Starcore Reports Year-End Financial Results

Vancouver, B.C. - Starcore International Mines Ltd. (the “Company”) has filed the results for the year ended July 31, 2010 for the Company and its mining operations from the San Martin Mine. Over the year ended July 31, 2010, the Company reports revenues of $23.2 million, earnings from mining operations of $9.44 million and a net loss of $3.97 million, which includes a net $2.9 million non-cash unrealized loss on forward sales contracts and a $457,000 non-cash stock-based compensation charge on option awards vested in the year. The basic and diluted loss per share for the year ended July 31, 2010 was $0.05.

The following table is a summary of mine production statistics for the San Martin mine for the six months ended July 31, 2010 and the cumulative amounts for the year ended January 31, 2010:

(Unaudited) Unit of measure   Actual results for
6 months ended
July 31, 2010
Actual results for
12 months ended
January 31, 2010
Production of Gold in Dore thousand ounces   7.0 19.3
Production of Silver in Dore thousand ounces   72.1 170.7
Equivalent ounces of Gold * thousand ounces   8.1 21.9
Gold grade grams/tonne   1.94 2.45
Silver grade grams/tonne   29 34
Milled thousands of tonnes   131.3 273.0
Operating Cost per tonne milled US dollars/tonne   38 32
Operating Cost per Equivalent Ounce US dollars/ounces   606 419

* assuming a 66:1 silver to gold equivalency ratio for six months ended July 31, and for the year ended January 31, 2010.
Overall equivalent gold production averaged 8,100 ounces over the six months ended July 31, 2010, compared to an average of 10,995 for the previous six month period. The lower production was due mainly to lower ore grades which averaged 1.94g/t and 29g/t for gold and silver, respectively, compared to an average of 2.45g/t and 34g/t in the prior period.

The Company expects higher ore grades over the next quarter and is planning to increase ore grades further over the next year. The mine maintains exploration efforts to increase reserves of resources and to find higher grade deposits. Management also continues efforts to cut mine and administration costs, where possible, to improve earnings and cash flow.

The following table contains selected highlights from the Company’s consolidated statement of operations and consolidated balance sheet for the years ending July 31, 2010 and 2009 (all amounts per table and discussion below are stated in thousands of Canadian dollars):

    July 31, 2010 July 31, 2009
(000’s)     (Restated )
Mined ore   $ 22,046 $ 21,351
Purchased ore   1,155 5,205
    $ 23,201 $ 26,556
Cost of Sales      
Mined Ore   10,728 11,273
Purchased ore   1,054 5,079
Amortization and depletion and reclamation   1,983 2,526
    $ 13,765 $18,878
Earnings from mining operations   9,436 7,678
Net loss      
(i) Total income (loss)   $ (3,728) $ 4,385
(ii) Income (loss) per share - basic   $ (0.05) $ 0.08
(iii) Income (loss) per share - diluted   $ (0.05) $ 0.05

Total assets
  $ 45,170 $ 46,256
Total long-term liabilities   $ 17,242 $ 18,438

Earnings from mining operations for 2010 were higher at $9,436 than 2009 earnings of $7,678, due mainly to higher metal prices in fiscal 2010, despite the lower equivalent metal production compared to the same period in the prior year. Overall revenues were lower due mainly to the reduction in purchased concentrate in fiscal 2010 as the suppliers ceased or reduced operations and, consequently, reduced deliveries of purchased concentrates to San Martin. While ore grades for the year ended July 31, 2010 averaging 2.16 g/t gold and 31 g/t of silver were reduced from the comparative period and despite mined ore amounts being lower, mined ore revenue was higher due to higher ore prices. In addition costs were higher at an average operating cost of US$520/EqOz for the twelve months ended July 31, 2010, compared to an average operating cost of US$420/EqOz in the twelve months ended July 31, 2009. Net income for the year ended July 31, 2010, decreased by $8,423 to a loss of $4,038 due mainly to the fluctuation in unrealized forward sales contracts as detailed below. Net realized and unrealized loss on forward contracts for 2010 was $9,873 compared to a net gain for 2009 of $1,349.

The Company also had positive cash flow from operations of $3,540 for the year ended July 31, 2010 compared to $3,687 for the same period in 2009.

Restatement (all amounts below in thousands of Canadian dollars)

Management of the Company determined, in consultation with its auditors, that some transactions required restatement to better reflect the substance of these transactions in relation to Canadian. The most significant change related to the treatment of the Company’s forward sales contracts. The Loan agreement entered into by the Company on the Acquisition of the San Martin mine on February 1, 2007, required that the Company enter into forward sales agreements for the sale of 81,876 ounces of gold at a price of US$731 per ounce until January, 2013, at the rate of settlement of approximately 1,135 ounces per month. Originally, it was determined that these forward sales contracts are excluded from the definition of derivatives because they allowed the obligation to be met by the physical delivery of gold and the Company’s practices, productive capacity and delivery intentions are consistent with the definition of sales contracts in accordance with the Company’s revenue recognition policy and with management’s interpretations of the facts made in consultation with the previous auditors to ensure compliance with Canadian GAAP. As the Company has consistently settled the obligation through the payment of cash, with the view that this is the more cost effective method of settlement, these forward sales contracts were determined by management, in consultation with the current auditors, to meet the definition of derivatives and changes in market value of the future contracts are recorded in the statement of operations as they occur. In the prior years, only the realized gains and losses on these contracts were recorded against revenues in the statement of operations.

The effect on the net income for the year ended July 31, 2010 was to record a loss for the unrealized forward sales contracts outstanding as at July 31, 2010 (34,768 ounces settled at US$731 per ounce monthly to January, 2013). Under the previous method of accounting for these forward sales agreements, the Company would have reportedearnings from mining operations of $4,054 instead of $9,436 due to $5,382 of realized forward sales contract payments made which were reclassified to net realized and unrealized loss on forward contracts. The Company would also have reported a net loss for the year of $829 instead of $3,728, due to $2,899 of unrealized forward sales contract losses, which are based on the change in the value of the forward sales contracts existing at July 31, 2010 from the July 31, 2009 value of those agreements. The increased liability from valuing these unrealized forward sales agreements and, consequently, the loss incurred, results from the increase in gold prices from $936/ounce at July 31, 2009 to $1,180/ounce at July 31, 2010. Management believes the restatement largely represents a change in the presentation of its accounts and the accounting treatment of the transactions and does not affect the business or operations of the Company.

As a result of the above, the audited consolidated financial statements as at July 31, 2009 have also been restated. Additionally, management has determined that certain foreign exchange gains in 2009 were incorrectly reported as other comprehensive income gains and should have been stated as a foreign exchange gain on the consolidated statement of operations.

The effect of the restatement of the July 31, 2009 financial statements was to increase revenues from $24,050 to $26,556, increase earnings from mining operations from $5,172 to $7,678 and increase net income from $911 as reported to $4,385, which includes $2,775 million of non-cash unrealized gain on forward sales contracts and $699 additional foreign exchange gain reclassified from other comprehensive income. The restatement also resulted in the recognition of the future liability related to unrealized forward contract obligations of $12,514 at July 31, 2009, which increased to $16,332 at July 31, 2010, due to the increase in the price of gold. The complete effect of the restatement to July 31, 2009 can be found in Note 3 to the Company’s consolidated financial statements. Full financial statements are available on SEDAR at and on Starcore’s website at

The Company will hold an investor and analyst conference call on Tuesday, November 2nd at 9:00 a.m. Pacific Standard Time to discuss the July 31, 2010 and restated July 31, 2009 financial results and future prospects for the mining operations of the Company. Investors and analysts are invited to attend the conference call by phoning into the Company’s conference call telephone line as follows:

Ready-Access numbers: North America 1-866-365-4406
  Mexico 001-800-514-8715
  United Kingdom 0-800-496-0580
  France 0-800-941-635
  Germany 0-800-101-4540
  Italy 800-912-700
  Luxemburg 800-23-946
  Malaysia 1-800-807134
  New Zealand 0-800-442-037
  Panama 00-800-226-9738
  Poland 00-800-111-4568
  Sweden 020-140-0592
  Switzerland 080-070-0286
Access Code to be keyed in when prompted:   6024935

If you wish to participate from a country not listed below, please contact the Company at (604) 602-4935 or for the appropriate access number in your area.


Signed “Gary Arca”
Gary Arca, Chief Financial Officer and Director

Telephone: 1-604-602-4935
Toll Free: 1-866-602-4935 / Facsimile: 1-604-602-4936


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