Grandich Client Timmins Gold

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July 24, 2012 07:04 PM


I spoke with CEO Bruce Bragagnolo and here’s his overview of where Timmins Gold stands:

Peter, I’m leased to report that operations at the mine are proceeding as per our expectations.

Production:

Just reported our Q2 production statistics and it was our best quarter ever just having sold 23,300 ounces of gold as we ramp up to 100,000 ounces sold this year. We anticipate that Q3 and Q4 will show further incremental increases.

We are currently in ongoing expansion mode as we are increasing our throughput. This expansion will initially take us from 18,000 tpd to 22,000 tonnes per day.* Further expansion planned for 2013 will result in 30,000 tpd and annual gold production of 130,000 ozs.

We have also made numerous modifications at the mine which will result in a more efficient and lower cost mining operation. This includes blasting improvements, sequencing of trucks in the pit, proper flow of solutions, metallurgical testing, more carbon column capacity, installation of a new tertiary crusher, new screen and feeder to remove bottleneck at primary crusher, and are commencing installation of a *pre-screen system to increase the flow of ore to the heap pads.* Four drill rigs are now turning only 1.5 km away at the La Chicharra pit in order to fine tune the expansion plan. All of this expansion is and has been financed from cash flow.

Along the way we have addressed many concerns that have directed our way:

-******* Size of deposit

• Initially was over 700,000 ozs and now is just under 3,000,000 ozs and we are continuing to drill. We have yet to find the limit of the mineralization either along strike or at depth.

-******* Life of mine

• Was 5 years now over 7

-******* Recoveries

• Are in line with target of approximately 68.5% life of mine

-******* Throughput

• Original plan called for 10,500 tpd and now will more than double to 22,000 tpd on its way to 30,000 tpd.

-******* Costs

• Are stabilizing

Exploration:

We currently have 4 drill rigs turning at the mine specifically at the La Chicharra open pit (located 1.5 kms away from main pit). There is an existing deposit there and our objective is to continue to drill in order to fine tune the extraction plan.* *We are very encouraged with results to date.

We have started a first phase core drill program at our project in Zacatecas. This property is located by Goldcorp’s Penasquito mine and near its Camino Rojo deposit. More information will be coming very shortly.

Financial:

We have been stabilizing our balance sheet as we had over $18 million cash on hand at the end of last quarter and this number is expected to continue to increase. Q2 financials will be published in mid August.

We also recently announced the extension of our $18 million line of credit with Sprott which now matures in 18 months at an interest rate of 8%.* The objective here was to provide us with a cushion as we have financial commitments remaining on capital expenditures (funding our expansion).

Misc:

We are fully permitted for our planned expansion and have also purchased additional land for the expansion. We have sufficient water and power and have both a short term supply of cyanide on site (4 months) and a long-term contract.

Analyst Coverage:

We now have 9 firms covering Timmins Gold and the most recent from the United States is Dahlman Rose.

Short term Plans:

1. Complete our 2012 expansion and realize production of 100,000 ozs in 2012.
2. Continue to drill San Francisco and La Chicharra to both find new ounces and convert existing inferred resources into the mine plan which will further extend the life of mine.
3. Add cash to the balance sheet.
4. Review strategic and accretive acquisitions.

All in all I’m most pleased with TImmins Gold stands today in a market that’s been challenging to say the least.

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