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SAS reports 'solid' Q4, full-year performance, costs decline

15th February 2013

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – Ontario-focused gold producer St Andrew Goldfields (SAS) on Thursday reported fourth-quarter net earnings attributable to shareholders of $12.6-million or $0.03 a share, 2.3% lower when compared with net income of $12.9-million or $0.04 a share a year earlier, despite improved production.

Full-year income rose by 51% to $26-million or $0.07 a share, as compared with $17.2-million or $0.05 a share in 2011. For 2012, SAS generated $54.1-million in cash flow from operations, which was an increase of 131.19% year-on-year, compared with $23.4-million or $0.06 a share in 2011.

The company recorded adjusted net earnings of $5.4-million or $0.01 a share, and for the full year, $18.02-million or $0.05 a share.

Operating cash flow in the quarter was 55% higher year-on-year at $21.7-million or $0.06 a share, compared with $14-million or $0.04 a share.

"We saw a steady increase in production and, as expected, our mine cash costs in the fourth quarter reduced to under $800/oz. Holt continues to perform well and we were operating at about 1 000 t/d at the end of the fourth quarter,” CEO Jacques Perron said during an analyst conference call.

He added the company had a “solid” operational performance in 2012 and was committed to continue to improve at each operation during 2013. Management said it expects to continue to operate this year without the need for any additional financing.

The junior produced 25 829 oz of gold from its Timmins-based Holt, Holloway and Hislop mines in the quarter and recorded record production of 95 604 oz for the full year.

SAS sold 26 050 oz of gold in the fourth quarter and 94 067 oz in 2012, at an average realised price of $1 667/oz for revenue of $156.4-million, which reflected a 40% increase in gold sales revenue over the previous year.

Importantly, the company recorded fourth-quarter cash cost of $745/oz and a royalty cost of $139/oz, for a total cash cost of $884/oz of gold sold. The full-year cash cost per ounce sold were $919/oz. Cash costs decreased quarter-over-quarter and beat guidance as production continued to ramp up at the Holt mine.

The improved cash costs trumped Casimir Capital analyst Eric Winmill’s expected fourth-quarter cash costs to come in at $952/oz. “The outperformance can be explained in part by reduced operating and contracted development at the Holt mine that more than offset some minor cost creep at Holloway and Hislop, resulting from lower mine production,” the analyst said in a note to clients.

SAS expected to crest the 100 000 oz production level this year, with production expected between 95 000 oz and 105 000 oz of gold. Costs were expected to remain flat at between $800/oz and $850/oz before royalties.

The 2013 capital budget was currently planned at $43-million, with $15-million budgeted for capital development at Holt, $7-million for development of the Smoke Deep zone at Holloway and $21-million planned for the Taylor project.

During the fourth quarter the company took a 15 000 t bulk sample from the Taylor project, which is currently being analysed. Processing is expected to be completed during this quarter, with results expected to be released after processing.

The company’s Toronto-listed stock was down 2.04% at 48 Canadian cents apiece on Friday.

Edited by Creamer Media Reporter

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