RNC Gold Inc.
TSX : RNC

October 31, 2005 08:30 ET

RNC Gold Announces Third Quarter 2005 Results

TORONTO, ONTARIO--(CCNMatthews - Oct. 31, 2005) -

Not for release in the United States

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

Significant developments during the third quarter of 2005, ended September 30, 2005, included:

- Entered into a letter of intent to acquire the San Andres mine in Honduras;

- Successful conversion of the La Libertad mine to contract mining;

- The addition of Peter Marrone to the Board of Directors;

- Production of 18,605 ounces of gold, an increase of 15% over second quarter 2005 gold production and a 14% increase over the same period last in 2004;

- Record gold production and record gold sales at the Bonanza Mine in the month of September 2005 of 2,725 and 3,041 ounces respectively.

- A loss of $1,873,925 or $0.05 per share (basic) for the three-month period ended September 30, 2005;

- The first full quarter of "un-hedged" production, and realized an average selling price of $429 per ounce of gold sold.

- Sales of 16,924 ounces of gold at a cash operating cost of $374 per ounce.

San Andres Acquisition Update

The Company was successful in negotiating a letter of intent to purchase the San Andres gold mine from the owners of San Andres on or before November 30, 2005 at a cost of approximately US$22.5 million. San Andres is in production. This acquisition will add approximately 70,000 ounces of annual production at an estimated operating cost of US$247 per ounce. Exploration potential adjacent to the current mining areas is considered excellent. To fund this transaction, RNC expects to undertake a financing in the near future. The Company will release details of the financing once final arrangements have been made.

Financial Results

For the three months ended September 30, 2005, RNC reported a loss of $1,873,925 or $0.05 per share, as compared to a loss of $1,664,243 or $0.05 per share in the comparable period of 2004. The main factor in the loss was the lower than forecast production at La Libertad prior to conversion to contract mining. RNC had revenue of $7.3 million during the third quarter of 2005 compared to $6.8 million a year earlier.

For the nine months ended September 30, 2005, RNC has recorded a loss of $3.2 million or ($0.08) per share from revenue of $20.4 million. In the same period of 2004, the Company had a modest loss of $0.09 million or $0.00 per share.



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

Q3 2005 Q3 2004

Gold sales (ounces) 16,924 16,914

Gold sales $7,253 $6,788

Average net realized gold price per ounce $429 $365

Cash operating cost per ounce sold(i) $374 $371

Net operating margin (deficit) ($219) ($225)

Income (loss) before non-controlling interest ($1,874) ($1,664)
Income (loss) ($1,874) ($1,664)
Income (loss) per share - Basic ($ 0.05) ($ 0.05)
Diluted - -
Weighted average common shares outstanding 40,569,021 31,281,342
Diluted common shares - end of period 64,042,301 49,148,335

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


Production Summary

All RNC's Gold's current production comes from its two mines in Nicaragua. The table below illustrates production and cost data related for the La Libertad and Bonanza mines for the three-month and nine-month periods ended September 30, 2005.



------------------------------------------------------------------------
Q3 2005 YTD 2005
------------------------------------------------------------------------
La La
Libertad Bonanza Total Libertad Bonanza Total
------------------------------------------------------------------------

------------------------------------------------------------------------
Gold sales
(ounces) 9,323 7,601 16,924 26,230 21,401 47,631
------------------------------------------------------------------------

------------------------------------------------------------------------
Gold
production
(ounces) 10,761 7,844 18,605 27,747 21,784 49,531
------------------------------------------------------------------------

------------------------------------------------------------------------
Mine
operating
costs
($)(i) 3,797,692 2,526,992 6,324,684 11,235,507 7,428,061 18,663,568
------------------------------------------------------------------------
Cash
operating
costs
($)(ii) 3,797,692 2,526,992 6,324,684 11,235,507 7,428,061 18,663,568
------------------------------------------------------------------------
Per ounce
sold $407 $332 $374 $428 $347 $392
------------------------------------------------------------------------

------------------------------------------------------------------------
Royalties
&
production
taxes ($) 75,729 33,579 109,308 191,726 95,521 284,248
------------------------------------------------------------------------
Total cash
costs
($)(ii) 3,873,421 2,560,571 6,433,992 11,427,233 7,523,582 18,947,816
------------------------------------------------------------------------
Per ounce
sold $415 $337 $380 $436 $352 $398
------------------------------------------------------------------------

------------------------------------------------------------------------
Amortization
and
depletion
($) 861,194 166,527 1,027,721 2,572,977 473,299 3,046,276
------------------------------------------------------------------------
Accretion
&
closure
costs ($) 10,329 - 10,329 30,985 - 30,985
------------------------------------------------------------------------
Total
production
costs
($)(ii) 4,744,944 2,727,098 7,472,042 14,031,195 7,996,881 22,025,077
------------------------------------------------------------------------
Per ounce
sold $509 $359 $442 $535 $374 $462
------------------------------------------------------------------------
(i) Mine operating costs are reduced by (i) silver by-product credits
and (ii) change in finished goods inventory. There is no significant
difference in the total cash cost per ounce of production and total
cash cost per ounce sold (as presented above).

(ii) Cash operating costs, total cash costs and total production costs
should not be considered as alternatives to operating profit or net
profit attributable to shareholders, or as an alternative to other
Canadian generally accepted accounting principle measures and may
not be comparable to other similarly titled measures of other
companies. However, RNC believes that these measures are useful
indicators to investors and management of the performance of the
company.


During September the La Libertad operation showed improvement in production with the use of the contract miner. Additionally, improving grades at Bonanza is expected to translate into increased production. Commencing in the fourth quarter of 2005, these two factors are expected to increase gold production and reduce unit operating costs.

Exploration Summary

During the third quarter of 2005, RNC invested $152,934 in exploration. The majority of these costs are associated with the bulk-tonne drilling project at Bonanza. In the comparable period of 2004, costs of $446,365 related to trenching and data analysis work conducted at La Libertad and Bonanza.

On a year to date basis, exploration costs in 2005 of $616,658 compared to exploration costs of $544,899 in the nine month period ended September 30, 2004. The increase is due to the higher level of exploration activity at Bonanza in 2005.

The exploration drill purchased in May 2005 arrived at Bonanza in September. It is anticipated that the new machine will drill approximately 11,000 metres per year. It is to be used to drill from surface to identify underground reserves and resources. The drill will also assist in better defining grade at depth to improve the mine planning process and grade control.

About RNC Gold

RNC Gold Inc. is a gold mining company focused on projects in the Caribbean basin. 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 40,569,021 common shares outstanding and on a fully diluted basis there are 63,847,736 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 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.



BALANCE SHEETS
as at September 30, 2005 and
December 31, 2004
(Unaudited - prepared by management)
(expressed in U.S. dollars,
unless otherwise stated)

September 30, December 31,
2005 2004
$ $
---------------------------------------------------------------------
Assets

Current assets
Cash and cash equivalents 1,067,823 87,592
Accounts receivable 2,545,064 1,933,270
Inventory 4,449,546 4,015,535
---------------------------------------------------------------------

8,062,433 6,036,397

---------------------------------------------------------------------
Property, plant and equipment 17,856,194 19,949,228

Mineral properties 8,857,170 7,782,226
---------------------------------------------------------------------

34,775,797 33,767,851

---------------------------------------------------------------------
Liabilities

Current liabilities
Accounts payable and accrued liabilities 7,141,274 5,473,559
Interest payable - 2,300,000
Unrealized loss on option contracts - 2,129,771
Current portion of long-term debt 1,802,333 955,252
---------------------------------------------------------------------

8,943,607 10,858,582

Long-term liabilities
Long-term debt 1,314,307 2,782,013
Due to related parties - 125,000
Asset retirement obligations 1,062,536 1,099,824
---------------------------------------------------------------------

2,376,843 4,006,837
Shareholders' equity (deficiency)

Capital stock
Common shares 25,686,008 21,095,777
Warrants 9,178,928 6,991,914
Agents options 638,343 477,000
Contributed surplus 3,607,334 2,837,768
Deficit (15,655,266) (12,500,027)
---------------------------------------------------------------------

23,455,347 18,902,432
---------------------------------------------------------------------

34,775,797 33,767,851
---------------------------------------------------------------------



CONSOLIDATED STATEMENTS OF OPERATIONS
for the three-month and nine-month periods
ended September 30, 2005 and 2004
(Unaudited - prepared by management)
(expressed in U.S. dollars,
unless otherwise stated)

Three Nine
months ended months ended
September September September September
30, 2005 30, 2004 30, 2005 30, 2004
------------------------------------------------------------------------
------------------------------------------------------------------------

Gold sales 7,253,066 6,787,683 20,359,703 24,042,656

Mine operating costs (6,324,684) (6,280,077) (18,663,568) (18,533,123)
Royalties and
production taxes (109,308) (94,658) (284,248) (347,767)
Amortization and
depletion (1,027,721) (594,711) (3,046,276) (3,382,278)
Accretion expense
and severance costs (10,329) (43,465) (30,985) (62,245)
------------------------------------------------------------------------

Net operating margin
(deficit) (218,976) (225,228) (1,665,374) 1,717,243

Administration (810,268) (348,338) (1,943,006) (998,866)
Exploration (152,934) (446,365) (616,658) (544,899)
Interest expense (64,171) (131,121) (238,744) (513,991)
Foreign exchange
gains (losses) 15,963 70,433 (172,935) (169,727)
Other income
(expense) (106,418) (106,080) 2,562,508 (515,300)
Stock based
compensation expense (323,761) (150,468) (769,566) (562,126)
Nicaraguan minimum
taxes (213,360) (183,833) (568,370) (660,386)
Non-hedge derivative
gain (loss) - (143,243) 256,906 2,158,902
------------------------------------------------------------------------
Loss before
non-controlling
interest (1,873,925) (1,664,243) (3,155,239) (89,150)
Non-controlling
interest - - - (112,845)
Loss for the period (1,873,925) (1,664,243) (3,155,239) (201,995)
Retained deficit - (13,781,341) (8,960,772) (12,500,027) (10,423,020)
------------------------------------------------------------------------

Deficit - End of
period (15,655,266) (10,625,015) (15,655,266) (10,625,015)
------------------------------------------------------------------------


Income
(loss per share)
- Basic ($0.05) ($0.05) ($0.08) ($0.01)
- Diluted N/A N/A N/A N/A

Weighted average
number of common
shares outstanding
- Basic 40,569,021 31,281,342 37,734,048 25,177,194
- Diluted 64,042,301 49,148,335 59,537,312 39,618,189



Consolidated Statements of Cash Flows
for the three-month and nine-month periods
ended September 30, 2005 and 2004
(Unaudited - prepared by management)
(expressed in U.S. dollars,
unless otherwise stated)

Three Three Nine Nine
months months months months
ended ended ended ended
September September September September
30, 2005 30, 2004 30, 2005 30, 2004

------------------------------------------------------------------------
$ $ $ $
Cash provided by (used in)

Operating activities
Loss before
non-controlling
interest and
discontinued
operations (1,873,925) (1,664,243) (3,155,239) (89,150)
Non-cash items
Amortization of
property, plant
and equipment 1,027,721 594,711 3,046,276 3,382,278
Non-cash portion
of non-hedge
derivative gain - (471,302) (1,262,632) (4,373,712)
Accretion expense
and severance
costs (66,504) 43,465 (45,848) 62,245
Stock based
compensation expense 323,761 150,468 769,566 562,126
Non-cash gain on
settlement of
CORNAP debt - - (2,648,371) -
Other non-cash
costs (income) (7,301) (3,625) 38,897 (52,775)
------------------------------------------------------------------------
(596,248) (1,350,526) (3,257,351) (508,988)
Net change in non-cash
working capital balances
related to operations 1,983,063 (417,631) (199,451) (3,756,513)
------------------------------------------------------------------------
1,386,815 (932,895) (3,456,802) (4,265,501)

Investing activities - - - -
Purchase of property,
plant and equipment (529,013) (648,289) (953,241) (2,524,994)
Investments in mineral
properties (44,712) (394,076) (956,305) (1,573,403)
------------------------------------------------------------------------
(573,725) (1,042,365) (1,909,546) (4,098,397)

Financing activities
Increase (decrease) in
due to related parties - - (125,000) (2,380,696)
Net proceeds of private
placement - - 6,743,833 13,747,218
Proceeds of exercise
of warrants - 25,834 - 1,223,702
Increase (decrease)
in debt (180,587) (991,347) (272,254) (3,541,778)
------------------------------------------------------------------------
(180,587) (965,513) 6,346,579 9,048,446

Increase in cash and
cash equivalents
during the period 632,503 (2,940,774) 980,231 684,549

Cash and cash
equivalents -
Beginning of period 435,320 4,129,600 87,592 504,279

Cash and cash
equivalents -
End of period 1,067,823 1,188,826 1,067,823 1,188,826
------------------------------------------------------------------------



Contact Information

  • RNC Gold Inc.
    Randy Martin
    Chairman and CEO
    (416) 365-9777
    or
    RNC Gold Inc.
    T.W. Lough
    President & CFO
    (416) 365-9777
    or
    The Equicom Group
    Martti Kangas
    (416) 815-0700 ext.243