2012 marked a year of significant milestones in terms of both financial and operational metrics. In 2012, the Company achieved record operating performance with record gold production of 86,506 ounces, a 16% increase compared to the same period of 2011. Investments made in crushing and milling capacity, the implementation of more cost-effective mechanized mining methods, and the removal of constraints from operations will continue to contribute to increased gold production.
In 2012, the Company completed a significant exploration program within the Rice Lake greenstone belt. Approximately 221,000 metres of exploration diamond drilling were completed by the Company. The Company is very encouraged by the results of the exploration drilling completed to date as it continues to demonstrate the potential for the expansion of existing mineralized zones and the discovery of new zones in the Rice Lake area.
Review of Financial Results
The Company reports a total and comprehensive loss of $13.2 million for 2012, compared with a loss of $5.1 million in 2011. The change was due in large part to the increased rate of depletion of mineral properties expense after the new resource and reserve estimate was released during the second quarter. Depletion expense was $41.2 million in 2012, compared with depletion expense of $18.3 million in 2011. This is a 126% increase in the recognized expense while production levels increased by only 16%.
San Gold earned revenue of $142.1 million in 2012, a 25% increase compared to revenue of $114.1 million in 2011. This increase was a result of both increased gold sales and an increased realized price of gold. The Company sold 85,690 ounces of gold in 2012, a 20% increase compared to gold sales of 71,684 ounces in 2011. The Company realized $1,659 per ounce of gold sold in 2012, a 4% increase compared to the $1,592 the Company realized per ounce in 2011.
The Company generated record cash flow from operating activities before changes in non-cash working capital of $42.1 million in 2012, a substantial increase compared to a $19.9 million in 2011. After changes in non-cash working capital, operating activities generated $51.1 million in 2012, compared to $9.6 million in 2011.
The Company reported income from operations of $20.6 million, compared with income from operations of $30.4 million from operations in 2011.
Capital spending in 2012 was focused on mine development, increasing mill capacity, improving key infrastructure, and sustaining capital. The Company capitalized $62.2 million of mine development and $15.5 million of property, plant, and equipment during the year compared to $50.4 million and $27.8 million in 2011, respectively.
Tables 1 to 4 at the end of this release provide a detailed summary of the Company's key financial and operating metrics for 2012.
The Company is pleased to report strong operating and financial results emphasizing its transition from explorer to positive cash flow gold producer while executing its plan to aggressively explore and develop the Rice Lake greenstone belt. Going forward, the Company anticipates improved operating cash flows while reinvesting in its mineral properties.
2013 will mark another significant step forward in the evolution of the Rice Lake Mining Complex by extending operational access beneath the current mining areas at the 007 and Hinge mines. This development will provide the drill platforms required to increase mineral reserves for long-term mine planning and will also provide access for continued exploration of targets located along strike from known deposits at depth. The Company continues to be excited about the resource potential at depth as recent drill results below 26 Level confirms continuity of the geological structures.
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