St Andrew Goldfields Ltd.
TSX : SAS

St Andrew Goldfields Ltd.

August 14, 2007 17:01 ET

St Andrew Reports 2007 Q2 Financial Results

OAKVILLE, ONTARIO--(Marketwire - Aug. 14, 2007) - St Andrew Goldfields Ltd. (TSX:SAS) ("St Andrew" or the "Company") reports its financial and operational results for its second quarter ended June 30, 2007. Financial results are based on Canadian GAAP and dollars are reported in Canadian currency, unless otherwise noted.

For the three-month period ended on June 30, 2007, St Andrew reported a net loss of $22,877,720, or $0.22 per share, compared with a net loss of $12,139,513 or $0.32 per share, in 2006. For the six-month period ending on June 30, 2007, St Andrew recorded a net loss of $38,118,338, or $0.23 per share, compared with a net loss of $15,329,658, or $0.43 per share, in 2006.

In the three months ended June 30, 2007, the Company incurred $10,534,222 of mine site development expenditures in the Holloway-Holt Gold Mine and $3,418,678 of exploration expenditures in its exploration projects, including $1.4 million in New Zealand and $1.8 million on its Taylor Advance Exploration Program. All these expenditures are charged to the statement of operations as operation expenses.

St Andrew's accounting policy requires all exploration and mine development expenditures prior to the establishment of economically recoverable reserves at a property to be charged to operations. When the Company has determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, costs incurred to develop the property are then capitalized. With the exception of the Company's Nixon Fork Gold Mine, the Company has not determined that any of the Company's exploration and mine development projects contain economically recoverable reserves.



Results of Operations

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Three months ended June 30, Six months ended June 30,
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2007 2006 2007 2006
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Amounts in thousands of Canadian dollars, except per
share and per ounce amounts
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Tonnes mined 14,429 33,115 64,086 60,370
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Tonnes milled 35,413 25,156 82,016 47,672
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Gold grade
(grams per tonne) 4.6 4.3 5.4 5.1
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Mill recovery rate
(percent) 83.3 82.9 82.9 79.9
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Gold production
(ounces) 3,816 3,642 9,915 7,670
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Gold sold (ounces) 5,521 3,391 8,809 9,397
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Realized price
per ounce (US$) $ 668 $ 598 $ 669 $ 578
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Gold sales $ 3,924 $ 2,292 $ 6,594 $ 6,136
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Net loss $ 22,878 $ 12,140 $ 38,118 $ 15,330
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Net loss per share $ (0.22) $ (0.32) $ (0.23) $ (0.43)
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Working capital deficit $ 15,379 $ 21,230
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Shareholders' equity $ 83,773 $ 45,886
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Number of shares
outstanding 189,491,891 41,845,098
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Consolidated gold production was significantly below the Company's expectations and projections due to equipment and work crew availability and mine development issues encountered at the upper portion of the deposit at its Nixon Fork Gold Mine. The Company expects gold production from the Nixon Fork Gold Mine to increase once the lower portion of the mine is developed in the end of the third quarter of 2007.

Nixon Fork Gold Mine

In the second quarter of 2007, the Nixon Fork Gold Mine processed 7,433 tonnes of ore with a head grade of 16.0 grams per tonne (g/t). Mill recovery rate for the quarter averaged 70.5% producing 2,661 ounces of gold. During the quarter, the Company recognized gold sales of $2.7 million recovered from 258 tonnes of copper concentrate delivered to the smelter.

Mine development scheduled for completion in the second quarter of 2007 for the opening up of three additional mining areas and mining stopes and to progress mine operations at sustainable levels fell behind schedule due to equipment and mining personnel shortages and ore face availability issues encountered at the upper portion of the Crystal deposit. The Company believes it has rectified the issue by revising its mine plan to accelerate the development of the lower portion of the deposit. In addition, a mining contractor has been engaged for the mining operations at the Nixon Fork Gold Mine to address the competitive labour market, the sourcing of equipment and materials and with a view to ensuring that the Company's performance targets at the Nixon Fork Gold Mine will be achieved.

The Company is planning to shutdown the mill operations at the Nixon Fork Gold Mine for about 6 weeks in August and September to allow for the planned installation of tailings filtration equipment and the integration of the dry stack tailings facility at the mine. Ore mining and development operations will continue and ore will be stockpiled at the mill. The Company believes there is sufficient mill capacity to make up the lost mill tonnage over the approximate 6 weeks following the commencement of mill operations. The Company anticipates gold production at the Nixon Fork Gold Mine will progress to a sustainable level by the end of the third quarter of 2007.

Stock Gold Complex

Clavos Project

As announced in May 2007, the Company has temporarily suspended mining and milling operations at its Stock Gold Complex (including the Clavos Project and the Stock Gold Mill) as a result of the focus of the Company's exploration and development activities at the Holloway-Holt Gold Mine, the larger capacity of the Holt Gold Mill, the competitive labour market in the Timmins Mining Camp and the difficulties in sourcing equipment and materials for its Timmins operations.

During the second quarter of 2007, only 7,719 tonnes of ore were mined at the Clavos Project. A total of 7,701 tonnes of ore from the Clavos Project grading at 2.9 g/t were milled at the Stock Gold Mill with a mill recovery rate of 85.0%. Gold production from the Clavos Project operation for the three months ended June, 2007 was 600 ounces.

Hislop Project

Since the beginning of 2007, mineralization from the Hislop West Pit was mined and transported to the Stock Gold Mill. Mineralization containing an averaged head grade of 1.9 g/t was used as supplement to the ore feed at the Stock Gold Mill. For the three months ended June 30, 2007, 15,100 tonnes of the Hislop mineralization with an average grade of 1.4 g/t were processed at the Stock Gold Mill producing 555 ounces of gold at a mill recovery rate of 78.3%. The Hislop pit mining and milling operations were suspended as a result of the temporary suspension of the Stock Gold Complex.

Stock Gold Mill

As the operations at the Stock Gold Mill were temporary closed effective May 31, 2007, the Company conducted the mill clean up processes during the month of June 2007. In June, all carbon was pulled from the circuit and stripped.

Holloway-Holt Gold Complex

The Company commenced mine site exploration and development activities at its Holloway - Holt Gold Mine in the first quarter of 2007 in preparation for a production decision to be made for the start up of the mines anticipated later in 2007 after receipt of an independent 43-101 Technical Report on the mine.

During the quarter, 5,026 metres of definition diamond drilling was conducted. Development at the Holloway-Holt Gold Mine is advancing according to plans. For the three months ended June 30, 2007, a total of 779 metres were advanced at the Holloway Mine and 976 metres were advanced at the Holt Mine. The Company invested $10.5 million in the quarter on mine site exploration, development and maintenance expenditures.

In order to address the competitive labour market, the sourcing of equipment and materials and with a view to ensuring that the Company's performance targets at the Holloway-Holt Gold Mine will be achieved, the Company engaged mining and metallurgical contractors. These contractors were retained to undertake the development of, and following a production decision, the mining operations at the Holloway-Holt Gold Mine and the operation of the Holt Gold Mill.

In June 2007, the Company began preliminary work to re-commission the Holt Gold Mill. During the month of June 2007, 28,692 tonnes of primarily development ore from the Holloway- Holt Gold Mine with a head grade of 3.8 g/t were processed at the Holt Gold Mill which produced 2,838 ounces of gold at a mill recovery rate of 78.7%. The majority of this gold will be locked up in the mill circuit as in circuit inventory.

Taylor Advance Exploration Project

As at the end of June 30, 2007, the main ramp development at the Taylor Advance Exploration Project had advanced 850 metres in 2007. The Company expects the ramp development under Phase One of the exploration program to be completed in the last half of 2008. During May 2007, the Company processed a 3,756 tonnes bulk sample from ore mined at the Shaft Zone located at the bottom of the Taylor Shaft producing 941 ounces of gold at a head grade of 8.3 g/t. The proceeds from the bulk sample of $0.7 million were accounted for as a reduction of exploration expenses.

About St Andrew

St Andrew is a gold mining and exploration company with operations in Timmins, Ontario and Alaska, USA. 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 50.2 % equity interest in New Zealand based gold explorer, Glass Earth Limited and a 12.6 % equity interest in Apollo Gold Corporation.

For further information about St Andrew Goldfields Ltd., please contact Investor Relations at (416) 368-3116 or toll-free at 1-800-463-5139 or email investor@standrewgoldfields.com or contact:

FORWARD LOOKING STATEMENTS

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 should refer to the Company's Annual Information Form filed at www.sedar.com for a further discussion of such risks, uncertainties and factors. 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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