St Andrew Goldfields Ltd.

St Andrew Goldfields Ltd.

September 15, 2009 08:30 ET

SAS Receives Positive Pre-Feasibility Study on its Hislop Project

TORONTO, ONTARIO--(Marketwire - Sept. 15, 2009) -


St Andrew Goldfields Ltd. (TSX:SAS) ("SAS" or the "Company") is pleased to announce the completion of a positive Pre-feasibility Study by Scott Wilson Roscoe Postle Associates Inc. ("Scott Wilson RPA"), Toronto, Canada, for a proposed open pit mine at the Company's Hislop Project, in northeastern Ontario, Canada. The Hislop Project is located in the central portion of the Company's 120km land package in the Timmins mining district, which straddles the Porcupine-Destor Fault Zone ("PDFZ"), host to numerous gold deposits in the region.

Highlights of Pre-feasibility Study:

- Probable Mineral Reserves for the Hislop Project are estimated to contain 1.9 million tonnes at an average grade of 2.3 g/t gold, for a total of 142,500 ounces of contained gold.

- The Mineral Reserves are amenable to open pit mining and processing at the Company's nearby Holt Mill for the recovery of gold.

- The Mineral Reserves are based upon the Mineral Resources within an optimized pit design and include 15% dilution at a grade of 0.5 g/t gold and 90% mining extraction. The pit design is based on an optimized Whittle shell that was developed using a long-term gold price of US$800 per ounce less 4% NSR and an average exchange rate of C$1.00 equals US$0.85. The project has a mine life of 4 years at a mill throughput of 1,500 tonnes per day ("tpd").

- Estimated total capital costs for the Project amount to C$11 million, and the average unit operating cost over the mine life is estimated to be C$42.54 per tonne milled.

- Using an average gold price of US$850 per ounce and a C$:US$ exchange rate of 0.86, the undiscounted pre-tax cash flow for the Hislop Project is C$20.9 million over the mine life on a stand-alone basis. Simple payback occurs after approximately 1.5 years. The pre-tax Net Present Value ("NPV") at a 5% discount rate is C$17.2 million, and the pre-tax Internal Rate of Return ("IRR") is 99.1%.

- At a gold price of US$950 per ounce and a C$:US$ exchange rate of 0.85, the undiscounted pre-tax cash flow for the Project increases to C$36.2 million. For this price scenario, the pre-tax NPV at a 5% discount rate is C$30.4 million, and the pre-tax IRR is 158.4%.

- SAS has sufficient tax pools to shelter the income and mining tax exposure on the Hislop Project.

- Average annual gold production during operation is 30,000 ounces per year, at a Total Cash Cost of US$621 per ounce of gold produced. The mine life capital unit cost is US$79 per ounce of gold produced, resulting in a Total Production Cost of US$700 per ounce produced. The pre-production lead time for the Project is three months.

- Additional Mineral Resources have been identified beneath the existing pit (located west of the current designed pit where the Mineral Reserves exist); however, detailed planning for the pushback is required to access and exploit these resources and has not been undertaken as part of this study.

The technical report was prepared by Scott Wilson RPA, Toronto, Ontario, Canada. Scott Wilson RPA has prepared the report in compliance with NI 43-101 standards. The complete Scott Wilson RPA Report on the Project will be available shortly on the SAS website at and on SEDAR at

"We are pleased with the results of the Pre-feasibility Study, which has confirmed the economics to develop an open pit operation at the Hislop Project", said Jacques Perron, President and CEO of SAS. "SAS has met yet another milestone that continues to add to the confidence in our profitable growth objective. The Hislop Project has added significant value to our plans due to the low levels of capital required to develop the project and the utilization of spare capacity at our Holt Mill. The completion of the Pre-feasibility Study allows us to move ahead with the development of the Hislop Mine which is in accordance with our plans to bring a second mine into production in early 2010 following the Holloway Mine that will be in production in the fourth quarter of this year. The addition of the Holt Mine, which will be our third mine to come on line during the second half of 2010, will provide additional profitable growth. We will be presenting this afternoon at the Denver Gold Show in Denver, Colorado, and are happy to be able to include the Hislop Project as part of our production and cost profile. A copy of the presentation will be available on the Company's website."

Scott Wilson RPA has reviewed the Mineral Resource estimates for the Hislop Project as reported by SAS as of June 2009. The Mineral Resources effective June 2009, are summarized in the following table.

St Andrew Goldfields Ltd - Hislop Project, Ontario, Canada

Classification Zone Tonnes Grade Ounces Gold
(000) (g/t Au) (000)
1-01 1,681 1.42 77
3-01 1,793 2.16 125
3-02 516 1.93 32
3-03 2,358 2.21 168
3-04 313 2.28 23
Total Indicated 6,661 1.98 425

1-01 927 1.42 42
3-01 1,446 1.71 80
3-02 1,126 1.84 67
3-03 1,427 1.94 89
3-04 412 2.32 31
Total Inferred 5,338 1.80 309

1. CIM definitions were followed for Mineral Resources.
2. Mineral Resources were estimated at a block cut-off grade of 0.94 g/t
3. Mineral Resources are estimated using a gold price of US$950 per ounce,
and an exchange rate of C$1.00 equals US$0.85.
4. A minimum mining width of 2.0 m was used.
5. A bulk density of 2.84 t/m3 was used for all rock types except syenite
(2.68 t/m3).
6. Totals may not add exactly due to rounding.

Indicated Mineral Resources were evaluated and converted to Probable Mineral Reserves through the application of mining plans, estimates for dilution and extraction, and an economic cut-off grade. Only those resources which could be included in a Life of Mine Plan (LOMP) were included as Mineral Reserves. The Mineral Reserves for the Project, summarized in the following table, are as of September 1, 2009.

St Andrew Goldfields Ltd. - Hislop Project, Ontario, Canada

Category Tonnes ('000) Grade (g/t Au) Contained Ounces
Probable 1,912 2.32 142,500

1. CIM definitions were followed for Mineral Reserves.
2. Mineral Reserves are estimated at a cut-off grade of 1.1 g/t Au.
3. Mineral Reserves are estimated using an average long-term gold price of
US$800 per ounce, and an exchange rate of C$1.00 equals US$0.85.
4. The Mineral Reserves are contained within the stated Mineral Resources.

Hislop Project - General Information

The Hislop Project is centrally located in the Abitibi greenstone belt in the Superior Province of the Canadian Shield, and lies approximately 85 kilometres east of Timmins, and 45 kilometres west of the Company's Holt Mill. Gold mineralization (associated with the PDFZ), occurs over a strike length of 1,200 metres following the fault contact between mafic flows to the north and ultramafic rocks to the south. Gold is associated with the margins of feldspar porphyritic syenite dikes, and sub-parallel zones of up to 20 metres in width, that are generally conformable to the contact between the mafic and ultramafic rocks striking west-northwest and dipping steeply to the north.

The Hislop Project was mined during several campaigns since the 1930's, and most recently in 1999-2000, and in 2006-2007. During these periods, a small open pit was operated from which approximately 238,168 tonnes at an average grade of 3.11 g/t gold were mined and processed at the Company's previously owned Stock Mill. Permits are in hand from previous mining campaigns with amendments to the existing closure plan currently in progress. Existing site infrastructure includes a series of access roads, a power line and a water settling pond. The site is cleared of trees and the central section has minimal overburden coverage, which should allow for the initiation of mining activities with less difficulty and expense than would be involved with similar projects in the area.

Qualified Person

Wayne Valiant, P.Geo., Principal Geologist, and R. Dennis Bergen, P.Eng., Associate Principal Mining Engineer with Scott Wilson RPA, are the Qualified Persons responsible for the review of the Mineral Resource and Reserve estimates, and they have reviewed and approved this news release.

About SAS

SAS (operating as SAS Goldmines), is a Canadian based gold mining, and exploration Company with an extensive land package in the Timmins mining district, Northeastern Ontario, Canada, which lies within the world famous Abitibi greenstone belt. With near-term production and 120 km of upside exploration potential along the Porcupine-Destor Fault Zone, SAS is focussed on building a foundation for profitable growth.


This news release contains forward-looking information and forward-looking statements (collectively, "forward-looking information") under applicable securities laws, concerning the Company's business, operations, financial performance, condition and prospects, as well as management's objectives, strategies, beliefs and intentions. Forward-looking information is frequently identified by such words as "may", "will", "plan", "expect", "estimate", "anticipate", "intend" and similar words referring to future events and results, including in respect of the resources, reserves, mine life, production levels, capital costs, cash operating costs, rate of return and payback period and pre-production time in respect of the Hislop Project, the use of the Holt Mill to process production from Hislop and the planned development and restart of the Holt Mine. This forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied by the forward-looking information. Factors that may cause actual results to vary materially include, but are not limited to, uncertainties relating to the interpretation of the geology, continuity, grade and size estimates of the mineral reserves and resources, unanticipated operational or technical difficulties which could escalate operating and/or capital costs, insufficient funding or delays or inability to raise additional financing on satisfactory terms, fluctuations in gold prices and exchange rates, changes in laws or regulations, the risks of obtaining necessary licenses and permits, changes in general economic conditions, changes in conditions in the financial markets and an adverse appeal Court decision on the Holt Royalty . Such forward looking information is based on a number of assumptions, including but not limited to the expected timeline to complete pre-production activities, the availability of adequate financing, the level and volatility of the price of gold, the accuracy of reserve and resource estimates and the assumptions on which such estimates are based, the ability to achieve capital and operating cost estimates and general business and economic conditions. Should one or more risks and uncertainties materialize or should any assumptions prove incorrect, then actual results could vary materially from those expressed or implied in the forward-looking information and accordingly, readers are cautioned not to place undue reliance on this forward-looking information. SAS does not assume the obligation to revise or update this forward-looking information after the date of this release or to revise such information to reflect the occurrence of future unanticipated events, except as may be required under applicable securities laws.

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