San Gold Corporation reports financial and operating results for the third quarter of 2011. The Company is also providing an update on its outlook for the remainder of the year.

Third Quarter 2011 Highlights:

For the first time in history, the Company reported unadjusted positive quarterly net income of $1.0 million.

Recognized record revenue of $32.9 million on gold sales of 18,867 ounces at a realized price of $1,743 per ounce.

Generated cash flow from operations before changes in working capital of $9.8 million.

Generated record operating income from operations of $12.1 million.

Reported total cash costs of $769 per ounce of gold sold, below annual guidance of $825 per ounce.

Realized a cash operating margin of $974 per ounce of gold sold.

Achieved average mill throughput of 1,324 tons per day.

Subsequent to quarter-end, the Company:

Maintained full-year production guidance of 80,000 ounces and reduced its full-year total cash cost guidance to less than $800 per ounce. Provided 2012 gold production guidance of 100,000 ounces and preliminary projected guidance for 2013 of 120,000 ounces.

I am very pleased with this quarter's financial and operating results, stated George Pirie, President and Chief Executive Officer of San Gold. The Company has reported record financial and operating performance in the first nine months of the year, with record revenue, cash flow from operations, and income from operations. The Company is also reporting its first ever quarter with positive earnings. The dramatic reduction we've seen in cash operating costs confirms our belief that the operational improvements implemented over the past two years would result in increased productivity leading to higher production and lower costs, as evidenced by record-low total cash costs of $769 per ounce. I am also pleased to report that we remain on track to deliver on our full-year guidance of 80,000 ounces and that we are reducing our total cash cost guidance for 2011 to below $800 per ounce of gold sold.

This press release should be read in conjunction with the Company's consolidated financial statements for the quarter ended September 30, 2011 and associated Management's Discussion and Analysis (MD&A), which are available from the Company's website (www.sangold.ca), in the News & Reports section under Financial Statements, and on SEDAR (www.sedar.com).

Review of Financial Results

For the first time in its history, the Company reports adjusted positive quarterly earnings in the third quarter of 2011, with total and comprehensive income in the third quarter of $1.0 million or a third of a cent a share. This is a significant improvement relative to a loss of $4.6 million or two cents per share, in the third quarter of 2010.

Gold sales revenue in the third quarter of 2011 was $32.9 million on the sale of 18,867 ounces, 137% higher than revenue of $13.9 million recognized in the third quarter of 2010. The increase in revenue in the third quarter of 2011 is a result of an 82% increase in the number of ounces sold and a 30% increase in the average realized gold price compared to the third quarter of 2011.

The Company generated record cash flow from operating activities before changes in non-cash working capital of $9.8 million, a significant change compared to a use of $0.4 million in the third quarter of 2010. After changes in non-cash working capital, operating activities generated $10.4 million in the third quarter of 2011, a substantial change from the use of $6.7 million in the third quarter of 2010.

In the third quarter of 2011, the Company reported record income from operations of $12.1 million, a 195% improvement from $4.1 million in the comparable period of last year. Income from operations in the third quarter of 2011 also represents a 60% increase relative to the prior period.

Capital spending in the third quarter of 2011 was focused on increasing mill capacity, improving key infrastructure, and sustaining capital. The Company capitalized $6.4 million of property, plant, and equipment during the quarter compared to $6.5 million in the same quarter of the prior year. In the first nine months of 2011, the Company capitalized $21.1 million of property, plant, and equipment compared to $10.0 million in the same period of last year.

Key financial metrics for the third quarter of 2011 compared to the third quarter of 2010 are presented at the end of this press release in Table 1.

Third Quarter 2011 Operating Results

Gold production in the third quarter of 2011 was 52% higher than production of 12,568 ounces in third quarter of 2010. Gold production of 53,918 ounces in the first nine months of the 2011 was 58% higher than production of 34,217 ounces in the same period of 2010. Higher gold production in 2011 is a result of increased mill throughput relative to the comparable periods of 2010.

Total cash operating costs were $769 per ounce of gold sold in the third quarter of 2011, below full year guidance of $825. Lower total cash operating costs, combined with a realized gold price of $1,743 per ounce, resulted in a record cash operating margin of $974 per ounce. With year-to-date production of 53,918 ounces and the mill expansion substantially complete, the Company remains on-track to meet full-year production guidance of 80,000 ounces. Year-to-date total cash costs of $813 per ounce of gold sold is slightly below full-year guidance of $825.

Key operational metrics and production statistics for the third quarter of 2011 compared to the third quarter of 2010 and on year-to-date bases are presented in tables 2 and 3 at the end of this press release, respectively.

Outlook

In the first nine months of 2011, the Company has achieved record operating and financial performance, characterized by record revenues and cash flow from operations, and downward trending cash costs per ounce of gold. Also, for the first time in the Company's history, the Company has reported positive quarterly earnings.

The increase in crushing and milling capacity, the implementation of more cost-effective mechanized mining methods, and the removal of constraints from operations contributed to the substantial increase in gold production and reduction in cash costs. With the expansion initiatives planned for 2011 substantially complete, mill throughput is forecast to increase significantly in the fourth quarter towards a year end exit rate of over 1,700 tons per day. In addition to the processing capacity improvements, the Company had a stockpile of 26,000 tons at the quarter end. In the subsequent period, the Company expects strong grades and increased tonnage from 007 and a reducing stockpile towards year end. As a result of these factors, the Company reiterates its full-year production guidance of 80,000 ounces. The Company also announces a 2012 gold production guidance of 100,000 ounces followed by a projected 120,000 ounces in 2013.

Record gold production has been accompanied by a steady quarter-over-quarter reduction in total cash operating costs per ounce of gold sold from $862 per ounce in the first quarter to a -low of $769 per ounce in the third quarter. Year-to-date total cash costs are $813 per ounce of gold sold, slightly below 2011's full year guidance of $825. The Company expects that it will continue to benefit from lower cash costs throughout the remainder of 2011 and is forecasting year-end exit total cash operating cost approaching $650 per ounce. Accordingly, the Company is revising its 2011 full year total cash cost guidance downward from $825 to less than $800 per ounce of gold sold.

Capital spending in the fourth quarter will be allocated to the commissioning of the new, high-capacity flotation cells and the installation and commissioning of a new overland conveyor and a screening plant. Once complete, these improvements are expected to further increase production and reduce total cash costs through increased capacity and improved gold recovery.

Exploration activities continue to build on this year's drill results. More detailed exploration disclosure will be forthcoming but early indications show that the 007 drilling programs have successfully identified significant vertical and lateral continuity and extension resulting in accelerated development in the district. The picture is changing from one of several discrete stacked lenses into a single continuous structure that is over 450 metres long and up to 12 metres wide at a depth of 350 metres below surface. The L10 zone has been confirmed by drilling from surface and underground to a depth of 800 metres and is fully accessible from the 16th level (730 metres below surface) at the Rice Lake Mine. A new drill program in proximity to the SG1 mine has produced some very encouraging initial results and may support dewatering of the mine which has been on care and maintenance for approximately three years. Exploration drill holes previously released with our third quarter production results have identified a new footwall zone at SG1 that is separate and distinct and has better widths and grade than the material originally mined at SG1 mining which was done to a maximum depth of 185 metres. The developments at SG1 support the thesis that there may be other large intrusive hosted ore bodies proximal to the nearby Ross River Pluton. San Gold is looking forward to summarizing its 2011 exploration program results and providing frequent updates during the fourth quarter of 2011.

Exploration activities for the remainder of the year will continue to focus on definition and extension drilling for both production planning and exploration purposes at the San Antonio Mining Unit, the Shoreline Basalt Unit, the Normandy Creek Shear Zone, and within the intermediate volcanic rock unit north of the Shoreline Basalt Unit. The objectives of the Company's exploration programs is to develop a larger mine complex that can be exploited through existing infrastructure. The Company plans to report an updated mineral reserve and resource statement in 2012.

With rising production, declining cash costs, record gold prices, and a strong balance sheet, the Company has positioned itself to finance its immediate development plans, as well as grow through new discoveries and potential acquisitions or joint venture opportunities.

Reminder of Third Quarter 2011 Financial Results Conference Call

The Company's senior management plans to host a conference call, November 15, 2011 at 11:00 am Eastern Standard Time to discuss the 2011 third quarter financial results, and to provide an update of the Company's operating, exploration, and development activities.

Participants may join the conference call by dialing 1 (877) 240-9772 or 1 (416) 340-8530 for participants outside of Canada and the United States. The conference call will also be available by webcast on the Company's website at www.sangold.ca.

A recorded playback of the conference call can be accessed after the event until November 22, 2011 by dialing 1 (800) 408-3053 or 1 (905) 694-9451 for calls outside Canada and the United States. The pass code for the conference call playback is 2825740. The archived audio webcast will also be available on the Company's website at www.sangold.ca.