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TORONTO,
ONTARIO--(Marketwire - May 28, 2009) - CASTLE
GOLD CORPORATION (Castle Gold, the Company) (TSX VENTURE:CSG) today
reported its financial and operating results for the first quarter 2009
period ended March 31, 2009. The Consolidated Financial Statements and
related Notes along with the Management's Discussion and Analysis have
been filed with SEDAR (www.sedar.com) and can be viewed on the Company's website at www.castlegoldcorp.com.
Highlights for the First Quarter 2009
- The Company reported net earnings for the three month period ended
March 31, 2009 of $676,733 or $0.01 per share compared to earnings of
$764,662 or $0.01 per share for the three month period ended March 31,
2008. Metal revenues for the first quarter of 2009 totalled $5,914,273
on the sale of 6,513 ounces of gold, compared to $1,610,271 on the sale
of 1,787 ounces of gold in the prior year period, operating costs
increased to $3,048,893 as compared to $417,331 in the same prior year
period.
- A new quarterly gold production record totalled 7,628 ounces and
included 1,510,000 tonnes of total material mined from the El Castillo
open pit, 12,000 ounces of gold contained in ore placed on the leach
pads and 5,968 ounces of gold recovered in the production plant.
- A Shareholder Rights Plan was implemented by the board of directors
to be voted upon by shareholders at the upcoming Annual General
Meeting.
- Results from a study of the mineral resources contained within the
Transition and Sulphide zones of gold mineralization that exist below
the oxide reserves at the El Castillo mine contained a mineral resource
of 27.9 million tonnes at an average grade of 0.7 grams per tonne gold for
a total of 624,712 ounces contained gold in the Inferred resource
category.
- The first phase of a reverse circulation drill program to test the
potential to expand oxide gold mineralization to the south and the east
of the El Castillo pit began during the quarter.
- A new mining contract was signed with CAMSA, the current mining
contractor at the El Castillo gold mine that provides for the use of a
fleet of larger mining equipment enabling the ramp-up of production and
a reduction in unit production costs by US$25 per ounce of gold.
- An internal study on the crushing plant at the El Castillo gold mine
demonstrated a US$34 per ounce operating cost savings and a 170%
internal rate of return from an investment of US$1.0 million for the
purchase and installation of a screening deck to screen the fine
fraction of high-grade ore.
Thomas Atkins, President and CEO of Castle Gold commented on the first
quarter results stating: "Another good quarter for the Company and
for the El Castillo mine. Mining rates and gold production at El
Castillo continued to increase during the quarter compared to the
previous quarter, despite the challenges of aged equipment being
phased-out in March in anticipation of the new mining contract and the
new equipment that would arrive soon after signing of this contract. Cash
operating costs continue to decline to the point where at El Castillo
cash operating costs were $502 per ounce of gold produced during the
quarter, which, after adjusting for the current higher than average
waste to ore ratio, were US$394 per ounce of gold produced. The
operations team at El Castillo made good progress in advancing the
Company's business plan for the asset, focussed on reducing operating
costs and demonstrating the potential to increase gold resources at El
Castillo. The purchase and installation of a screening deck at the
crushing plant shows a compelling 170 percent internal rate of return
and engineering for the installation of this equipment is underway. The
team also made progress in advancing gold resource growth potential
both in the oxide material to the south and south-east of the Castillo
pit through its reverse circulation program and potential gold
resources within the Transition-Sulphide zone. We remain confident of
the ability to continue to advance some compelling value creating
opportunities at El Castillo in the months and quarters ahead."
Financial Results - First Quarter 2009
During the quarter ended March 31 2009, metal revenues consisted of
$5,914,273 on the sale of 6,513 ounces of gold at an average price of
$908 per ounce of gold. Revenues consisted of $5,194,023 on sales of
5,698 ounces of gold at an average price of $911 per ounce of gold from
the El Castillo mine and revenues of $720,250 (100% - $1,440,500) on
sales of 814 ounces of gold (100% - 1,628 ounces) at an average price
of $884 per ounce of gold from the Company's 50% interest in the El Sastre mine. This compares to metal revenues during
the quarter ended March 31, 2008 of $1,610,271 on the sale of 1,787
ounces of gold at an average price of $901 per ounce of gold
representing the Company's 50% of the sales from the El Sastre gold mine. The increase in revenues and gold
sales during the three month period ended March 31, 2009 as compared to
the same prior year period is a result of the recording of revenues
from the El Castillo mine. Due to timing delays associated with final
gold refining, any gold produced that has not been fully refined is
recorded as inventory until such time as a sale transaction has taken
place.
Consolidated production costs at both the El Sastre
and El Castillo gold mines for the three month period ended March 31,
2009 were $3,048,893 as compared to $417,331 in the same prior year
period representing an overall cost of sales for the period of $468 per
ounce of gold sold compared to $234 per ounce of gold sold for the same
prior year period. Depreciation, depletion and amortization were
$778,676 for the three month period ended March 31, 2009 as compared to
$174,822 for the three month period ended March 31, 2008. The increase
in operating costs and depreciation, depletion and amortization are
primarily related to the inclusion of these items from the Company's El
Castillo mine that attained commercial production status effective July
1, 2008.
Changes in non-operating items for the three month period ended March
31, 2009 compared to the same prior year period, included: (1) an
increase in general and administrative costs of $1,021,042 as compared
to $349,033 in the prior year period; (2) a $256,434 gain in foreign
exchange as compared to a gain of $304,095 in the prior year period,
primarily a function of the change in exchange rates during the period;
and (3) ($220,560) in income tax expense and ($205,000) in future
income tax expense as compared to ($21,731) and $Nil, respectively in
the prior year period; primarily a function of the inclusion of the
result for the El Castillo mine in the current year period.
The increase in general and administrative expenses were primarily the
result of: (1) $208,122 in stock based compensation (2) $216,000 in
legal expenses and fees related to expenses associated with the
Company's review of strategic alternatives, (3) $100,000 in additional
investor relations expenses (4) $90,000 in director fees and expenses,
and; (5) the inclusion of $83,000 in expenses associated with the
inclusion of the El Castillo operation.
The Company reported earnings for the three month period ended March
31, 2009 of $676,733 or $0.01 per share compared to earnings of
$764,662 or $0.01 per share for the three month period ended March 31,
2008. During the quarter ended December 31 2008, the Company's
consolidated production costs and royalties at both the El Sastre and El Castillo gold mines were $2,868,799
representing an overall cost of sales for the quarter of $447 per ounce
of gold sold compared to a cost of $120 cost per ounce of gold sold for
the quarter ended December 31, 2007. The increase in operating costs is
related to the inclusion of the production data from the commissioning
of the El Castillo mine. Production costs during the fourth quarter
2008 at the El Sastre mine averaged $251 per
ounce and costs at the El Castillo mine were $520 per ounce of gold.
Operating Performance - El Castillo Mine, Durango State, Mexico (100%
interest)
During the first quarter ended March 31, 2009 the El Castillo gold mine
operated at ore mining rates of approximately 503,000 tonnes per month
for a total of 1,509,900 tonnes of material mined from the open pit, of
which 651,000 tonnes was ore placed on the leach pad having an average
cyanide soluble grade of 0.57 grams per tonne (g/t) gold. During the
quarter, the Company placed an estimated 12,000 ounces of gold in ore
on the leach pads of which the Company estimates 7,200 ounces of gold
were recovered during the quarter for a calculated recovery rate of 60
percent with 5,698 ounces of gold actually sold. The difference in
actual production and calculated production is for gold that continues
to remain in loaded carbon and will be recovered in subsequent periods.
Gold sales during the period totalled 5,698 ounces. The difference in
the quantity of gold produced and gold sold is a function of delays
between the amounts of gold produced at the mine and the actual gold
sale transaction.
Three Months Three Months Ended Ended March 31, 2009 March 31, 2008(1) Operating Statistics (100%) (100%) Total tonnes mined 1,509,900 873,000 Tonnes waste 848,400 414,000 Tonnes ore-direct to leach pad 452,900 352,000 Tonnes crushed and placed 198,500 107,000 Tonnes ore placed on leach pad 651,000 459,000 Gold grade (grams/tonne) 0.57 0.42 Gold produced - commercial production (ounces) 5,968 2,632 Gold sales (ounces) 5,698 1,555 Average realized gold price per ounce (US$) $ 911 - Cost of sales per ounce sold (US$) $ 502 - Adjusted cost of sales per ounce sold (US$) $ 394 - (1) Represents the results for the operations prior to achieving commercial production status as of July 1, 2008.
During
the first quarter 2009, El Castillo production costs were $502 per
ounce of gold sold. The adjusted cost of production was $394 per ounce
of gold sold, the difference a function of the higher than average
removal of waste relative to ore that occurred in the quarter at 1.32
to 1 and what this cost would have otherwise been had El Castillo been
mined at the life-of-mine waste to ore ratio of 0.6 to 1. It is
expected that these higher than average costs will continue throughout
2009, following which the strip ratio begins to decline towards the
life-of-mine average by the second half of 2010.
Operating Performance - El Sastre Mine,
Guatemala (50% interest)
During the first quarter ended March 31, 2009 the El Sastre gold mine operated (100% interest) at ore
mining rates of approximately 56,000 tonnes per month for a total of
168,400 tonnes of material mined from the open pit, of which 91,400
tonnes was ore placed on the leach pad having an average cyanide
soluble grade of 1.87 g/t gold. During the quarter, the mine placed an
estimated 2,700 ounces of gold in ore on the leach pads of which the
Company estimates approximately 2,000 ounces of gold were recovered
during the quarter for a calculated recovery rate of 75 percent with
1,628 ounces of gold actually sold. Similar to El Castillo, the
difference in the quantity of gold produced and gold sold is a function
of delays between the amounts of gold produced at the mine during any
quarter and the actual gold sale transaction.
Three Months Three Months Ended Ended March 31, 2009 March 31, 2008 Operating Statistics (50%) (50%) Total tonnes mined 84,200 91,000 Tonnes waste 38,500 66,500 Tonnes ore-direct to leach pad 29,000 13,500 Tonnes crushed and placed 16,700 11,000 Tonnes ore placed on leach pad 45,700 24,500 Gold grade (grams/tonne) 1.87 1.87 Gold produced (ounces) 1,660 1,280 Gold sales (ounces) 814 1,787 Average realized gold price per ounce (US$) $ 884 $ 901 Cost of sales per ounce sold (US$) $ 234 $ 234
During the first quarter 2009, El Sastre production costs were $234 per ounce of gold
sold. Subsequent to 2008 year-end, the Company completed an updated
mine survey. At present, it is expected the primary mining activities
at the El Sastre project will begin to wind
down late in the second quarter of 2009. Subsequent to the
discontinuation of mining operations, crushing operations on existing
coarse ore stockpiles are expected to continue until late in 2009
(although at a reduced production rate). Site leaching operations are
then projected to continue into 2010 whereupon gold ore stacked on the
pads will continue to produce gold, although gold production rates will
begin to decline as new ore production ceases.
Conference Call
The Company does not intend to host a conference call to discuss the
financial and operating results for the first quarter 2009 period at
this time given it recently held a year-end results conference call in
which an overview of first quarter 2009 operating results were
discussed. The Company intends to provide an overview of first quarter
results and an outlook for 2009 at its Annual General Meeting to be
held at the Toronto Board of Trade, 1 First Canadian Place, Toronto,
Ontario M5X1C1, Ketchum/Osgoode
Rooms on Friday, June 19, 2009 at 1:30 p.m. (Toronto time). It is
anticipated that a conference call facility with question and answer
capabilities will be made available for those unable to attend the
Annual General Meeting in person
.
About Castle Gold
Castle Gold Corporation is a growth oriented gold producer with
projects focused in the America's. The Company owns a 100% interest in
the El Castillo gold mine in Mexico and a 50% interest in the El Sastre gold mine in Guatemala. Castle Gold is also
advancing exploration and development work at its La Fortuna
gold-silver-copper project in Mexico and at its El Sastre
and El Arenal project in Guatemala.
Total Shares Outstanding: 75.3MM
Fully Diluted: 82.8MM
52-Week Trading Range: C$0.15 - $0.71
The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this news release.
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