Summary of the San Gold AGM – June 23, 2008
Part 1 – the Business Session

The San Gold AGM was held at the Victoria Inn in Winnipeg. CIBC Mellon had two scrutineers at the door who recorded the names of all as they arrived and the room was quite full, some standing on the side or at the back (near the coffee pot!).

Hugh Wynne started the meeting at 10:07 by saying “It’s a pleasure to me to see so many happy faces!” He then outlined the agenda, noted that CFO Gestur Kristjansson was acting as Secretary for the meeting.

The CIBC Mellon scrutineers reported that there were 139 shareholders in attendance representing 63,552,865 common shares either in person or by proxy. This worked out to 29.56% of the outstanding shares, was a quorum and the meeting was officially constituted.

The first item of business was a review of the auditted financial statements for the fiscal year ended December 31, 2007. Given the opportunity to ask questions, someone wondered why we had to pay out $250,000 to cancel the CIBC financing agreement in 2007, and why it was not noted as an extraordinary item in the financial statements. Gestur K. explained that this was paid out in order to cancel the right of first refusal that CIBC had from the financing agreement that had been made with them. In other words, it cleared the deck so that SGR could then go out and secure its own, non-brokered financing. which it did later in the year, raising $40 million. The payment to CIBC was part of the cost of being able to obtain financing, and does not require a special note in the statements. Hugh Wynne explained further that the CIBC deal was cancelled when the share price had dropped from $1.29 to $.90 during the time the financing was being sought, so it was not at an acceptable level. Another question was why we had not set a fixed price in the CIBC agreement? The answer was that this was not a “bought deal” or private placement – it was on a “best efforts” basis and was the first “brokered deal” for the company. The deal they replaced it with was a PP and was completed at a better price with less dilution. The latest deal that brought in the $40 million was a “bought deal”.

A second question related to the royalty agreement we have with Red Mile. The $4 million payment to them seems high relative to the revenue we have generated. It was explained that these payments are based on an estimate of future revenues, and they are deposited to a Trust account that then pays interest back to SGR. Thus the transaction is going forward pretty much cash flow neutral; it uses up credits in our tax pools and replaces them with a prepaid interest expense and indemnity fee. (This is a complex financial item, but the benefit was to initially give us $11,000,000 with which to develop the mine, and saved us from having to go out and sell 25 – 30 million shares to raise the same amount of money. The interest earned on the asset (which is loaned to a bank) is used to pay for the royalty so overall it is a cash flow wash. After 11 years there is a put option that allows the company to buy out Red Mile using the funds remaining invested in the loan to the bank from the original investment).

We then had the election of the six nominated directors: Hugh Wynne, Dale Ginn, Richard Boulay, Michael Power, Courtney Shearer and Ben Hubert.
At that point Hugh Wynne made recognition of the service of former director David Filmon. Asked why David resigned, Hugh answered that he was spending too much time on SGR work to the detriment of his own legal practice. However, David and his legal firm is still doing the legal work for SGR.

Asked whether San Gold is still searching for more independent directors, Hugh answered that they are – Michael Power is one, Courtney Shearer will become independent later this year, and they are needing one additional independent director in order to have the right mix to qualify for a TSX listing. [Later in the meeting it was clarified that they are intending to seek approval to list on the TSX once they have the right mix of directors in place, but Dale would make no estimates on time frame for such to be completed (rather than attempting to give a time and miss it on account of uncontrollable factors, as has happened in the past].

The meeting then approved the appointment of Scarrow & Donald as auditors for another year.

The Company’s stock-option plan for management and board members was then re-approved for another year.

We then moved on to the Amended Shareholder Rights Plan. The previous plan was written right after the merger with Gold City. The wording in the new plan is better suited to today’s norms, especially in terms of what the TSX is used. The plan is intended to protect existing shareholders in case there would be a hostile take-over bid by giving the company more time to explore alternatives and to receive competing bids, thereby attempting to get maximum value for the shareholders.

That was followed by proposed the Employee Share Ownership Plan. This plan allows all employees of SGR to buy shares of the company up to 5% of their gross salary. The company can sell the shares to them at a discount. The amount of discount is regulated by the Venture Exchange (maximum 20%), but the company directors will set the discount rate, if any. Shares bought at a discount lose the 50% capital gain advantage, so it was suggested that it might be preferable for the company to sell them at full market value depending on the tax implications to the employee and a shareholder suggested it would make more sense to offer a matching contribution instead. As it stands the company will guarantee a loan from a financial institution to the employee for the purchase of shares from Treasury. The company will administer the loan payments through payroll deductions and the shares will not vest into the employees name until the loan is re-paid in full. The plan was approved.

In the discussion on this proposal, Hugh Wynne emphasized that they would like all of their employees to be buying shares, and that such plans in other industries have had great success, e.g. Westjet. Therefore, they are encouraging employees to take part through a payroll deduction plan. It was noted that it builds employee morale and retention with minimal dilution and actually brings money back into the company treasury.

We then dealt with ratification of the New General By-Law No. 1 which governs the conduct of the company, and it was approved as well.

That concluded the items brought to the meeting by the company. Under new business, someone brought up the matter of many folks not receiving their materials regarding the AGM till last week, leaving them little or no time to plan or to respond to the invitation. Rick Boulay commented on this, noting that those who have shares in their own name did receive their information from the 1st mail out that was done in mid-May as required. The rest of the materials, going to those who own their shares through brokerage houses, was sent to the distribution center in good time and they processed it, but that things then seemed to get delayed by Canada Post. The Company was rather concerned when they had only received responses representing 3% of the shares by last Wednesday, but then it poured in until it was nearly 30% by end of the week.

Suggestions were to mail earlier, and to also place the information on the San Gold website. Those suggestions were duly noted by the Company.

Someone then asked whether the Company would consider buying back shares in order to help boost the share price. The answer to that was “no” – Hugh stated that the Company believes the best use of their financial resources is to use them to find gold and to produce gold. Dale noted that companies doing buybacks are those with large profits and excess cash, a position SGR is not yet in.

This concluded the business portion, and we adjourned the official meeting at 10:58 a.m. After a short break, there was a powerpoint presentation and a question and answer time (to follow).