San Gold completes first No. 1 mine long-hole blasts

2007-04-04 08:47 ET - News Release

Mr. Dale Ginn reports

SAN GOLD DEVELOPMENT AND OPERATIONS UPDATE APRIL 3, 2007

San Gold Corp.'s first long-hole production blasts have been successfully completed at the San Gold No. 1 mine, representing the first production ore from this new mine. San Gold is also pleased to summarize key operational developments to date as the company increases the ratio of production ore, as well as overall tonnage and grade as it progresses toward planned full production of 800 tons per day by the end of the second quarter.

San Gold No. 1 mine

The first long-hole blasts have been successfully completed and represent the first production or stope ore from this mine. This mining block has been fully developed on five levels; each separated by 50 feet vertically and represents an ore block of approximately 60,000 tons which will be extracted over the next five months. Production long-hole drilling has been completed for 75 per cent of this block and decline development continues to access similar mining blocks below and along strike. Production at this mine was initially planned at 400 tons per day, however, production has already exceeded 1,000 tons on a number of individual days since the first long-hole blast. As well, this mine only requires approximately eight people per shift to operate and mining costs are anticipated to be substantially lower than as stated in San Gold's most recent mining plan (ACA Howe, December, 2006).

Rice Lake mine

San Gold has concentrated its efforts at the Rice Lake mine on two separate mining areas which are the existing levels above 31st level (4,600 feet) and the downward extension of the main Rice Lake veins below 5,300 feet which are accessed via decline. Development above the 31st level has resulted in the availability of over 15 ore faces, including six shrinkage stopes and three ore faces in the high-grade 93 and 98 veins. Development below the 5,300-foot level is within one week of reaching the broad breccia veins as outlined by recent drilling (see news release in Stockwatch dated March 12, 2007). Two additional veins with similar structure to the high-grade 93 and 98 veins (see news releases in Stockwatch dated March 22, 2007, Jan. 18, 2007, and Nov. 1, 2007) have been identified and will be accessed from the 26th level (3,900 feet). Production at this mine is currently at approximately 250 tons per day and is steadily increasing toward the planned 400-ton-per-day rate by the end of the second quarter.

Rice Lake mill

The Rice Lake mill has processed over 80,000 tons of low-grade development material to date. As the ratio of tonnage from producing stopes increases, head grades will rise to over 0.20 ounce per ton (7.0 grams per tonne) this quarter and recoveries will rise from approximately 90 per cent to over 93 per cent. A number of mill components required additional maintenance or replacement over the past six months as the mill was tested to capacity. This included additional work on the carbon stripping vessels, vibrating feeders and crushing circuits, and has now been completed. Successful installation and operation of the second Knelson gravity recovery unit have prompted San Gold to plan on purchasing and installing a third this summer in order to increase recovery of fine free gold and to increase overall recoveries to 96 per cent. Modifications to the mill's crushing circuit are also being considered at this time in order to increase overall mill capacity in anticipation of increased tonnage from San Gold No. 1 and the addition of the Cartwright zone.

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