NYSE MKT: TGD • $0.39     TSX: TMM • $0.52     Gold: 1284.56

2010

Operating and Financial Results for the Three Months Ended June 30, 2010 San Francisco Mine Generates $1.9 Million in Net Profits before Tax


August 31, 2010

Timmins Gold Corp., ("Timmins" or the "Company") is pleased to report on its first ever operating and financial results since commercial operations at its flagship San Francisco Mine commenced on April 1, 2010. All currency in this report is in Canadian dollars unless otherwise indicated.

The major highlights for the three months ended June 30, 2010 include the following:

CONSOLIDATED RESULTS

For the three months ended June 30, 2010, Timmins reported a net loss of $4,090,157 or $0.03 per share on revenue of $14,332,597. This compared to a net loss of $804,330 or $0.01 per share during the three months ended June 30, 2009, a period during which development of the San Francisco Mine had not yet commenced. The financial performance of the Company benefitted from continued strong gold prices and a successful and improving operating performance at the San Francisco Mine offset by expenses recognized on the gold loan.

Cost of goods sold totaled $10,845,997 or $945.89 per ounce of gold sold, net of by-product credits. Depreciation and amortization was $1,215,903 or $107.62 per ounce of gold sold. General and administration costs (including non-cash stock based compensation expense of $553,013) were $1,326,537 for the current quarter, compared to $1,236,190 for the comparable quarter in 2009. In the comparable quarter for 2009, stock based compensation expense was only $49,023.

The asset retirement obligation was $30,741 (2009:$3,621) and other miscellaneous expenses were $2,652, relating to abandoning the Tequila property in March 2010.

During the quarter, the requirement to fair value the embedded derivative in the gold loan resulted in a non-cash expense of $2,599,745 a result of the price of gold increasing by $128.50 per ounce between March 31, 2010 and June 30, 2010. However, the non-cash loss on the embedded derivative is mitigated by the fact that this financial instrument did not require the hedging of any production in late 2009 when gold prices are lower than they are today. The interest expense on the gold loan for the quarter was $2,413,778, and it was also a non-cash item this quarter as repayment of the gold loan does not commence until the end of August 2010.


THE SAN FRANCISCO MINE

The table below illustrates certain key operating statistics for the San Francisco Mine for the three months ended June 30, 2010. There were no comparable statistics to report for the three months ended June 30, 2009.

  April May June Total
Waste mined (mt) 1,431,434 1,295,774 1,350,360 4,077,568
Ore mined (mt) 317,997 288,096 299,203 905,296
Ore grade (g/t) 0.628 0.732 0.800 0.718
Gold sold (oz) 2,309 3,941 5,049 11,299
Silver sold 1,433 2,372 2,891 6,696
Operating cost per tonne (C$) 12.85 13.77 14.43 13.67


During the first six months of this calendar year the Company has made a number of significant improvements to the operating performance and the operating life of the San Francisco Mine. The most notable achievements include:

ABOUT TIMMINS

Focused mainly in Mexico, Timmins Gold Corp. is now a producer of gold with its recent commissioning of the San Francisco Mine in Sonora, Mexico. In addition, the Company has a number of other properties in Mexico on which it will conduct on-going exploration.

For more information, please contact:

Bruce Bragagnolo LLB, CEO
Vancouver, B.C.
Tel: 604-638-8980
bruce@timminsgold.com

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

This News Release contains forward-looking statements. Forward-looking statements are statements which relate to future events. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans, "anticipates", believes", "estimates", "predicts", "potential", or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, level of activity, performance or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggestions herein. Except as required by applicable law, Timmins Gold does not intend to update any forward-looking statements to conform these statements to actual results.


NOTICE OF AUDITOR'S REVIEW OF

INTERIM CONSOLIDATED FINANCIAL STATEMENTS


Under National Instrument 51-102, Part 4, subsection 4.3 (3) (a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that an auditor has not reviewed the financial statements.

The accompanying unaudited financial statements of the Company have been prepared by and are the responsibility of the Company's management.

The Company's independent auditor has not performed a review of these financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity's auditor.


TIMMINS GOLD CORP.
CONSOLIDATED BALANCE SHEETS
(in Canadian dollars)

   
June 30, 2010 (Unaudited)
 
March 31, 2010
(Audited)
     
ASSETS
Current    
Cash and cash equivalents
$ 5,364,079
$ 2,694,825
Accounts receivable (Note 3)
7,448,183
6,319,583
Inventory (Note 4)
8,190,866
6,420,154
Prepaid expenses
527,730
655,704
Due from related party (Note 7)
79,200
92,656
 
21,610,058
16,182,922
     
Equipment (Note 5)
25,155,762
24,397,467
Resource properties (Note 6)
43,153,726
41,698,893
 
 
$ 89,919,546
$ 82,279,282
     
     
Current    
Accounts payable and accrued liabilities
$ 5,362,420
$ 4,403,822
Vendor loan (Note 5)
1,808,490
1,758,120
Current portion of long-term debt (Note 10)
15,789,046
8,045,163
 
22,959,956
14,207,105
 
Future income tax
3,947,011
3,967,061
Long term debt (Note 10)
5,285,469
8,088,563
Other long term liabilities
1,082,605
1,035,590
Asset retirement obligation (Note 9)
972,210
929,382
 
34,247,251
28,227,701
 
Shareholders' equity
Share capital (Note 8)
58,705,648
52,271,066
Convertible preference shares (Note 8)
13,586,780
13,586,780
Warrants (Note 8)
1,745,449
2,876,305
Contributed surplus (Note 8)
4,180,910
3,773,765
Deficit
(22,546,492)
(18,456,335)
 
 
55,672,295
54,051,581
 
 
$ 89,919,546
$ 82,279,282

Nature and continuance of operations (Note 1)
Commitments and contingencies (Note 13)
Subsequent events (Note 15)


The accompanying notes are an integral part of these consolidated financial statements.

TIMMINS GOLD CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited in Canadian dollars, except for per share amounts)

 
Three months ended June 30,
 
2010
2009
 
 
 
Metal Revenues
$14,332,597
$-
 
Expenses:
Cost of sales
10,845,997
-
Amortization and depreciation
1,215,903
15,560
Asset write down
2,652
-
Corporate and administrative
773,524
1,187,167
Accretion of reclamation liability
30,741
3,621
Stock-based compensation (Note 8)
553,013
49,023
 
Income (Loss) From Operations
910,767
(1,255,371)
 
Other Income / (Expenses):
Other income / (expenses)
6,060
820
Interest expense, net
(2,477,272)
(67,190)
Foreign exchange gain / (loss)
70,033
517,411
Loss on embedded derivatives
(2,599,745)
-
 
 
Income (loss) before taxes
(4,090,157)
(804,330)
 
Income tax expense
-
-
 
Net income (loss) and comprehensive income (loss)
for the period
$ (4,090,157)
$ (804,330)
 
Loss per share -- basic and diluted
$ (0.03)
$ (0.01)
 
Weighted average number of shares outstanding -
basic and diluted
130,934,846
80,033,913


The accompanying notes are an integral part of these consolidated financial statements.

TIMMINS GOLD CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited in Canadian dollars)

 
Three months ended June 30,
 
2010
2009
CASH FLOWS TO OPERATING ACTIVITIES
 
 
Loss for the year
$ (4,090,157)
$ (804,330)
Items not affecting cash:
Accretion of reclamation liability
30,741
3,621
Accretion of vendor loan
-
67,190
Amortization of equipment
1,215,903
15,560
Accrued interest on long-term debt
2,412,015
-
Loss on embedded derivative
2,599,745
-
Stock-based compensation
553,013
49,023
Unrealized foreign exchange gain
16,091
(426,989)
Asset write downs
2,652
-
 
2,740,003
(1,095,925)
Changes in non-cash working capital items:
Accounts receivable
(1,126,239)
(307,665)
Inventory
(1,770,712)
-
Prepaid expenses
(185,603)
35,531
Accounts payable and accrued liabilities
934,105
1,078,492
Due from related parties
13,456
(34,549)
 
 
 
Cash flows provided by
(used) in operating activities
605,010
(324,116)
 
 
 
CASH FLOWS PROVIDED (USED)
BY FINANCING ACTIVITIES
 
 
Shares issued for cash
5,157,857
12,745,024
Share issue costs
-
(625,056)
 
 
 
Cash flows provided by
financing activities
5,157,857
12,119,968
 
 
 
CASH FLOWS USED BY
INVESTING ACTIVITIES
Purchase of equipment
(1,335,037)
(2,680,436)
Expenditures on resource properties
(1,758,576)
(1,745,193)
 
Cash flows used in investing activities
(3,093,613)
(4,425,629)
Increase (decrease) in cash and cash equivalents
during the year
2,669,254
7,370,223
Cash and cash equivalents, beginning of year
2,694,825
700,104
Cash and cash equivalents, end of year
$ 5,364,079
$ 8,070,327

Supplemental disclosure with respect to cash flows (Note 11)

The accompanying notes are an integral part of these consolidated financial statements    

You can view the Next News Releases item: Mon Sep 27, 2010, Timmins Gold Corp. makes proposal to merge with Capital Gold Corporation