Castle Gold Corporation

Castle Gold Corporation

December 04, 2007 13:31 ET

Castle Gold Records Third Quarter Results; Q3 Cash Margin on Ounces Sold Rises to $522 Per Ounce

TORONTO, ONTARIO--(Marketwire - Dec. 4, 2007) - Castle Gold Corporation (formerly Aurogin Resources Ltd.) ("Castle Gold" or the "Company") (TSX VENTURE:CSG) today announced its unaudited financial results for the three and nine months ended September 30, 2007. The consolidated interim financial statements along with management's discussion and analysis are available on SEDAR at and on the Company's website at (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 nine month periods ended September 30, 2007 exclude the results of operations and cash flows of Morgain prior to August 29, 2007.

Third Quarter Highlights

- Cost of sales per ounce was $191 in the third quarter on sales of 3,251 ounces reducing year-to-date cost of sales per ounce to $202 on sales of 8,053 ounces.

- Revenue was $2,318,088 in the third quarter on an average realized price per ounce sold of $713, beating the market average by $33 per ounce.

- Cash margin per ounce for the third quarter (revenue per ounce - cash operating cost per ounce) grew to $522 (year-to-date $484 per ounce).

- Cash flow from operations in the third quarter was $847,754 resulting in a cash and cash equivalent balance at September 30, 2007 of $1,793,268.

- Net loss for the third quarter was $200,134 or $0.00 per share, while year-to-date net earnings remained positive. (Includes unrealized foreign exchange loss of $446,572)

- 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 third quarter results:

"We are very pleased to see the margin on our mining operations continuing to grow as we keep operating costs per ounce low and benefit from a soaring gold price. This has contributed to another strong quarter of cash flow from operations allowing Castle Gold to internally fund the final stages of development and start-up at its El Castillo gold mine."

"With the addition of a second operating mine we expect to be well positioned to take advantage of gold prices that have not been seen in over 30 years."

Summary of financial and operating results(a)

Three months ended Nine months ended
September 30, September 30,
2007 2006 2007 2006
Gold ounces - produced 3,116 - 8,568 -
Gold ounces - sold 3,251 - 8,053 -
Average realized gold
price ($/ounce) $713 - $686 -
Total cash costs per ounce
sold ($/ounce)(b) $191 - $202 -
Metal sales $ 2,318,088 $ - $ 5,521,564 $ -
Cost of sales(c) $ 621,534 $ - $ 1,623,934 $ -
Accretion, depreciation,
depletion and
amortization $ 266,810 $ - $ 682,630 $ -
Mine operating earnings $ 1,429,744 $ - $ 3,214,997 $ -
Net (loss) earnings for
the period $ (200,314)$ (113,914)$ 43,317 $ (246,306)
Earnings (loss) per share
(basic and diluted) $ (0.00)$ (0.00)$ 0.00 $ (0.00)
Cash flow provided by
(used in) operating
activities $ 847,754 $ 448 $ 1,779,499 $ (28,517)

(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
(d) This table does not include the sale of 400 ounces at $715 per ounce
from the El Castillo mine in Mexico currently in pre-production.
Proceeds of approximately $285,000 have been netted against costs

Revenue from metal sales decreased 3% in the third quarter from the second quarter as a higher realized gold price did not fully offset lower sales volume. The lower sales volume of 3,251 ounces in the quarter compared with 3,561 in the previous quarter, resulted from the timing of final gold refining. The average realized gold price increased to $713 in the third quarter from $668 in the second quarter. The average spot price in the third quarter of 2007 was $680 per ounce and $666 per ounce for the first nine months of 2007.

Third quarter 2007 production was 3,116 ounces compared to 2,444 in the second quarter of 2007. The increase over the second quarter corresponded with the resolution of issues which had delayed the return of used carbon from the United States to Guatemala.

Cost of sales was $191 per ounce for the third quarter of 2007 compared $180 per ounce for the second quarter. This caused year-to-date cost of sales per ounce to decline to $202. The continued reduction reflects higher gold recoveries associated with higher mining rates compared to start up levels.

The net loss for the third quarter of 2007 was $220,314 compared to net earnings of $349,400 in the second quarter of 2007. On the acquisition of Morgain Minerals Inc., the Company assumed long-term debt denominated in Canadian dollars of CDN$7,243,587. The rapid strengthening of the Canadian dollar between August 28, 2007, the date of acquisition and September 30, 2007, caused an unrealized foreign exchange loss on this debt of $446,572 which was recorded in the third quarter. If not for this item, the bottom line for the quarter would have been positive.

General and administrative expenditures during the third quarter of 2007 were $271,936 compared to $117,291 in the third 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 third quarter of 2007 were $186,345 relating primarily to exploration drilling performed on the El Arenal Zone in Guatemala compared to no exploration expenditures in the third quarter of 2006.

Cash flow from operating activities for the third quarter of 2007 was $847,754, compared to $448 in the third quarter of 2006. The increase reflects the continued strong quarterly operating results from the El Sastre mine in Guatemala.

Results of Mining Operations

El Sastre Main Zone gold mine (50% ownership)
Amounts presented in the table below are at 100%

Three months ended Six months ended
September 30, September 30,
2007 2006 2007 2006
Operating Statistics
Tonnes mined 226,725 - 619,856 -
Waste 149,812 - 424,426 -
Ore - direct to leach pad 57,554 - 160,758 -
Ore - direct to leach pad 19,359 - 34,672 -
Tonnes ore place on leach pad 76,913 - 195,430 -
Grade (grams/tonne) 2.74 - 2.96 -
Gold ounces - produced 3,116 - 8,568 -
Gold ounces - sold 3,251 - 8,053 -
Financial Data
Metal sales $ 2,318,088 $ - $ 5,521,561 $ -
Cost of sales 621,534 - 1,623,934 -
Depreciation, depletion and
amortization 245,878 - 652,456 -
Accretion 2,364 - 7,094 -
-------------- -------- ------------ --------
1,448,312 - 3,238,077 -
Exploration 163,083 - 251,980 -
Other income (2,786) - (4,937) -
-------------- -------- ------------ --------
Earnings before income taxes 1,288,015 - 2,991,034 -
Income taxes 115,904 - 276,078 -
-------------- -------- ------------ --------
Net segment earnings $ 1,172,111 $ - $ 2,714,956 -
-------------- -------- ------------ --------
-------------- ------------
Capital expenditures $ 225,744 $ - $ 443,057 $ -
-------------- -------- ------------ --------
-------------- ------------


Christopher Babcock, President and Chief Executive Officer


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.

Current issued and outstanding share capital: 73,260,782

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy of this news release.

Contact Information

  • Castle Gold Corporation
    Court Babcock, Investor Relations
    (778) 928-5006 or (604) 643-1727
    Toll Free: 1-866-MINE-CSG (866-646-3274)