Alhambra Resources Ltd. Year 2013 Financial and Operational Results

Alhambra Resources Ltd. (TSX VENTURE:ALH) ("Alhambra" or the "Corporation"),
announces its financial and operating results for the year ended December 31,
2013. All amounts related to the financial results are expressed in thousands of
United States dollars unless otherwise indicated. 


YEAR 2013 HIGHLIGHTS



--  Mining operations were suspended during the year 
--  Stacked 42,630 tonnes ("t") of ore on the heaps at an average grade of
    0.43 grams per tonne gold ("g/t Au") 
--  Production was estimated at 383 ounces ("ozs") of gold 
--  Revenue from gold sales amounted to $2.9 million based on the sale of
    2,091 ozs at an average gold price of $1,389 per ounce ("/oz") 
--  Cash operating costs were $1,028/oz of gold sold 
--  The Corporation recorded a net loss of $22.4 million ($0.21/share) 
--  Kazakhstan mining operations reported a net loss of $20.5 million
    ($0.20/share) 
--  Incurred an inventory write-down of $9.3 million due to a write-down of
    6,050 ozs of gold in work in progress ("WIP") 
--  The estimated recoverable gold in WIP as of December 31, 2013 was 30,000
    ozs 
--  Recorded an impairment loss on property, plant and equipment of $22.6
    million



FINANCIAL HIGHLIGHTS 

The financial results for 2012 and 2013 are for the period January 1 to December 31.



----------------------------------------------------------------------------
  (in thousands of US$     Three Months ended       Year ended December 31  
     except per share          December 31                                  
         amounts)                                                           
----------------------------------------------------------------------------
                                2013         2012         2013         2012 
----------------------------------------------------------------------------
Gross revenue                  $ 412      $ 1,438      $ 2,905      $ 9,518 
----------------------------------------------------------------------------
Net income/loss            $ (20,101)    $ (3,343)   $ (22,365)    $ (4,980)
----------------------------------------------------------------------------
  Per share (basic and                                                      
   diluted)                    (0.19)       (0.03)       (0.21)       (0.05)
----------------------------------------------------------------------------
Weighted average shares                                                     
 outstanding             104,132,059  104,132,059  104,132,059  104,132,059 
----------------------------------------------------------------------------
Shares outstanding at                                                       
 end of period           104,132,059  104,132,059  104,132,059  104,132,059 
----------------------------------------------------------------------------



In 2013, the Corporation recognized $2.9 million in revenue from the sale of
2,091 ozs of gold at an average price of $1,389/oz. This compares to $9.5
million in revenue from the sale of 5,702 ozs of gold at an average price of
$1,669/oz during 2012.


For the year ended December 31, 2013, the net loss for the Corporation was $22.4
million ($0.21/basic and diluted share) compared to a net loss in 2012 of $5.0
million ($0.05/basic share and diluted share). 


OPERATING HIGHLIGHTS 

During 2013 the Corporation continued to experience financial hardships which
prevented it from satisfying some of its outstanding obligations. Due to these
financial constraints, the Corporation continued to suspend mining of new
material to conserve cash until the Corporation could raise sufficient funds to
pay outstanding obligations. The Corporation continues to pursue financing
alternatives. Should a financing be completed, a portion of the proceeds will go
towards the resumption of the mining of ore. 


In 2013, the Corporation stacked a total of 42,630 t of ore at an average grade
of 0.43 g/t Au onto the pad. The estimated recoverable gold mined totaled 383
ozs. As of December 31, 2013, the estimated recoverable gold classified as WIP
was 30,000 ozs. 


OPERATING EXPENSES 

Operating costs for the year 2013 were $2.3 million or $1,099/oz of gold sold as
compared to $5.0 million or $882/oz of gold sold for 2012. The 2013 figure
includes $0.4 million ($179/oz) of mining costs charged directly to operating
costs for the months in which there was no new ore mined. This compares to $0.2
million ($38/oz) of mining costs charged directly to operating costs for the
year 2012. 


Included in the 2013 operating cost amount is $0.1 million or $71/oz related to
the amortization of the bump-up to fair value from the estimated cost of WIP on
re-valuation on September 15, 2009. Cash operating costs were therefore
$1,028/oz. In 2012, $0.4 million or $75/oz of similar costs were included in
operating costs resulting in the cash cost of gold sold for this period of
$807/oz.


For more details on operating expenses, see the Corporation's 2013 audited
financial statements and MD&A.


WRITE-DOWN OF INVENTORIES

At December 31, 2013 the Corporation reviewed the estimated quantity of gold
contained in WIP and in addition performed the net realizable test on the value
of that gold. As mining operations had been suspended due to issues relating to
the Corporation's current financial condition, the Corporation was better able
to analyze the quantity of gold contained in various processes more
specifically, gold in circuit and in concentrate. The Corporation determined
that it should reduce the quantity of gold in WIP to 30,000 ozs from the 36,050
ozs previously recorded. This write down is reflective of an estimated recovery
rate of 65% for gold that is mined and stacked on the heap leach pads. The
Corporation had adjusted the recovery from 70% to 65% on September 15, 2009 when
the assets were revalued in connection with the court decision which returned
the assets to the Corporation. Up until that date the recovery rate used was
70%. The Corporation has reported a loss of $7.7 million in connection with this
adjustment.


In addition to the adjustment made related to gold contained in WIP, the
Corporation determined that the net realizable value of the WIP required a
further adjustment to reflect the current gold prices. As a result an additional
write off of $1.5 million was taken at December 31, 2013. This write down
reflects the decrease in estimated gold price. The gold price assumed in the net
realizable value analysis was $1,255/oz.


The total write off of WIP inventory was $9.3 million.

IMPAIRMENT TEST

An impairment test was triggered because the carrying amount of property, plant
and equipment was more than the Corporation's market capitalization at December
31, 2013 indicating that the assets may be impaired. As a result a detailed test
was carried out and based on the results of the test, the Corporation recorded
an impairment charge of $22.6 million. The impairment was primarily the result
of a delay in timing of the planned development of the transitional and sulphide
zones of Uzboy due to the Corporation's financial condition together with
general market conditions that are impacting junior gold mining companies.
Another factor that impacted the impairment test was the recent decline in the
Corporation's long term gold price assumption. The key assumptions and estimates
used in the impairment test to determine the net asset value are commodity
prices, discount rates, operating costs, exchange rates and capital
expenditures. For purposes of the test for impairment at December 31, 2013, the
Corporation assumed a gold price of $1,250/oz for 2014 and $1,300/oz thereafter
and an after tax discount rate of 14%.


2013 EXPLORATION DRILLING UPDATES 

During 2013, no field work was carried out in Kazakhstan. This was as a result
of the Corporation's lack of financial resources as described previously. 


OUTSTANDING LEGAL CHALLENGES

As of December 31, 2013 there were a number of outstanding creditor actions
which had been filed against Saga Creek and there were unpaid salaries which had
been securitized by the property of the Corporation. 


For details related to these legal challenges, see the Corporation's 2013
audited financial statements and MD&A. 


SUBSEQUENT EVENT - FINANCING

On December 20, 2013 the Corporation entered into agreements to issue up to
C$5.65 million in convertible notes (the "Notes") plus 5.625 million warrants
(the "Warrants"). The Notes have a term of three years from the date of issue
with interest calculated using the nominal interest method at a rate of 12% per
annum. Interest and principle under the notes are convertible into the common
shares of the Corporation at the option of the holder at C$0.25 per common share
during the term of the Notes. The Corporation has the right to pay interest on
the Notes in cash or shares. The Corporation also has a right to force
conversion of the principal and accrued and unpaid interest under the notes into
the shares of Alhambra at a minimum price of US$0.20 per share. If the weighted
average trading price of the Corporation's common shares for any five trading
days within ten consecutive trading days equals or exceeds C$0.35 per common
share, any outstanding balance owing on the Notes will automatically convert to
common shares.


The Warrants have an exercise price of C$0.30 per common share and are
exercisable for three years from the date of issue of related Notes. Similar to
the terms attached to the Notes, if the weighted average trading price of the
Corporation's common shares for any five trading days within ten consecutive
trading days equals or exceeds C$0.35 per common share, the Warrant holder is
required to convert any Warrants outstanding at that time. 


Subsequent to December 31, 2013 the Corporation completed the issue of the
C$5.65 million of the Notes and the 5.65 million Warrants. In consideration for
issuing the Notes and Warrants, the Corporation received C$0.65 million in cash
and 2,764,500 ordinary shares of Global Resources Investment Trust plc ("GRIT")
at a deemed price of GBP 1 per GRIT share. GRIT is a new investment trust
established to seek to exploit investment opportunities in the junior mining and
natural resources sectors and whose ordinary shares trade on the London Stock
Exchange's main market for listed securities. At the time the Corporation sells
the 2,764,500 of GRIT ordinary shares, the terms related to the issue for cash
of the C$0.65 in Notes require that the Corporation repay any principal balance
plus accrued interest outstanding on the C$0.65 Notes plus C$0.0325 million in
early redemption fees. Upon repayment, any Warrants then outstanding related to
the C$0.65 in Notes will expire. 


2014 OBJECTIVES 

Currently Alhambra's efforts are focused on arranging financing, the use of
proceeds from which will be directed towards the settlement of outstanding
accounts payable, the re-initiation of the stacking of ore on the heap leach
pads and the resumption of exploration and development programs. The Corporation
has identified a number of exploration targets it wishes to drill once funds
have been raised. In addition the Corporation plans to begin a pre-feasibility
study directed towards bringing into production the transitional and sulphide
zones of Uzboy. However, these programs as well as the Corporation's ability to
continue on as a going concern are dependent on Alhambra completing one or more
of the financing transactions it is currently investigating. While the
Corporation has been successful in the past, there is no guarantee that the
Corporation will be successful in the future in raising sufficient funds to
continue as a going concern.


AUDITED FINANCIAL STATEMENTS AND MANAGEMENT DISCUSSION AND ANALYSIS ("MD&A")

The Corporation's 2013 audited financial statements and MD&A are available on
the Corporation's website, can be obtained on application from the Corporation
and are available under the Corporation's profile on SEDAR at www.sedar.com. 


ABOUT ALHAMBRA

Alhambra is a Canadian based international exploration and production
corporation in Kazakhstan. 


Alhambra common shares trade in Canada on The TSX Venture Exchange under the
symbol ALH, in the United States on the Over-The-Counter Pink Sheets Market
under the symbol AHBRF and in Germany on the Frankfurt Open Market under the
symbol A4Y. The Corporation's website can be accessed at
www.alhambraresources.com.


Neither the TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in the Policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release. 


Forward-Looking Statements 

Certain statements contained in this news release constitute "forward-looking
statements" as such term is used in applicable Canadian and US securities laws.
These statements relate to analyses and other information that are based on
forecasts of future results, estimates of amounts not yet determinable and
assumptions of management. In particular, statements regarding the formalization
of a financing, re-initiation of the stacking of ore on the heap leach pads, the
resumption of exploration and development programs, initiating the Uzboy
pre-feasibility study, availability of capital to fund ongoing projects and
other factors and events described in this news release should be viewed as
forward-looking statements to the extent that they involve estimates thereof.
Any statements that express or involve discussions with respect to predictions,
expectations, beliefs, plans, projections, objectives, assumptions or future
events or performance (often, but not always, using words or phrases such as
"expects" or "does not expect", "is expected", "anticipates" or "does not
anticipate", "plans, "estimates" or "intends", or stating that certain actions,
events or results "may", "could", "would", "might" or "will" be taken, occur or
be achieved) are not statements of historical fact and should be viewed as
"forward-looking statements". Such forward looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Corporation to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such risks and other factors
include, among others, the formalization of a financing, the re-initiation of
the stacking of ore on the heap leach pads, the resumption of exploration and
development programs, initiating the Uzboy pre-feasibility study, the
availability of capital to fund exploration and production development;
political, social and other risks inherent in carrying on business in a foreign
jurisdiction and such other business risks as discussed herein and other
publicly filed disclosure documents. Although the Corporation 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 as anticipated,
estimated or intended. There can be no assurance that such statements will prove
to be accurate as actual results and future events could vary or differ
materially from those anticipated in such statements. Accordingly, readers
should not place undue reliance on forward-looking statements contained in this
news release. 


Forward looking statements are made based on management's beliefs, estimates and
opinions on the date the statements are made and the Corporation undertakes no
obligation to update forward-looking statements and if these beliefs, estimates
and opinions or other circumstances should change, except as required by
applicable law. 


This news release contains forward-looking statements based on assumptions,
uncertainties and management's best estimates of future events. When used
herein, words such as "intended" and similar expressions are intended to
identify forward-looking statements. Forward-looking statements are based on
assumptions by and information available to the Corporation. Investors are
cautioned that such forward-looking statements involve risks and uncertainties.
Actual results may differ materially from those currently anticipated. The
forward-looking statements contained herein are expressly qualified by this
cautionary statement.


FOR FURTHER INFORMATION PLEASE CONTACT: 
Alhambra Resources Ltd.
Ihor P. Wasylkiw
VP & Chief Information Officer
[phone]


Alhambra Resources Ltd.
Donald D. McKechnie
VP Finance & Chief Financial Officer
[phone]