Crew Gold Corporation
TSX : CRU
OSLO STOCK EXCHANGE : CRU

Crew Gold Corporation

November 16, 2009 08:47 ET

Crew Gold Corporation: Financial Results for the Quarter and Nine Months Ended September 30, 2009

LONDON, UNITED KINGDOM--(Marketwire - Nov. 16, 2009) - Crew Gold Corporation (TSX:CRU) (OSLO:CRU) ("Crew" or "the Company")

HIGHLIGHTS

- Overview

-- As a result of reaching agreements for the sale of the assets of Nalunaq Gold Mine, the Nugget Pond Processing facility and the Maco property, the results of the continuing operations of the Company will reflect only LEFA and corporate overheads

-- Total gold sold in the quarter was 45,663 oz at an average realised price of $957/oz (Q3 2008 - 71,769 oz sold at an average realised price of $871/oz)

-- Total gold sold for the nine months ended September 30, 2009 was 182,596 oz at an average price of $921/oz (nine months ended September 30, 2008 - 198,166 oz at an average price of $898/oz)

- Financial Results

-- EBITDA for the quarter of negative $8.8 million (quarter ended September 30, 2008 - positive $2.7 million)

-- Net loss of $23.1 million for the quarter ended September 30, 2009 (quarter ended September 30, 2008 - net loss of $111.1 million mainly due to impairment charges of $131.3 million)

- LEFA

-- Quarterly gold production of 37,458 oz, due to reduced SAG mill capacity while repairs were undertaken (Q3 2008 - 46,078 oz)

-- SAG Mill 1 ("SAG1") was returned to service in September after the replacement of the trunnion bearings.

-- The transformer damaged in July by lightning at Lero crusher was reinstated in September.

-- Environmental bond agreed with the Government of Guinea with an unbudgeted $5 million being deposited in June and July, to be followed by further analysis to reconfirm the estimated amounts of reclamation costs and the annual review process

- Maco

-- Quarterly gold production of 6,669 oz, (Q3 2009 - 5,053 oz)

-- Agreement signed in September for the sale of the project in its entirety for cash consideration of $7m; $6m of proceeds received to date

- Nalunaq Gold Mine ("Nalunaq") and Nugget Pond Processing Facility ("Nugget Pond")

-- The final gold recovery of the ore processed from Nalunaq and the treatment of the residual material from the process plant is now completed

-- Toll milling at Nugget Pond continued in the quarter (commenced on June 29, 2009)

-- Sale of all Nalunaq gold mine's assets, infrastructure and inventories completed in October for total cash consideration of $1.5 million

-- Sale of Nugget Pond processing facility completed in October for consideration of CDN$3.5 million (US$3.3 million)

- Outlook

-- Both SAG mills at LEFA are expected to be operational during the majority of the last quarter (gold production in October was 18,000 ozs). Work is continuing on improving plant availabilities through purchase of insurance spares, progressive refurbishment and debottlenecking projects.

-- The recent events in Conakry, have impacted deliveries of fuel and this may continue over the next few months until political stability in the country returns. This may result in the rescheduling of mining to conserve fuel.

-- Further significant capital expenditures will be required to refurbish the LEFA mining fleet as it reaches its mid life and to improve process plant reliability and efficiencies through the acquisition of insurance spares and additional mobile equipment with the goal being improved throughput and operating costs per oz at LEFA

-- The Company did not repay its debt facility that came due on October 27, 2009. A proposal has been made by the Company's lenders to undertake a debt for equity restructuring of the Company's debt. This proposal is subject to the approval of bondholders and is detailed in the Liquidity and Capital Resources section of this MD&A.

-- Continued reduction of corporate costs

OVERVIEW

Crew is currently focused on financial restructuring and maximizing the performance of its gold project in Guinea.

Results

The Company adopted Canadian Institute of Chartered Accountants statement 3064 "Goodwill and Intangible Assets" during the year ended December 31, 2008. As a result prior period pre-operating revenues and costs for LEFA and Maco were recognised in the profit and loss statement and comparative unaudited profit and loss statement and balance sheet amounts have been restated where applicable. Following agreements reached for the sale of the assets of Nalunaq Gold Mine, the Nugget Pond Processing facility and the Maco property, the results and financial position of these operations have been reclassified as discontinued operations.

For the quarter ended September 30, 2009, EBITDA was negative $8.8 million (quarter ended September 30, 2008 - positive $2.7 million) with mineral sales of $34.2 million offset by direct mining and mine site administration costs of $36.2 million and general corporate expenditures of $3.3 million.

Loss from discontinued operations (Nalunaq/Nugget Pond and Maco) totalled $2.8 million in the quarter ended September 30, 2009 (quarter ended September 30, 2008 -loss of $65.6 million due mainly to impairment charges of $48.9 million for Nalunaq/Nugget Pond).

Net loss for the quarter ended September 30, 2009 was $23.1 million (quarter ended September 30, 2008 - net loss of $111.1 million) with EBITDA of negative $8.8 million, amortisation charges of $5.1 million, interest and finance costs on the bonds and other long term debt of $6.1 million, non-cash foreign exchange losses of $2.8 million and losses from discontinued operations of $2.8 million.

Total group gold produced in the quarter ended September 30, 2009 was 44,127 oz (quarter ended September 30, 2008 - 66,996 oz). Total group gold sold during the quarter ended September 30, 2009 was 45,663 oz (quarter ended September 30, 2008 - 71,769 oz).

For the nine months ended September 30, 2009, EBITDA was $7.8 million (nine months ended September 30, 2008 - negative $10.6 million) with mineral sales of $119.7 million, realized gains of $1.9 million on the repurchase of a portion of the Company's outstanding long-term bonds in the period, direct mining and mine site administration costs of $100.3 million and general corporate expenditures of $8.9 million.

Profit from discontinued operations (Nalunaq/Nugget Pond and Maco) totalled $10.6 million in the nine months ended September 30, 2009 (nine months ended September 30, 2008 -loss of $79.2 million due mainly to impairment charges of $48.9 million for Nalunaq/Nugget Pond).

Net loss for the nine months ended September 30, 2009 was $30.9 million (nine months ended September 30, 2008 - net loss of $185.5 million). This net loss arises from the EBITDA of $7.8 million and profit from discontinued operations of $10.6 million, offset by higher amortisation charges of $27.2 million (due mainly to the acceleration of the amortisation of some major components of the open pit mining equipment at LEFA), interest and finance costs on the bonds and other long term debt of $18.9 million and non-cash foreign exchange losses of $7.1 million.

Total group gold produced in the nine months ended September 30, 2009 was 168,295 oz (nine months ended September 30, 2008 - 198,288 oz). Total gold sold during the nine months ended September 30, 2009 was 182,596 oz (nine months ended September 30, 2008 - 198,166 oz).

For the full results, please see attached pdf file.

William LeClair, Chief Executive Officer

Safe Harbour Statement

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. The words "expect", "anticipate", "will", "believe" and "may", and other similar expressions, are often used to identify forward-looking statements. Forward-looking statements included herein relate, but are not limited to, statements regarding (1) the completion of the proposed Restructuring, (2) the expected impact of the Restructuring, (3) the results of the resource and reserve reviewing currently underway at the LEFA gold mine, and (4) expected shareholdings following completion of the Restructuring.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual events or results to be materially different from the events or results expressed or implied by such forward-looking statements. In evaluating these statements, prospective purchasers should specifically consider various factors that may cause actual events or results to be materially different from the events or results expressed or implied by such forward-looking statements. Risk factors that could impact the Company include, without limitation, risks relating to (1) receipt of all necessary approvals of the Restructuring, (2) the actions of bondholders in enforcing the existing terms of the bonds, (3) production levels at the LEFA gold mine. Although Crew has attempted to identify important factors that could cause actual events or results to differ from those described in forward-looking statements contained herein, there can be no assurance that the forward-looking statements will prove to be accurate as actual events or results could differ materially from those anticipated in such statements.

The material factors and assumptions used to develop forward-looking statements include, without limitation, (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 LEFA consistent with our current expectations, (3) foreign exchange rates among the currencies that 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 our 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 these forward-looking statements 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.

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