LONDON, United Kingdom: Crew Gold Corporation ("Crew" or "the Company") (TSX, OSE: CRU)  today announces  an update with respect to its third quarter production, cash position, reserve and resource reporting, revised production guidance for LEFA and the proposed capital and debt restructuring.

 

 

Gold produced at LEFA for the quarter ended September 30, 2009 was 39,000 ounces ("oz"). Production was impacted by previously announced downtime relating to SAG Mill 1 ("SAG1") and the Lero crusher. In addition, there were disruptions relating to availability of the mining fleet due to mechanical breakdowns. Unrestricted cash and cash equivalents at the end of September amounted to $8.4 million however there were significant amounts of overdue trade creditors' payments outstanding.

 

 

The NI43-101 reserve and resource reports are being reviewed by the Company's independent consultants and are expected to be released in November. Notwithstanding that the independent consultants have not yet finished their work, it is anticipated that the previously published proven and probable reserves for the LEFA concession will be reduced, after taking into account reserve depletion since the previous publication, by approximately 10%. The principal reason for the reduction in reserves is a decrease in the overall reserve grade due to;

 

          a significant reduction in the estimated grade of ore to be mined in the Fayalala pit. Following the poor reconciliation in 2008 between mined ore and ore predicted by the geological model, in the extremely complicated mineralization at Fayalala, the block model has been redone and the result has been a reduction in grade;

 

         mining of the higher available grades in the Lero and Karta pits during the previous 24 months of operation to meet cash flow concerns of the LEFA. The previous models predicted that this higher grade ore would be processed over the life of the mine;

 

         a reduction, based on independent geotechnical reviews, of some of the pit slope angles used in previous modelling leading to a reduction in economically mineable higher grade ore at the bottom of those pits.

 

It is also anticipated that the Company's previously published measured, indicated and inferred resources will remain substantially unchanged after taking into account resource depletion. The Mineral Reserves are being estimated using an $800 per oz gold price in accordance with the requirements of NI43-101 while the mineral resources are being estimated using a $1,000 per oz gold price. The Company is using Whittle pit shell models in both cases which the Company believes is becoming the industry norm and is an improvement in procedure  from the company's previous reserve and resource reporting methodologies.

 

Once the independent consultants have completed their work, the detailed reports will be announced and filed at www.SEDAR.com and www.newsweb.no.

 

The Company anticipates that production for the final quarter of the 2009 year will be between 50,000 and 65,000 oz. However this estimate is predicated on continuous operations without equipment breakdowns, delays in the delivery of supplies or stoppages caused by social issues.. At present, and in line with the return of SAG1, the plant is running reliably at a rate of approximately 15,000 tonnes per day ("tpd"). Achieving a reliable rate of production is subject to a number of factors including availability of the Company's mining fleet, insurance spares and consumables. Throughput is also impacted by the blend of fresh ore and saprolite.

 

The fuel supply to the site has been disrupted as a result of the recent events occurring in Conakry. The Company's principal fuel supplier declared a force majeure under the contract of supply but fuel supply recommenced on October 8, 2009. The impact of the delay in fuel deliveries at the beginning of October was that mining activities were curtailed and ore fed to the mill was taken from the stock piles which contain lower grades than the ore that was planned to be mined and processed.

 

The Company believes a reliable production rate of 18,000 tpd is achievable provided significant capital expenditures are undertaken over the next 3 years, principally in connection with the Company's mining fleet and the acquisition of insurance spares to reduce the risk of long term shutdowns when there are equipment failures. Once the Company's Life of Mine Plan and independent reserve and resource reports are completed, the Company expects to provide revised long-term production guidance.

 

 

The Company has, at this point, been unable to reach agreement with the bondholders holding bonds due for repayment in October 2009 in connection with its previously announced capital and debt restructuring. If the Company fails to reach an agreement with the aforementioned bondholders, it is uncertain whether it will make the $23.2 million (NOK 131 million) principal payment due to the bondholders in late October 2009 as it will be required to conserve cash for operating and necessary capital expenditure purposes. The Company continues to work with its convertible bondholders (due for repayment in November 2010) and secured bondholders (due for repayment in March 2011) with respect to a restructuring of all bonds to be completed under Canadian law or pursuant to an arrangement with the bondholders.

 

Certain statements contained herein that are not statements of historical fact, may constitute forward-looking statements and are made pursuant to applicable and relevant national legislation (including the Safe-Harbour provisions of the United States Private Securities Litigation Reform Act of 1995) in countries where Crew is conducting business and/or investor relations. Forward-looking statements, include, but are not limited to those with respect to (1) production guidance for LEFA, (2) the proposed capital and debt restructuring, (3) the expected release of NI 43-101 reserve and resource reports and the contents of those reports, (4) the anticipated update of the Company's life of mine plan, (5) the expected actions of the Company's principal fuel supplier, and (6) the Company's anticipated non-payment of the $23.2 million principal payment due to bondholders in October 2009. Often, but not always, forward-looking statements can be identified by the use of words such as plans, expects, targets, budget, estimates, forecasts, intends, anticipates, believes, or equivalents or variation, including negative variation, of such words and phrases, or state that certain actions, events or results, may, could, would, might or will be taken, occur or be achieved.

 

Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements. Such risks and uncertainties include, among others, (1) the actual production results at LEFA being less than anticipated, (2) the actual results of the independent consultant's review of the reserves and resources at LEFA, (3) failure of plant, equipment or processes to operate as anticipated, (4) accidents, labour disputes and other risks of the mining industry, and (6) the Company's operating and necessary capital expenditures being higher or lower than expected.

 

The material factors and assumptions used to develop forward-looking statements which may be incorrect, include, but are not limited to, (1) there being no significant disruptions affecting operations, whether due to labour disruptions, supply disruptions, damage to equipment or otherwise, (2) continued development, operation and production at the Company's properties consistent with current expectations, (3) foreign exchange rates among the currencies the Crew does business in being approximately consistent with current levels, (4) certain price assumptions for gold, (5) prices for electricity, fuel oil and other key supplies remaining consistent with current levels, (6) production forecasts meeting expectations, and (7) materials and labour costs increasing on a basis consistent with Crew's expectations. 

 

Except as may be required by applicable law or stock exchange regulation, the Company undertakes no obligation to update publicly or release any revisions to the forward-looking statements contained herein to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events. Accordingly, readers should not place undue reliance on forward-looking statements.