Desert Sun Mining Corp.
TSX : DSM
AMEX : DEZ

Desert Sun Mining Corp.

November 10, 2005 05:06 ET

Desert Sun Third Quarter 2005 Financial Results-Production and Costs on Target

TORONTO, ONTARIO--(CCNMatthews - Nov. 10, 2005) - DESERT SUN MINING CORP. (TSX:DSM)(AMEX:DEZ) reports revenue for the third quarter ended September 30, 2005 of CAD$9.0 million, generated from the sale of 16,400 ounces of gold at an average selling price of US$442 per ounce. All gold production is from the Jacobina Mine located in the state of Bahia in northeastern Brazil, situated at the south end of the 155-km long Bahia Gold Belt, which is controlled 100% by Desert Sun. Third quarter 2005 financial results include operating earnings for the first three months of commercial production at the Jacobina Mine.

Q3 Highlights

- Ore mined of 340,913 tonnes

- Ore milled of 300,505 tonnes

- Gold production of 18,683 ounces at an average cash cost of US$292 per ounce

- Gold sales of 16,400 ounces at a realized price of US$442 per ounce

- Revenues from gold sales of CAD$ 9.0 million

- Mine operating earnings of CAD$1.2 million

- Cash flow from operating activities of CAD$566,000

"The third quarter of 2005 represents a significant milestone for Desert Sun Mining, with positive earnings and cash flow from operations in our first quarter of commercial production," commented Bruce Humphrey, President and CEO. "We continue to be on track to our full production rate of 100,000 ounces per year during the upcoming fourth quarter."

The Jacobina Mine produced operating earnings for the three months of CAD$1.2 million, before general and administration costs and financial revenue and expenses. Total cash operating costs in the quarter were US$292 per ounce, including US$9 for selling, transport and refining and US$4 for royalties payable to the Brazilian government (equal to 1% net smelter revenue). In the three months ended September 30 2005, the mill at Jacobina processed 300,505 tonnes with an average grade of 2.03g Au/t, producing 18,683 ounces of gold. The average recovery rate at the mill was 95.4%.

Desert Sun declared commercial production at the Jacobina Gold Mine effective July 1, 2005. The Jacobina Mine produced at 75% of operating capacity during the third quarter as part of the planned ramp up to full production.

Total production for 2005 is forecast at 55,000 ounces, including production of 11,935 ounces in the pre-production phase. Average head grade at full production is projected to be 2.1g Au/t with an average recovery rate expected at the plant of 96.5%. The Company anticipates that total operating costs should decrease by approximately US$30 to US$35 per ounce as production levels ramp up to full capacity, and by a further approximately US$30 to US$35 per ounce during 2006 when approximately 70% of operating costs will be protected from the current strength of the Brazilian Real through the Company's currency protection program.

On a consolidated basis, Desert Sun recorded a net loss from operations of CAD$503,000 in the three months ended September 30, 2005, or 1 cent per share, compared with a net loss of CAD$4.6 million, or 6 cents per share, in the three months ended June 30, 2005 and net loss of CAD$1.7 million, or 2 cents per share, in the three months ended March 31, 2005. General and administration costs for the three and nine months ended September 30, 2005 were CAD$859,000 and CAD$3.65 million respectively, compared with CAD$623,000 and CAD$2.39 million in the comparable 2004 periods.

Capital expenditures in the quarter ended September 30, 2005 were CAD$7.7 million, including CAD$2.9 million on property, plant and equipment (primarily machinery and equipment), CAD$1.6 million on sustaining capital development at the Jacobina Mine, CAD$0.9 million at Morro do Vento, and CAD$2.3 million on exploration primarily at Canavieiras, Morro do Vento Extension and Pindobacu.

At September 30, 2005 the Company had CAD$11.3 million in cash, while cash generated by operating activities amounted to CAD$566,000 in the three months ended September 30, 2005, compared to an outflow of CAD$7.1 million in the six months ended June 30, 2005. Negotiations are progressing well on alternative financing strategies, including Brazilian and international project finance facilities, to fund development of Morro do Vento (see Desert Sun Mining press release dated August 11, 2005). Total assets at September 30, 2005 were CAD$99.6 million and the Company had 87.6 million issued and outstanding common shares, including 2 million common shares from the exercise of share purchase warrants in the period.

Desert Sun's third quarter 2005 Financial Statements and Management's Discussion & Analysis can be found on www.SEDAR.com.

Desert Sun will hold a conference call at 10:00 AM EST on Thursday November 10, 2005 to discuss third quarter 2005 financial results and update investors on production activities, mine development programs and exploration results at the Jacobina Mine and on the Bahia Gold Belt in Brazil. Bruce Humphrey, President and Chief Executive Officer; Stephen Woodhead, Chief Financial Officer, Peter Tagliamonte, Chief Operating Officer and Dr. Bill Pearson, Vice President, Exploration will participate in this call. Desert Sun's third quarter financial results press release will be issued at approximately 5:00 AM EST on November 10, 2005.

Conference Call Details



Date: Thursday November 10, 2005
Time: 10:00 AM EDT
Local Callers: 416-849-2698
North American Callers: 1-866-400-2270
International Callers: 1-416-849-2698


An archive recording of this call will be available following the completion of the call on the Desert Sun website, www.desertsunmining.com.

Desert Sun Mining is a Canadian gold mining company listed on the Toronto Stock Exchange and the American Stock Exchange with 100% ownership of the Jacobina Mine and the 155 km long Bahia Gold Belt in the state of Bahia, in northeastern Brazil. Proven and Probable mineral reserves in the Jacobina Mine area are now 17,620,000 tonnes at 2.11 g Au/t containing 1,200,000 ounces of gold. As a result of Desert Sun's exploration programs to date, Measured and Indicated resources total 24,800,000 tonnes at 2.53 g Au/t containing 2,050,000 ounces of gold, and Inferred Resources total 22,200,000 tonnes at 2.61 g Au/t containing 1,900,000 ounces of gold. The mineral reserves are included within the Measured and Indicated mineral resources. For additional information, contact Naomi Nemeth, Vice President Investor Relations at 416-861-5901 (info@desertsunmining.com) or visit Desert Sun's website at www.desertsunmining.com.

Statements in this release that are not historical facts are "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Readers are cautioned that any such statements are not guarantees of future performance and that actual developments or results may vary materially from those in these "forward-looking statements". This news release also uses the terms "measured resources", 'indicated resources' and 'inferred resources'. Desert Sun Mining Corp. advises investors that although these terms are recognized and required by Canadian regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission does not recognize them. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. In addition, 'inferred resources' have a great amount of uncertainty as to their existence, and economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies, or economic studies except for Preliminary Assessment as defined under 43-101. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

Contact Information

  • Desert Sun Mining Corp.
    Naomi Nemeth
    Vice President, Investor Relations
    416-861-5901 or 1-866-477-0077
    416-861-8165 (FAX)
    www.desertsunmining.com