3Q Financial Details - Post 1
posted on
Nov 29, 2007 02:06PM
San Gold Corporation - one of Canada's most exciting new exploration companies and gold producers.
Excerpts:
The Company recognized revenue during the quarter of $1,431,951 on 1,896 oz. of gold shipped (Q3 2006 - $0). This is consistent with the revenue and production level of the previous quarter and represents an increase over the same quarter in the previous year when the Company did not produce any gold. The Company is still expending resources on maintaining and bringing its operations to higher levels of productive utilization. There are a significant amount of fixed costs associated with enhancing the productive ability of operations which contribute to the increased level of expenditure over the previous year. In addition to ongoing working capital requirements, the Company must secure sufficient funding for exploration and development programs, general and administration costs and interest charges.
Towards this end, the Company was successful in closing a transaction during the quarter, pursuant to which 3,448,276 Flow-Through Shares were issued for aggregate gross proceeds of $5,000,000. Additionally, in the period subsequent to the quarter, the Company entered into a letter of engagement whereby a group of underwriters have agreed to purchase on a bought deal private placement basis 17,900,000 units (the "Units") of San Gold at a price of $1.40 per Unit for total gross proceeds to the Company of $25,060,000. The Underwriters have an option, exercisable at any time on or before the second business day prior to the closing date, to purchase up to an additional 10,725,000 Units for approximately $15 million in additional gross proceeds. Each Unit consists of one common share plus one half of one transferable common share purchase warrant exercisable into a common share at a price of $2.00 for a period of 18 months from closing.
The Company capitalized $1,627,221 of expenditures during the most recently completed quarter ($7,350,837 for the YTD) related to the Rice Lake and SG #1 mineral properties and acquired $915,103 of property, plant and equipment during the quarter ($3,675,224 for the YTD). The Loss from operations for the quarter ended September 30, 2007 was $8,644,289 compared to $9,510,390 in the same quarter last year. The Company has capitalized its development of mineral properties consistent with its policy. The level of expenditure on exploration activities has reduced significantly compared to the same period last year – this is consistent with the shifting of activities towards production. There was no production in the same quarter last year so activity was directed towards developmental activities
General and Administrative expenses were $1,113,290 for the most recently completed quarter compared to $1,465,863 for the same quarter last year.
As a result of the above noted, the loss for the 3 months ended September 30, 2007 was $6,567,151 compared to a loss in the prior year in the same quarter of $8,918,104 and on a year to date basis, the loss for the nine months is $23,063,424 compared to $27,364,676 for the same period last year. It is somewhat difficult to compare the periods directly because the Company is approaching commercial production. As a result, activity levels are significantly higher and amortization of property, plant and
equipment have commenced without a commensurate increase in revenue associated with commercial levels of production.
While there has been a modest increase in revenue over the last quarter, management anticipates that there will be continued increasing levels of production and stabilization of operational expenses. In considering variations in quarterly activity, of significance in the 4th quarter of 2006 and to a lesser extent in the second quarter of 2006 was the inclusion of revenues received on account of the Red Mile royalty and investment transactions. These revenues and expenses continue into the 2007 fiscal year.
Note that gold revenue is identified in the fourth quarter of 2006. Management also notes that the level of gold inventory increased at the end of the most recently completed quarter by $1,070,987 over December 31, 2006 as a result of gold in circuit that was poured and shipped early in the subsequent period. Revenue on this gold will not be recognized until the fourth quarter of 2007.