Elgin Mining Reports First Quarter 2013 Results

VANCOUVER, BRITISH COLUMBIA--(Marketwired - May 13, 2013) - Elgin Mining Inc. ("Elgin Mining" or the "Company") (TSX:ELG)(TSX:ELG.WT) reports its financial and operational results for the three months ended March 31, 2013. Elgin Mining owns and operates the Björkdal gold mine ("Björkdal") in Sweden, and is advancing the Lupin gold mine ("Lupin") in Nunavut, Canada towards a potential restart of operations. All figures are in Canadian dollars ($ or CAD) unless otherwise indicated.

A copy of the Company's financial statements and Management's Discussion and Analysis can be viewed on the Company's website at www.elginmining.com or on SEDAR at www.sedar.com.

First Quarter 2013 Highlights

• Gold production of 10,034 gold ounces;
• Cash cost per gold ounce¹ sold of US$1,246;
• Cash cost per gold ounce produced of US$1,348;
• Cash provided by operating activities before non-cash working capital changes was $0.5 million;
• Net loss of $3.6 million which included $2.5 million in Lupin pre-development costs;
• Basic and diluted loss per share of $0.02;
• Activities to improve the long-term production and profits of the Björkdal Mine are on-going. Initiatives in the areas of grade control and mine planning in both the open pit and underground have shown some initial benefits. However, other trial changes such as the use of new drill and blast patterns in the open pit during March and the cable-bolting of certain underground stopes prior to mining to reduce ore dilution will require further tests and refinements; and
• Finalized a Swedish krona 40 million equipment loan facility with a Swedish bank at an attractive variable interest rate of under 3.5% per annum to fund approximately $6.1 million of new mining equipment budgeted for in 2013.

Patrick Downey, President and CEO, stated "Gold production was slightly behind plan for the first quarter with a corresponding increase in per ounce cash cost as the Company continues to work on several initiatives to improve the average ore grade mined. We are confident that the effects of these initiatives, along with the Company's transition to owner-operated mining in the underground area scheduled for the third quarter of this year, will take hold over the next several quarters. We had expected the first quarter to be the most challenging quarter for the year due to known events, such as the changeover to the new open pit contractor, and possible negative variances from trial testing new mining procedures, particularly in the open pit. Already to date for the second quarter, grade and mill throughput have increased, with the mine operating at or ahead of plan in the areas of gold production and per ounce cash cost."

¹ "Cash cost per gold ounce" is a non-IFRS measure. Refer to the "Non-IFRS Measures" section of the Company's Management's Discussion and Analysis for an explanation and reconciliation of this measure to the Company's financial statements.

Liquidity and Capital Resources

	March 31, 2013		December 31, 2012
Cash and cash equivalents	$	11.5 million	$	15.8 million
Working capital	$	17.0 million	$	20.4 million
Gold concentrate inventory		1,945 ounces		2,552 ounces
Long-term debt, non-current portion	$	0.6 million	$	0.6 million

As detailed in its April 29, 2013 news release, the Company has taken a number of cost reduction measures to manage its existing cash resources in the most effective manner. The measures will allow the Company to ensure that Björkdal is funded for 2013 to carry out its near-term operational improvements despite the recent decline in the price of gold.

To improve liquidity, the Company is currently in advanced discussions with a number of lenders in regards to a revolving credit facility. Management is optimistic that the closing and announcement of such a facility can be made before the end of the second quarter.

First Quarter 2013 Financial and Operational Summary

Due to the Company changing its fiscal year end from November 30 to December 31 in the previous fiscal year, the Company's results discussed below are for the three months ended March 31, 2013 with comparatives for the three months ended February 29, 2012.

		For the three		For the three
		months ended		months ended
		March 31, 2013		February 29, 2012
Gold ounces sold		10,644		10,750
Gold ounces produced		10,034		10,826
Revenue	$	16,736,206	$	17,936,648
Production costs, excluding depreciation and depletion	$	13,302,557	$	10,745,240
Income from mining operations	$	959,199	$	5,361,905
Exploration expense	$	123,867	$	104,305
Lupin pre-development	$	2,505,563	$	-
Net (loss) income	$	(3,598,884)	$	529,725
Net (loss) earnings per share
- Basic	$	(0.02)	$	0.01
- Diluted	$	(0.02)	$	0.01
Cash flow (used in) provided by operations	$	(2,844,203)	$	2,269,473
Cash and cash equivalents	$	11,509,958	$	15,918,347
Average realized gold price (USD per ounce)	$	1,618	$	1,700
Cash cost per gold ounce sold (USD per ounce)	$	1,246	$	1,033

Björkdal Gold Mine - Skellefteå, Sweden

								Four months
								ended
Operating Data		Q1-2013		Q4-2012		Q3-2012		June 30 2012		Q1-2012
Open Pit (tonnes)			121,912		128,965		139,128		193,238		155,728
Open Pit (gpt)			0.97		1.12		1.15		0.87		0.86
Underground (tonnes)			140,569		139,002		131,712		215,004		141,525
Underground (gpt)			1.50		1.65		1.37		1.45		1.59
Stockpile (tonnes)			32,674		38,859		57,507		24,188		20,242
Stockpile (gpt)			0.61		0.77		0.55		0.86		1.08
Tonnes milled			295,155		306,826		328,347		432,430		317,495
Plant throughput (tonnes per day)			3,280		3,335		3,569		3,545		3,489
Average plant head grade (gpt)			1.18		1.32		1.13		1.16		1.20
Average plant recovery rate			89.4%		87.8%		87.6%		87.6%		88.5%
Gold (ounces)
	- Produced		10,034		11,401		10,460		14,121		10,826
	- Sold		10,644		12,572		9,463		13,744		10,750
Average realized gold price (USD/oz)		$	1,618	$	1,608	$	1,800	$	1,571	$	1,700
Cash cost per gold ounce sold (USD/oz)		$	1,246	$	938	$	1,052	$	1,071	$	1,033
Cash operating margin per ounce sold (USD/oz)		$	372	$	670	$	748	$	500	$	667
								Four months
								ended
Production Costs Data		Q1-2013		Q4-2012		Q3-2012		June 30 2012		Q1-2012
			SEK		SEK		SEK		SEK		SEK
Ore tonnes milled			295,155		306,826		328,347		432,430		317,495
Mining costs per ore tonne milled
	Open Pit		153		107		106		93		91
	Underground		255		241		192		215		251
	Stockpile		8		15		9		8		8
	Average mining costs per ore tonne milled		186		156		123		149		157
Processing costs per ore tonne milled			64		63		47		52		56
G&A and other site costs per ore tonne milled			33		32		22		28		26
Total production costs per ore tonne milled			282		251		192		229		239
Average SEK per USD exchange rate			6.43		6.65		6.74		6.89		6.79
		USD		USD		USD		USD		USD
Mining costs per ore tonne milled
	Open Pit	$	23.74	$	16.15	$	15.76	$	13.47	$	13.43
	Underground	$	39.69	$	36.28	$	28.40	$	31.17	$	37.03
	Stockpile	$	1.27	$	2.29	$	1.29	$	1.20	$	1.21
	Average mining costs per ore tonne milled	$	28.85	$	23.51	$	18.30	$	21.59	$	23.17
Processing costs per ore tonne milled		$	9.88	$	9.55	$	6.90	$	7.57	$	8.18
G&A and other site costs per ore tonne milled		$	5.08	$	4.76	$	3.23	$	4.07	$	3.88
Total production costs per ore tonne milled		$	43.81	$	37.82	$	28.43	$	33.23	$	35.23

Gold production for Q1-2013 was 10,034 ounces, which was 12% lower than Q4-2012 gold production due primarily to a 10% lower head grade coupled with a 4% drop in ore tonnes processed, offset in part by a 2% increase in the plant recovery. The drop in ore tonnes processed was due to plant throughput being negatively impacted by the commissioning of a new wetscreen in the grinding circuit which has now been rectified and by unscheduled maintenance made in the current quarter.

Open pit ore grades are expected to trend higher over the remainder of 2013 as higher grade blocks are expected to be mined and as grade control initiatives, including further refinements to patterns for drill and blast, take hold.

Underground ore grades are also expected to improve as we modify and improve the method of cable- bolting the underground stopes, the underground transition to owner-operated drift mining is made in Q3- 2013, and benefits of other on-going grade control initiatives are realized.

Cash cost per gold ounce sold for Q1-2013 was US$1,246 per ounce, which was 33%, or US$308 per ounce, higher than Q4-2012 cash cost per gold ounce sold of US$938, due mainly to higher per ounce cash cost from lower head grades, higher per tonne operating costs and a stronger SEK currency in the current quarter.

The higher per tonne open pit mining costs were unusual and reflected a higher-than-average strip ratio as part of mine sequencing, reduced ore tonnage from normal inefficiencies encountered on the changeover to the new open pit contractor in January, and higher costs associated with the transition to new drill and blast techniques and patterns. Open pit mining costs per tonne are expected to return to levels seen in previous quarters for the remainder of 2013.

Underground mining costs per ore tonne also increased in the current quarter due to the processing of a greater tonnage of higher-cost contractor cable-bolted stope ore and repair costs incurred for mechanical failures to the underground production drill and scooptram in February 2013, which also lowered the quantity of stope ore mined. Underground mining costs per ore tonne are expected to remain elevated until the changeover from contractor to owner-operated ore mining and the subsequent ramp-up are successfully completed.

Lupin

As a cash conservation measure, the Lupin camp and operations were shut down in late April 2013 and will remain closed indefinitely. No mobilization of mining equipment to site was made and no underground mining activity was conducted prior to closure of the camp. Only essential work will continue during this period of shutdown to ensure all key permits are kept in good standing.

The Lupin camp and surface infrastructure are in excellent condition and will allow Lupin to re-open expeditiously should market conditions and the price of gold, among other factors, improve to allow the Company to re-commence work.

Conference Call Details

Elgin Mining will host a conference call and a presentation/audio webcast on Tuesday, May 14, 2013 at 9:00 am (Eastern Time).

Live Dial-In Information

Toronto and International: 416-340-2216

North America (Toll Free): 866-226-1792

Participant Audio Webcast: www.elginmining.com

Replay Call Information

Toronto and International: 905-694-9451 passcode 8807287

North America (Toll Free): 800-408-3053 passcode 8807287

The conference call replay will be available from 2:00 pm (Eastern Time) on May 14, 2013, until 11:59 pm (Eastern Time) on May 28, 2013.

Elgin Mining Inc.

Elgin Mining is a Canadian based company focused on production at the Björkdal gold mine in Sweden, and on advancing the Lupin gold mine, located in Nunavut, Canada, to a production decision. In addition, Elgin Mining's portfolio includes the Ulu gold project located approximately 155 kilometers north of the Lupin gold mine in Nunavut, Canada, a 29.5% interest in Auracle Resources Ltd., which is exploring the Mexican Hat property in Arizona, an exclusive right and option to earn a 60% interest in Lincoln Mining Corporation's Oro Cruz (California) and La Bufa (Mexico) gold projects and an option to earn a 60% interest in North Arrow Minerals Inc.'s Contwoyto gold project located adjacent to the Lupin gold mine in Nunavut, Canada. Elgin Mining also selectively reviews opportunities to add advanced stage development projects to its portfolio. The Company has a strong balance sheet, generates cash flow from gold sales, and remains un-hedged.

Cautionary Note Regarding Forward-Looking Information

This news release contains "forward-looking information" within the meaning of Canadian securities legislation and "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. Except for statements of historical fact relating to the Company, information contained herein constitutes forward-looking statements, including any information as to the Company's strategy, plans or future financial or operating performance. Forward-looking statements are characterized by words such as "plan," "expect", "budget", "target", "project", "intend," "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made, and are inherently subject to a variety of risks and uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those projected in the forward-looking statements.

These factors include risks relating to variations in the mineral content within the material identified as mineral reserves and mineral resources from that predicted, changes in development or mining plans due to changes in logistical, technical or other factors, the impact of general business and economic conditions, global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future conditions, fluctuating metal prices and currency exchange rates, possible variations in ore grade or recovery rates, changes in accounting policies, changes in the Company's corporate resources, changes in project parameters as plans continue to be refined, changes in project development and production time frames, the possibility of project cost overruns or unanticipated costs and expenses, higher prices for fuel, steel, power, labour and other consumables contributing to higher costs and general risks of the mining industry, failure of plant, equipment or processes to operate as anticipated, unexpected changes in mine life, unanticipated results of future studies, seasonality and unanticipated weather changes, costs and timing of the development of new deposits, success of exploration activities, successful completion of proposed acquisitions, permitting time lines, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims, limitations on insurance coverage and timing and possible outcome of pending litigation and labour disputes as well as those risk factors discussed or referred to in the Company's Annual Information Form dated March 22, 2013, a copy of which is filed on SEDAR at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended.

There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The Company undertakes no obligation to update forward-looking statements if circumstances or management's estimates, assumptions or opinions should change, except as required by applicable law. The reader is cautioned not to place undue reliance on forward-looking statements. The forward-looking information contained herein is presented for the purpose of assisting investors in understanding the exploration and development plans and objectives and may not be appropriate for other purposes.