Mr. Robert Hutmacher reports

SUTTER GOLD MINING INC. FAVORABLY RESTRUCTURES ITS DEBT OBLIGATIONS AND PROVIDES PROJECT UPDATE

Sutter Gold Mining Inc. has entered into an agreement for a restructured senior secured term loan facility with RMB Australia Holdings Ltd. The new facility will replace the current prepaid gold facility between Sutter and RMB Australia dated July 14, 2011, and the bridge loan facility dated Oct. 18, 2012, as amended and restated.

Key terms and conditions of the senior secured term loan facility include the following:

• The existing forward positions associated with the prepaid gold facility have been closed out at market according to the close out protocol agreed between the company and RMB Australia, with the resulting marked-to-market value of the prepaid gold facility obligations forming part of the principal amount to be restructured in the senior secured term loan facility. The prepaid gold facility refinancing amount is $17.05-million.
• The bridge loan facility principal of $19.97-million will be refinanced as additional principal under the senior secured term loan facility.
• The total amount available under the senior secured term loan facility will be $40-million, for the purpose of repaying amounts owing under the prepaid gold facility close out and bridge loan facility, and for continued development of the Lincoln project and general corporate purposes.
• The senior secured term loan facility will bear interest at Libor plus 5 per cent per annum, payable quarterly beginning March 31, 2014, and continuing until repayment of the facility.
• Scheduled principal repayments of the senior secured term loan facility will commence on Dec. 31, 2014, on a quarterly basis through March 31, 2018.
• Mandatory prepayments of the senior secured term loan facility will be made equal to 75 per cent of the available free cash flow after all project and corporate costs, interest, and scheduled repayments on a quarterly basis.
• The senior secured term loan facility may also be prepaid by the company at any time without penalty, in part or in whole.
• Upon commencement of commercial production the company may enter into gold hedging arrangements with RMB Australia, at its discretion, over a maximum of 60 per cent of forecast production over the term of the senior secured term loan facility.

The key benefits of restructuring the prepaid gold facility are to crystallize and reduce the obligations of the company in a transparent manner, with the marked-to-market value at close $2.95-million less than the nominal $20-million borrowed at inception under the prepaid gold facility. The close out of the prepaid gold facility allows for all future production to be sold at spot rather than at a blend of the $941-per-ounce delivery price under the prepaid gold facility and the spot price. This improves expected cash flow for debt service and allows for the consideration of new hedging at a higher price point that would provide a greater degree of downside gold price protection during debt repayment. In addition, the senior secured term loan facility reduces the interest rate on funds borrowed under the bridge loan facility from Libor plus 10 per cent to Libor plus 5 per cent.

The senior secured term loan facility is subject to the approval of the TSX Venture Exchange.

Project update

Underground development associated with the most recent work program (see press release of July 3, 2013) was completed in November, ahead of schedule and on budget. The development completed the lateral and vertical development required to establish secondary egress from the mine to achieve regulatory compliance allowing for production mining. Additional development on the 900, 1000 and 1100 levels exposed key mineralized veins, improving the project geological models and reducing geologic risk, as well as providing enhanced information for detailed mine planning and additional development required for access and commencement of production mining from initial mining panels.

Progress at the mill was hampered by poor design elements, inappropriate equipment selection and improper installations, made apparent from the processing of approximately 400 tons of stockpiled mineralized material. Process and metallurgical consultants were engaged to assess these issues, and have made several recommendations that have been implemented with respect to changes in the process flow sheet, selecting new equipment, and improving operating protocol and procedure. Mill operation has recommenced, and the process of commissioning the milling facilities for production is under way.

The company is finalizing the budget and programs for the next phase of work at the Lincoln project. This work program will entail:

• The additional underground development required to allow for the commencement of production from mining panels between the 900 and 1000 levels, and between the 1030 sublevel and the 1100 level;
• Processing of 3,000 to 3,500 tons of mineralized material stockpiles to identify and correct any remaining bottlenecks, optimize mill operations, complete commissioning of the processing facilities for production, and generate revenue from the gravity and flotation circuits;
• Completing detailed mine planning for the first 12 months of mine production and revisiting the life-of-mine plan, as appropriate, with the additional information generated from the recently completed mine development and the detailed mine plan for the first year of mine production.

The work plan is scheduled for completion by the end of March, 2014, with an overall objective of having the mine and mill in a position to commence mining and milling operations.

Rick Winters, interim president and chief executive officer, commented: "We are pleased with the continued support of the company and project by RMB in refinancing our existing obligation on favourable terms, and providing continuing funding to move forward with our next phase of work. We have been very pleased with the underground development we have completed, and have an improved understanding of our principal veins and our approach to continued development and mining. The issues we experienced as we began running the mill were more troublesome than we expected, though we are confident we have identified the problems and bottlenecks, and addressed them to allow for sustained processing of our existing stockpiles and commissioning of the processing facilities over the next three months. Fortunately, a fundamental positive for the project is excellent metallurgy, as demonstrated from nearly eight million ounces produced historically and extensive testwork that has been completed for the project. We look forward to generating initial revenue in the first quarter of 2014 as we execute our next work program and plan on having the project in a position to be able to commence production at its conclusion."

We seek Safe Harbor.