SGR AGM June 23, 2008 – Part 2

Following a short break, Dale Ginn led the meeting as he showed a powerpoint presentation. Some of the points made during the presentation (taken from slides or from what Dale said include):

There are approximately 215,000,000 shares of SGR outstanding, and valued at $2 that gives the company a Market Cap of $430,000,000. Management holds about 12% of the shares and institutions now hold about 60%. The average daily volume over the past 3 months is 1.2 million shares traded daily.

SGR is on the Manitoba side of the Greenstone rock formation and Red Lake is on the Ontario side. Manitoba has seen less than 1% of the exploration dollars spent on the Greenstone belt, and most that which has been spent has been by SGR. Dale said “We are truly a leader in the Rice Lake Belt and in Manitoba Gold.” SGR will continue to be aggressive explorers and are encouraging their neighbours in the greenbelt to “pick up the pace as well”

San Gold’s objective was to have a large central position within the Manitoba Greenstone belt and then have other peripheral companies come to SGR for development and/or production.

The new high-grade discoveries (e.g. Hinge Zones) are in volcanic formations that are different from the main rock formation where gold was previously thought to be concentrated. The new geological model sees the gold deposit as structural implying that all the volcanic rock previously unexplored is prospective for gold mineralization.

Dale said “We’ve broken the old model. We’ve looked at the geology differently”
All the benefits of SGR’s location were highlighted including stability, permits and energy costs.

The main Rice Lake Gold Mine goes down to over 5500 feet. Cartwright has been drilled down to the 1200 foot level; the same is true of SGR#1 and SGR#3 as well as the new Hinge Zones.

Dumas has contractors working in the lower zone of the main Rice Lake mine, whereas SGR employees are working the upward trending zones from the 4500 foot level in the main mine. Dumas has already developed about 6 months ahead of requirements.

Cartwright is believed to be a twin to the main Rice Lake Gold Mine. There are plans to construct an incline from a new portal to access both the Cartwright and new Hinge Zones.

There are amazing parallels between Goldcorp’s Red Lake experience and SGR. In both cases, there were known gold trends going in a certain direction, but then new higher grade areas were found going off in a different direction at 5000 feet.

The advantage of the new Hinge Zones is that they are near the surface so much easier and less costly to access.

SGR#1 is accessible down to the 600feet level. They have drilled past that to the 1200 ft. level but have more work to do there. They will now mine the available ore and drill to “stretch it out at depth”.

The mill is working regularly. They are able to recover about 50% of the gold in the mill by gravity and this will probably increase with the Hinge deposit as there is a lot of visible gold in that ore (that is the quickest and lowest cost method – the rest is recovered through leaching and electrolytic methods).

Dale showed a production projection chart going to 2012. It showed projections for 200,000 tons or ore and approx. 50,000 ozs of gold for 2008, and showed approx. 300,000 tons of ore and approx. 80,000 ozs of gold for 2009. [This was not a detailed chart and was mainly intended to display a growing production, IMO] It projected over 150,000 ounces per year from about 600,000 tons of ore in 2012. [That indicates the plan to expand mill capacity is still ahead].

Dale commented that anything above their regular average grade (as per the last 43-101) can be considered the upside to this chart. The new 43-101 will be compiled soon and will include the high grade in Rice Lake and the Hinge zone and with that a revised mining plan that will give them “a different looking production profile”.

Manitoba has the cheapest power in the world – 2.5 cents per kilowatt hour versus 9 cents per kilowatt hour just across the border in Ontario. In addition, Manitoba is a stable, pro-mining jurisdiction, SGR is fully permitted and has infrastructure already in place. There are currently about 250 employees plus 35 contractors working for the company.

We then looked at an overhead diagram showing the locations several axes (plural of axis?) – the first one holds the main Rice Lake mine structure, the second axis is where the lower Rice Lake mine zones are found (over about 1 kilometer to the east). Now we have the rich new hinge zones in another (third) axis yet further to the east. It is supposed that there may be as many as 6 more axes to drill – and there are old mine workings in some of them where they have previously found gold at surface.

In addition to the Hinge the implication of the new geological model is that the entire SAM unit should be prospective for gold veining so they started drilling off into the footwall side that had not been actively explored since the 30’s and found ore very close to the existing infrastructure. This area holds a lot of potential.

Dale described the Vein #4 in this Hinge #3 zone this way: “Dipping to the North at about 60 degrees and we’ve now found that this Hinge #4 is at least from surface to 1200 feet deep and the average width is about 14 feet… and the average grade is about 1 oz per ton… at least 4 times the grade we are normally dealing with.”

The next slide showed a cross-section of the mine showing the same angular trends of the various gold-bearing formations, including the new hinge zones east of the main mine. It was noted that there is also a vein off to the east of the main mine unit at the 5000 foot level with all the characteristics of the Hinge veins
(from drilling done in 1994 that penetrated beyond the SAM unit into the volcanic rocks) . It is believed that the gold-bearing veins may extend throughout…… [implying: in which case there is one huge amount of gold in that rock!!]

The sum of this all is, as Dale said, that we have discovered a new system, not just another individual gold-bearing location.

SGR has been aggressive in exploration and will stay aggressive in exploration. The previous cost for exploration was about $20 per ounce; in these new near-surface zones, the cost has dropped to about $2.00/ounce.

There is still 20km of favourable ground for exploration they have yet to get to.

We then looked at a map showing the new Dalton property on the SW corner of Timmins, ON. There has been 60 million ounces of gold produced in the main gold camp on the east side of Timmins over the years. The Dalton property that SGR got is in a volcanic sediment formation and meets the criteria SGR looks for in any potential property – favourable geology near existing production. It was acquired at a favourable price.

There was a second property shown on the map that also seemed to be SGR’s but it was not discussed.

Looking at charts of SGR’s share price as compared to other gold companies, both junior and senior, SGR has outperformed, especially with the recent upward movement in share price. In general, the markets have not been kind to gold companies. SGR is the only one that has gone up after doing a recent financing.

That concluded the presentation and we then moved on to a question and answer time (to follow).

[Note, special thanks to Elementwise who has reviewed these notes to check for accuracy and has added other details which he picked up at the meeting.]