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Elgin Mining Provides Strong Fourth Quarter Cash Costs and Positive 2014 Outlook

VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 03/03/14 -- Elgin Mining Inc. ("Elgin Mining" or the "Company") (TSX: ELG)(TSX: ELG.WT) released today its gold production and operating outlook for 2014. The Company expects to see a significant year-over-year improvement in the operating and cost performance of its Bjorkdal mine with gold production consistent with the previous year. At current gold prices above US$1,300 per ounce, the Company expects AISC(i) to be below $1100/oz boosting its cash and working capital, and reducing its current modest long-term debt, in 2014.

2014 Gold Production and Cost Guidance


----------------------------------------------------------------------------
                                                                    Q4-2013
                              2014 Forecast 2013 Actual(1)        Actual(1)
----------------------------------------------------------------------------
Gold production (ounces)    44,000 - 49,000         46,946           13,818
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Cash cost per ounce
 produced (USD/ounce)      $     890 - $975 $        1,095 $            870
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Plant throughput (tonnes)         1,300,000      1,261,368          314,975
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  Open pit                          483,200        515,225          153,121
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  Underground                       649,700        699,880          155,485
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  Stockpile                         167,100         46,263            6,369
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Plant head grade (Au grams
 per tonne)                     1.21 - 1.33           1.32             1.55
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Plant recovery rate (%)                87.7%          87.7%            88.0%
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Capital expenditures at
 Bjorkdal (USD)            $    7.9 million $ 14.1 million $    2.1 million
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Corporate general & admin
 costs(2) (USD)            $    1.9 million $  4.0 million $    1.0 million
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Debt principal and interest
 payments (USD)(3)         $    1.6 million $  1.0 million $    0.4 million
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SEK per USD exchange rate              6.50           6.51             6.51
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CAD per USD exchange rate              1.10           1.03             1.05
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1.  Figures are unaudited and subject to final year-end adjustments.
2.  Costs shown exclude non-cash stock-based compensation.
3.  Cash amounts only as non-cash accretion of loan set-up charges are
    excluded.

(i) "All-in Sustaining Costs" as shown follow the published definition provided by the World Gold Council in June 2013 except for the exclusion of: (a) non-cash share-based remuneration and (b) accretion expense on the Bjorkdal mine's provision for closure and reclamation which is not significant.

Patrick Downey, the Company's President and Chief Executive Officer stated, "We had a very strong Q4-2014 at the Bjorkdal mine where the transition to owner-operated mining underground went much better than anticipated. Our costs per tonne mined decreased significantly and we also increased our mine head grade by better ore sequencing. Furthermore, we successfully completed the drill and blast changes in the open pit which led to better costs and more consistent grades from the pit. I am also pleased to state that we continue to see these improvements in the early part of 2014. For 2014, we remain steadfastly focused on executing the operational improvements that commenced in the last quarter of 2013. We expect the initiatives undertaken at the Bjorkdal mine in 2013 to gain further traction in 2014, allowing the Bjorkdal mine to continuously move down the industry cost curve. However, we are being reasonably conservative in our guidance for 2014 in terms of mill head grade and, should the mill feed grade continue at current levels, we should see better costs and production than current guidance. Furthermore, with the higher productivity we are seeing in the underground operations, we are planning to expand the Bjorkdal operations in both the underground and the plant. With this modest expansion, we expect production to ramp up to between 55,000 to 60,000 gold ounces per annum."

2014 Gold Production

Gold production is estimated to be in the range of 44,000 to 49,000 ounces for 2014. Plant throughput is expected to reach 1,300,000 tonnes with plant head grade between 1.21 to 1.33 grams per tonne ("gpt") from a mix of open pit (37%), underground (50%) and stockpile ore (13%).

In the open pit ("OP"), the Company expects to realize better grades in 2014 from the mining of higher grade benches and from the continuation of its stringent grade control practices. OP grades were negatively impacted in the first 8 months of 2013 by an unsuccessful drill and blast pattern change. This was rectified in Q3 which had a positive impact on grades and costs in Q4-2013. Based on the lower gold price environment in late Q4, the Company revised its open pit mine plan in order to mine less open pit tonnes. However, the Company has continued to see better grades from the open pit ore to date in 2014 and if gold price remains at or above US$1,300 per ounce, the Company may not reduce open pit tonnages below 2013 levels, and this adjustment would further boost 2014 guidance.

In the underground ("UG"), the Company transitioned from contractor to owner-operated mining starting in early Q4-2013. As stated, the transition has exceeded early expectations and has allowed the mine to improve its UG mine planning, pace of UG development, and grade control practices. To date this has resulted in lower costs per tonne and better mill feed grades. The ramp-up to owner-mining is still on-going with additional hiring of skilled UG miners and mechanics, and the cross-training of newly-hired and existing UG operators, all of which is expected to be completed in H1-2014. The Company anticipates that UG productivity and equipment utilization could exceed that forecasted in the latter half of 2014.

In the plant, the Company is planning for an expansion to increase its maximum annual plant throughput from 1.3 million tonnes to 1.5 million tonnes. Site management is currently working with local consultants in preparing the expansion application for submission before the end of Q2-2014. A response from the Swedish mining authorities on the expansion request is expected by the end of 2014. Based on its preliminary analysis, the Company does not expect the capital investment required to increase the plant's nameplate capacity to 1.5 million tonnes annually to be significant, allowing for a short pay-back and commissioning period.

The Company has not included the above-mentioned upside potential for its OP, UG and plant in its 2014 guidance.

Operating Costs

Cash cost per ounce for 2014 is expected to be between US$890 to US$975 per ounce, a significant improvement from the cash cost reported for 2013. Lower per ounce cash cost in 2014 will be achieved through a combination of lower per tonne mining costs in the OP and UG, and from potentially better OP and UG grades.

In the OP, mining cost per ore tonne will be lower in 2014 due to a decrease in the strip ratio in the 2014 OP mine plan and cost savings associated with returning to the previous drill and blast patterns. In addition, the higher predicted OP grades should lead to an improved per ounce cash cost.

In the UG, the transition to owner-operated mining commencing in Q4-2013 has led to savings in unit mining costs. As the ramp-up continues into 2014, the Company expects to realize a further reduction in unit mining costs from greater manpower productivity and equipment utilization. In addition, the Company is forecasting a smaller number of on-vein development metres in 2014 as the mine is no longer obliged to provide a minimum number of payable metres to the UG contractor. For 2014, the Company is budgeting for a greater proportion of stope tonnes, which are cheaper to mine, in its UG ore feed. Specifically, the planned 2014 UG ore feed is estimated to consist of 51% development tonnes (2013 - 59%) and 49% stope tonnes (2013 - 41%) due to fewer on-vein development metres and the mining of more stope tonnes. Beyond the operating costs included in the Company's per ounce cash cost calculation, the Company is not subject to any royalties or mining taxes on its gold sales, and enjoys a low corporate income tax rate of 22% on its net income earned in Sweden with no withholding taxes on any future repatriation of funds.

Capital Budget

Capital expenditures at the Bjorkdal mine are budgeted at US$7.9 million for 2014 and consist of:


----------------------------------------------------------------------------
                     2014 Budgeted
Area of Operations    Expenditures              Capital Spending
----------------------------------------------------------------------------
Underground                         UG capital development (US$3.5 million);
                                      UG capitalized diamond drilling (5,000
                                         metres) and in-fill drilling (3,000
                                       metres) programs (US$1.0 million) and
                                           other UG sustaining capex (US$0.9
                      US$5.4 million                                million)
----------------------------------------------------------------------------
Open Pit                              Capitalized OP waste pushback and till
                      US$1.6 million                removal (US$1.6 million)
----------------------------------------------------------------------------
Processing                                     Tailings (US$0.7 million) and
                      US$0.8 million           concentrator (US$0.1 million)
----------------------------------------------------------------------------
Administration        US$0.1 million                           Miscellaneous
----------------------------------------------------------------------------
Total                 US$7.9 million
----------------------------------------------------------------------------

No other capital expenditures are budgeted for in 2014.

Regional Exploration

The Company expects to incur a small amount of regional exploration costs in drill testing prospective brownfield targets near its Bjorkdal mine.

General and Administration

The Company is budgeting corporate general and administration costs (cash component) of US$1.9 million for 2014, a reduction of over 50% from costs incurred in the previous year, as the Company remains focussed on eliminating non-essential expenditures. The substantial cost decrease from the prior year is primarily the result of staff reductions and non-recurring severance charges undertaken in 2013 in response to the drop in the price of gold and the placement of the Lupin gold project back into care and maintenance.

Liquidity

Despite lower gold prices in Q4-2013, and certain non-recurring severance expenses, the Company was able to add to its cash position, ending the year with CAD 13.3 million (unaudited), an increase of CAD 0.3 million from its September 30, 2013 cash balance of CAD 13.0 million.

Elgin Mining Inc.

Elgin Mining is a Canadian based company focused on production at the Bjorkdal gold mine in Sweden. In addition, Elgin Mining's portfolio includes the Lupin and Ulu gold projects located in Nunavut, Canada.

For further information, please visit the Company's web site at www.elginmining.com.

Cautionary Note Regarding Forward-Looking Information

This news release contains "forward-looking information" within the meaning of Canadian securities legislation and "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. Except for statements of historical fact relating to the Company, information contained herein constitutes forward-looking statements, including any information as to the Company's strategy, plans or future financial or operating performance. Forward-looking statements are characterized by words such as "plan," "expect", "budget", "target", "project", "intend," "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made, and are inherently subject to a variety of risks and uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those projected in the forward-looking statements.

These factors include risks relating to variations in the mineral content within the material identified as mineral reserves and mineral resources from that predicted, changes in development or mining plans due to changes in logistical, technical or other factors, the impact of general business and economic conditions, global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future conditions, fluctuating metal prices and currency exchange rates, possible variations in ore grade or recovery rates, changes in accounting policies, changes in the Company's corporate resources, changes in project parameters as plans continue to be refined, changes in project development and production time frames, the possibility of project cost overruns or unanticipated costs and expenses, higher prices for fuel, steel, power, labour and other consumables contributing to higher costs and general risks of the mining industry, failure of plant, equipment or processes to operate as anticipated, unexpected changes in mine life, unanticipated results of future studies, seasonality and unanticipated weather changes, costs and timing of the development of new deposits, success of exploration activities, successful completion of proposed acquisitions, permitting time lines, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims, limitations on insurance coverage and timing and possible outcome of pending litigation and labour disputes as well as those risk factors discussed or referred to in the Company's Annual Information Form dated March 22, 2013, a copy of which is filed on SEDAR at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended.

There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The Company undertakes no obligation to update forward-looking statements if circumstances or management's estimates, assumptions or opinions should change, except as required by applicable law. The reader is cautioned not to place undue reliance on forward-looking statements. The forward-looking information contained herein is presented for the purpose of assisting investors in understanding the exploration and development plans and objectives and may not be appropriate for other purposes.

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