San Gold Corporation

(SGR-T: C$2.84) intraday

Idea Support

BUY, High Risk*

12-month target price: C$5.30

April 8, 2011

Paul Burchell / (416) 350-3499

pburchell@dundeesecurities.com

Truly Impressive Drill Intersections

RiskHigh52-Week RangeC$ 5.00lowC$ 2.45Shares Outstanding (MM)300.4 Fully Diluted Shares (MM)314.8 Market Capitalization (MM)C$ 853Ave. Volume (000 shares/day)835 Working Capital (31-Dec-10) - (MM)59$ Value Cash, ST Inv. (31-Dec-10) - (MM)56$ Assumptions 2010A 2011E Long term Gold (US$/oz)12261438975FX(US$/C$)0.970.980.90Valuation (C$/share)2012E 5% DCF Corporate ValueC$ 4.632011E Year-end Cash etc.C$ 0.19Additional Resource ValueC$ 0.00NAVC$ 4.82DCF Multiple1.1TargetC$ 5.30Earnings and Cash Flow (C$/share)2010A2011E2012EAdjusted EPS-0.080.000.33CFPS before WC-0.040.080.43All Figures in C$ Unless Otherwise Noted

Source: See Note 1

007 East results averaging 17.7 g/t over 6.0m

San Gold released the results of an additional 24 drill holes from its ongoing 007 Zone exploration program at its 100%-owned Rice Lake property. The most recent assays can only be described as impressive and included individual intersections of 51.0 g/t over 6.3m, 15.4 g/t over 13.7m, and 43.5 g/t over 4.8m (uncut assays over core widths). We calculate a weight-averaged (by core width) uncut grade of 17.7 g/t over 6.0m from the 25 reported intersections (Table 1). The average grade drops only slightly to 16.7 g/t when high grade intersections are cut to 50 g/t, a testament to the consistent high-grade nature of the results.

We continue to view San Gold as one of the more prospective exploration stories in the past couple of years, and expect the company to rapidly add to its reserve/resource base going forward. The market, however, has become fixated on the company's current production ramp up (which has been slower-than-expected), and has apparently lost sight of the low-cost, high-margin potential of the property. We believe the recent under performance of the stock provides an excellent opportunity for investors, and we are maintaining our BUY rating (Top Pick) and 12-month price target of C$5.30/share.

Identified along a 500m strike length

The most recent drilling on the 007 East area has now extended the 007 mineralization over a strike length of 500m, 350m of which have been developed on the 260m underground level. The mineralization is demonstrating the two most important aspects needed for a successful underground operation - grade and continuity (as an aside, we consider concerns over dilution from the recent underground development to be overblown - the drift accessing the mineralization was designed to accommodate large underground equipment and was more a haulage way than a mining stope - we expect future mining will break less waste material with commensurate higher grades to the mill).

The 007 Zone is rapidly approaching the Emperor Zone at its eastern end - we believe it likely that the two zones will be shown to be one, extending the mineralization to over 600m along strike. Both zones remain open in all directions (Figure 1).

The recent results from the 007 East area are contained in a 220m long by 220m deep envelope. Given the average grade and width, we think it reasonable to suggest that this relatively small volume has the potential to host over 300,000 oz of gold. With current known dimensions of up to 600m long and over 450m deep, we consider the potential of the 007/Emperor zones to be far greater than the market's estimate.

SGR: Price/Volume Chart

Source: Thomson ONE

Company Description

San Gold is an emerging gold producer with 100%-owned operating mines and exploration properties in the Rice Lake greenstone belt of southeastern Manitoba.