Garson Gold Corp.

Garson Gold Corp.

November 27, 2009 18:27 ET

Garson Gold Announces Filing of Audited Financial Statements for the Year Ended July 31, 2009

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 27, 2009) - Garson Gold Corp. ("Garson" or "the Company") (TSX VENTURE:GG) announced today the filing of its financial statements for the year ended July 31, 2009. The complete financial statements and accompanying Management Discussion can be viewed online at or the Company's website


During the fiscal year ended July 31, 2009 the Company raised a total of $1,896,262 from the issue of common shares, net of financing fees, and has spent $1,885,534 on mineral properties and deferred exploration costs. These have been incurred to expand the potential of the New Britannia Mine property and include drilling, assaying, geological consulting and geological staff at the site.

The Company has focused on resource evaluation on the NBM Property, which has included the exploration of a prospective north-northwest trending corridor that encompasses the New Britannia Main Mine, the Boundary Zone, and the No. 3 Zone and to date has completed approximately 45,000 metres of diamond drilling within these zones. The drilling results to date confirm the potential for new discoveries and resource expansion within this prospective corridor and elsewhere on the 4,800 hectare property.

During the year, assays returned encouraging near surface results from the Boundary Zone, with the intersection of multiple mineralized lenses including a 48.77 metre (m) intersection with an average grade of 2.43 grams per tonne (g/t) gold and a 38.5m intersection of 2.18 g/t gold. The results of these holes and previously announced drill results continue to build confidence in the near-surface open-pit potential at Boundary Zone.

The NBM property currently hosts an estimated Measured and Indicated resource of 449,000 ounces (2,605,000 tonnes @ 5.37 g/t), and 317,000 Inferred ounces (1,886,000 tonnes @ 5.22 g/t) (News Release dated June 9, 2008).

Also during the fiscal year, the Company completed a Preliminary Assessment ("PA") of the No. 3 Zone at the New Britannia Mine (News Release dated April 28, 2009). The PA was completed by Micon International Limited ("Micon") in compliance with National Instrument ("NI") 43-101.

The study assessed the economics of mining at No.3 Zone and re-activation of the 2,150 tonne per day New Britannia mill which is currently on care and maintenance. The No.3 Zone is located 1.5 kilometres from the New Britannia mine and mill and remains open for expansion down plunge. The study was based only on the mining and processing of approximately 149,000 oz gold from 830,000 tons (753,000 tonnes) at an average grade 0.179 ounces per ton (6.14 grams per tonne) from the No.3 Zone.

Highlights of the study and results of the base case economic analysis are as follows:

No. 3 Zone Resource:

  • Indicated resource of 434,000 tons (394,000 tonnes) at an average grade of 0.20 ounces per ton ("opt") (6.72 grams per tonne); approximately 85,000 ounces
  • Inferred resource of 634,000 tons (575,000 tonnes) at an average grade of 0.18 opt (6.31 grams per tonne); approximately 117,000 ounces

Mining and Processing:

  • Mining plan for approximately 830,000 tons (753,000 tonnes) at an average grade 0.179 opt (6.14 grams per tonne) inclusive of mining dilution and losses (approximately 149,000 ounces)
  • A mining rate of 1,000 tons per day (750 tons mill feed and 250 tons waste) for a mine life of approximately 3 years and a total project life of approximately 3.8 years
  • Milling rate of 1,300 tons per day on a 4 day per week basis at an estimated recovery of 92% (approximately 137,400 ounces)

Economic Analysis:

  • An after tax internal rate of return (IRR) of 18.9% based on US$ 725 per ounce gold and an exchange rate of C$1.20 per US$1.00
  • Cumulative undiscounted cash flow of C$16.64 M and an NPV of C$7.73M at an 8% discount rate and an NPV of C$10.66M at a 5% discount rate
  • Pre-production capital expenditures of C$22.33M and sustaining capital expenditures of C$13.95M (undiscounted and includes a C$4.15M contingency)
  • Average cash operating cost of US$362.38 per ounce or C$72.00 per ton milled

Expansion Potential:

  • The No.3 Zone remains open for expansion at depth

Several other zones on the property are at an advanced stage of assessment and exploration and have the potential to contribute to the mining plan thereby extending mine life and increasing mill throughput.

Liquidity of the Company has decreased in the 2009 fiscal year, attributable to lower availability of financing prior to July 31, 2009, and the current maturity of the Company's convertible debenture (recorded in current liabilities at a fair value of $1,468,431). As at July 31, 2009, the Company had a working capital deficit of $2,237,058 which included a cash balance of $149,496 (subsequent to the fiscal year-end, the Company completed a private placement for gross proceeds of $2,075,000), and investments of $163,428. The Company had a net loss of $4,550,302 during the current year versus $2,235,754 in the previous fiscal year, being an increase in loss of $2,314,548 (104%). The increase in net loss can be attributed to non-cash increases in accretion charges related to asset retirement obligations and convertible debentures and impairment losses on the Company's investments in marketable securities. Unrealized losses of $727,441 recognized in the previous fiscal year were reclassified to impairment losses in 2009. However, the Company has reduced most cash-based expenses and overhead over the year.


In the Company's July 31, 2007 annual audited consolidated financial statements, the amalgamation of Piper Capital Inc. with Garson Resources Ltd. to form the Company was accounted for as a business acquisition and valued at the fair value of the shares issued as consideration over a certain time period before and after the date that the transaction was agreed to and announced. Pursuant to the 2009 audit, it is the opinion of the Company's auditors that the transaction did not qualify as a "business" acquisition as defined in the CICA Handbook's EIC-124 "Definition of a Business". The prior year financial statement figures have thus been restated to reflect the accounting for the transaction as an asset acquisition and the fair value of the shares issued as consideration have been re-measured to reflect the fair value of the shares issued in consideration as at the date of closing the acquisition.

This change has a positive impact on the financial statements of the Company by increasing the book value of the Company's net assets, particularly of mineral properties and deferred exploration costs. The Company notes that these changes are of a non-cash nature and do not impact the Company's cash position or operating activities.

In summary, the effect of the balance sheet restatement was to increase total assets acquired in the amalgamation by $8,884,116, with corresponding increases of $4,285,662 in share capital (due to the appreciation of the Company's stock price between the announcement of the amalgamation and closing) and $4,598,454 representing the related future tax liability (due to differences between the new accounting values and tax values for the assets acquired). Differences between consideration and the net book value of assets acquired in Garson Resources Ltd, previously treated as "goodwill", are recorded as an increase to mineral properties.

In the fiscal year ended July 31, 2008, the future income tax liability decreased to $4,070,763, loss per share was decreased by $0.01, and an additional future income tax benefit of $527,691 was realized due to a change in legislated rates of income taxation in the year of reversal.

Please refer to Note 5 of the Audited Financial Statements for a summary of changes.


The Directors of the Company maintain their support for the Alexis Minerals Corporation bid for the Company's common shares and as stated in the Director's Circular unanimously recommend that the Company's shareholders accept the Alexis offer and tender their shares.


Garson Gold holds a 100% interest in The New Britannia Mine (NBM) Project in Snow Lake Manitoba and the Copper Prince and the McMillan Gold Mine properties located in Ontario. The Company's flagship project is the NBM, which covers approximately 4,840 hectares and hosts the historic New Britannia Gold Mine which operated from 1949 to 1958 and again from 1995 to 2004 and produced approximately 1.43 million ounces of gold. The resource estimate at the NBM property, audited by Micon International Ltd. in accordance with CIM classifications pursuant to National Instrument 43-101, is available for viewing on SEDAR ( and Infrastructure at the New Britannia Gold Mine includes a fully-permitted 2,150 tonne per day modern mill and tailings facility, and associated plant, and equipment.

On Behalf of the Board,

David G. Tafel, CEO & Director

This news release may contain forward looking statements concerning future operations of Garson Gold Corp. (the "Company"). All forward looking statements concerning the Company's future plans and operations, including management's assessment of the Company's project expectations or beliefs may be subject to certain assumptions, risks and uncertainties beyond the Company's control. Investors are cautioned that any such statements are not guarantees of future performance and that actual performance and exploration and financial results may differ materially from any estimates or projections.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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