Dundee Research - April 27, 2011 - Paul Burchell
San Gold Completes Crusher Installation, Increases Mill Throughput
POSITIVE IMPACT
San Gold (SGR-T, C$2.93, BUY (Top Pick), $5.30 target) reported that it has completed crusher upgrades at the Rice
Lake Mine, and test milling has shown large increase in production capacity
- operation averaged 1,375 tonnes per day (1,513 tons per day) in first week of operation while maintaining highrecovery rates of 94%
- upgrades were completed ahead of schedule and have increased mill capacity beyond design specs
- we estimate the operation needs to average 950 tonnes per day in Q2 and Q3 and 1,150 tonnes per day in Q4 (at average grade of 7.8 g/t) to meet 2011 production guidance of over 80,000 oz
- company states its remains on track to produce over 80,000 oz this year
- we expect this positive news from production standpoint is likely to help ease market jitters on slower than anticipated ramp up
- allow focus to once again be placed on exploration success and potential to add high margin oz
