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

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 Companys 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

Summarized Operating and Financial Data

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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys forecast for the remainder of 2013 has been reduced by $20.8 million, a reduction of 40% from the initial amount planned.

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 opera