery rates.
Cautionary Note Regarding Forward Looking Statements
No stock exchange, securities commission or other regulatory
authority has approved or disapproved the information contained
herein. This news release includes certain "forward-looking
statements". All statements, other than statements of historical
fact included in this release, including, without limitation,
statements regarding forecast gold production, gold grades,
recoveries, cash operating costs, potential mineralization, mineral
resources, mineral reserves, exploration results, and future plans
and objectives of the Company, are forward-looking statements that
involve various risks and uncertainties. These forward-looking
statements include, but are not limited to, statements with respect
to mining and processing of mined ore, achieving projected recovery
rates, anticipated production rates and mine life, operating
efficiencies, costs and expenditures, changes in mineral resources
and conversion of mineral resources to proven and probable mineral
reserves, and other information that is based on forecasts of
future operational or financial results, estimates of amounts not
yet determinable and assumptions of management.
Any statements that express or involve discussions with respect
to predictions, expectations, beliefs, plans, projections,
objectives, assumptions or future events or performance (often, but
not always, using words or phrases such as "expects" or "does not
expect", "is expected", "anticipates" or "does not anticipate",
"plans", "estimates" or "intends", or stating that certain actions,
events or results "may", "could\", "would", "might" or "will" be
taken, occur or be achieved) are not statements of historical fact
and may be "forward-looking statements." Forward-looking statements
are subject to a variety of risks and uncertainties that could
cause actual events or results to differ from those reflected in
the forward-looking statements.
There can be no assurance that forward-looking statements will
prove to be accurate and actual results and future events could
differ materially from those anticipated in such statements.
Important factors that could cause actual results to differ
materially from the Company's expectations include, among others,
the actual results of current exploration activities, conclusions
of economic evaluations and changes in project parameters as plans
continue to be refined as well as future prices of precious metals,
as well as those factors discussed in the section entitled "Other
MD&A Requirements and Additional Disclosure and Risk Factors"
in the Company's most recent quarterly Management's Analysis and
Discussion ("MD&A"). Although the Company has attempted to
identify important factors that could cause actual results to
differ materially, there may be other factors that cause results
not to be as anticipated, estimated or intended. There can be no
assurance that such statements will prove to be accurate as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements.
Exploration results that include geophysics, sampling, and drill
results on wide spacings may not be indicative of the occurrence of
a mineral deposit. Such results do not provide assurance that
further work will establish sufficient grade, continuity,
metallurgical characteristics, and economic potential to be classed
as a category of mineral resource. A mineral resource that is
classified as "inferred" or "indicated" has a great amount of
uncertainty as to its existence and economic and legal feasibility.
It cannot be assumed that any or part of an "indicated mineral
resource" or "inferred mineral resource" will ever be upgraded to a
higher category of resource. Investors are cautioned not to assume
that all or any part of mineral deposits in these categories will
ever be converted into proven and probable reserves.
Cautionary Note to United States and Other Investors Concerning
Estimates of Measured, Indicated and Inferred Mineral
Resources:
This press release uses the terms "Measured", "Indicated", and
"Inferred" resources. United States investors are advised that
while such terms are recognized and required by Canadian
regulations, the United States Securities and Exchange Commission
does not recognize them. "Inferred Mineral Resources" have a great
amount of uncertainty as to their existence, and as to their
economic and legal feasibility. It cannot be assumed that all or
any part of an Inferred Mineral Resource will ever be upgraded to a
higher category. Under Canadian rules, estimates of Inferred
Mineral Resources may not form the basis of feasibility or
pre-feasibility studies. United States investors are cautioned not
to assume that all or any part of Measured or Indicated Mineral
Resources will ever be converted into Mineral Reserves. United
States investors are also cautioned not to assume that all or any
part of a Mineral Resource is economically or legally mineable.
Table 1: Third Quarter 2011 and 2010 Production Summary and
Statistics (1,2)
Q3 Q3 Change Change
2011 2010 (#) (%)
Ore mined (tons) 124,952 71,463 56,721 75%
Ore milled (tons) 121,844 75,263 46,581 62%
Head grade (g/tonne Au) 5.83 6.12 -0.29 -5%
----------------------------------------------------------------------------
Contained Gold (ounces) 20,732 13,436 7,296 54%
Ounces of gold produced (3) 19,119 12,568 6,551 52%
Ore mined per day (tons) 1,358 777 581 75%
Ore milled per day (tons) 1,324 818 506 62%
Mill recovery (%) 92% 94% -2 -2%
(1) All amounts for Q3-2011 are preliminary and based on initial end
of period estimates. Final adjustments may be required.
(2) Certain numbers may not compute due to the effects of rounding and
truncation.
(3) Before final refinery settlements, which may result in increases
or decreases to reported gold production.
Table 2: Year-to-Date Production Summary and Statistics
(1,2)
Q3 Q2 Q1 YTD-Q3 YTD-Q3 Change Change
2011 2011 2011 2011 2010 (#) (%)
Ore mined (tons) 124,952 123,261 102,200 350,413 197,810 152,603 77%
Ore milled (tons) 121,844 114,624 82,792 319,260 192,686 126,574 66%
Head grade (g/tonne
Au) 5.83 6.35 6.47 6.19 6.52 -0.33 -5%
----------------------------------------------------------------------------
Contained Gold
(ounces) 20,732 21,244 15,636 57,612 36,668 20,944 36%
Ounces of gold
produced (3) 19,119 20,111 14,688 53,918 34,217 19,701 58%
Ore mined per day
(tons) 1,358 1,355 1,136 1,284 725 559 77%
Ore milled per day
(tons) 1,324 1,260 910 1,169 706 463 66%
Mill recovery (%) 92% 95% 94% 94% 93% 1 0%
(1) All amounts for Q3-2011 are preliminary and based on initial end
of period estimates. Final adjustments may be required.
(2) Certain numbers may not compute due to the effects of rounding and
truncation.
(3) Before final refinery settlements, which may result in increases
or decreases to reported gold production.
To view, "Figure 1: Northeast-looking Longitudinal Section,"
please visit the following link:
http://media3.marketwire.com/docs/sgold_fig_1007.pdf.
The TSX and the OTCQX exchanges have not reviewed and do not
accept responsibility for the adequacy or accuracy of this
release.
Contacts: San Gold Corporation Tim Friesen Director,
Communications (855) 585-4653 or +1 (204) 772-9149 ext. 202 San
Gold Corporation Jeremy Link Vice-President, Corporate Development
+1 (416) 214-0024 ext. 201www.sangold.ca
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