St Andrew Goldfields Ltd.

St Andrew Goldfields Ltd.

March 26, 2009 08:00 ET

St Andrew Reports 2008 Financial Results

OAKVILLE, ONTARIO--(Marketwire - March 26, 2009) -


St Andrew Goldfields Ltd. (TSX:SAS) ("St Andrew" or the "Company") reports its financial results for the year ended December 31, 2008.

Results of Operations

For the year ended December 31, 2008, St Andrew incurred a loss from continuing operations of $9,746,599 or $0.04 per share as compared to $72,813,328 or $0.52 per share for 2007. Net loss for 2008 was $15,064,189 or $0.05 per share compared to $103,940,494 or $0.74 per share in 2007.

The significant decrease in net loss from continuing operations in 2008 when compared to 2007 was the result of the Company's strategic decision to suspend non-profitable operations and to divest non-core assets in order to focus on advancing its Holloway-Holt Project and its East Timmins properties. As a result, the Company ceased its mining and milling activities at its producing mines in 2007 and suspended its exploration activities at the Taylor Project in the third quarter of 2007. After the completion of exploration activities at the Holloway-Holt Project necessary to complete a technical report for those properties, the Company placed the Holloway-Holt Project on care and maintenance in the second quarter of 2008.

During 2008, executing on its strategic plan, the Company completed a number of transactions to improve the financial position of the Company, including:

- the sale of the Stock mine and mill complex to Apollo Gold Corporation ("Apollo Gold") in the summer of 2008 for $20.0 million, on which the Company realized a gain on sale of $21.4 million (the carrying value of the asset of $14.9 million had been written off in 2006);

- the disposition of the Company's equity position in Glass Earth Gold Limited for proceeds of $8.1 million, on which it realized a gain of $2.3 million.

- the settlement of a payable to a mining contractor by the payment of $14.0 million in cash, which the Company realized a gain of $1.9 million.

- the conversion of $42.0 million of indebtedness due to related parties to equity of the Company by the issuance of 76,363,636 shares at $0.55 per share.

Included in the 2008 loss was the loss realized on the Company's investment of common shares in Apollo Gold of $7.3 million.

Development Projects

Holloway-Holt Project

The Company completed a National Instrument 43-101 ("NI43-101") compliant technical report on its Holloway-Holt Project in July 2008. The report highlighted proven and probable gold reserves of 629,000 ounces. The Company has made a positive production decision to re-start mining and milling activities, subject to arranging adequate financing.

Since the second half of 2008, the Company has actively pursued a US$30.0 million debt financing for the Holloway-Holt Project. Due to the limited level of credit available in the capital markets in the second half of 2008, the financing, originally anticipated to be completed during the fourth quarter of 2008, has been delayed. The process of obtaining financing was further hindered due to a royalty issue surrounding its Holt property, as discussed below.

In the fourth quarter of 2008, the Company made an application to the Superior Court of Justice (Ontario) for an order determining its rights and obligations in respect of a royalty agreement previously entered into by Newmont Canada and Barrick Gold Corporation ("the Holt Royalty"). Pursuant to this application, the Company is seeking a declaration by the Court that the Company's obligation in respect of this royalty agreement is limited to a 0.013% NSR on gold production from the Holt property and that any additional obligations under the royalty agreement remain the responsibility of Newmont Canada. The underlying royalty agreement originally entered into between Newmont and Barrick indicates that the royalty in respect of the Holt property may not be so limited but rather that the royalty obligation in respect of gold production is to be determined by multiplying the prevailing gold price from time to time by 0.013%. The Court hearing was completed in February 2009 and the decision of the Court is currently pending. The Company remains confident that its position in respect of the Holt Royalty will be upheld by the Court.

In view of the uncertainty of the financial impact of the Holt Royalty on the Holt mine, the Company has completed a revised operating plan to stage the start-up of the Holloway mine and the Holt mine on a staggered basis. Management believes that once the financing is in place, it will take approximately 6 months to complete the required pre-production activities at the Holloway mine. The Company is also accelerating its exploration activities at its Hislop Project with the objective of bringing the project into production in the near term. The start up of Holt will commence once the royalty issue is satisfactorily resolved, subject also to receipt of adequate financing. The revised operating plan reduces the Holloway-Holt Project start-up capital from US$30.0 million, as originally planned, to approximately US$20.0 million. The Company is currently in discussions with potential investors for a private placement of up to US$20.0 million in debt financing. The Company remains optimistic that the economics of the Holloway mine and the Holt mine are sufficiently robust to secure this financing.

Hislop Project

Since the second quarter of 2008, the Company compiled an extensive amount of historic information from drilling and underground exploration on the Hislop Project. This information, combined with the results of the Company's surface drilling and re-sampling program of 2006-2007, was used to complete an updated geologic model and internal resource estimate in order to assess the potential viability of mining the near surface gold mineralization by open pit. Preliminary results warrant that the Company pursue this project.

In January, 2009, the Company initiated a 10,000 metre surface core drilling program to continue its assessment of the near surface, low grade gold mineralization having the potential to be mined by open pit mining methods. The drilling results will be used to construct an updated three-dimensional geological model that will be used as a foundation to estimate mineral resources. Subsequently, an economic assessment of the project will be completed. It is anticipated that any future mining of the Hislop low grade gold mineralization occurring near surface could be processed at the Company's Holt mill. Scott Wilson RPA of Toronto, Canada has been commissioned to complete an updated NI43-101 technical report on the Hislop property, which is expected to be completed at the end of the second quarter of 2009.

Other Projects in the Timmins Mining Camp

Other projects in the Timmins mining camp (including the Taylor Project, the Aquarius Project and the Clavos Project) were kept on care and maintenance during 2008. The Company does not have current plans to resume activities at these properties. Depending on the cash position of the Company, the Company may consider classifying these assets as non-core and may divest these assets to potential purchasers.

Assets Divestitures

Investment in Apollo Gold Corporation

During the fourth quarter of 2008, the Company sold 10,454,700 common shares in Apollo Gold for gross proceeds of $2.2 million. In the first quarter of 2009, the Company sold the remaining balance of its ownership in common shares of Apollo Gold for gross proceeds of a further $4.6 million.

Mystery Creek Resources, Inc.

On February 12, 2009, the Company completed the sale of all of the shares of, Mystery Creek Resources, Inc., which owns the Nixon Fork gold property located in Alaska, U.S.A., to Pacific North West Capital Corp. for proceeds of US$0.5 million.

Eskay Creek Property

In May 2008, the Company optioned its Eskay Creek, British Columbia properties to Kenrich-Eskay Mining Corporation ("Kenrich"), an exploration company listed on the TSX Venture Exchange, which holds additional properties in the area. Kenrich paid $50,000 and issued 500,000 shares to the Company. To earn a 70% interest in the project, Kenrich must incur $3.0 million of exploration expenditures and issue a further 1.25 million of its shares and pay $150,000 to St Andrew in installments over the next three years. Kenrich may increase its interest from 70% to 80% by incurring an additional $1.0 million of exploration expenditures by May, 2012. In the event that the Company's interest in the Eskay Creek Properties is diluted to less than 10%, its interest will revert to a 2% net smelter return royalty interest.

The optioning of the property by the Company allows it to benefit from Kenrich's exploration program while allowing it to continue its primary focus on its Holloway-Holt Project.

Liquidity and Capital Resources

During the fourth quarter of 2008, the Company completed a private placement of 11,947,092 flow-through units (one common share on a flow-through basis and one-half warrant on a non flow-through basis) for gross proceeds of $2.6 million to finance its planned exploration activities in the Hislop Project, surface Holloway-Holt exploration properties and other targets in the Timmins mining camp.

At December 31, 2008, St Andrew had a working capital deficit of $1.1 million and cash of $4.1 million. In the first quarter of 2009, the Company realized gross proceeds from the sale of its entire interest in 19,079,429 common shares of Apollo Gold for gross proceeds of $4.6 million. The Company expects that it has sufficient cash on hand to satisfy its ongoing working capital commitments and other contractual obligations for the next few months. The Company anticipates that it will be able to obtain additional capital from the planned US$20.0 million debt financing, which will provide sufficient funds to restart the Holloway mine and to meet its general working capital requirements.

About St Andrew

St Andrew is a gold mining and exploration company with operations in Timmins, Ontario. St Andrew controls a very large land position in the Timmins Mining Camp and an extensive land position at Eskay Creek in northern British Columbia.


This news release may contain forward-looking information under applicable securities laws, concerning St Andrew'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", "anticipate", "intend" and similar words referring to future events and results, including in respect of receipt of a favorable Court ruling on the Holt Royalty, the completion of a debt financing, the restart of mining at the Holloway-Holt Project and the possible divestitures of non-core assets. 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, a Court decision on the Holt Royalty which is unfavorable to the Company, delay or inability to raise additional financing on satisfactory terms, 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 and changes in conditions in the financial markets. Readers are cautioned not to place undue reliance on this forward-looking information as actual results may differ materially from those expressed or implied in the 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.

Contact Information

  • St Andrew Goldfields Ltd.
    Jacques Perron
    President and CEO
    1-800-463-5139 or (905) 815-9855
    (905) 815-9437 (FAX)
    St Andrew Goldfields Ltd.
    Ben Au
    CFO and VP Finance & Administration
    1-800-463-5139 or (905) 815-9855
    (905) 815-9437 (FAX)