Timmins Gold reports "strong" second quarter, sales rise 41% on record output

Timmins Gold Corp.(TSE:TMM)(AMEX:TGD) announced Tuesday results from a "strong quarter", generating revenues up 41 per cent year-over-year, on top of record gold production.

For the three months that ended June 30, the gold miner, focused solely in Mexico, posted earnings of $6.2 million, or 4 cents per share, compared to $5.7 million, or 4 cents per share, a year ago.

Profit from operations at its San Francisco gold mine in Sonora rose 31 per cent to $13.6 million from $10.4 million in the second quarter of 2011.

Metal revenues were $38.2 million, up from $27.0 million during the same prior year period.

The company produced a record 23,203 ounces of gold and sold 23,499 ounces of gold, compared to 16,676 and 17,965, respectively, a year ago.

Total by-product cash costs were $758 per gold ounce in the quarter, higher than the $533 per ounce in the year-earlier period.

The increase is attributed to 2011 variable compensation of $0.3 million paid ($14 per gold ounce) in the most recent quarter.

Timmins said management began accruing for the 2012 variable compensation, or $4 per gold ounce, in June, which is expected to be negotiated and paid in May 2013.

Average realized prices were also higher in the latest quarter, however, at $1,624 per ounce, versus $1,504 per ounce in the second quarter of 2011.
                   
"Q2 was a strong quarter operationally as demonstrated by increased profit from operations," said the company's CEO, Bruce Bragagnolo.

"During the quarter we began implementing a comprehensive cost reduction program, the results of which should be seen in the upcoming quarters."

Production costs, excluding depletion and depreciation, rose sharply in the quarter to $18.2 million from $9.9 million a year ago as the company's expansion program continues with the installation of a new higher capacity tertiary crusher.

"The installation of a pre-screening system to increase capacity from the San Francisco crushing circuit by between 6,000 to 8,000 tpd is on schedule with over 80% of the equipment on site," said Bragagnolo.

"The company continues to fund all of its operations, expansion and drilling from existing cash flows. The company believes it is well positioned to continue realizing current gold prices, generating strong margins and increased cash flow from operations."

Cash flows from operations, a measure by which to gauge a company's ability to fund future activity, rose to $7.5 million, from $6.0 million a year earlier.
               
Timmins said a planned 50,000 metre drill program for the San Francisco gold project began in the second quarter, with four reverse circulation rigs and one core rig now on site.

Additionally, a 5,000 metre core drill program at the San Onesimo project in Zacatecas, Mexico, began last month.

The company increased its cash position to $21.2 million at the end of the quarter, investing $2.0 million on drilling and $2.0 million on plant and equipment.

The San Francisco gold mine in Sonora, Mexico is an open pit heap leach operation that has forecast production at a rate in excess of 100,000 ounces of gold per year.