SGR – AGM December 3, 2007 – Part 2

There were a few comments made prior to the PowerPoint presentation.  In brief, they are finding lots more gold through both surface drilling and underground drilling.  There will be about 10000 ounces of gold produced this year.  

Dale Ginn then began the PowerPoint presentation with commentary going along with the various slides.  This presentation is the one that they typically would run through when presenting SGR to bankers or potential investor groups when on the road.  The information from the presentation will eventually get put on the San Gold website.

Production is now coming from both the main Rice Lake mine and SGR#1.  There is definition drilling happening in the Cartwright and Gabrielle area.  There is also a lot of surface drilling taking place in the area east of the main Rice Lake mine.  In general, they are finding gold wherever they are drilling, in varying amounts (see more specific comment below).

Historically, the main Rice Lake mine has been mined going down at a certain angle from the surface; now they are discovering that they are finding better grade deposits by moving sideways/perpendicular to the previous angle of exploration.  This is a similar pattern to what happened at Goldcorp – they also changed to a perpendicular approach away from the main angle of exploration and found new, high-grade deposits.

Currently miners are working at developing access to long, narrow veins at the 28, 29 and 30 levels of the main mine.  They also are developing the lowest levels of D Shaft with mechanized mining.  A third area also being worked on is called the “deep east zone”.  With the discovery of new, richer veins, there was a change in focus in mid-year to getting these higher-grade areas ready for production.  The net result was that actual gold production has lagged behind previous projections as the effort now has gone into providing access and preparing to mine these new, richer areas.  Therefore months have been spent working on this “waste development” instead of working the previous plan.  In a few months, production from these richer deposits will begin and then gold production will come to the levels we have all been waiting for.  However, the cost of production at that point will be lower per ounce due to the better grade of ore.  

When gold goes though the mill, 50% is recovered through gravity methods, saving the company from having to use the chemical process for that part.  

The target for production now is to be at approximately 880 tons per day (tpd) by the end of 2007 using a mixture of development and stope ore.  As ore from the richer veins also comes available, the production rate will grow.   By January 2009, they are hoping to reach 1250 tpd, but they will need to add another ore source (Cartwright).  

A new 43-101 is expected in early 2008.  The consultant who writes it will be available in January to work on it, and it usually takes a month or two to complete.  It will include the results of the drilling that has done to date.  

Drilling continues all the time.  The “discovery cost” (of drilling to find the gold) has been around $10/ounce, which is a very low rate in comparison to other companies.  Having the drills on hand locally (Hugh Wynne’s) has been a great advantage.   Over 1 million ounces of resource has been added over the past 2 years through discovery.   

There has been drilling recently in various places (some mentioned previously) including the Wingold zone and the Oro Grande/Gunner area will be drilled this winter once the ground hardens up.  Generally speaking, they are finding gold in 90% of the holes they drill and 60% of the time the gold is of mineable grade.

(more to follow)