|
Suite
1101, 55 University Avenue Toronto, Ontario
Canada M5J
2H7
Telephone:
(416) 214-4809
Facsimile:
(416) 214-4877
www.castlegoldcorp.com |
News Release 2007-02
CASTLE
GOLD RECORDS STRONG SECOND QUARTER RESULTS;
CASH COSTS FALL TO $180 PER
OUNCE
TORONTO, ON, September 7, 2007 – Castle Gold
Corporation (formerly Aurogin Resources
Ltd.) ("Castle Gold" or the “Company”) (TSX-V: CSG) today announced its unaudited
financial results for the three and six months ended June 30, 2007. The consolidated interim financial
statements along with management’s discussion and analysis are available
on SEDAR at www.sedar.com and on the Company’s website at
www.aurogin.com. (All currency references are to U.S. dollars, unless otherwise
noted.)
Castle Gold was formed on August 28, 2007
following the amalgamation of Aurogin Resources Ltd. (“Aurogin”) and Morgain
Minerals Inc. (“Morgain”). Aurogin
was deemed to be the acquirer for accounting purposes. As a result, these interim results for
the three and six month periods ended June 30, 2007 reflect the results of
operations and cash flows of Aurogin only and its financial position as at that
date.
Second Quarter Highlights
- Net earnings for the second quarter were $349,400 or $0.01
per share which also resulted in year to date net earnings.
- Cost of sales per ounce fell to $180 in the second quarter on
sales of 3,561 ounces compared with cost of sales per ounce of $290 in
the first quarter on sales of 1,241 ounces.
- Revenue was $2,378,898 in the second quarter on an average
realized price per ounce sold of $668.
- Cash flow from operations in the second quarter was $1,124,054 resulting in a cash and cash equivalent balance at June 30,
2007 of $1,215,315.
- Beginning in May 2007, the El Sastre gold mine reached and
exceeded the planned mining rate of 25,000 tonnes of ore per month
placed on the leach pad.
- On August 28, 2007,
Aurogin and Morgain completed the amalgamation of the two companies to
form Castle Gold Corporation.
|
|
CEO commentary
Christopher Babcock, President and CEO of Castle
Gold, made the following comments in relation to the 2007 second quarter results:
“We are extremely pleased with the second quarter
results posted by the Aurogin operations.
In only the second quarter of full operation, cost of sales at the El
Sastre gold mine in Guatemala, have fallen to $180 per ounce, contributing to
significant operating cash flow and allowing Castle Gold to post bottom line
earnings.”
“These results confirm our belief that El Sastre
would be a low cost producing gold mine delivering superior returns in a strong
gold market. Also of significance
was the fact that the mine achieved and exceeded its planned mining rate during
the quarter. This speaks very
positively towards the Company’s operating
ability.”
“These strong results give us a tremendous
starting point upon which to build a significant gold producer. In the very near future, with the
commencement of commercial production at the Company’s El Castillo gold mine in
Mexico, we will be even better positioned to take advantage of a gold market
that appears set to test the $700 mark
again.”
“It is an extremely exciting time for both
management and our shareholders to be involved with Castle
Gold.”
Summary of financial and operating results
(a)
|
Three months
ended
June
30, |
Six months
ended
June
30, |
|
2007 |
2006 |
2007 |
2006 |
Gold ounces –
produced |
2,444 |
- |
5,452 |
- |
Gold ounces –
sold |
3,561 |
- |
4,802 |
- |
Average realized gold
price ($/ounce) |
$668 |
- |
$667 |
- |
Total cash costs per
ounce sold ($/ounce)
(b) |
$180 |
- |
$209 |
- |
Metal
sales |
$
2,378,898 |
$
- |
$
3,203,473 |
$
- |
Cost
of sales (c) |
$ 642,100 |
$
- |
$
1,002,400 |
$
- |
Accretion,
depreciation, depletion and amortization |
$ 278,297 |
$
- |
$ 415,820 |
$
- |
Mine operating
earnings |
$
1,458,501 |
$
- |
$
1,785,253 |
$
- |
Net earnings (loss)
for the period |
$ 349,400 |
$
(39,839) |
$ 243,631 |
$
(132,553) |
Earnings (loss) per
share (basic and diluted) |
$
0.01 |
$
(0.00) |
$
0.00 |
$
(0.00) |
Cash flow provided by
(used in) operating activities |
$
1,124,054 |
$ 47,607 |
$ 931,745 |
$
(28,966) |
(a) As a result of
having to fully consolidate the results from the Company’s 50% owned El Sastre
gold mine, the amounts above represent 100% of the gold ounces produced and
sold, metal sales, cost of sales and accretion, depreciation, depletion and
amortization.
(b) Cost of sales
per ounce is calculated by dividing cost of sales as per the consolidated
financial statements with gold ounces sold.
(c) Cost of sales
excludes, accretion, depreciation, depletion and
amortization
Revenue from metal sales increased 188% in the
second quarter over the first quarter from $824,575 to $2,378,898 primarily as a
result of a 187% increase in the number of ounces sold and a slight increase in
the average realized gold price from $665 to $668. The average spot price in the second
quarter of 2007 was $667 per ounce and $658 per ounce for the first six months
of 2007.
Second quarter 2007 production was 2,444 ounces
compared to 3,008 in the first quarter of 2007. While mining rates increased to planned
levels, unforeseen delays in returning stripped carbon to Guatemala from the
United States simply pushed the timing of certain gold recoveries into the third
quarter of 2007.
Cost of sales was $180 per ounce for the second
quarter of 2007, which represents a 38% decrease from the first quarter of
2007. The reduction reflected
higher gold recoveries associated with higher mining rates compared to start up
levels.
Net earnings for the second quarter of 2007 were
$349,400 compared to a net loss of $39,839 for the corresponding period in
2006. Mine operating earnings from
El Sastre more than offset exploration and general and administrative
expenditures.
General and administrative expenditures during
the second quarter of 2007 were $237,085 compared to $61,832 in the second
quarter of 2006. The smaller impact
on earnings in 2006 resulted from the fact that certain general and
administrative costs were capitalized during the construction phase of the El
Sastre mine.
Exploration expenditures during the second
quarter of 2007 were $99,977 relating primarily to exploration drilling
performed at El Arenal and elsewhere on the El Sastre exploitation licence,
compared to a recovery of $15,720 in the second quarter of 2006.
Cash flow from operating activities for the
second quarter of 2007 was $1,124,054, compared to $47,607 in the second quarter
of 2006. The increase reflects the
strong quarterly results from the El Sastre
mine.
Results of Mining
Operations
El Sastre Main Zone gold mine
(50% ownership)
Amounts presented in the
table below are at 100%
|
Three months ended June 30, |
Six
months ended June 30, |
2007 |
2006 |
2007 |
2006 |
Operating
Statistics |
|
|
|
|
Tonnes
mined
Waste
Ore
Ore crushed and
placed
Tonnes ore place on
leach pad
Grade
(grams/tonne)
Gold ounces –
produced
Gold ounces –
sold |
219,687
150,720
68,967
15,313
84,280
2.85
2,444
3,561 |
-
-
-
-
-
-
-
- |
380,283
274,614
105,669
15,313
120,982
3.11
5,452
4,802 |
-
-
-
-
-
-
-
- |
Financial
Data |
|
|
|
|
Metal
sales
Cost of sales
Depreciation,
depletion and amortization
Accretion
Exploration
Other
expense
Earnings before
income taxes
Income
taxes
Net segment
earnings
Capital expenditures |
$
2,378,898
642,100
273,556
2,365
1,460,877
82,864
(2,603)
1,380,616
118,945
$
1,261,671
$
66,674 |
$ -
-
-
-___
-
-
-___
-
-_ __
$ -__ _
$ -__ _ |
$
3,203,473
1,002,400
406,578
4,730
1,789,765
88,897
(2,151)
1,703,019
160,174
$
1,542,845
$
217,313 |
$
-
-
-
-___
-
-
-___
-
-_ __
$ -__
_
$ -___ |
For further information about
Castle Gold contact:
Court Babcock, Investor
Relations (604) 643-1727
Coal Harbor
Communications Inc. (604) 662-4505 or Toll-free
1-877-642-6200
Current issued and
outstanding share capital: 70,195,647 |
CAUTION REGARDING
FORWARD LOOKING STATEMENTS:
The information referred to referred
to above contains "forward-looking
statements" within the meaning of the United States Private Securities
Litigation Reform Act of 1995 and applicable Canadian securities legislation.
Forward-looking statements include, but are not limited to, statements with
respect to the future price of metals, timing of exploration activities, mine
life, economic viability and estimated internal rate of return, estimation of
mineral resources, the results of drilling, estimated future capital and operating costs, future stripping ratios, projected mineral recovery rates and
plans for developing, the projects.
Generally, these forward-looking statements can be identified by the use
of forward-looking terminology such as "plans", "expects" or "does not expect",
"is expected", "budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates" or "does not anticipate", or "believes", or variations of such
words and phrases or state that certain actions, events or results "may", "can",
"could", "would", "might" or "will be taken", "occur" or "be
achieved". Forward-looking statements are subject to known and
unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the companies to be
materially different from those expressed or implied by such forward-looking
statements, including but not limited to: risks related to the exploration and
potential development of the projects, risks related to international
operations, the actual results of current exploration activities, conclusions of
economic evaluations, changes in project parameters as plans continue to be
refined, future prices of metals.
Although the companies have attempted to identify important factors that
could cause actual results to differ materially from those contained in
forward-looking statements, 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. The companies do not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with
applicable securities laws.
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy of this news release.