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AuRico Reports Second Quarter Production Results

TORONTO, July 16, 2012 /PRNewswire/ --

- Provides Updated Production Guidance for Ocampo

AuRico Gold Inc. (TSX:AUQ) (NYSE: AUQ), ("AuRico" or "the Company") reports the preliminary operational results for the second quarter ended June 30, 2012. All amounts are in U.S. dollars. The Company will host a conference call on Tuesday, July 17, 2012 beginning at 9:00 a.m. Eastern Time.

Second Quarter Production Highlights

Production results from AuRico's three core assets[1] in North America include:

        
        - Production of 51,101 gold ounces and 894,414 million silver ounces, or
          67,411 gold equivalent ounces using the actual gold equivalency ratio of 54.8:1.
        - Cash costs of $488 per gold equivalent ounce, using the actual gold
          equivalency ratio of 54.8:1.[2]

Second Quarter and Recent Highlights

Young-Davidson

        
        - Since the first gold pour on April 30 until June 30, the mine has produced
          11,950 gold ounces. In June, mill availability improved to 95% with metallurgical
          recoveries better than planned, averaging 88%. Production during the quarter was
          impacted by the one-month delay in the first gold pour and a 10 day power supply
          disruption.
        - Supported with a separate 120,000 tonne high-grade stockpile at grades of
          approximately 1.65 g/t that is in addition to the over one million tonne stockpile,
          the mine remains on track to declare commercial production in August and meet 2012
          production guidance.
        - During the quarter, the mine continued to advance productivity towards
          commercial production. In June both the open pit and mill facility exceeded the
          targets of 29,750 tpd and 5,100 tpd, respectively, that are required to declare
          commercial production, as indicated in the table below.

        
                                 April 2012 May 2012 June 2012
        Open Pit (tpd)               27,137   27,151    32,311
        Mill throughput (tpd)         2,670    4,075     6,163
        Mill grade (g/t)               0.73     1.05      1.40
        Recoveries (%)                  60%      82%       88%
        Production (gold ounces)      1,170    3,489     7,291
        Mill Availability (%)           57%      66%       95%

        
        - Mechanical commissioning of the flotation and gravity circuits is complete
          and are the final components required for commercial production. As a result, it is
          now anticipated that mill recoveries will improve to targeted rates of approximately
          90% in Q3.
        - Mechanical commissioning of the primary crusher was completed during the
          quarter with crushing commencing on June 5. The commissioning of the conveyor system
          and ore bins is nearing completion, which will optimize the introduction of mill feed
          into the mill circuit and allow site management to test maximum throughput rates and
          eliminate re-handling costs.
        - Grades to the mill are expected to increase once commercial production is
          declared as mill feed will draw on the new higher grade stockpile and as mining
          operations move to higher grade areas of the open pit. Further increases in mill feed
          grade are anticipated later in the year as the underground operation commences
          longhole stoping, which is expected to increase feed grades to the mill to over 2.0
          g/t.
        - Capex for the full year has increased by approximately $40 million from
          original estimates relating to EPCM construction costs, comprised of $13 million in
          labour costs and $27 million in materials or scope changes. Virtually all EPCM work
          has been completed and the contractor has begun demobilizing from the site. The
          majority of these increases relate to the revised mine plan with capex expected to
          decrease over the balance of the year.

(1) Core assets include the Ocampo, El Chanate and Young-Davidson mines.

(2) The Young-Davidson mine has not yet declared commercial production, and is therefore excluded from consolidated cash costs from core assets.

Ocampo

        
        - During the quarter, the Ocampo mine reported production of 21,269 ounces
          of gold and 894,414 ounces of silver (or 37,579 gold equivalent ounces) at cash costs
          of $515 per gold equivalent ounce using the realized gold equivalency ratio of 54.8:1
          for the quarter.
        - Production in the quarter was negatively impacted by the unusually high
          turnover of skilled labour that significantly reduced underground development at the
          Northeast underground mine. This resulted in an above planned depletion of developed
          ore inventories. During the quarter, the underground averaged 1,613 tonnes per day at
          5.38 g/t, a 30% decrease in tonnage and a 13% improvement in grade over the previous
          quarter.
        - As a result of the decreased tonnes mined from the underground, the grade
          processed at the mill facility decreased as the mill feed was supplemented with lower
          grade open pit ore. The underground mines need to increase development by
          approximately 4,000 meters for the balance of the year. It is expected that
          underground development rates will return developed ore inventories to targeted levels
          during the first half of 2013. To support the accelerated development plans, the
          following initiatives have been put into place;
             - The Company has launched an aggressive recruiting campaign and to date,
             the Company's recruitment efforts have filled the majority of the open positions
             with training programs well underway.
             - The Company is in the final negotiations of engaging contractors to
             support the accelerated underground development program.
        - Accordingly, the Company has revised the 2012 production outlook to
          155,000-170,000 gold equivalent ounces at cash costs of $540-570 per gold equivalent
          ounce (using the Company's long-term gold equivalency ratio of 55:1) primarily due to
          the additional ore development requirements during the second half of the year.
        - During the quarter the open pits averaged approximately 102,001 tonnes per
          day, which was above the targeted rates of 100,000 tonnes per day and consistent with
          the previous quarter. As the 2012 pre-stripping program is largely complete and
          related mining equipment has been idled, it is expected that the open pit tonnes mined
          will decrease over the balance of the year.
        - The mill facility reported an average of 3,198 tonnes per day, consistent with
          throughput in previous quarters and with gold and silver recoveries increasing to 97%
          and 93% respectively.
        - Stacking at the heap leach facility increased to 10,155 tonnes per day, a 14%
          increase over the previous quarter.
        - Construction of the heap leach pad extension has begun and is expected to be
          completed by mid-2013.

El Chanate

        
        - During the quarter, the El Chanate mine reported production of 17,882
          ounces of gold at cash costs of $432 per gold ounce and is on track to meet 2012
          guidance.
        - Late completion of phase 6 leach pads delayed the commencement of leaching and
          deferred metal ounces produced in the quarter. These areas have since been placed
          under irrigation and are currently producing in line with expectations.
        - Additional upgrades, including replacing 8" diameter water distribution pipes
          with 16" diameter pipes, is expected to be completed in July and will allow the
          Company to increase the area under leach from the current 67% to over 80% by the end
          of the year.
        - Crushing and stacking rates increased to approximately 20,080 tonnes per day
          with an additional 11,697 tonnes per day of run-of-mine ores.

Corporate Highlights

        
        - On July 13, 2012 the Company closed the sale of the El Cubo mine and the
          Guadalupe y Clavo project to Endeavour Silver Corp. that included a cash payment of
          $100M, and $100M in equity shares of Endeavour to the Company.
        - On May 4, 2012, the Company completed the divestment of the Stawell and
          Fosterville mines located in Australia to Crocodile Gold Corp. for a cash payment of
          $55M.
        - On April 25, 2012, the Company's revolving credit facility was expanded to
          $250 million. The expanded four-year credit facility is syndicated with seven lenders
          and carries an interest rate of LIBOR plus 2.25% to 3.50%.

"While we have met with several challenges during the quarter at our Ocampo mine, we have launched strategic initiatives to address the skilled labour shortage and return developed inventory to optimal levels as quickly as possible," stated Rene Marion, Chief Executive Officer. He continued, "Highlighting our quarter, the Young-Davidson mine is ramping up extremely well and during June we exceeded threshold levels required for commercial production at both the open pit and mill facility. With the flotation and gravity circuits commissioned in late June, we fully anticipate that we will declare commercial production in August. The Company reaffirms its operational guidance for 2013 and 2014."

Conference Call Details

A conference call will be held on Tuesday, July 17, 2012 starting at 9:00 a.m. Eastern Time. Senior management will be on the call.

Conference Call Access:

        
        - Canada & US Toll Free: 1-888-231-8191
        - International & Toronto: 1-647-427-7450

If you are unable to attend the conference call, a replay will be available until midnight July 24 2012 by dialing the appropriate number below:

        
        - Local Toronto Participants: 1-416-849-0833 Passcode: #98445552
        - North America Toll Free: 1-855-859-2056 Passcode: #98445552

Operational Results - Core Assets

        
        Three months                               Young-
        ended June 30/12   Ocampo El Chanate  Davidson(4)  Q2 2012  Q2 2011
        Gold eq. oz.
        produced
        (realized)(1)      37,579     17,882       11,950   67,411   74,439
        Gold eq. oz.
        sold
        (realized)(1)      33,548     16,504        5,209   55,261   73,998
        Total cash costs
        per gold eq. oz.
        (realized)(1)(2)     $515       $432            -     $488     $372
        Margins per gold
        eq. oz.
        (realized)         $1,083     $1,178            -   $1,115   $1,137
        Gold eq. oz.
        produced
        (55:1)(3)          37,531     17,882       11,950   67,363   65,722
        Gold eq. oz.
        sold (55:1)(3)     33,543     16,504        5,209   55,256   65,419
        Total cash costs
        per gold eq. oz.
        (55:1)(2)(3)         $515       $432            -     $488     $420
        Margins per gold
        eq. oz. (55:1)     $1,083     $1,178            -   $1,115   $1,089

(1) Gold equivalent ounces include silver ounces produced / sold converted to a gold equivalent, based on the ratio of the realized sales prices of the commodities.

(2) Cash costs for the Ocampo mine and on a consolidated basis are calculated on a per gold equivalent ounce basis. Cash costs for the El Chanate mine are calculated on a per gold ounce basis, using silver revenues as a by-product cost credit.

(3) Gold equivalent ounces include silver ounces produced / sold converted to a gold equivalent, based on the long-term gold equivalency ratio of 55:1.

(4) The Young-Davidson mine has not yet declared commercial production.

        
        Six months ended                           Young-
        June 30/12         Ocampo El Chanate  Davidson(4)     2012     2011
        Gold eq. oz.
        produced
        (realized)(1)      76,956     36,975       11,950  125,881  124,293
        Gold eq. oz.
        sold
        (realized)(1)      68,881     35,165        5,209  109,255  124,679
        Total cash costs
        per gold eq. oz.
        (realized)(1)(2)     $526       $420            -     $490     $376
        Margins per gold
        eq. oz.
        (realized)         $1,122     $1,250            -   $1,169   $1,087
        Gold eq. oz.
        produced
        (55:1)(3)          75,841     36,975       11,950  124,766  110,425
        Gold eq. oz.
        sold (55:1)(3)     67,858     35,165        5,209  108,232  110,728
        Total cash costs
        per gold eq. oz.
        (55:1)(2)(3)         $534       $420            -     $495     $423
        Margins per gold
        eq. oz. (55:1)     $1,114     $1,250            -   $1,164   $1,040

(1) Gold equivalent ounces include silver ounces produced / sold converted to a gold equivalent, based on the ratio of the realized sales prices of the commodities.

(2) Cash costs for the Ocampo mine and on a consolidated basis are calculated on a per gold equivalent ounce basis. Cash costs for the El Chanate mine are calculated on a per gold ounce basis, using silver revenues as a by-product cost credit.

(3) Gold equivalent ounces include silver ounces produced / sold converted to a gold equivalent, based on the long-term gold equivalency ratio of 55:1.

(4) The Young-Davidson mine has not yet declared commercial production.

About AuRico Gold

AuRico Gold is a leading Canadian gold producer with a diversified portfolio of three high quality mines and projects in North America that have significant production growth and exploration potential. AuRico's core operations include the Ocampo mine in Chihuahua State, the El Chanate mine in Sonora State and the Young-Davidson gold mine in northern Ontario that is expected to declare commercial production in early August of 2012. AuRico is currently focused on organic expansion and optimization of the core asset base that will support production growth to upwards of 530,000 gold equivalent ounces in 2014. AuRico's strong project pipeline also includes several advanced development opportunities in Mexico and British Columbia. AuRico's head office is located in Toronto, Ontario, Canada.

Cautionary Statement

Cautionary Note to US Investors - The United States Securities and Exchange Commission permits US mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. This press release uses certain terms, such as "measured", "indicated" and "inferred" "resources" that the SEC guidelines strictly prohibit US registered companies from including in their filings with the SEC. The term "resources" does not equate to the term "reserves" and U.S. investors are cautioned not to assume that any part or all of the minerals in these categories will ever be converted to reserves. US Investors are urged to consider closely the disclosure in AuRico Gold's Annual Report on Form 40-F, which may be secured from AuRico Gold, or from the SEC's website at http://www.sec.gov/edgar.shtml.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

Certain statements included herein, including information as to the future financial or operating performance of the Company, its subsidiaries and its projects, constitute forward-looking statements. The words ''believe'', ''expect'', ''anticipate'', ''target'', ''continue'', ''estimate'', ''may'', and similar expressions identify forward-looking statements. Forward-looking statements include, among other things, statements regarding anticipated future financial and operational performance, the ability of the Company to achieve its guidance for production, cash costs, and capex, the ability to continue to fund expansion and exploration operations through cash flows, the ability of the Company to optimize and expand its operations and development projects through capital expenditure, the ability of the Company to complete its expansion studies in a timely manner and to achieve positive results therefrom, the ability to realize the perceived benefits of the acquisition of Capital Gold and Northgate, and the divestiture of the Australian assets as well as the El Cubo and Guadalupe y Calvo assets, the ability of Young-Davidson to commence production in early August and to meet 2012 guidance for Young-Davidson, the ability to meet targeted mill recovery rates and mill feed grades at Young-Davidson, the ability to accelerate underground production at Young-Davidson, the ability to increase mining rates at Young-Davidson, the ability to accelerate underground development, the ability to achieve revised production guidance at Ocampo, the ability to complete the heap leach pad expansion at Ocampo by mid-2013, the ability to complete upgrades at El Chanate by the end of the year, and the upgrade of water distribution pipes by the end of July, the ability of the Company to achieve its targets for the continued expansion and development of Ocampo and El Chanate, the future price of gold and silver and the ratio of their prices, the de-risking of operations, future exploration results of the Company's exploration and development programs and the success of the Company's exploration approaches, the Company's ability to delineate additional resources and reserves as a result of such programs, statements regarding the Company's financial exposure to litigation, targets, estimates and assumptions in respect of gold and silver production and prices, operating costs, results and capital expenditures, mineral reserves and mineral resources and anticipated grades, recovery rates, future financial or operating performance, margins, operating and exploration expenditures, costs and timing of completion of the Ocampo expansion program and improvements to the heap leach pad, costs and timing of the development and commencement of production of new deposits, costs and timing of construction, costs and timing of future exploration and reclamation expenses including, anticipated results for the periods set out within, operating performance projections for the periods set out within, the Company's ability to fully fund its business model internally, gold and silver production for the periods set out within and the cash and operating costs associated therewith, the ability to achieve productivity and operational efficiencies, and the timing of each thereof. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Company, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. The operating and financial performance of the Company will be affected by changes in the actual gold equivalency ratio realized for the periods set out within. Many factors could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Company. Such factors include, among others, known and unknown uncertainties and risks relating to additional funding requirements, reserve and resource estimates, commodity prices, hedging activities, exploration, development and operating risks, illegal miners, political and foreign risk, uninsurable risks, competition, limited mining operations, production risks, environmental regulation and liability, government regulation, currency fluctuations, recent losses and write-downs, restrictions in the Company's loan facility, dependence on key employees, possible variations of ore grade or recovery rates, failure of plant, equipment or process to operate as anticipated, accidents and labour disputes. Investors are cautioned that forward-looking statements are not guarantees of future performance and, accordingly, investors are cautioned not to put undue reliance on forward-looking statements due to the inherent uncertainty therein.

For further information:

For further information please visit the AuRico Gold website at http://www.auricogold.com or contact:

        
        Rene Marion
        Chief Executive Officer
        AuRico Gold Inc.
        +1-647-260-8880
        Anne Day
        Vice President, Investor Relations and Communications
        AuRico Gold Inc.
        +1-647-260-8880
        (AUQ. AUQ)

SOURCE AuRico Gold Inc.

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