U.S. Silver & Gold Reports Adjusted net income of $3.7 million or $0.06 per share

TORONTO, Nov. 13, 2012 /PRNewswire/ - U.S. Silver & Gold Inc. (TSX: USA, OTCQX: USGIF) ("U.S. Silver & Gold" or the "Company") today reported financial and operational results for the third quarter ending September 30, 2012.

This earnings release should be read in conjunction with the Company's MD&A, Financial Statements and Notes to Financial Statements for the corresponding period, which have been posted on SEDAR at www.sedar.com and are also available on the Company's website at www.us-silver.com.

Third Quarter Highlights  
(All figures in U.S. dollars unless otherwise noted)

• Adjusting for one-time charges which resulted from the business combination of U.S. Silver Corporation and RX Gold & Silver Inc., net income for the quarter was $3.7 million or $0.06 per share.  With the inclusion of these one-time charges, the Company reported a third quarter net loss of $1.8 million or $0.03 per share, compared with net income of $5.2 million or $0.08 per share for the third quarter of 2011. Revenue increased from $14.7 million in the second quarter of 2012 to $34.4 million in the third quarter of 2012.

• Galena Complex silver production was 544,104 ounces for the quarter and 1.62 million ounces for the first nine months of 2012. Drumlummon production since August 13, 2012 was 2,223 ounces of gold and 23,451 ounces of silver. Adjusted Drumlummon production for the entire quarter was 4,421 ounces of gold and 64,176 ounces of silver and, for the first nine months of 2012 was approximately 16,600 ounces of gold and 280,000 ounces of silver.
  
  
• Year-to-date combined production was 1.9 million ounces of silver and 16,600 ounces of gold. The Company remains on target to achieve its guidance of 2.6-2.8 million ounces of silver and 20,000 - 25,000 ounces of gold. The fourth quarter is expected to be the highest silver production quarter.
  
  
• The new Management team of the recently created U.S. Silver & Gold is focused on increasing the mining grade while improving production in order to reduce operating costs.  Early in 2013 productivity at the Galena Complex will increase by changing from a five-day work week to a 24/7 shift schedule. In addition, the Drumlummon Mine will institute labour cost reductions and maximize processing efficiencies by moving the milling of gold and silver ore from a leased mill to the Galena Complex.
  
  
• A new team, separate from operations, has been created to focus on the development of the Lead Zone. As announced in the Company's October 11, 2012 press release, the newly-interpreted geometry of this world class silver / lead mineralized zone suggests that alternative, lower-cost mining methods may be utilized in this part of the Galena Complex.
  
  
• Management has eliminated approximately 90 percent of the corporate cost duplication and expects to achieve $3 million per annum in corporate cost savings through the business combination.

"The third quarter of 2012 progressed as expected, with a profit achieved before one-time charges including severance and other merger-related costs," stated Darren Blasutti, President and Chief Executive Officer of U.S. Silver & Gold.  "After assessing the existing mining plans, the new Management team has shifted the Company's focus from achieving arbitrary ounce production targets to increasing the profitability of ounces mined. We are also undertaking productivity improvements and cost reductions to allow for greater earnings and cash flow per share going forward."

Key Statistics

Financial Results

Adjusting for one-time charges including transaction costs related to the Company's business combination, net income for the quarter was $3.7 million, or $0.06 per share.  With the inclusion of these charges, the Company had a third quarter net loss of $1.8 million or $0.03 per share, compared with net income of $5.2 million or $0.08 per share for the third quarter of 2011.  (Note: Due to much higher realized silver prices, 2011 was a year of record revenue.)

Adjusting for one-time charges as outlined above, net income for the first nine months of 2012 would have been $5.3 million, or $0.08 per share.  With the inclusion of these charges, the Company had a net loss for the first nine months of 2012 of $1.2 million, or $0.02 per share.  This compares with net income of $15.9 million or $0.25 per share during the first nine months of 2011 and net income of $1.5 million for the same period in 2010.

Year-to-date ore production was 170,899 tons versus 180,922 tons milled during the first nine months of 2011 and cash costs increased to $20.90 per ounce. Tonnage was negatively impacted by the termination of highly-paid contract-mining crews in early 2012, which resulted in development, repair and exploration crews taking on production roles that require a different skill set.  In August 2012 this situation was improved by the addition of 60 full-time employees, which will enable the Galena Complex to move from the current five-day-a-week schedule to a 24/7 schedule on January 1, 2013.

The new Management team is committed to increasing profitable production and ensuring a cash flow positive operation in fiscal 2013 and beyond.  The hiring ramp-up and new-employee training raised labour costs in the quarter. However, the increase in productivity that is expected to result from an appropriate staffing complement and the switch to a seven-day-a-week schedule, should positively impact ounce production and cash costs starting in early 2013.

Realized silver prices in the quarter were $2 per ounce lower than the third quarter 2012 average spot silver price primarily due to the timing of Xstrata contracts on the copper/silver ore, which defers pricing on concentrate shipments by one month. Average head grade year-to-date was 9.91 compared to 10.21 during the first nine months of 2011.

During the third quarter of 2012 mining personnel were reassigned to enable development of diamond drilling stations for exploration on the Northstar and Frankie veins.  Although this meant accessing smaller high-grade vein areas and consequently decreasing production tonnage in the quarter and into the fourth quarter, it will enable development of additional mining areas for 2013 production.

Approximately 30 percent of Drumlummon's total operating costs result from milling at a leased mill in Philipsburg, Montana.  Management believes cost savings of roughly $30 - 40 per ton can be achieved by milling ore at the Galena Complex beginning in the first quarter of 2013.  The Company is already seeing benefits at the Galena Complex from reduced inventory, warehousing, shared services, personnel and equipment and exploration synergies.

Exploration Update

The Company's Board of Directors has approved a $3 million exploration drill program for the remainder of the current fiscal year based on the success of our recent exploration drilling (see October 11, 2012 press release).  The focus of this program will be as follows:

Galena Complex

• Extend and better define the Lead Zone.
• Develop immediate and near term minable resources in veins close to existing infrastructure.
• Convert resources to reserves at the Coeur Mine.
• Aggressively follow a plan to increase the rate of underground and surface exploration diamond core drilling in order to define reserves, upgrade resources and identify viable new silver and lead veins.

As of December 31, 2011 the Galena Complex contained 23.2 million ounces of proven and probable silver reserves.  The exploration program continues to be cost-effective in adding reserves and resources at modest expenditure levels.  The Company expects the expanded exploration program to continue to increase reserves and resources.

Drumlummon and Belmont Mines

• Explore the newly-discovered Frankie Zone to immediately develop minable resources.
• Better define ore shoots discovered in 2012 and previous drilling on the Northstar zone with immediate mining potential.
• Confirm historic resources at the newly acquired Belmont Mine through surface drilling to test the more significant veins by "twinning" some of the existing holes drilled by others and confirm the presence of mineralization. Mining is anticipated by early 2014.

2012 Outlook

U.S. Silver & Gold affirms its 2012 anticipated production of 2.6 - 2.8 million ounces of silver and 20,000 - 25,000 ounces of gold. This outlook is based on a number of assumptions that the Company believes are reasonable at the time of this earnings release.

Conference Call at 4:30 pm on Tuesday, November 13, 2012
Financial and operating results will be discussed during an analyst and investor conference call with senior management today November 13th at 4:30 pm ET. A question and answer session will follow management's presentation.

A live audio webcast of the conference call will be available at www.us-silver.com and www.newswire.ca.

A replay of the call will be available until November 20, 2012 by calling 416-849-0833 or 1-855-859-2056, reference number 64243671.

About U.S Silver & Gold

U.S. Silver & Gold Inc. is a newly formed silver and gold mining company focused on growth from its existing asset base and the execution of targeted accretive acquisitions. U.S. Silver & Gold owns and operates the Galena Mine Complex in the heart of the Silver Valley/Coeur d'Alene Mining District, Shoshone County, Idaho and the Drumlummon Mine Complex in Lewis and Clark County, Montana. Within the Galena Mine Complex, the Galena mine produces high-grade silver and is the second most prolific silver mine in U.S. history, delivering over 200 million ounces to date, the Coeur mine is under late re-development and the Lead Zone is being evaluated for bulk mining development. The Drumlummon mine currently produces high-grade gold and silver with historical production of 1 million ounces of gold and 12 million ounces of silver and has never been fully exploited or explored. Visit www.us-silver.com.

Mr. Jim Atkinson , Vice President, Exploration and a Qualified Person under Canadian Securities Administrators guidelines has approved the applicable contents of this news release.

Some of the potential quantities and grades disclosed in this news release are conceptual in nature. At the current stage of exploration, there is insufficient drilling to determine the extent of continuity of the mineralization required to define a mineral resource for all mineralization at the Galena Mine Complex and Drumlummon Mine. It is uncertain if further exploration will result in certain exploration targets being delineated as a mineral resource.

Please see SEDAR or www.us-silver.com for the 43-101 compliant Technical Report and Resource Estimate on the Drumlummon Mine Project dated April 9, 2012 and the Galena Project dated March 19, 2012.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information in this press release may contain forward-looking statements. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements. The Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward looking-statements unless and until required by securities laws applicable to the Company. Additional information identifying risks and uncertainties is contained in filings by the Company with the Canadian securities regulator available at www.sedar.com.

SOURCE U.S. Silver & Gold Inc.