Mr. George Pirie reports

SAN GOLD REPORTS 2012 Q1 RESULTS

San Gold Corp., with greatly improved operating cash flow and cash costs, and record gold production, is releasing its quarterly financial and operating results for the first quarter of 2012.

2012 first quarter financial and operating highlights:

• Generated quarterly operating income from operations of $8.0-million, compared with income from operations of $3.2-million in the first quarter of 2011;
• Recognized quarterly total and comprehensive loss of $700,000, compared with total and comprehensive loss of $5.3-million in the first quarter of 2011;
• Cash flow from operating activities before changes in non-cash working capital of $10.0-million, compared with $600,000 in the first quarter of 2011;
• Produced a record 22,162 ounces of gold, a 51-per-cent increase compared with 14,688 ounces in the first quarter of 2011;
• Recognized record quarterly revenue of $35.5-million on gold sales of 21,322 ounces at a realized price of $1,665 per ounce, a 79-per-cent increase from revenue of $19.8-million in the first quarter of 2011;
• Achieved record average mill throughput of 1,687 tons per day for the quarter, an 8-per-cent increase compared with average mill throughput of 920 tons per day in the first quarter of 2011;
• Achieved total cash costs of $840 per ounce of gold sold, compared with $862 per ounce sold in the first quarter of 2011;
• Realized a cash operating margin of $825 per ounce of gold sold with a realized price of $1,665 per ounce through the quarter;
• Had a cash and cash equivalents balance of $36.2-million as at March 31, 2012;
• Completed approximately 64,000 metres of exploration and definition diamond drilling;
• Appointed Torben Jensen as vice-president, corporate development, in the subsequent period.

"It is incredible to see the mining complex taking shape in Rice Lake. Rice Lake has now reached the point where the cash contribution from operations is financing substantial vertical and lateral development in the 007 and Hinge zones. Development work continued ahead of schedule during the quarter, providing additional flexibility to our mine planners. With total tonnage now on budget, we believe this flexibility is critical to refining the mining sequence toward improving overall production volumes," said George Pirie, president and chief executive officer of San Gold.

Review of financial results

The company reports quarterly operating income from operations of $8.0-million, and a total and comprehensive loss of $700,000, compared with income from operations of $3.2-million, and a total and comprehensive loss of $5.3-million, in the first quarter of 2011. The improvement was a result primarily of increased production volumes. The company produced 22,162 ounces of gold during the first quarter of 2012, compared with 14,688 ounces in the first quarter of 2011.

The company earned revenue during the first quarter of 2012 of $35.5-million, a 79-per-cent increase over revenue of $19.8-million in the first quarter of 2011. This increase was a result of both greater gold sales and a higher realized price of gold. The company sold 21,322 ounces of gold in the first quarter of 2012, a 52-per-cent increase, compared with sales of 14,059 ounces in the first quarter of 2011. The company realized $1,665 per ounce of gold sold in the first quarter of 2012, an 18-per-cent increase compared with the $1,410 the company realized per ounce in the first quarter of 2011. San Gold recognized an expense of $1.0-million associated with its share of SGX's loss for the quarter. The carrying value of the company's investment in SGX is currently therefore recognized at $1. The market value of the company's 28.6 million shares of SGX is $12.3-million as at March 31, 2012.

The company generated record cash flow from operating activities before changes in non-cash working capital of $14.2-million in the first quarter of 2012, a substantial change compared with a use of $4.4-million in the first quarter of 2011. After changes in non-cash working capital, operating activities generated $9.6-million in the first quarter of 2012, compared with a use of $10.0-million in the first quarter of 2011.

Capital spending in the first quarter of 2012 was focused on mine development, increasing mill capacity, improving key infrastructure and sustaining capital. The company capitalized $14.6-million of mine development, and $3.7-million of property, plant and equipment, during the first quarter of 2012, compared with $12.9-million and $10.7-million in the first quarter of 2011, respectively.

2012 guidance:

• Production of between 95,000 and 105,000 ounces of gold;
• Cash costs of $700 to $800 per ounce of gold;
• Exploration of in excess of 250,000 metres of diamond drilling.

Outlook

The company remains on track to produce between 95,000 and 105,000 ounces of gold in 2012, at a cash cost of between $700 and $800 per ounce sold, and maintains its preliminary forecast of 115,000 to 125,000 ounces for 2013.

Capital expenditures will focus on development in the 007 and L10 zones, and on the 16 and 26 levels of the Rice Lake mine, as well as maintaining and improving the mining fleet, additional mill improvements, and continued expansion of the tailings facility. In the 007 and L10 zones, declines are being advanced below 300 metres from surface. A 5.5-metre-diameter-raise bore hole is also being constructed to a depth of 335 metres to facilitate ventilation of working areas in the downdip extension of the 007 zone. In the Rice Lake mine, development work remains focused on the 98 and 84 veins on 26 level and on extending 16 level. Development continues from the 16 level of the Rice Lake mine to access the Shoreline basalt deposits. This access will allow the company to develop the exploration platforms and infrastructure required to explore and exploit these deposits from this horizon.

Bissett area exploration efforts remain focused primarily along the Shoreline basalt unit, with particular attention being paid to the L10, 007 and L8 zones. Drilling continues to test the downdip extensions of the L10 zone from the 16 and 26 levels of the Rice Lake mine (730 metres and 1,220 metres below surface, respectively). Deep drilling continues from surface to trace the downdip extensions of the 007 zone. Exploration activity has commenced on the properties joint ventured in 2011. Additional drill plans for these properties will be determined by the results of previous drilling in conjunction with the company's contractual obligations.

2012 first quarter conference call

The company's senior management plans to host a conference call on Wednesday, May 9, 2012, at 11 a.m. Eastern Standard Time, to discuss the 2012 first quarter results, and to provide an update of the company's operating, exploration and development activities.

Participants may join the conference call by dialling 1-866-226-1793 for participants within Canada and the United States, or 1-416-340-8527 for participants outside of Canada and the U.S. The conference call will also be available by webcast on the company's website.

A recorded playback of the conference call can be accessed after the event until May 30, 2012, by dialling 1-800-408-3053 for callers within Canada and the U.S., or 1-905-694-9451 for callers outside Canada and the United States. The passcode for the conference call playback is 3604382. The archived audio webcast will also be available on the company's website.

  INTERIM CONDENSED CONSOLIDATED STATEMENTS OF NET LOSS AND COMPREHENSIVE
               LOSS FOR THE THREE-MONTH PERIOD ENDED MARCH 31   

                                                        2012           2011 

Revenue                                         $ 35,501,860   $ 19,817,478 
Operations                                                                  
Operations                                        27,517,466     16,619,833 
Income from operations                             7,984,394      3,197,645 
Exploration                                        4,601,290      5,305,747 
General and administrative                         4,672,796      3,170,564 
Loss before other income and expenses              1,289,692      5,278,666 
Other income (expenses)            
Finance income, net                                  298,713         61,533 
Finance (costs)                                     (114,831)      (118,636)
Equity (loss) of associate                        (1,000,000)             - 
                                                -------------  -------------
Loss before income tax                             2,105,810      5,335,769 
Income tax recovery on flow-through shares         1,415,612              - 
                                                -------------  -------------
Net loss and comprehensive loss 
for the period                                  $    690,198   $  5,335,769 
                                                =============  =============
Loss per common share
Basic                                           $       0.00   $       0.02 
Diluted                                         $       0.00   $       0.02 

We seek Safe Harbor.