Elgin Mining Reports Fourth Quarter and 2013 Results

Vancouver, British Columbia, March 24, 2014 – Elgin Mining Inc. (‘Elgin Mining’ or the ‘Company’) (TSX: ELG and ELG.WT) reports its financial and operational results for the three months and year ended December 31, 2013. Elgin Mining owns and operates the Björkdal gold mine (‘Björkdal Mine’) in Sweden, and holds the past-producing Lupin gold mine (‘Lupin’) and the Ulu gold property in Nunavut, Canada. 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.

Fourth Quarter 2013 Highlights

• Record quarterly gold production of 13,818 ounces;
• Cash cost¹ per ounce produced of US$862, an improvement of 24% from Q3-2013 cash cost per ounce produced of US$1,127;
• Successfully completed a full transition to owner-operated underground (‘UG’) mining operations at the Björkdal Mine;
• Saw continued improvements in operations in terms of grade and costs in all areas of the Björkdal Mine;
• Cash provided by operating activities of $2.5 million despite lower gold prices in the quarter; and
• Net loss of $8.1 million which included non-cash impairment charges of $4.2 million primarily for Ulu, $2.0 million in reclamation expense on the Company’s US depleted coal properties, and $0.4 million in Lupin care and maintenance costs.

Fiscal Year 2013 Highlights

• Gold production of 46,946 gold ounces was at the top end of the Company’s revised 2013 guidance, and a record since re-start of operations in 2006;
• Cash cost per gold ounce produced of US$1,097 per ounce was below the low-end of the Company’s revised 2013 guidance of US$1,125 per ounce; and
• Net loss of $25.4 million which included non-cash impairment charges of $9.2 million and $4.8 million in Lupin care and maintenance costs.

2013 Operational Highlights

• Transition from contractor to owner mining in the UG at the Björkdal Mine has exceeded early expectations². With owner operated mining, the Björkdal Mine now has full control over all aspects of the UG operations which will lead to better mine planning, pace of UG development, and grade control practices;
• Rectified operational issues in the Open Pit (‘OP’) by Q4 that had caused significant increases in the cost per tonne mined and the overall cash cost per ounce produced in earlier part of 2013;
• Commenced other operational improvements in Q2-2013 at the Björkdal Mine took effect in the last quarter of 2013 and resulted in higher average mill feed grades and lower per tonne mining costs which management believes will be sustainable over the long-term;
• Released an updated mineral resource and reserve estimate for the Björkdal Mine in June 2013 showing an overall increase in reserves and resources, net of mine depletion, from the previous estimate released in March 2012;
• Continued exploration of the OP and UG extensions of the Björkdal Mine by completing 8,805 metres and 1,631 metres of diamond drilling in the UG and OP, respectively. Assay results of drill intercepts from the 2013 drill program demonstrated that the Björkdal ore body remains open in multiple directions and holds a resource base that is supportive of management’s future mine and mill expansion plans;
• Streamlined corporate general and administration costs rapidly in response to the precipitous drop in the gold price starting in April 2013, and the Company’s decision to place Lupin back into care and maintenance;
• Secured a Swedish krona (‘SEK’) 40 million equipment loan facility with a Swedish bank at a favourable variable interest rate below 3.5% per annum to fund approximately US$6.1 million of new mining equipment. Approximately, SEK 27 million of this facility remains available at the end of 2013; and
• Strengthened the flexibility of the Company’s balance sheet upon the completion of a $2.95 million private placement of 24.6 million units on September 13, 2013 and a $5.0 million bridge loan facility due March 25, 2015 on September 25, 2013.

Patrick Downey, President and CEO, commented, ‘We finished 2013 strongly and I am very pleased that the operational improvements that we commenced in Q3 continued through Q4, which was a record in terms of gold production for the Björkdal Mine. The OP is now operating extremely well and the transition to fully owner-operated mining during Q4 has exceeded our expectations. This has resulted in lower unit costs and higher grades to the mill and, at the same time, improved mine planning and reduced sustaining capital development costs. Training of the new underground miners is still on-going and we can expect to see greater productivity and lower unit costs as final ramp-up is achieved later in 2014. Based on this successful transition, we are currently planning a 15% mill expansion to increase processing capacity from 1.3 million tonnes to 1.5 million tonnes annually. This additional capacity could increase overall gold production to 55,000 to 60,000 ounces per year with expected low capital expenditures, mainly related to mill upgrades.

We also had a very successful exploration program during 2013. Results have shown that the resource is still wide open along strike to the east and west and down-dip. Exploration results have also shown that there are areas of significantly higher grade that appear to be associated with folding of the main hanging wall, and we plan to focus on expanding those areas and testing new targets down-dip.

After a tough start to the year, we exited very strongly, have improved our balance sheet, have minimal debt and are well-positioned to generate significant free cash flow in the current gold price environment.’

Read more: http://www.elginmining.com/s/NewsReleases.asp?ReportID=643636&_Type=News-Releases&_Title=Elgin-Mining-Reports-Fourth-Quarter-and-2013-Results

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