RNC Gold Inc.

May 13, 2005 09:19 ET

RNC Gold Announces First Quarter 2005 Results

TORONTO, ONTARIO--(CCNMatthews - May 13, 2005) -

Not for release in the United States

RNC Gold Inc. (TSX:RNC) today announced its first quarter financial results and operational highlights. The interim financial statements can be viewed at our website at http://www.rncgold.com and have been filed on SEDAR (www.sedar.com). All amounts are expressed in USD unless otherwise noted.

During the first quarter, RNC's management undertook a number of activities designed to improve the Company's financial stability, increase production, move development of the Cerro Quema gold project in Panama forward and kick off aggressive exploration programs at its Nicaraguan properties. Highlights for the first quarter of 2005 included:

- Completion of a private placement financing for gross proceeds of CAN$8,952,000;

- Improvement in the Company's working capital position from a deficit of $4,822,185 at December 31, 2004 to a working capital surplus of $896,318 at March 31, 2005;

- Reduction of the outstanding ounces under option contract from 21,343 at December 31, 2004 to 6,128 at March 31, 2005 and the subsequent complete elimination of the option contracts in early May;

- Sale of 14,753 ounces of gold;

- Purchase of capital equipment for Cerro Quema development project

Financial Results

For the three months ended March 31, 2005, RNC reported a loss of $1,810,007 or ($0.06) per share, as compared to a loss (before non-controlling interest) of $692,914 or ($0.04) for the comparable period in 2004. The main factor in the increased loss was a reduction in production and subsequent gold sales. RNC had revenue of $6.3 million during the first quarter of 2005 compared to $7.8 million a year earlier.

Consolidated Financial Results Summary
(All amounts are in USD, 000's unless otherwise stated)

Q1 2005 Q1 2004

Gold sales (ounces) 14,753 19,297

Gold sales $6,302 $7,816

Average net realized gold price per ounce $381 $367

Cash operating cost per ounce sold(a) $399 $272

Net operating margin (deficit) ($693) $888

Loss before non-controlling interest $1,810 $693
Loss $1,810 $768
Loss per share - basic and diluted ($0.06) ($0.04)

Weighted average common shares
outstanding 32,186,651 17,733,015
Diluted common shares - end of period 50,790,560 28,135,339

(a) Calculated in accordance with the Gold Institute Standard to
include all direct mining costs, refining and transportation
costs and by-product credits.

Production Summary

As previously announced by the Company, RNC's production declined in the first quarter of 2005 versus the same period in 2004. Reduced working capital was the principal factor affecting production. To address the need to supplement working capital, management planned a private placement financing for early 2005 to provide funds for exploration, the development of Cerro Quema, and to cover the Company's ongoing cash requirements until the option contracts requiring RNC to sell a portion of La Libertad's gold production at $340 per ounce were settled.

The planned financing was completed March 22, 2005. Exploration activities at Bonanza, as well as development activities in Panama were delayed. In addition, limited cash was available at the mine sites for investment in inventory parts and supplies, which particularly impacted La Libertad. Mobile equipment availability could not be improved in the short term.

During the first quarter, La Libertad produced 8,269 ounces of gold, a 38% decrease from production in the comparable period of 2004. With funds now available as a result of the financing, mine management expects that La Libertad production will ramp up to a rate consistent with its designed capacity of approximately 70,000 ounces of gold per year.

During the most recent quarter, Bonanza produced 6,501 ounces as compared to 7,000 ounces in the comparable period of 2004, primarily the result of mining lower ore grades. Grades in April 2005 have increased significantly, and mine management predicts that production for the year will continue to be approximately 30,000 ounces.

Cerro Quema Development

In the first quarter of 2005, RNC invested $256,495 in the Cerro Quema mine development project in Panama. RNC purchased an ADR plant, a laboratory complex, an agglomerator and conveying equipment as well as some parts and supplies inventory. This equipment and material originates from an existing site in Honduras where mining activity was recently suspended. Management believes the purchase of existing equipment represents a significant cost savings to the alternative of buying new. RNC's team disassembled the buildings and equipment during the first quarter, and shipment to Panama is in process. Construction of leach pads and other "earthwork" will begin during the next dry season in Panama (typically November/December); the project is slated to begin production during the third quarter of 2006. Upon the start of production, RNC will increase its ownership in the project to 100% at no additional cost.

Exploration Summary

RNC has made a significant commitment to exploration in 2005 at its Nicaraguan properties. Each of RNC's producing and development assets - the 205,000-hectare Bonanza property, the 18,300-hectare La Libertad property and the 14,900-hectare Cerro Quema property - has significant blue sky exploration potential in addition to current production.

In anticipation of the completion of the first quarter financing and subsequent availability of exploration funds, the Company sourced drilling equipment to be mobilized to Bonanza and La Libertad.

Subsequent to quarter's end, RNC announced that it began a reverse circulation drill program on the recently identified bulk tonnage gold target at the Company's Bonanza property in northeastern Nicaragua. The Phase I drilling program, which is expected to total approximately 7,000 meters follows an earlier trenching program that revealed a large area of widespread mineralization that remains open along strike.

At La Libertad, RNC expects to drill around the existing mine site to identify reserves to replace production and, later in the year, to explore the newly acquired Santo Domingo concessions.

About RNC Gold

RNC Gold Inc. is a gold mining company focused on projects in the Caribbean basin. From its current production base of 100,000 ounces of gold, RNC is positioned for growth through operational efficiencies, exploration potential on property around its present mines, through construction of new mines and the acquisition of new projects. The Company's main assets include the La Libertad and Bonanza mines in Nicaragua, the Cerro Quema development project in Panama and the Picachos exploration property in Mexico as well as the option to acquire 25% of the San Andres mine in Honduras. The Company has 40,243,451 common shares outstanding and on a fully diluted basis there are 63,522,736 securities outstanding.

Certain statements included herein, include those that express management's expectations or estimates of future performance, constitute "forward looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. Forward looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic, regulatory, competitive and geological uncertainties and contingencies. Such forward-looking statements involve known and unknown risks, uncertainties and other risk factors that may cause the actual financial results, performance, or achievements of RNC Gold to be materially different from estimated future results, performance, or achievements expressed or implied by those forward looking statements. These are discussed in greater detail in RNC Gold's Annual Information Form and other reports filed with Canadian provincial securities commissions at http://www.sedar.com. RNC Gold expressly disclaims any intention or obligation to update or revise any forward- looking statements whether as a result of new information, events or otherwise.

Contact Information

  • RNC Gold Inc.
    Randy Martin
    President and CEO
    416 365-9777
    RNC Gold Inc.
    T.W. Lough
    Vice President Finance
    416 365-9777
    The Equicom Group
    Martti Kangas
    416-815-0700 ext.243