San Gold Corporation reported unaudited consolidated earnings results for the second quarter and six months ended June 30, 2014. The company reported quarterly loss from operations of CAD 4.2 million and a total and comprehensive loss of CAD 8.5 million, compared to income from operations of CAD 3.4 million and a total and comprehensive loss of CAD 3.6 million in the second quarter of 2013. The change in loss from operations is primarily due to reduced gold production and gold sales in the second quarter of 2014. The increase in loss from operations was partially offset by a CAD 4.8 million decrease in depletion expense. The decrease in depletion expense is due to the reduced carrying value of mineral properties resulting from the non-cash impairment charge recognized in the fourth quarter of 2013 and due to the decrease in gold production. Gold sales revenue in the second quarter of 2014 of CAD 20.0 million was 34% lower than revenues of CAD 30.4 million recognized in the second quarter of 2013. The decrease in gold sales revenue in the second quarter of 2014 is a result of a 35% decrease in the number of ounces sold. The average realized gold price was relatively consistent compared to the second quarter of 2013. Loss before income tax was CAD 8.5 million against CAD 5.431 million of prior year period. Loss before other income and expenses was CAD 5.73 million against CAD 3.8 million a year ago. Basic and diluted net loss per share was CAD 0.02 against CAD 0.01 a year ago. In the second quarter of 2014, the company invested CAD 6.6 million in mine development activities and recognized related depletion of CAD 3.1 million, compared to an investment of CAD 12.9 million and depletion of CAD 7.8 million in the same period of the prior year. The company capitalized CAD 1.8 million of property, plant, and equipment during the second quarter of 2014 compared to CAD 4.1 million in the same quarter of the prior year.

For the six months, the company reported loss from operations of CAD 6.96 million and a total and comprehensive loss of CAD 16.2 million, compared to income from operations of CAD 3.34 million and a total and comprehensive loss of CAD 13.23 million a year ago. Revenue was CAD 34.91 million against CAD 54.7 million a year ago. Loss before income tax was CAD 16.2 against CAD 16.6 of prior year period. Loss before other income and expenses was CAD 11.804 million against CAD 13.92 million a year ago. Basic and diluted net loss per share was CAD 0.04 against CAD 0.04 a year ago. Cash provided by operating activities was CAD 3.9 million or CAD 0.02 per basic and diluted share against CAD 5.1 million or CAD 0.01 per basic and diluted share a year ago. Capital spending in the second quarter of 2014 was focused on increasing mining capability, improving key infrastructure, and sustaining capital. For the quarter ended June 30, 2014, the company invested CAD 8.4 million in operating and development capital compared with expenditures of CAD 17.0 million in the same quarter of the prior year.

The company produced 11,375 ounces of gold during the quarter compared with 22,526 ounces in the second quarter of 2013. Lower gold production in the second quarter of 2014 relative to the same period of 2013 was primarily the result of the company's revised mine plan. This resulted in a 29% decrease in tons of material processed by the mill. A 17% decrease in milled head grade was also experienced during the quarter as the company completed mining operations in previously developed, lower grade districts. Mill recovery was consistent with the second quarter of 2013 despite the lower head grade. challenges related to the transition from mechanical cut and fill to long-hole mining as the company's primary mining method and the implementation of new grade control initiatives. During the second quarter of 2014, the Rice Lake mill processed 115,802 tons of ore at an average grade of 4.18 grams of gold per tonne of ore. The company achieved a quarterly mill throughput rate of 1,273 tons per day in the second quarter of 2014, a 29% decrease compared to throughput of 1,784 tons per day in the second quarter of 2013. The decrease in mill throughput relative to the prior period was mainly the result of decreased tonnage delivered from the mine. During the second quarter of 2014, the company mined ore at a quarterly rate of approximately 1,231 tons per day for a total of 112,018 tons, a decrease of 35% compared to the rate of 1,905 tons per day in the same period of 2013. The company has intentionally reduced its mining rate compared with last year to ensure sufficient development work can be completed to facilitate improved decision making ahead of mining operations.

The company expects recent changes to result in improved grade for the balance of the 2014 and a further decrease in capital development and property, plant and equipment spending requirements.