St Andrew Goldfields Ltd.

St Andrew Goldfields Ltd.

November 15, 2006 17:00 ET

St Andrew Announces Third Quarter Results

OAKVILLE, ONTARIO--(CCNMatthews - Nov. 15, 2006) - St Andrew Goldfields Ltd. (TSX:SAS) ("St Andrew" or the "Company") - For the three-month period ended on September 30, 2006, St Andrew reported a net loss of $24,637,341, or $0.59 per share, compared with a net loss of $4,583,734 or $0.16 per share, in 2005. For the nine-month period ending on September 30, 2006, St Andrew recorded net loss of $39,966,999, or $1.06 per share, compared with a net loss of $11,979,282, or $0.48 per share, in 2005.

St Andrew expenses all exploration and mine development expenditures. All these expenditures are included as operating expenses. In addition, the mine development activities at the Company's Nixon Fork Gold Mine and the advanced exploration activities at the Taylor Project were charged to operations. Included in the loss for the three months and the nine months ended September 30, 2006 was a write-off of the carrying value of the Clavos Project of $8,984,148 or $0.24 per share. In the third quarter of 2006, following a review of its Stock Gold Complex mining properties and investments, in conjunction with the recently completed technical reports prepared for the Company by Scott Wilson Roscoe Postle Associates Inc. ("Scott Wilson RPA") on its Stock Gold Complex, which resulted in a reduction in measured, indicated and inferred mineral resources defined at the Clavos Project the Company determined that the future cash flows from the Clavos Project operations based on revised gold resources that are currently available for mining, excluding the recovery of amount capitalized would not recover the carrying amount of the Clavos Project. The Company has determined that an impairment loss exists and recognized a write-off of the carrying value of the Clavos Project as at September 30, 2006.

Results of Operations

Gold production from the Clavos Project was significantly below the Company's expectations and projections. The Company expects gold production from the Clavos Project to increase once additional mining crews are recruited and trained, the predominately shrinkage stoping method is implemented, additional working phases are made available and additional working levels are developed.

The majority of the mining activity during the first nine months of 2006 was focused on underground development and the building up of shrinkage stoping operations.

The Company expects gold production from the Clavos Project to increase to 40,000 ounces of gold per annum in 2007 and believes that these production rates can be maintained for the next 3 years based on the currently defined gold resources.

A technical report, prepared by Scott Wilson RPA of Toronto, Canada for the Company on its Stock Gold Complex defined measured and indicated resources at the Clavos Project of 149,400 tonnes at a grade averaging 8.08 g/t containing 37,100 ounces of gold and an inferred mineral resource of 529,000 tonnes at a grade of 6.49 g/t containing 110,300 ounces of gold. The resources defined at the Clavos Project have reduced significantly from the previous technical report on the project which defined an indicated resource of 753,000 at a grade of 7.3 g/t containing 177,000 ounces of gold and an inferred resource of 452,000 tonnes at a grade of 8.9 g/t containing 129,000 ounces. With a view to increase and/or replace mineral resources that have been mined, the Company continues to pursue an aggressive underground drilling program at the Clavos Project. At any one time there are usually 2 diamond drills delineating the ore shoots ahead of development and exploring for new areas of gold mineralization. Any increase and/or replacement of mineral resources will extend the life of the Clavos Project.

Stock Gold Complex

Clavos Operating Statistics
Three Months Ended Nine Months Ended
September 30, 2006 (1) September 30, 2006 (1)
Tonnes mined 21,244 79,018
Mined grade (g/t) 5.8 5.0
Tonnes milled 21,743 68,692
Mill recovery rate (%) 87.6% 93.2%
Gold sales (ounces) 3,671 13,069
Gold ounces produced 3,521 10,533
Ramp development (metres) 494 1,278
Sill and access development
(metres) 905 2,572
Underground diamond drilling
(metres) 5,153 17,432

(1) Comparable figures for the quarter and the nine months period ended September 30, 2005 are not available as the Clavos Project commenced mining operations in the beginning of January 2006.

In the three months ended September 30, 2006, the Clavos Project delivered 21,743 tonnes to the Stock mill. The grade of ore mined from the stoping areas was 7.2 grams per tonne (g/t) and 52% of the mill feed was "development muck" blended with the mined ore leading to a lower grade milled ore of below 5.8 g/t. For the nine months ended September 30, 2006, the Stock mill processed 68,692 tonnes of ore from the Clavos Project at a grade of 5.0 g/t.

During the nine months ended September 30, 2006, the lack of experienced shrink stope miners and the implementation of the most suitable mining method (predominately shrinkage) for the deposit has resulted in larger volumes of "development muck" at lower gold grades and lower volumes of stope ore being treated through the Stock mill. The Company believes that once the core labour force of predominately shrinkage miners and locked up ore is established in the production stopes, mining operations will progress at sustainable levels. The Company is pursuing an active recruitment campaign for shrinkage miners and other skilled labour in the region.

Taylor Advance Exploration Project

In the first half of 2006, St Andrew completed the development of the box cut at its Taylor Advanced Exploration Project and commenced a 3,300 metre underground decline ramp development to access the Taylor Shaft, Upper Porphyry and West Porphyry Zones for underground delineation and drilling and metallurgical testing. Underground drifting and delineation drilling are expected to commence in the first quarter of 2007.

Aquarius Deposit

In the fourth quarter of 2006, the Company engaged SRK Consulting in Denver to complete a feasibility study for the Company to integrate the Aquarius Deposit into the existing Stock Gold Complex operations.

Holloway-Holt Gold Complex

On November 6, 2006, St Andrew completed the acquisition from Newmont Canada Limited of the Holloway Mining Company ("HMC") (see November 7, 2006 press release). Current plans are underway to integrate the Holloway-Holt gold mining operations with the Company's procurement, warehousing and other administrative functions in Timmins, Ontario.

Scott Wilson RPA of Toronto, Canada has been engaged by the Company to prepare a mine plan for the re-commencement of the Holloway-Holt gold mine operation to produce gold at a forecasted rate of 75,000 - 100,000 gold per annum. The Company plans for the mining operation at the Holloway-Holt gold mine to resume in the first half of 2007.

Nixon Fork Gold Mine

As previously announced on November 10, 2006, the commissioning of a 150 tonne a day gold mill at the Nixon Fork Gold Mine is now underway and is planned to be completed within the next 2 weeks. The processing of stock piled ore on surface is expected to follow and gold production is forecast to commence in late November 2006 with a large proportion of this initial gold production becoming "locked up" in the new gold circuit as in-circuit inventory. The Company anticipates that the Nixon Fork Property will achieve a production rate of 40,000 ounces of gold per annum in 2007.

Financing from Technifund and Trapeze

As previously announced on November 7, 2006, funding for the cash consideration required to purchase the shares of HMC, fund certain expenses related to the acquisition of HMC and to provide additional working capital has been provided by Technifund Inc. ("Technifund") (a company controlled by the Chairman of St Andrew) to the extent of a $70 million secured debenture; and Trapeze Asset Management Inc. and Trapeze Capital Corp., both on behalf of managed accounts, (collectively "Trapeze") (insiders of St Andrew) to the extent of a $21 million secured debenture. Both secured debentures are secured against the assets of the Company. The secured debentures have an 18 month term and bear interest at 10% per annum plus a commitment fee of 2% of the principal amount.

The secured debentures replace the existing 10% demand loans approximately $50 million previously advanced by Technifund to the Company for capital projects and acquisition of Glass Earth shares and for operations and working capital purposes.

The Company anticipates that the entire amount of the secured debenture will be retired from a $100 million Rights Offering Circular planned for December, 2006. The completion of the Rights Offer is expected to take place in early 2007. Technifund and Trapeze have agreed to act as standby guarantors for the Rights Offer on terms still to be negotiated.

St Andrew (TSX:SAS) is a gold mining and exploration company producing gold from its Stock Gold Complex in Timmins, Ontario and with gold production from its Nixon Fork project in Alaska scheduled to commence in November of 2006. The recently acquired Holloway-Holt Gold Mine in the Timmins Mining Camp is forecast to increase St Andrew's gold production by 75,000 to 100,000 ounces per annum. St Andrew controls a very large land position in the Timmins Mining Camp, an extensive land position at Eskay Creek in northern British Columbia and land positions around Nixon Fork in the Kuskokwim-Tintina Mining Camp in Alaska. St Andrew also holds an approximate 48.3% equity interest in New Zealand-based gold explorer, Glass Earth Limited.

For further information about St Andrew Goldfields Ltd., please visit St Andrew's website at or contact Investor Relations toll-free at 1-800-463-5139 or email


The information in this release may contain forward-looking information under applicable securities laws. 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 implied by the forward-looking information. Factors that may cause actual results to vary material include, but are not limited to, inaccurate assumptions concerning the exploration for and development of mineral deposits, political instability, currency fluctuations, unanticipated operational or technical difficulties, changes in laws or regulations, the risks of obtaining necessary licenses and permits, changes in general economic conditions or conditions in the financial markets and the inability to raise additional financing. Readers are cautioned not to place undue reliance on this forward-looking information. St Andrew 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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