|August 13, 2012|
Elgin Mining Reports Second Period 2012 Results
Vancouver, British Columbia, August 13, 2012 - Elgin Mining Inc. ("Elgin Mining" or the "Company") (TSX: ELG and ELG.WT) released today financial results for the second period of 2012 which is the first to include production results from the Bjorkdal gold mine acquired pursuant to a plan of arrangement completed May 1, 2012. The Company's unaudited condensed consolidated interim financial statements for the four and seven months ended June 30, 2012 and notes thereto ("Interim Financial Statements"), along with its Management's Discussion and Analysis ("MD&A") are available at www.sedar.com and www.elginmining.com. Unless otherwise noted, all financial information expressed herein is in Canadian dollars.
Second Period 2012 Highlights
Drilling also commenced on certain regional targets at Lupin and with the completion of the detailed airborne geophysics program we expect to generate several new targets for drill testing. Over the coming months, we expect to bring on additional key hires to further advance the Company's stated objectives."
On May 1, 2012, Elgin Mining acquired all of the issued and outstanding shares of Gold-Ore Resources Ltd. ("Gold-Ore") under a plan of arrangement whereby each Gold-Ore shareholder received one Elgin Mining share and one-half of one share purchase warrant in exchange for each Gold-Ore share.
Notwithstanding that Elgin Mining is the legal acquirer, Gold-Ore has been determined to be the accounting acquirer in the arrangement transaction ("RTO"). Under the RTO, Gold-Ore is deemed to have acquired Elgin Mining on May 1, 2012. As a result, the financial and operating results contained in this news release, and in the Company's MD&A and related Interim Financial Statements for the periods ended June 30, 2012 are a continuation of Gold-Ore.
Change in Year-end
Prior to the RTO, Gold-Ore had a November 30 year-end while Elgin Mining had a December 31 year-end. As Gold-Ore is also deemed the reporting issuer under the RTO in accordance with the applicable securities rules, a notice of change in year-end was filed for the current period to change the Company's year-end from November 30, 2012 to December 31, 2012 to better align the Company's year-end to the year-end of other publicly traded mining companies.
Summarized Financial and Operating Results
Due to the change in year-end, the Company's results in this second period will not be directly comparable to the results of the corresponding period in the previous fiscal year.
Bjorkdal Gold Mine - Skelleftea, Sweden
Gold production was higher due to the extra 30 days in the current period in comparison to the 2011 second quarter. Excluding the effect of the extra days, gold production would have been 4% less than the 2011 second quarter due to a 9% drop in the head grade to the plant arising from lower grades mined in both the open pit and underground, and from processing a lower proportion of higher-grade underground ore which were offset by a 6% increase in the plant's daily throughput rate.
To address the decline in grades, the Company is investing additional resources in its grade control program in the open pit by hiring two additional pit geologists and by conducting grade control drilling to improve mine planning. For the underground unit, the Company will be testing the benefits of cable bolting in active operations in the third quarter of 2012. In addition, the Company will also study other ways to enhance the economic return of the underground operations by examining its processes for grade control, mining practices and mine planning.
Cash cost per ounce sold in the current period was 14%, or US$129 per ounce, higher than the 2011 second quarter due to a 9% lower plant head grade, higher underground mining cost per tonne, and general cost escalation in labour and contractor rates. Underground mining cost per tonne has been negatively impacted by higher shotcrete and pumping costs due to additional ground support and greater pump repair costs, respectively. However, management has addressed these cost areas with the result that underground mining cost per tonne have trended down from the last two quarters. The Company also benefitted from a 9.1% weakening of the Swedish krona against the US dollar during the current period, and by the processing of more stockpile material.
During the period, the Company also published a new reserve and resource estimate for the Bjorkdal mine showing a significant increase in reserves from both the underground and open pit, and in addition, released significant new drill results at the Bjorkdal mine outlining a new extension to the ore zone.
Lupin Gold Mine - Nunavut, Canada
During the second period, the Company continued with its 2012 drill program by completing the surface drilling on the shallow upper portion on the West Zone South of Shaft and by commencing a regional drill program. The Company currently has two drills testing multiple targets within the mine's surface leases and expects to drill 13,000 metres over the course of this summer/fall drilling season. In addition, the Company has also recently completed a significant airborne geophysics program including HTEM and HeliTEM in order to focus on key targets and to identify potentially unknown targets within the Lupin exploration holdings.
Ulu Gold Project - Nunavut, Canada
During the second period, the Company completed a ground geophysics survey of the property, mapping and sampling of potential targets, and the preparation of the camp for the current summer drilling campaign. Two drills were mobilized to site in July with 7,000 metres of drilling planned with the goals of expanding and upgrading the resource base on the current high grade Flood Zone and in testing the extent and quality of mineralization of other known nearby gold occurrences.
The regional exploration program at Lupin along with the planned exploration at Ulu will help the Company meet its obligation to incur $9 million of flow-through expenditures for the 2012 calendar year.
Elgin Mining Inc.
Elgin Mining is a Canadian based company focused on production at the Bjorkdal Gold Mine in Sweden, which surpassed its first millionth ounce of gold production in 2010, and the exploration and development of the Lupin gold mine and Ulu gold project, both located in Nunavut, Canada. In addition, Elgin Mining's portfolio includes a 37% interest in Auracle Resources Ltd., which is exploring the Mexican Hat property in Arizona, and an exclusive right and option to earn a 60% interest in Lincoln Mining Corporation's Oro Cruz (California) and La Bufa (Mexico) gold projects and to earn a 60% interest in North Arrow Minerals Inc.'s Contwoyto gold project located adjacent to the Lupin gold mine in Nunavut, Canada. Elgin Mining also selectively reviews opportunities to add advanced stage development projects to its portfolio. The Company has a strong balance sheet, generates cash flow from gold sales, and remains un-hedged.
For further information, please visit the Company's web site at www.elginmining.com.
President and Chief Executive Officer
Tel: (604) 682-3366 / Fax: (604) 682-3363
Certain information set forth in this press release contains "forward-looking statements", and "forward-looking information" under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements which include management's assessment of Elgin Mining's future plans and operations and are based on Elgin Mining's current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking statements may be identified by words such as "expects" "anticipates", "believes", "projects", "plans", and similar expressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause Elgin Mining's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Elgin Mining undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.
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