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502 – 535 Thurlow Street
Vancouver, B.C. CANADA V6E 3L2
Telephone: 604-681-4653
Facsimile: 604-568-4902
Email: [email protected]

Thursday, August 30, 2012
TSX.V: MJS, FSE: A0BK1D

Majestic Gold reports 4,891 oz of gold produced at Song Jiagou in Q3 2012

Vancouver, British Columbia - Majestic Gold Corp. (TSX.V: MJS, FSE: A0BK1D) (“Majestic” or the “Company”) is pleased to report its third quarter of 2012 unaudited financial and operational results for the period ended June 30, 2012 (“Q3 2012”) and gold production results of its Chinese joint venture, Yantai Zhongjia Mining Enterprise Limited (“Zhongjia” or the “Joint Venture”) at the Song Jiagou property. Readers should refer to the Q3 2012 management discussion and analysis (MD&A) and consolidated financial statements for more complete information. The following financial results are expressed in US dollars unless otherwise stated.

Q3 2012 HIGHLIGHTS

  • 133% Increase in Gold Production: The Joint Venture produced 4,891 ounces of gold and sold 3,215 ounces of gold during Q3 2012, compared to gold produced of 2,099 ounces and 1,893 ounces sold during Q3 2011. 
  • 162% Increase in Revenues: Q3 2012 Joint Venture revenues were $6.8 million, compared to $2.6 million in Q3 2011.
  • 143% Increase in Gross Profit: Gross Joint Venture profit from operations was $1.7 million in Q3 2012, compared to
    .7 million in Q3 2011.
  • 200% Increase in Quarterly Operating Profit: Majestic’s share of Joint Venture operating profit during Q3 2012 was
    .6 million, compared to
    .2 million in Q3 2011. Majestic effectively owns 94% of 75% or 70.5% of operating profit.
  • Increased Milling Capacity: Increased Joint Venture revenues and profits are a result of increased throughput of ore following the commissioning of the 6,000 tpd mill in May 2011.
  • $6.76 Million of Estimated Gold Inventory: The Joint Venture has 4,055 ounces of gold in inventory valued at cost according to IFRS at $3,743,919 versus an estimated market value of $6,758,063 (based on spot close of $1,666.60/oz on August 28, 2012).

YEAR TO DATE HIGHLIGHTS

  • 225% Increase in Gold Production: The Joint Venture produced 14,237 ounces of gold and sold 10,403 ounces during the nine months ended June 30, 2012, compared to producing 4,384 ounces and selling 4,015 ounces during the nine months ended June 30, 2011
  • 240% Increase in Revenues: Joint Venture revenues for the nine months ended June 30, 2012 were $19.4 million, compared to $5.7 million for the nine months ended June 30, 2011.
  • 374% Increase in Gross Profit: Gross Joint Venture profit for the nine months ended June 30, 2012 was $7.87 million, compared to $1.66 million for the nine months ended June 30, 2011.
  • Shift to Cash-Flow Positive Operations: Majestic’s share of the operating profit for the nine months ended June 30, 2012 was $2.9 million, compared to a
    .4 million loss for the same period in 2011, representing a shift from operating loss to profit.
  • 19% Reduction in Cash Costs Per Ounce: Cash cost per ounce of $806 for the nine months ended June 30, 2012 decreased significantly from $995 during the nine months ended June 30, 2011 due to a contract re-negotiation for a lower mining and processing rate and efficiencies experienced through the commissioning of the new 6,000 tpd mill.

SUMMARISED INTERIM FINANCIAL STATEMENTS AND OPERATING RESULTS

 

Quarter Ended June 30, 2012

Quarter 
Ended June 30, 2011

9 months Ended June 30, 2012

9 months Ended June 30, 2011

Sales (ounces)

3,215

1,893

10,403

4,015

Average realized gold price per ounce

$1,604

$1,384

$1,704

$1,424

Gold revenues

$5,156,063

$2,620,658

$17,731,750

$5,718,904

Other Revenue including adjustments for smelting fees

$1,641,790

 

$1,641,790

 

Total Revenues

$6,797,853

$2,620,658

$19,373,540

$5,718,904

Operating costs, excluding depletion and depreciation

$3,384,546

$1,884084

$9,865,605

$4,056,992

Other Operating Costs including adjustments for smelting fees

$1,641,790

 

$1,641,790

 

Total Operating Cost

$5,026,336

$1,884,084

$11,507,395

$4,056,992

Cost per ounce (1)

$1,028

$968

$806

$995

Earnings before income tax and non-cash items

$1,497,068

$480,584

$7,026,991

$916,598

Earnings before tax

$1,206,141

$324,624

$5,371,832

$172,580

Net profit (loss) at subsidiary level

$765,427

$215,240

$3,967,370

$(131,221)

Majestic’s share of operating (net) profit (loss)

$607,280

$201,129

$2,867,469

$(357,026)

OPERATIONAL RESULTS – SONG JIAGOU MINE

 

 

 

 

 

Tonnes of ore mined

655,057

303,140

1,752,420

884,081

Tonnes of ore milled

516,353

284,131

1,465,259

519,203

Tonnes per day milled

5,674

3,122

5,157

5,328

Effective head grade(g/t)

0.35

0.28

0.36

0.31

Gold Produced (ounces)

4,891

2,099

14,237

4,384

Recovery

84.2%

82.1%

84.2%

84.7%

Gold realized net of smelting fees

4,578

1,947

13,321

4,079

 

 

 

 

 

 (1) Operating costs for the three months ended June 30, 2012 included charges relating to Q1 and Q2 totaling $1,067,516.  This resulted in cash costs per gold ounce being adjusted by $219 per ounce.  Excluding such costs would have resulted in a cash cost per ounce of $809.

OPERATIONS

  • 98% Increase in Tonnes Mined: In the nine months ended June 30, 2012, the Company mined 1,752,420 tonnes of ore, a 98% increase compared to 884,081 tonnes in the same period of the previous year.
  • 182% Increase in Tonnes Milled: In the nine months ended June 30, 2012, the Company milled 1,465,259 tonnes of ore, a 182% increase compared to 519,203 tonnes in the same period of the previous year.

About Majestic Gold

Currently focused solely in China, Majestic Gold Corp. is a Vancouver, BC based company engaged in commercial gold production at the Song Jiagou gold mine in Yantai, China.  The mine is an open pit and underground operation.  Majestic Gold has forecast an average production for the life of mine at a rate in excess of 100,000 ounces of gold per year. (Wardrop Engineering Inc. NI 43-101 Technical Report dated February, 2011).    Additional information on the Company and its projects is available at www.sedar.com and on the Company’s website at www.majesticgold.net.

On Behalf of the Board of Directors
MAJESTIC GOLD CORP.

Signed "Rod Husband"

Rod Husband, P.Geo
President

Contact:
Investor Relations: (604) 681-4653 or 1-866-282-8398
Email: [email protected] or visit our Website: www.majesticgold.net