RE: gbn REVIEW OF QUARTERLY FINANCIAL RESULTS
During Q1 2013, the Company produced 8,395 gold ounces and 2,413 silver ounces. In Q1 2012, the Company
produced 10,933 gold ounces and 2,791 silver ounces. The reduced gold production is due to a lower tonnage
from Roy Lloyd underground mine (13,213 tonnes at July 31, 2012 compared to 21,623 tonnes at July 31, 2011),
as well as commencement of shrink stoping mining method and continuing challenges with contractor
performance.
The Company sold 7,929 gold ounces in the first quarter of 2013 generating revenue of $12,681,297, an
average realized gold price of $1,599. In Q1 2012 the Company sold 10,031 gold ounces generating revenue of
$14,955,812, an average realized gold price of $1,491.
During Q1 2013, cash cost of sales were $11,025,952 compared to $9,038,934 in the same period of the 2012
fiscal year. Non-IFRS total cash costs per gold ounce sold were $1,391 for Q1 2013 compared to $901 for Q1
2012 due to the reasons identified above. To address contractor performance, a Mine Superintendant has been
contracted to provide direct oversight of onsite contractors.
Depletion and amortization for Q1 2013 was $4,264,041 as operational assets, are being depleted and
amortized on a unit of production basis over the remaining ounces in the resource base for deposits in
commercial production.
General and administrative expenses for Q1 2013 were $2,587,301 compared to $1,562,654 in Q1 2012. These
expenses were higher in the current year due to financing costs on vendor accounts of $1.2 million. Wages and
benefits were $460,326 for Q1 2013 compared to $370,857 in Q1 2012 as certain permanent positions that were
vacant in Q1 2012 were filled for Q1 2013.
Exploration expenses were $67,600 in Q1 2013 as the Company continues its exploration program in the La
Ronge gold belt.
The Company incurred a loss of $3,579,687 in Q1 2013 compared to a net loss of $1,304,996 as production and
sales of gold ounces was lower in Q1 2013 (8,395 ounces and 7,929 ounces, respectively) compared to Q1
2012 (10,933 ounces and 10,031 ounces, respectively).
The Company recorded cash flow from operations of $164,872 for Q1 2013 compared to cash from operations
of $11,905,330 for the same period in the previous fiscal year as gold ounces sold decreased to 7,929 ounces in
Q1 2013 from 10,031 ounces in Q1 2012.
Roy Lloyd Underground Mine
Roy Lloyd mine is an underground mine extracting ore from the Bingo deposit. Initial production began in late
2010 and continued, at depth, through the first quarter of 2013. In the first quarter of the 2013 fiscal year,
underground mine production was 13,213 tonnes at an average grade of 13.88 g/t gold, a decrease of 39% from
the Q1 2012 of 21,623 tonnes as mining operations were adjusted for the changing nature of the Roy Lloyd ore
body at increasing depth.
As the ore body continues at depth not only has the grade become more variable but the physical nature of the
ore body has morphed from a generally tabular consistent unit to a sinuous, pinching and swelling unit. This is
generally more prevalent on the north side of the central fault, which, as the deposit deepens the ore zones drift
from the south to north resulting in a larger percentage of the ore body contained in the highly variable regime.
To address the change in the ore body, the mining methodology has shifted from large equipment and long-hole
stoping, which resulted in significant dilution of the ore, to shrinkage stoping targeting