Alhambra Resources Ltd.: Year 2010 Financial and Operational Results

Alhambra Resources Ltd. (TSX VENTURE:ALH) ("Alhambra" or the "Corporation"), an
international gold explorer and producer, announces its financial and operating
results for the year ended December 31, 2010. All amounts related to the
financial results are expressed in thousands of United States dollars unless
otherwise indicated. 




YEAR 2010 HIGHLIGHTS                                                        

--  Annual gold production was estimated at 18,192 ounces ("ozs") 
--  Revenue from gold sales amounted to $16.0 million based on the sale of
    12,663 ozs 
--  Yearly gold sales were slightly lower than anticipated due to un-
    seasonally cold weather in the first quarter of 2010 and some fourth
    quarter delays due to ore stacked on a new pad that didn't begin
    production until much later in the quarter resulting in lower gold
    recoveries 
--  Cash operating costs were $538.10 per oz of gold sold 
--  Stacked 1,023,853 tonnes ("t") of ore on the heaps at an average grade
    of 0.85 grams/tonne ("g/t") 
--  The estimated recoverable gold in work in process ("WIP") as of December
    31, 2010 was 36,623 ozs 
--  The Corporation recorded net cash used in operating activities of $2.1
    million ($0.02/share) and a net loss of $5.0 million ($0.06/share) 
--  27,265 metres of exploration drilling was completed 
--  Completion of the 2010 drilling program and the assaying of more than
    11,800 associated drill samples was pushed into 2011 due to export
    permit delays 
--  Exploration expenditures were $2.0 million 
--  Provisional capital expenditures of $13.8 million recorded in Kazakhstan
--  Completed a private placement in the third quarter for gross proceeds of
    $8.0 million 
--  Secured debentures plus accrued interest totalling $1.2 million
    converted into 4,221,488 shares 



FINANCIAL HIGHLIGHTS 

The financial results for 2010 are for the period January 1, 2010 to December
31, 2010 while the financial results for 2009 are for the period from the date
of re-acquisition of Saga Creek on September 15, 2009 to December 31, 2009. As a
result, the financial results recorded for 2010 are not necessarily comparative
to the financial results for 2009.




----------------------------------------------------------------------------
(in thousands of US$ except     Three Months ended                          
 per share amounts)                 December 31      Year ended December 31 
----------------------------------------------------------------------------
                                     2010       2009        2010       2009 
----------------------------------------------------------------------------
Gross revenue                     $ 4,030    $ 5,034    $ 15,991    $ 6,160 
----------------------------------------------------------------------------
Net income/loss                  $ (4,005)  $ (8,142)   $ (5,042)  $ 66,755 
----------------------------------------------------------------------------
 Per share (basic)                  (0.05)     (0.10)      (0.06)      0.87 
----------------------------------------------------------------------------
 Per share (diluted)                (0.05)     (0.10)      (0.06)      0.81 
----------------------------------------------------------------------------
Weighted average shares                                                     
 outstanding                  103,986,157 79,403,682  88,710,746 76,688,989 
----------------------------------------------------------------------------
Shares outstanding at end of                                                
 period                       103,994,309 81,074,421 103,994,309 81,074,421 
----------------------------------------------------------------------------



For the year ended December 31, 2010, the net loss for the Corporation was $5.0
million ($0.06/basic and diluted share) compared to net income in 2009 of $66.8
million ($0.87/basic share and $0.81/diluted share). Net cash used in operating
activities was $2.1 million ($0.02/share) for the year 2010 compared to net cash
provided from operating activities of $0.1 million ($0.00/share) for the year
2009. 


OPERATING HIGHLIGHTS 

During the year 2010, the Corporation stacked a total of 1,023,853 tonnes of ore
at an average grade of 0.85 grams per tonne ("g/t") of gold onto the pad. The
estimated recoverable gold mined totaled 18,192 ozs. The estimated recoverable
gold classified as work in progress was 36,623 ozs as of December 31, 2010. In
addition, the Corporation mined 2,374,398 tonnes of waste during this same
period.


In 2010, the Corporation recognized $16.0 million in revenue from the sale of
12,663 ozs of gold at an average price of $1,262.78/oz. This compares to $6.2
million in revenue from the sale of 5,606 ozs of gold at an average price of
$1,098.84/oz during the period September 15, 2009 to year end 2009.


OPERATING EXPENSES 

Operating expenses consist of all costs associated with the production of gold,
(including direct costs incurred in the mining, leaching, and resin stripping
processes ("process operating costs")), transportation and refining of the
cathodic sediment. All process operating costs are charged to work in progress
and are expensed on the basis of the quantity of gold sold as a percentage of
total recoverable gold mined.


Operating costs for the year 2010 were $9.1 million or $720.25/oz sold as
compared to $3.7 million or $651.18/oz of gold sold for the period from
September 15 to December 31, 2009.


Included in the 2010 operating cost amount is $2.3 million or $182.15/oz related
to the amortization of the bump-up to fair value from the estimated cost of work
in progress on revaluation at September 15, 2009. Cash operating costs were
therefore $538.10/oz. For the period September 15 to December 31, 2009, $1.3
million or $229.23/oz of similar costs were included in operating costs making
the cash cost of gold sold for this period $421.95/oz.


CAPITAL PROGRAM

In 2010, Alhambra recorded capital expenditures of $16.1 million, all in
Kazakhstan. Of that total, $13.8 million relates to the acquisition of
historical data as legislated by the Government of Kazakhstan. This Historical
Data was acquired by a previous owner of the Saga Creek licenses for a cost of
$95,000. The indicative cost incurred by the Government of Kazakhstan at that
time was $15.8 million. Effective January 1, 2009 the Government of Kazakhstan
enacted legislation that required those companies that had acquired the
Historical Data begin paying the Government of Kazakhstan the unpaid amounts
beginning on January 1, 2009 in equal quarterly installments over ten (10)
years. 


It is the opinion of the Corporation that it is not liable for this liability as
the obligation is not recorded in the contract governing foreign investment
which details the Corporation's rights and obligations associated with its
licenses. In late 2010, as the result of an audit of Saga Creek by the
Kazakhstan tax authorities, the Government of Kazakhstan assessed Saga Creek for
the liability rejecting the Corporation's appeal of the assessment. The
Corporation has since filed a claim in the economic court in Kazakhstan seeking
to have the decision of the tax authorities reversed together with the
obligation and related interest and penalties. While Alhambra believes that its
position is defendable, there is a risk that it will not be successful in the
Kazakhstan courts and as such has recorded the provision. The liability
associated with the provision for Historical Data is $13.8 million of which $9.4
million has been recorded as non-current. A discount rate of 3.2% was used to
determine the amount of the liability. The undiscounted value of the liability
is approximately $15.7 million.


Of the remaining $2.3 million, $0.3 million relates to buildings, machinery and
equipment used in the operations in Kazakhstan. The remaining $2.0 relates to
Alhambra's 2010 capital expenditure on its exploration program.


2010 EXPLORATION DRILLING UPDATES

Alhambra's 2010 extensive exploration drilling program was concentrated on its
three advanced exploration projects (Uzboy Gold Deposit ("Uzboy"), Shirotnaia
and Dombraly) and three early stage exploration projects (Zhanatobe, Kerbay and
North Balusty). In addition, a soil and rock chip sampling program was conducted
on one of its early stage exploration projects (Vasilkovskoe East). 


Alhambra completed 27,265 metres ("m") of exploration drilling of which
approximately 34% was core drilling, 11% was reverse circulation ("RC")
drilling, 32% was rotary air-blast ("RAB") drilling and the remaining 23% was
hydro-core lift ("KGK") drilling. Of the yearly metres drilled, approximately
74% of this total was drilled on Alhambra's advanced exploration project areas
of Uzboy, Shirotnaia and Dombraly. The remaining 26% was drilled on Alhambra's
early stage exploration project areas of North Balusty, Kerbay, and Zhanatobe. 


Completion of the 2010 drilling program was pushed well into 2011. This combined
with export delays of more than 11,800 drill samples due to new export law and
procedures lead to significant delays in receiving drill assay results. The
assays for the 2010 drilling program are expected to be totally completed within
the second quarter of 2011. 


1) UZBOY GOLD DEPOSIT

An extensive exploration program was completed at Uzboy. This included drilling
to delineate additional oxide and sulfide gold mineralization along strike and
depth. The 2010 drilling program consisted of 8,298 m of core, RAB and KGK
drilling.


At Uzboy Nova, located approximately 1.5 kilometres ("kms") north-east ("NE") of
the West Uzboy open pit, an area that is logistically part of the existing Uzboy
gold deposit and heap-leach operation, 8 core holes totaling 571 m were drilled.
Four oxide and four sulfide mineralization zones were intercepted. At Uzboy NW,
located 2.5 kms north-west ("NW") from the West Uzboy open pit, 127 KGK holes
totaling 4,183 m were completed. A favorable geophysical anomaly, suggesting
gold mineralization, was tested. 


At West Uzboy and East Uzboy, core drilling started with relatively shallow
holes targeting near surface oxide mineralization as an extension of the known
oxide mineralization and continued with deeper holes at depth to test for
additional sulphide gold mineralization. Twenty-seven holes totaling 3,239 m
were drilled. These deeper holes confirmed the presence at depth of zones of
strong sulphide mineralization and numerous intervals of intensive hydrothermal
alteration, pervasive silicification, and quartz veinlets were intercepted. 


2) SHIROTNAIA 

Shirotnaia covers a 20 km strike length of the Aksu-Balusti mineral trend
approximately three kms north of the gold and uranium deposits currently being
mined at Aksu and Quartzite Hills. The gold mineralization at Shirotnaia is
hosted in faulted and sheared andesite volcanic and volcaniclastic rocks that
exhibits intense pyrite-sericite-carbonate and silica-clay alteration. The 2010
drilling program consisted of 3,391 m of core and RC drilling. 


The first stage of the drilling program consisted of nine core holes totaling
1,141 m. The objective of this drilling program was to test the depth extension
of the large gold anomaly previously outlined by the 2008 RAB drilling program.
Two significant intervals of high-grade gold mineralization were encountered
within a large area of lower grade gold mineralization, suggesting the probable
continuation of the high grades to depth as is usual for this style of
mineralization. 


The assays from the nine hole core drilling program resulted in the discovery of
two new zones of higher grade gold mineralization at Shirotnaia as well as
numerous wide zones of low grade mineralization. In particular, one hole
intersected 4.32 grams per tonne ("g/t") gold over an interval of 36.0 m
including a higher grade interval of 16.80 g/t gold over 9.0 m and a second hole
intersected 2.13 g/t gold over an interval of 20 m. These two zones could be
estimated as at least 850 and 1,000 m long, 10-20 m wide and more than 60 m
along the dip. The mineralized zones remain open along strike and at depth. 


A second stage in-fill RC drilling program consisting of 43 holes totaling 2,250
m was completed at Shirotnaia to further enhance and understand the geometry of
the large zone of anomalous gold mineralization previously outlined at
Shirotnaia. These RC holes were drilled between the nine 2010 core holes and the
area NE of these core holes. Broad intervals of anomalous gold concentrations
(for +0.15 g/t) were intersected in 79% of the holes drilled. The RC drilling
program successfully confirmed the presence of gold mineralization for at least
another 550 m of strike length to the northeast, outside the boundaries of the
2007/2010 core drilling defined area of gold mineralization. The program also
successfully provided new priority targets for the follow-up core drilling
program in 2011. 


3) DOMBRALY

The 2010 drilling program consisted of 8,511 m of core, RC and RAB drilling. 

The objective of the 2010 exploration program at Dombraly was to continue core
and non-core drilling on the oxide and sulphide zones of gold mineralization, to
test the depth extensions of the known zones of gold mineralization, to locate
new zones of gold mineralization in close proximity to Dombraly and to validate
the gold mineralization and grade of the former stockpile and open pit
back-fill. This program was focused to further define the extent and continuity
of the gold mineralization at Dombraly, leading to an initial NI 43-101
compliant resource estimate by year-end 2011. 


The gold mineralization at Dombraly is oxidized to a depth ranging from
approximately 60-80 m, but in some cases, it can reach a depth of 100-120 m. The
oxide zone is underlain by a transitional zone which in turn is underlain by
sulphide gold mineralization. 


Fifteen core drill holes totaling 3,788 m were completed. This included two
holes that collapsed and were re-drilled. Of the thirteen core holes drilled,
four holes were drilled at the northern flank of the Dombraly main zone of gold
mineralization with the objective of extending the deep sulfide mineralization
to the north and to check for shallow oxide mineralization. The remaining nine
core holes were drilled just south of the known zones of gold mineralization
where the gold mineralization is open-ended and aided in outlining the possible
continuation of gold mineralization there. 


All the holes confirmed the presence of previously established zones of
hydrothermal alterations, quartz veining and pyrite mineralization. Assay
results for the 15 core hole program are pending.


The RC drilling program at Dombraly included drilling of the waste pile, the
open pit back fill material and the possible extension of oxide mineralization
northward of the pit. The waste pile was successfully drilled as 25 RC holes
totaling 340 m were completed. The back fill material was also successfully
drilled with 7 inclined and vertical RC holes totaling 287 m. Most of these
holes were planned to be 120 m deep to test the area below the bottom of the
open pit for gold mineralization but due to technical difficulties, the average
depth of the holes was 41 m with the maximum being 74 m. The 5 hole RC line
totaling 256 m drilled northward of the pit met the same problems and as a
result the average depth of the holes was 51 m instead of 120 m with the maximum
of 57 m. Assay results from these holes are pending.


The RAB drilling program completed around the Dombraly gold deposit was focused
on testing a possible further extension to the south from the waste pile as well
as another possible mineralized zone 900 m north-east of the pit. This program
consisted of 192 RAB holes totaling 3,840 m. Assay results are pending.


4) ZHANATOBE

RAB drilling was completed at Zhanatobe. Fifteen drill lines with 483 holes
totaling 4,744 m were drilled. 


Geological results of the RAB drilling are encouraging. As established by drill
chip logging, numerous bodies of completely silicified iron oxide rich rocks
were intercepted. These types of rocks could be indicators for the presence of
carbonate hosted gold mineralization. 


Only partial assay results from this drilling program have been received. The
results of the RAB drilling program are encouraging with sporadic gold values
ranging from 0.1 to 0.2 g/t being established in both the Northern and Central
areas. The most significant +0.2 g/t Au anomaly with a peak value of 0.51 g/t Au
was established in the last drill line in the Northern area. This appears to be
the obvious target for 2011 follow-up drilling. 


Assay results from RAB holes drilled at the silicified zone situated in the
Central area are still pending.


5) KERBAY

Two scout diamond holes totaling 305 m were drilled on Kerbay. Both holes
intercepted intervals of hydrothermal alterations in andesite and siltstone, but
the assay results did not indicate significant mineralized intercepts. The only
anomalous interval was established in hole DDK 110-01 from 99 to 108 m. The
weighted average gold grade was 0.2 g/t with the peak value of 0.36 g/t.
Exploration at Kerbay will continue in 2011 with RC drilling in the NW part of
the area which wasn't tested in 2010 and where some trench anomalies exist.


6) NORTH BALUSTY

As a result of the exploration conducted at North Bulusty in prior years, a 12.8
km long and up to 2.5 km wide zone of gold anomalism in alluvium and saprolitic
rocks was established. It consists of numerous wide individual anomalies where
the gold values exceed 0.1 g/t. In three potential target areas the
concentration of anomalies is higher and the gold grades reach 0.5 g/t in RAB
samples. 


The 2010 drilling program completed was a test line of 51 KGK holes totaling
2,018 m. The depth of the holes averaged 40 m but varied from 7 to 79 m. In
total, 988 samples were taken. Assay results are still pending. 


7) VASILKOVSKOE EAST

The exploration program for Vasilkovskoe East, a 500 square kilometre ("km(2)")
project area located on the western section of Alhambra's license area, included
soil sampling of two areas (Western and Akshasor) as well as geological
traverses with rock chip sampling at the Ivanovka area situated between the
Western and Akshasor locations. 


In the Western area, 4 N-S orientated lines from 5 to 7 kms long were sampled.
The distance between the lines was 500 m and between samples along the line at
100 m. A total of 225 soil samples were taken. In the Akshasor area 9 NW soil
sampling lines orientated 1,000 to 1,650 m long and 200 m apart were completed.
Samples were taken each 25 m along the line in the central part of the area and
each 50 m at the flanks. A total of 336 samples were taken. The results from the
Western area returned one sample containing 20 ppb gold and a second sample
containing 1.9 ppm gold. Taking into account the very wide space between the
individual samples, more soil/rock samples are planned be taken in this area. 


Soil sampling results from the Akshasor area were very interesting. Twenty-five
samples returned gold grades of between 20 ppb with the peak grade of 0.289 g/t
Au. The anomalous contour of +30 ppb Au, consisting of two NW and NE orientated
parts, has dimensions of about 550 m by 450 m. It continues as zones of patchy
gold anomalism in both NW and south-east ("SE") directions and remains open to
the SE where sampling still has to be done. Elevated grades of Ag, As, Sb, Ba,
Bi and Mo support the gold anomaly and this signature suggests the presence of
an orogenic intrusion related mineralization (Vasilkovskoe style)
mineralization.


In the Ivanovka area, 30 kms of geological traverses covering an area of 12.7
km(2) were done and 54 rock chip samples taken. A schematic geological map of
the area was prepared which shows a favourable geological environment measuring
1,100 m long and 250 m wide for sediment hosted gold mineralization.


FOURTH QUARTER 2010 RESULTS

During the fourth quarter of 2010, Alhambra realized $4.0 million from the sale
of 2,870 ozs of gold at an average price of $1,403.90/oz. This compares to the
fourth quarter 2009 sales amount of $5.0 million from the sale of 4,501 ozs at
an average gold price of $1,118.43/oz. The $1.0 million decrease in gold sales
revenue was a result of 1,631 ozs less sales partially offset by an increase in
the average price of gold of $285.61/oz. 


The Corporation stacked 281,208 tonnes of ore at an average grade of 0.99 g/t as
compared to 303,383 tonnes of ore at an average grade 0.91 g/t in the fourth
quarter of 2009. Because the ore stacked in the fourth quarter of 2010 went onto
a new pad which did not get into production until later in the quarter and then
was affected by an early freeze, the Corporation did not benefit from the flush
production that can result from new ore being put under leach. It is anticipated
that the benefits of this new pad and better than average grade will be seen in
the second quarter of 2011.


Operating costs for the fourth quarter of 2010 were $2.1 million or $728.46/oz
as compared to $3.2 million or $718.17/oz for the fourth quarter of 2009. This
positive variance of $1.1 million relates directly to the 36% decrease in sales
volumes. Included in the fourth quarter 2010 operating costs was $0.4 million
related to the estimated fair value assigned to the work in progress at
September 15, 2009. This equates to $148.75/oz of gold produced for a cash cost
of $579.69/oz of gold sold. The fourth quarter 2009 cash costs were $432.65/oz.


Alhambra recorded a net loss for the fourth quarter of 2010 of $4.0 million or
$0.05 per share based on a weighted average number of shares outstanding for the
period of 103,986,157. This compares to a net loss of $8.1 million or $0.10 per
share based on a weighted average number of shares outstanding of 79,403,682 for
the fourth quarter of 2009. The large net loss in the fourth quarter of 2010 was
primarily the result of the penalties and interest charged on the liabilities
being disputed regarding the tax assessment. The large net loss in 2009 was the
result of adjustments made on the gain recorded at September 15, 2009 from
regaining control of the Kazakhstan Subsidiaries. 


2011 OBJECTIVES

Completion of the 2010 drilling program was pushed well into 2011. This combined
with export delays of more than 11,800 drill samples due to new export law and
procedures lead to significant delays in receiving drill assay results. The
assays for the 2010 drilling program are expected to be totally completed within
the second quarter of 2011. 


Due to the late completion of the assaying and interpretation of the drill
samples, the updated Uzboy National Instrument ("NI") 43-101 compliant resource
estimation report and Preliminary Economic Assessment (i.e. Scoping Study)
Reports have been delayed. Both reports will be completed as early as possible.
The initial NI 43-101 compliant resource estimation reports for both Dombraly
and Shirotnaia are still anticipated to be completed by year-end 2011. Assay
results will be released when received and interpreted. 


During 2011, Alhambra is planning to significantly accelerate the development of
its advanced exploration projects of Uzboy, Shirotnaia and Dombraly. The
Corporation also anticipates advancing numerous early stage exploration projects
and assessing a number of other gold targets of anticipated high potential over
its vast mineral license area. 


Alhambra anticipates implementing an exploration and development program of up
to $7.5 million, subject to sufficient cash flow and suitable financing. The
main focus will continue to be on Uzboy, Dombraly and Shirotnaia with continuing
resource development drilling and production development assessments, including
metallurgical and gold recovery tests. 


Alhambra will continue to position itself for continued growth and to create
growing wealth for its shareholders through the ongoing exploitation of its vast
exploration and development license. In addition, the Corporation will continue
developing and upgrading its staff to meet its future challenges and objectives.
Increased market liquidity for its common shares and access to capital markets
will be focused on by continuing to pursue a dual listing on an Asian stock
exchange. 


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

The Corporation's 2010 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 gold production
corporation celebrating its eighth year of operations in the Republic of
Kazakhstan. Alhambra holds exploration and exploitation rights to a 2.4 million
acre (9,800 km(2)), 100% owned, license called the Uzboy Project, located in the
Northern Kazakhstan Metallogenic Province which hosts numerous world-class gold
deposits. Over 100 mineral targets, including 5 advanced exploration plays are
contained within the Uzboy Project.


Alhambra common shares trade in Canada on The TSX Venture Exchange under the
symbol ALH, in the United States on the Over-The-Counter 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. 


Elmer B. Stewart, MSc. P. Geol., a technical consultant, is the Corporation's
nominated Qualified Person. Mr. Stewart has reviewed the technical information
contained in this news 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 that Alhambra's updated
resource report and Preliminary Economic Assessment will be completed in a few
months, 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, updating the current resource report and Preliminary
Economic Assessment, costs and timing of exploration and production development,
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.