St. Andrew narrows Q2 losses, revenues rise 20%

St. Andrew Goldfields (TSE:SAS) announced Tuesday it narrowed its second quarter losses on higher gold revenues as prices for the yellow metal continue to soar.
For the three months ending June 30, St. Andrew posted a net loss of $1.23 million, or nil per share, compared to a $7.14 million loss, or $0.02 per share, a year ago.
Adjusted for certain one-time items, net earnings were $1.35 million, or nil per share, compared to $848,000, or nil per share, in the same period last year.
Revenues rose to $22.14 million, up 20% from the year-ago period.
The gold mining and exploration company produced a total of 15,197 ounces of gold during the quarter, selling 15,160 ounces at an average realized price of US $1,507 per ounce.
Including production costs of $1,178 per ounce, and royalty costs of $99 per ounce, total cash costs were $1,277 per ounce of gold produced. St. Andrew's cash margins from mine operations were $3.4 million for the quarter.
"Our revenue increased over the previous quarter, however, we had a significant capital requirement at Hislop due to the increased overburden and waste mining, and experienced a challenging quarter at our operations," said president and CEO, Jacques Perron.
"The development of the Holt Mine progressed slower than initially anticipated which was coupled with lower than expected ore grades from the C-103 Zone.
"We encountered difficult overburden conditions at the Hislop Mine, and continued pressures at the Holloway Mine due to the transition in mining.
"In spite of these issues, we are encouraged that the mined ore grade at Zone 4 [at the Holt mine] thus far is in line with our expectations; that the development at Smoke Deep [at the Holloway mine] is progressing well; and we are confident we will be able to bring these zones into production in the second half of this year."
Indeed, despite a slightly decreased outlook for its Hislop Mine, which is now expected to produce between 18,000 and 21,000 ounces of gold for the year, the company actually increased its guidance for the Holloway Mine.
The Holloway Mine, located nearby the Holt Mine outside of Timmins, Ontario, is now anticipated to produce between 23,000 and 26,000 ounces of gold in 2011, up from its original forecast of 20,000 and 23,000 ounces in May.
Still, the company expects the cost of operation for its Holloway mine to remain high, at $1,128 per ounce, until the Smoke Deep zone is brought into production, expected during the second half of the year, and until mined ore grade improves, it said.
Meanwhile, the Holt mine, also in eastern Ontario, is expected to generated between 24,000 and 28,000 ounces of gold for the year.
St Andrew's $10.9 million 2011 exploration program has focused on targets near its existing operations, particularly east of the Holloway mine at the Deep Thunder zone, and the eastern extents of the Blacktop East zone, the Garrison Creek project and the Taylor project, for which it released strong results yesterday, including 9.88 grams per tonne gold over 9.0 metres.
"The exploration programs at the Deep Thunder Zone, Garrison Creek Project and in particular, at the Taylor Project, have all returned positive results," Perron added.
"We remain confident that our third and fourth quarters will deliver better results."
Exploration will continue at these properties, and will be extended to include the recently acquired Stroud project, located southwest of the Hislop mine, and an area northwest of the Hislop property.
In other news, St. Andrew announced favourable results from the Ontario Court of Appeal regarding its obligation under a royalty agreement with Newmont Canada and Barrick Gold Corp.