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TORONTO,
ONTARIO--(Marketwire - Aug. 26, 2009) -
CASTLE GOLD CORPORATION (Castle Gold, the Company) (TSX VENTURE:CSG)
today reported its financial and operating results for the second
quarter 2009 period ended June 30, 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 Second Quarter 2009
- New quarterly production records at the El Castillo mine included
1,862,000 tonnes of total material mined from the open pit, 6,421
ounces of gold recovered in the production plant and 6,426 ounces of
gold sold. For the quarter the Company's annualized gold production
totalled 31,548 ounces of gold from its El Castillo mine and share of
production from the El Sastre mine, a 47%
increase compared to total production of 21,400 ounces for the same
year earlier period,
- Metal revenues for the second quarter of 2009 totalled $7,542,379
compared to $847,250 in the prior year period.
- Operating costs increased to $4,112,613 as compared to $181,089 in
the same prior year period primarily related to the inclusion of the
Company's El Castillo mine that attained commercial production July 1,
2008.
- The Company reported net earnings for the three month period ended
June 30, 2009 of $318,378 or $0.00 per share compared to a loss of
($316,377) or $0.00 per share for the three month period ended June 30,
2008. The primary reason for the change in earnings relative to the
first quarter 2009 period was a $815,284 difference in foreign exchange
loss due to fluctuations in the US:Canadian
exchange rate during the periods.
- New equipment for the El Castillo mine production ramp-up, intended
to facilitate expanded mining rates from approximately 500,000 tonnes
per month to 800,000 tonnes per month later in 2009, arrived at site.
- Results from 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, outside of the known Castillo mine
reserves, were announced during the quarter.
- The first phase of reconnaissance exploration work on the Company's
La Fortuna concessions identified a number of zones of potential
mineralization surrounding the known La Fortuna deposit with plans
underway to prepare the next phase of the exploration program for the
project.
Thomas Atkins, President and CEO of Castle Gold commented on the first
quarter results stating: "We were pleased to see the new equipment
arrive on site and be in operation during the second quarter. This
equipment enables a ramp-up in production towards our goal of 800,000
tonnes of material mined per month. With this production level we
should begin to see increased production of gold in the coming months
as more ore is mined and stacked on the heaps and gold is recovered
according to the recovery rates and timing. Gold production will
continue to climb towards the Company's objective of 50,000 ounces of
gold per annum into 2010 as the waste to ore ratio is reduced in the
coming months which enables the mining of more
ore with the available fleet. We expect per ounce cash production costs
to also decline with the increase in ore production later this year and
into 2010 allowing the Company to generate more cash from operations. We
hope to be announcing the new resources at El Castillo in the coming
weeks, a result of the Phase 1 drill program. Once we've studied the
new resource additions we intend to plan a Phase 2 drill program as the
next step to bring this material into the mine plan."
Financial Results - Second Quarter 2009
During the quarter ended June 30, 2009, consolidated metal revenues
were $7,542,379 on the sale of 8,187 ounces of gold consisting of
revenues of $5,877,743 on 6,426 ounces of gold from the El Castillo
mine and $1,664,636 (100%-$3,329,272) on 1,761 ounces of gold
(100%-3,522) from the Company's 50% interest in the El Sastre mine. This compares to metal revenues of
$847,250 for the period April 1 to June 30, 2008 for 50% of the sales
from the El Sastre gold mine on the sale of
963 ounces of gold. The increase in revenues and gold sales during the
three month period ended June 30, 2009 as compared to the same prior
year period is a result of the recording of revenues from the El
Castillo mine and approximately an 80% increase in the ounces of gold
sold from the El Sastre gold mine.
Consolidated production costs at both the El Sastre
and El Castillo gold mines for the three month period ended June 30,
2009 were $4,112,613 as compared to $181,089 in the same prior year
period representing an overall cost of sales for the period of $502 per
ounce of gold sold compared to $188 per ounce of gold sold for the same
prior year period. Depreciation, depletion and amortization were
$745,079 for the three month period ended June 30, 2009 as compared to
$40,692 for the three month period ended June 30, 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 June
30, 2009 compared to the same prior year period , included: (1) an
increase in general and administrative costs to $1,146,954 as compared
to $893,660 in the prior year period; (2) a ($558,850) loss in foreign
exchange as compared to a loss of ($84,452) in the prior year period,
primarily a function of the appreciation of the Canadian dollar
relative to the U.S. dollar and the impact on the Company's Canadian
dollar denominated debt during the period; (3) interest expense of
($180,940) as compared to $Nil in the prior year period due to the
capitalization of the interest in the prior year period and (4)
($294,251) in income tax expense as compared to ($18,869) in the prior
year period and future tax expense of $140,000 as compared to a
recovery of $204,000 in the prior year period., primarily a function of
the inclusion of the result for the El Castillo mine in the current
year period and the increase in gold sales from the El Sastre mine.
Included in general and administrative expenses of $1,146,954 for the
three month period ended June 30, 2009 are: (1) legal, professional and
consulting fees and expenses of $261,839 as compared to $284,576 in the
prior year period with the current year period inclusive of onetime
professional and legal expenses associated with the Strategic
Alternative Review process and Annual General Meeting; (2) stock based
compensation of $155,272 as compared to $53,027 in the prior year
period; (3) investor relations expenses of $ 172,412 as compared to
$Nil in the prior year period related to the expanded investor
relations campaign during the period; (4) $182,000 in director fees and
expenses as compared to $Nil in the prior year period reflecting the change
in the corporate structure in mid 2008 and Strategic Alternative Review
process; (5) the inclusion of $57,332 in expenses associated with the
inclusion of the El Castillo operation as compared to $Nil in the prior
year period due to the pre-commercial status of the; and (6) the
recording of $Nil in general and administrative expenses for the
Company's 50% interest in the Rocas el Tambor mine compared to $172,000 in the prior year
period.
The Company reported earnings for the three month period ended June 30,
2009 of $318,378 or $0.00 per share compared to a loss of ($316,377) or
$0.00 per share for the three month period ended June 30, 2008.
Operating Performance - El Castillo Mine, Durango State, Mexico (100%
interest)
During the three month period ended June 30, 2009 mining rates at the
El Castillo gold mine averaged 620,700 tonnes per month, a 33% increase
from the fourth quarter of 2008, as the company continued to ramp-up
its mining operations. During the quarter a total of 1,862,200 tonnes
of material were mined from the open pit of which 775,100 tonnes of
ore, having an average grade of 0.47 grams per tonne gold was placed on
the leach pad. During the quarter, the Company placed an estimated
11,700 ounces of gold in ore on the leach pads of which the Company
estimates 7,000 ounces of gold are recoverable for a calculated
recovery rate of 60%. Gold production during the quarter was 6,421
ounces and gold sales were 6,426 ounces at an average realized price of
$915 per ounce of gold for gross proceeds of $5,877,743. Gold
production figures shown reflect the gold recovered in the gold
processing facilities while gold sales refer to the gold contained in
the final refined dore as of the date of the
final sale transaction.
Three Months Three Months Ended Ended June 30, 2009 June 30, 2008 (1) Operating Statistics (100%) (100%) Total tonnes mined 1,862,200 889,000 Tonnes waste 1,087,100 419,000 Tonnes ore-direct to leach pad 573,200 317,000 Tonnes crushed and placed 201,900 153,000 Tonnes ore placed on leach pad 775,100 470,000 Gold grade (grams/tonne) 0.47 0.52 Gold produced - commercial production (ounces) 6,421 4,692 Gold sales (ounces) 6,426 3,697 Average realized gold price per ounce (US$) $915 - Cost of sales per ounce sold (US$) $569 - Adjusted cost of sales per ounce sold (US$) $457 - (1) Represents the results for the operations prior to achieving commercial production status as of July 1, 2008.
During
the second quarter 2009, El Castillo production costs were $569 per
ounce of gold sold. The adjusted cost of production was $457 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 1.40
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. It is expected that in
the third quarter 2009 tonnage mined will average near 800,000 tonnes
per month and that the waste to ore ratio will average 1.40 to 1.50 as
waste is removed to facilitate higher production of ore at the expanded
800,000 tonnes per month production level. The average grade of ore
mined is expected to be slightly lower than that of the currently
reported quarter according the mine plan.
Operating Performance - El Sastre Mine,
Guatemala (50% interest)
During the three month period ended June 30, 2009, a total of 91,000 tonnes
of material were mined at the El Sastre gold
mine of which 66,000 tonnes was placed on the leach pad at an average
grade of 1.49 grams per tonne gold. Of this amount, 44,000 tonnes was
run of mine ore (not crushed) having an average grade of 1.60 grams per
tonne gold and a total of 22,000 tonnes was crushed ore having an
average grade of 1.26 grams per tonne gold. Gold production at the El Sastre mine during the quarter was 2,930 ounces of
gold of which 1,466 ounces of gold are attributable to Castle Gold's
50% interest. Gold sales for the quarter totalled 3,522 ounces of gold
of which 1,761 ounces of gold are attributable to Castle Gold's 50%
interest. Gold sales revenues recorded for the three month period ended
June 30, 2009 were $3,329,272 (50% - $ 1,664,636) for an average
realized price of $945 per ounce of gold. Any figures reported for gold
sales refer to the gold contained in the final refined dore as of the date of the final sale transaction. Due
to timing delays associated with final gold refining, compared to the
measured amount of gold in the loaded carbon, any gold produced that
has not been fully refined is recorded as inventory until such time as
a sale transaction has taken place.
Three Months Three Months Ended Ended June 30, 2009 June 30, 2008 Operating Statistics (50%) (50%) Total tonnes mined 45,500 96,500 Tonnes waste 22,500 64,500 Tonnes ore-direct to leach pad 22,000 26,000 Tonnes crushed and placed 11,000 6,000 Tonnes ore placed on leach pad 33,000 32,000 Gold grade (grams/tonne) 1.49 1.83 Gold produced (ounces) 1,466 658 Gold sales (ounces) 1,761 963 Average realized gold price per ounce (US$) $945 $879 Cost of sales per ounce sold (US$) $261 $188
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. Primary mining activities
at the El Sastre mine began to wind down late
in the second quarter of 2009 and are expected to cease in the third
quarter 2009. 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 leach pads will continue to
produce gold, although gold production rates will begin to decline as
new ore production ceases.
About Castle Gold
Castle Gold Corporation is a growth oriented gold producer with
projects focused in the Americas. 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.
TSX-V Trading Symbol: CSG Total Shares Outstanding: 75.5MM Fully Diluted: 83.0MM 52-Week Trading Range: C$0.15 - $0.80
The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this news release.
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