The primary business activity of San Gold Resources is the exploration and development of mineral

properties in the Rice Lake Greenstone Belt of Manitoba.

In the Rice Lake area, the largest gold producer, the Bissett Mine (originally known as the San Antonio

Gold Mine), is associated with a gold bearing mafic unit that is located within the Normandy Creek Shear

zone, a prominent, recessive ductile deformation zone.

Historically, over 200 gold occurrences have been found in the Rice Lake area and virtually all of the

showings, including the Bissett Mine and San Gold’s main zone or #1 Zone were located by prospecting

prior to the 1950’s.

The exploration carried out during this quarter was a continuation of the diamond drilling program started

last year. Last year’s drilling was successful in discovering a new gold zone approximately 3 kilometers

east of the San Gold main zone. This new discovery lies along the Normandy Creek Shear, one of the major

structural features in the western part of the Rice Lake Greenstone Belt. This shear zone extends from

under Rice Lake at the adjoining Harmony Gold (Canada) Inc., Bissett Gold Mine in a northeast trend for

over 15 kilometers through the San Gold property. This new gold zone does not outcrop and is under 30-45

feet of overburden and is approximately parallel to and about 150 feet south of Provincial Road 304, 3

miles east of the Town of Bissett, Manitoba.

The most significant gold values from this zone were from Hole SN-01-17 which intersected 2 feet of

0.455 ounces of gold per ton and Hole SN-01-20 which intersected 2 feet of 0.322 ounces of gold per ton

The exploration program last year discovered another gold zone. This zone called #3 zone is also under 30-

45 feet of overburden and is located approximately 150 metres southeast of the #2 zone.

Both of these new gold zones were located by follow-up diamond drilling of the previously completed

ground magnetic and electromagnetic surveys.

Initial drilling of the #3 Zone produced very encouraging results, for example Hole # SN-02-06 drilled at

an angle of 55° on section 31+ 75 East intersected 18 feet of 0.18 oz/ton gold between 437-455 feet down.

Included in this intersection was 2 foot section (439-441) of 0.51 oz/ton. Another hole # SN-02-08 on

section 31+ 50 East at 55° intersected 4 feet of 0.21 oz/ton at down hole depth between 417-421 feet. A

70°hole drilled from the same setup intersected 6 feet of 0.28 oz/ton between 625-631 feet included in this

intercept was a 2 foot section (627-629) assaying 0.53 oz/ton.

A line-cutting program was commenced to extend the present grid for approximately 3 kilometers along

strike to the east. This will be followed by a geophysical survey to locate further drill targets.

The exploration undertaken over the past year was assisted with funds from the Manitoba Mineral

Exploration Assistance Program (MEAP). Approximately $72,000 was received from MEAP for the

program ending March 31