San Gold Reports 2015 First Quarter Results

TSX-V: SGR
(All amounts in Canadian dollars unless otherwise stated)

WINNIPEG, June 5, 2015 /CNW/ - San Gold Corporation (TSX-V: SGR) today reported its 2015 first quarter financial and operating results.

On March 5, as part of the Company's ongoing court-ordered restructuring process pursuant to its application under Part III, Division I of the Bankruptcy and Insolvency Act (Canada), the Company undertook a Sale and Investor Solicitation Process (SISP) to seek investment, or bids for the acquisition of the Company's assets, sufficient to satisfy priority obligations and enable a viable proposal to be made to unsecured creditors.

No third-party bids were received by the May 26, 2015 bid deadline and as a result it is expected that the Company's secured lenders will seek court approval for a transaction by which the assets of the Company will be acquired by a nominee of the Company's principal secured lenders in exchange for secured debt. In such event, the Company will have no ability to make a viable proposal to its creditors and will become bankrupt upon the expiry of the Stay Period.

The Company has determined that the going concern assumption is no longer appropriate in this context and has changed the basis of presenting its financial statements from a going concern basis to a liquidation basis effective January 1, 2015.

2015 First Quarter Financial and Operating Summary:

• Changed to a liquidation basis of accounting as at January 1, 2015, resulting in a total and comprehensive loss of $nil and net liabilities in liquidation of $64.4 million.
• Recognized revenue of $14.0 million on gold sales of 9,442 ounces at a realized price of $1,491 per oz and had total cash costs of $1,199 per oz of gold sold.
• Closed debt financing for gross proceeds of $6.6 million.
• Produced 8,631 ounces of gold.
• Recorded average mill throughput of 905 tons per day.
• Announced an updated mineral reserve and resource estimate with moderate increases in both the M+I resource and 2P reserve categories.
• Retained Beacon Securities Limited as its financial advisors to undertake a Sales and Investor Solicitation Process (SISP).
• Announced on March 23, 2015, that the Company is suspending mine development activities pending completion of SISP.
• Secured approval to resume trading shares and debentures on TSX Venture Exchange on March 24, 2015.
• Announced on March 25, 2015, that the Company will not be funding the $2 million interest payment due March 31 in respect of its subordinated unsecured convertible debentures currently traded on the TSX Venture Exchange.

Subsequent Events

• Announced April 15, 2015, the suspension of all mining and milling operations.
• Obtained an extension to the court-ordered Stay Period until June 22, 2015 for the Company's proposal trustee to file a proposal to creditors.
• Announced May 28, 2015 that no third-party bids were received from the SISP and that the Company will become bankrupt upon the conclusion of the Stay Period.

About San Gold

San Gold is an established Canadian gold producer, explorer, and developer that owns and operates the Rice Lake Mining Complex near Bissett, Manitoba. San Gold is listed on the TSX Venture Exchange under the symbol "SGR".

This press release should be read in conjunction with the Company's consolidated financial statements for the quarter ended December 31, 2014 and associated Management's Discussion and Analysis ("MD&A"), which are available from the Company's website (www.sangold.ca), in the "News & Reports" section under "Financial Statements", and on SEDAR (www.sedar.com).

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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

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: 2015 Q1 Income Statement

SAN GOLD CORPORATION
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF NET LOSS AND COMPREHENSIVE LOSS
FOR THE THREE MONTH PERIOD ENDED MARCH 31 (UNAUDITED)
				2015		2014
REVENUE			$	14,074,324	$	14,936,099
OPERATIONS
	Operations (Note 15)			11,325,466		17,732,481
INCOME (LOSS) FROM OPERATIONS				2,748,858		(2,796,382)
	Exploration			73,327		21,595
	General and administrative (Note 16)			1,690,925		3,259,813
INCOME (LOSS) BEFORE OTHER INCOME AND EXPENSES				984,606		(6,077,790)
OTHER INCOME AND EXPENSES
	Finance income - net (Note 17)			35,229		289,195
	Finance costs (Note 17)			(2,968,154)		(1,929,852)
	Foreign exchange gain (loss)			(2,827,306)		19,164
	Gain on asset disposal			73,419		-
	Net loss applied to estimated revenue and expenses to liquidation			4,702,206		-
NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD			$	-	$	( 7,699,283 )
NET LOSS PER COMMON SHARE: (Note 20)
	Basic		$	-	$	(0.02)
	Diluted		$	-	$	(0.02)
Effective January 1, 2015, San Gold Corporation changed the basis of presenting its financial statements from a going
concern basis to a liquidation basis (Notes 1 and 2).

Table 2: Financial Highlights 

	Q1	Q1
	2015	2014
Total and comprehensive income (loss) (000)	$0	($7,699)
Items not affecting cash (000)	($221)	$2,114
Cash provided (used) by operating activities before changes in non- cash working capital (000)	($221)	($5,585)
Net change in non-cash working capital (000)	$209	$432
Cash provided (used) by operating activities (000)	($12)	($5,153)
Earnings (loss) per share
- basic	$0.00	($0.02)
- diluted	$0.00	($0.02)
Weighted average number of common shares outstanding
- basic	373,390,981	373,390,981
- diluted	373,390,981	373,390,981

Table 3: Production Summary and Statistics

	Q1	Q1	Change	Change
	2015	2014	(#)	(%)
Ore milled (tons)	81,427	119,996	(38,569)	-32%
Head grade (g/tonne Au)	3.91	3.67	0.24	6%
Contained gold (ounces)	9,261	12,830	(3,569)	-28%
Ounces of gold produced	8,631	12,083	(3,452)	-29%
Ore mined (tons)	88,002	123,868	(35,866)	-29%
Ore milled per day (tons)	905	1,333	(429)	-32%
Ore mined per day (tons)	978	1,376	(399)	-29%
Mill recovery (%)	93%	94%	-1.0%	-1.0%

Table 4: Quarterly Production Summary and Statistics

	Q1	Q4	Q3	Q2	Q1	Q4	Q3	Q2
	2015	2014	2014	2014	2014	2013	2013	2013
Ore milled (tons)	81,427	78,117	76,649	115,802	119,996	148,042	175,311	162,344
Head grade (g/tonne Au)	3.91	3.77	4.63	4.18	3.67	3.78	4.24	5.05
Contained gold (ounces)	9,261	8,763	10,488	12,115	12,830	16,308	21,672	23,964
Ounces of gold produced	8,631	8,407	10,025	11,375	12,083	15,118	20,220	22,526
Ore mined (tons)	88,002	79,663	73,397	112,018	123,868	144,165	167,937	173,350
Ore milled per day (tons)	905	849	833	1,273	1,333	1,609	1,906	1,784
Ore mined per day (tons)	978	866	798	1,231	1,376	1,567	1,825	1,905
Mill recovery (%)	93%	96%	96%	94%	94%	93%	93%	94%

NOTE: Final refinery settlements, or the effects of rounding, may have resulted in increases or decreases to reported gold production.

SOURCE San Gold Corporation

For further information on San Gold, please visit www.sangold.ca or contact: Mandeep Rai, Chief Financial Officer; Greg Gibson, President and CEO; 1 [phone], [email protected]