Castle Gold Corporation

Castle Gold Corporation

June 20, 2008 07:30 ET

Castle Gold Files Q1-2008 Financial Statements Indicating First Quarter Profit

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 20, 2008) - Castle Gold Corporation ("Castle Gold" or the "Company") (TSX VENTURE:CSG) is pleased to announce that it has filed its consolidated interim financial statements and management discussion and analysis for the three month period ended March 31, 2008 and reported a first quarter profit of US$0.01 per share on net income of US$764,662 and revenues of US$1,610,271. Coincident with the filing of the financial statements the Company has applied to the British Columbia Securities Commission and the Ontario Securities Commission for the revocation of cease trade orders which were issued against the Company on June 10 and June 11, 2008. Upon revocation of the cease trade orders and the removal of the Company from the list of issuers in default maintained by each of the British Columbia, Alberta and Ontario Securities Commissions, the Company will proceed to make an application to the TSX Venture Exchange to reinstate the Company's shares for trading.

Trading in the Company's shares on the TSX Venture Exchange was halted on June 11, 2008 as a result of the issuance of the cease trade orders against the Company for failing to file first quarter 2008 financial statements within the time prescribed by National Instrument 51-102. The Company would like to re-iterate that the cease trade order in no way related to the financial condition of the Company. The Company apologizes for any concerns that this has caused our shareholders.

Operating and Financial Results

During the first quarter of 2008, the Company reported a quarterly profit of US$0.01 per share on net income of US$764,662. Total first quarter revenue was US$1,610,271 primarily from the sale of 1,787 ounces of gold (Castle Gold's 50% share) from the Company's 50% owned El Sastre Mine in Guatemala. The average gold price received on the sale of gold during the quarter was US$901 per ounce. This compares to a loss of US$105,769 on revenues of US$824,575 primarily from the sale of 620 ounces of gold during the first quarter of 2007. The average gold price received on the sale of gold during the first quarter of 2007 was US$665 per ounce. The Company's 100% owned Castillo mine in Mexico remains in the pre-production stage and as such all operating results were capitalized during the first quarter 2008.

El Sastre Mine, Guatemala

The El Sastre mine produced 1,280 ounces of gold (Castle Gold's 50% share) during the first quarter of 2008 compared to 1,504 ounces of gold during the first quarter 2007. The decline in gold production at the El Sastre Mine from the first quarter of 2007 to the first quarter of 2008 is a result of mining and leaching lower grade ore from the El Sastre open pit in late 2007 and early 2008. Construction of a second leach pad at the El Sastre Mine began in late 2007. The second pad was required as the first leach pad was nearing planned capacity. Over the course of 2008 the average grade of ore placed on the heap pad is expected to improve to the historical average of approximately 2.5 grams per tonne. In addition the return to planned mining rates of 75,000 tonnes per month should result in improved gold production late in 2008 and into 2009. It is anticipated that as ore grading closer to the historical average is placed on the leach pad over the course of 2008 that costs per ounce of gold sold will decline later in 2008 and into 2009.

El Castillo Mine, Mexico

At the Company's 100% owned El Castillo Mine in Durango State, Mexico, the Company sold 1,555 ounces of gold during the quarter. The Company initiated pre-production mining operations at the Castillo gold mine in July 2007 with limited leaching performed on ore removed during waste stripping by utilizing existing test leach facilities. Construction of the new leach pad was completed in September 2007 and loading of ore began in October 2007. Pre-production gold output for the three months ended March 31, 2008 was 2,632 ounces. Gold sales for the three months ended March 31, 2008 were 1,555 ounces at an average realized price of $927 per ounce for gross proceeds of $1,441,983. The resulting revenue has been offset against operating costs with the balance of operating costs being capitalized until the mine is in commercial production. Upon achieving commercial operating status, revenues and operating costs from gold sales at El Castillo mine will be recognized in the Company's statement of operations. During the first quarter of 2008, the El Castillo gold mine remained in pre-production status with mining advancing at planned mining rates of 291,000 tonnes per month for a total of 873,000 tonnes of material being mined from the open pit. Of this volume 153,000 tonnes per month was ore for a total of 459,000 tonnes of ore, having an average cyanide soluble grade of 0.42 g/t Au was placed on the leach pad and which contained an estimated 6,250 ounces of gold in ore. The Company estimates 3,632 ounces of gold is recoverable from this ore.

The Castillo mine will remain in pre-production status until gold production has achieved a consistent rate of certain operating parameters and costs, including producing on average 1,250 ounces of gold per month (15,000 ounces annualized), at which time the mine will be declared to be in commercial production. The Company is also in the process of having a revised NI 43-101 technical report on the El Castillo gold mine prepared which will update mineral resources and reserves. The updated NI 43-101 resource and reserve report is expected early in the third quarter of 2008.

As of March 31, 2008 the Company had US$658,687 in cash and working capital (current assets less current liabilities) of US$2,084,997.

About Castle Gold

Castle Gold Corporation is a growth focused gold producer currently expanding gold production within the America's. Castle Gold 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 project in Mexico and at its El Sastre, El Arenal, Bridge and Lupita Projects in Guatemala.


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.

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