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Pilot Gold Reports Q2 2014 Financial and Operating Results

VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 08/13/14 -- Pilot Gold Inc. (TSX:PLG) ("Pilot Gold" or the "Company") is pleased to announce its financial and operating results for the six-months ended June 30, 2014, and to provide an update on exploration activities at TV Tower and Kinsley Mountain.

"Building on our recent discovery of a new gold-copper porphyry system at TV Tower and continued exploration success at Kinsley Mountain, we remain focused on delivering results through the second half of 2014 and beyond," stated Matt Lennox-King, President and CEO of Pilot Gold. "We believe the quality of our projects, our proven team, and healthy treasury sets us apart in today's market, and position Pilot Gold as a standout in the sector."


--  Reported the discovery of another gold-copper porphyry system at TV
    Tower. Drill highlights at the "Valley Porphyry" to date (see press
    releases dated June 11, 2014 and July 22, 2014), include: 
    --  0.99 grams / tonne (g/t) gold (Au) and 0.39% copper (Cu), or 1.65
        g/t gold-equivalent (AuEq), over 153.1 metres in KRD010, including: 
        --  1.57 g/t Au and 0.56% Cu (2.52 g/t AuEq) over 66.2 metres; 
    --  1.59 g/t Au and 0.48% Cu over 130.9 metres (2.41 g/t AuEq) in KRD-
        14C, including: 
        --  3.12 g/t Au and 0.85% Cu over 49.9 metres (4.57 g/t AuEq).

AuEq calculated using $1,200/oz Au and $3.00/lb Cu and assuming 100% recovery

--  Reported high-grade gold-bearing drill intercepts from the ongoing 2014
    drill program at Kinsley (see press releases dated June 5, 2014 and July
    10, 2014), including: 
    --  3.35 g/t Au over 41.1 metres in hole PK144, including: 
        --  5.11 g/t gold over 4.6 metres;
    --  5.59 g/t gold over 38.1 metres in step-out drilling in hole PK158C;
    --  8.35 g/t gold over 12.5 metres in step-out drilling in hole PK151C.
--  Entered into an arrangement agreement (the "Cadillac Agreement") with
    Cadillac Mining Corporation ("Cadillac") pursuant to which, the Company
    has agreed to acquire all of the issued and outstanding shares of
    Cadillac by way of a court-approved plan of arrangement (see press
    release dated June 13, 2014). 
--  Raised C$20 million from the issuance of 13,072,000 common shares of the
    Company by way of a bought deal financing led by National Bank Financial
    Inc. and Scotiabank (the "Bought Deal"). 

Exploration highlights and significant events through and subsequent to June 30, 2014:

Kinsley Mountain

Kinsley is a Carlin-style, sedimentary rock-hosted gold system and past-producer located along the Long Canyon Trend in northeastern Nevada. The property's Western Flank zone continues to grow and remains open in several directions, returning high grade gold intercepts from multiple stratigraphic horizons.

Through June 30, 2014 the Company completed 8,100 metres of core and 6,460 metres of reverse circulation drilling as part of the $6.04 million, 2014 drill program. Pilot Gold continues to discover new mineralized zones within several stratigraphic units, including high grade oxide gold starting at surface. The Company also secured 1,080 acre feet of water rights for use at Kinsley and leased five patented claims to the south of the historic Kinsley mine, adding 66 acres of private mineral and surface rights.

Approval of an amendment to the existing Plan of Operations that covers the property's northern claim block is expected soon. Upon receipt of an approved amendment, we anticipate expanding the current program to cover newly-permitted ground.

In the six months ended June 30, 2014, approximately $3.56 million in direct expenditures were capitalized at Kinsley (year ended December 31, 2013, $3.85 million). Expenditures and activity through the period include: drilling and assaying ($2.35 million), salaries ($0.25 million) and road construction ($0.30 million).

Pilot Gold holds approximately 79% of Kinsley. A subsidiary of Nevada Sunrise Gold Corporation holds the remaining 21% interest in the property. The Company and its partner are each obligated to fund their pro rata share of activity on the property to avoid dilution of the percentage interest held.

TV Tower

TV Tower is part of an evolving gold-silver-copper district located in northwestern Turkey. The current year drill program began on April 10, 2014 following the completion of extensive mapping, sampling, surface work and limited drilling in 2013 on the recently acquired Karaayi license in the south of TV Tower.

In June and July 2014 we reported drill results from a new discovery at the Valley Porphyry target complementing the earlier discovery at the adjacent Hilltop Porphyry. These gold-copper porphyry targets are approximately 15 kilometers from the Company's 40%-owned PEA-stage Halilaga copper-gold porphyry project. Results from the Valley Porphyry include long runs of gold and copper mineralization starting at surface with grades superior to those typical of many copper-gold porphyry deposits around the world.

Expenditures during the six-months ended June 30, 2014 include: drilling and assaying of $0.40 million, salaries of $0.62 million and consultant's costs of $0.25 million. As a result of exploration success at the Hilltop and Valley porphyry targets, the 2014 budget was increased to $4.68 million. Through the remainder of the year we anticipate completing an additional 4,400 metres of core drilling.

The Company currently holds 40% of TV Tower and is the project operator. "Orta Truva", a subsidiary of Teck Resources Limited holds the majority 60% interest in the project. Pilot Gold is incurring expenditures under a right to acquire an additional 20% interest (to an aggregate of 60%) of the project. There is currently approximately $3.54 million remaining to satisfy the total $21 million earn-in expenditure requirement.


The following selected financial data is derived from the unaudited condensed interim consolidated financial statements and related notes thereto for the six months ended June 30, 2014 (the "Interim Financials"), as prepared in accordance with International Financial Reporting Standards. Details of these results are described in the Interim Financials and related Management's Discussion and Analysis. These documents can be found on the Company's website (www.pilotgold.com) or on SEDAR at www.sedar.com. All amounts are presented in United States dollars unless otherwise stated.

                                                      As at                 
                                           June 30, 2014   December 31, 2013
                                               (in 000s)           (in 000s)
Cash and short-term investments                  $30,071             $19,006
Working capital                                  $28,674             $18,471
Total assets                                     $88,579             $71,374
Current liabilities                               $2,614              $1,709
Non-current liabilities                              $89                 $68
Shareholders' equity                             $82,272             $67,174
(Expressed in 000s, except per share Three months ended   Six months ended  
 data)                                    June 30,            June 30,      
                                          2014      2013      2014      2013
Loss for the period                   ($1,263)  ($3,845)  ($3,416)  ($6,355)
Loss and comprehensive income (loss)                                        
 for the period                           $969  ($5,469)  ($2,623)  ($9,063)
Basic and diluted loss per share       ($0.01)   ($0.04)   ($0.04)   ($0.07)

Total assets increased to $88.58 million as at June 30, 2014 (December 31, 2013: $71.37 million), and comprise primarily of cash and short-term investments of $30.07 million (December 31, 2013: $19.01 million). The increase primarily reflects the receipt of cash raised in the Bought Deal that closed during the quarter, offset by cash outflows related to corporate activities through the six months ended June 30, 2014. The balance of current assets comprises receivables and prepayments of $1.22 million (December 31, 2013: $1.03 million) which have increased primarily due to the timing of payments from Orta Truva relating to work performed by the Company on TV Tower.

For the three and six months ended June 30, 2014, we reported a net loss of $1.26 million and $3.42 million respectively, compared to a net loss of $3.85 million and $6.35 million, for the same periods in the prior year. The losses per share for the three and six-month periods ended June 30, 2014 were $0.01 and $0.04 respectively (three and six-months ended June 30, 2013: $0.04 and $0.07 per share). The most significant contributors to the losses for the six-months ended June 30, 2014 were the cost of wages and benefits ($0.88 million) and non-cash stock-based compensation ($0.67 million). The most significant contributors to the comparative period loss were; the write-down of the New Boston property ($1.28 million), non-cash stock-based compensation ($1.56 million), and the change in fair value of financial instruments ($1.51 million).

Other comprehensive gains of $2.23 million and $0.79 million were recognised in the three and six months ended June 30, 2014 (comprehensive losses of $1.62 million and $2.71 million for the same respective periods in the prior year). The six months ended June 30, 2014 includes a $0.23 million gain (June 30, 2013: $2.84 million loss) from the impact of exchange gains and losses arising from exchange differences further to the translation of our foreign operations with a non-United States dollar functional currency, as well as net fair value gains of our financial instruments of $0.54 million (six months ended June 30, 2013: $nil). The impact from exchange differences will vary from period to period depending on the rate of exchange; in the period between January 1, 2014 and June 30, 2014, there was a 0.4% change in the exchange rate between the United States and Canadian dollars.

Liabilities at June 30, 2014 and at December 31, 2013 reflect primarily accounts payable and accruals recorded at period end arising from ongoing activities.

Cash flows through the six-month period include $2.42 million in outflows for operating expenditures, $16.90 million inflow from financing activities, $1.09 million outflow from investing expenditures derived mostly from the investment in our exploration properties, and the impact of changing foreign exchange rates ($0.57 million).

Moira Smith, Ph.D., P.Geo., Chief Geologist, Pilot Gold, is the Company's designated Qualified Person for this news release within the meaning of National Instrument 43-101, Standards of Disclosure for Mineral Projects ("NI 43-101") and has reviewed and validated that the scientific and technical information contained in this release is accurate.

TV Tower and Kinsley are both early stage exploration projects and, except for the mineral resources at the KCD deposit at TV Tower, neither contain any mineral resource estimates as defined by NI 43-101. The potential to define a mineral resource at the copper-gold K2 zone of TV Tower or on the Western Flank zone at Kinsley are conceptual in nature and there has been insufficient exploration to define a mineral resource thereat. It is uncertain if further exploration at either TV Tower or Kinsley will yield any mineral resources at Kinsley or additional resources at TV Tower. The existence of similar features at TV Tower's K2 exploration target as those at Halilaga do not mean that a mineral resource will be found to exist at K2 or, if found to exist, that it will be of similar grade or quantity that is found at Halilaga.

Closing of the proposed acquisition of Cadillac is subject to court, regulatory and shareholder approvals.

This press release should be read in conjunction with Interim Financials and related Management's Discussion and Analysis. These documents can be found on the Company's website (www.pilotgold.com) or on SEDAR at www.sedar.com. All amounts are presented in United States dollars unless otherwise stated.


Pilot Gold is a well-funded gold exploration company led by a proven technical team that continues to discover and define high-quality projects featuring strong grades, meaningful size and mining-friendly addresses. Our three key assets include interests in the Kinsley project in Nevada, and the TV Tower and Halilaga projects in Turkey, each of which has the ability to become a foundational asset. We also have a pipeline of projects characterized by large land positions and district-wide potential that can meet our growth needs for years to come.

For more information, visit www.pilotgold.com.

Unless stated otherwise, information of a scientific or technical nature in this press release regarding the TV Tower, Halilaga or Kinsley Mountain properties are summarized, derived or extracted from, the following technical reports: "Independent Technical Report for the TV Tower Exploration Property, Canakkale, Western Turkey", effective January 21, 2014 and dated February 20, 2014, prepared by Casey M. Hetman, P.Geo. with SRK Consulting (Canada) Inc., James N. Gray, P. Geo. of Advantage Geoservices Ltd., and Gary Simmons, BSc, Metallurgical Engineering, of G L Simmons Consulting, LLC; "Preliminary Economic Assessment Technical Report for the Halilaga Project, Turkey", effective August 27, 2012 and dated October 10, 2012 prepared by Gordon Doerksen, P.Eng., James Gray, P.Geo., Garth Kirkham, P.Geo., Dino Pilotto, P.Eng., Maritz Rykaart, P.Eng, and Kevin Scott, P.Eng.; and "Technical Report on the Kinsley Project, Elko County, Nevada, U.S.A." effective February 15, 2012 and dated March 26, 2012 prepared by Michael Gustin, CPG and Moira Smith, Ph.D., P.Geo. For further detail on TV Tower, Kinsley Mountain or the Halilaga PEA, refer to the respective technical reports filed on the Company's website at www.pilotgold.com or under Pilot Gold's SEDAR profile at www.sedar.com.

All statements in this press release, other than statements of historical fact, are "forward-looking information" with respect to Pilot Gold within the meaning of applicable securities laws, including statements with respect to the anticipated timing and closing of the Cadillac Agreement, or those that address potential quantity and/or grade of minerals, potential size and expansion of a mineralized zone, proposed timing of exploration and development plans. Forward-looking information is often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "planned", "expect", "project", "predict", "potential", "targeting", "intends", "believe", "potential", and similar expressions, or describes a "goal", or variation of such words and phrases or state that certain actions, events or results "may", "should", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking information is not a guarantee of future performance and is based upon a number of estimates and assumptions of management at the date the statements are made including, among others, assumptions about future prices of gold, copper, silver and other metal prices, currency exchange rates and interest rates, favourable operating conditions, political stability, obtaining governmental approvals and financing on time, obtaining renewals for existing licences and permits and obtaining required licences and permits, the impact of archaeological, cultural or environmental studies within the property area, labour stability, stability in market conditions, availability of equipment, accuracy of any mineral resources, successful resolution of disputes and anticipated costs and expenditures. Many assumptions are based on factors and events that are not within the control of Pilot Gold and there is no assurance they will prove to be correct.

Such forward-looking information, involves known and unknown risks, which may cause the actual results to be materially different from any future results expressed or implied by such forward-looking information, including, risks related to the interpretation of results at the Kinsley property, reliance on technical information provided by our joint venture partners or other third parties; successfully completing the earn-in at TV Tower, including the ability to complete the Expenditure Requirement; changes in project parameters as plans continue to be refined; current economic conditions; future prices of commodities; possible variations in grade or recovery rates; the costs and timing of the development of new deposits; failure of equipment or processes to operate as anticipated; the failure of contracted parties to perform; the timing and success of exploration activities generally; delays in permitting; satisfaction of Turkish requirements relating to the periodic submissions of Environmental Impact Assessments; possible claims against the Company or its joint venture partners; labour disputes and other risks of the mining industry; delays in obtaining governmental approvals, financing or in the completion of exploration as well as those factors discussed in the Annual Information Form of the Company dated March 14, 2014 in the section entitled "Risk Factors", under Pilot Gold's SEDAR profile at www.sedar.com.

Although Pilot Gold has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Pilot Gold disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise unless required by law.

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