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San Gold a Growing,
Low-Cost Gold Producer on Manitoba’s Prolific
Rice Lake Gold Belt

Spectacular New High Grade Hinge Zone Is Making News... and Waves

By focusing its exploration and mine development efforts on Canada’s prolific Rice Lake Greenstone Belt, San Gold Corporation (OTC BB: SGRCF; TSX.V: SGR) -- www.sangoldcorp.com -- has successfully transformed itself into a growing gold producer that is also a pure gold play maximized by a far higher than average profit margin.
San Gold, one of Canada’s newest gold producers, has not just one producing gold mine, but two – as well as a third high grade gold deposit waiting to join the gold production line, two other proven deposits in the development stage at the Rice Lake Deep mine and, just discovered, a very high grade surface zone, a real contender, less than a mile east of the mill.
A resource update to be announced in September is expected to substantially increase the company’s gold resource base. Over the past three years, San Gold increased its ore resource from 550,000 to 1.6-million gold ounces, brought its flagship Rice Lake Gold Mine to commercial production, and, through an aggressive exploration program, continues to discover new high-grade gold deposits.

“We are a rapidly emerging and, as yet, unrecognized gold producer – our official gold resource count has nearly tripled and, with our recent high-grade underground discoveries together with our new spectacular near surface Hinge zone, we soon will be adding even more gold ounces to our asset base,” says San Gold Corp. CEO Dale Ginn.
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The multiple-mine Rice Lake project lies along a prolific regional geologic trend where more than 41 million ounces of gold have been discovered to date – including Goldcorp’s Red Lake Mine (10+ million ounces of gold).
Gold was first discovered at Rice Lake in 1911, leading to the opening of the Rice Lake Mine in 1932. The mine, which is located 230 km northeast of Winnipeg in Manitoba, produced 1.4 million ounces of gold until it closed in 1968. By the late 1990s, Harmony Mining and others invested $140 million to upgrade and reopen the Rice Lake Mine, only to close it again in 2001 as gold prices fell.
Meanwhile, San Gold acquired land along the Rice Lake Greenstone Belt and discovered the San Gold #1 Mine. In 2004, San Gold purchased the Rice Lake Gold Mine from Harmony for a comparable pittance – $7.5 million, a cost discounted by acquired tax losses San Gold was able to convert to $12 million. In essence, the company was paid $5 million to take the mine off Harmony’s hands.
Subsequently, San Gold invested $80 million along the Rice Lake Belt to re-open and redevelop the Rice Lake mine, re-activate the Rice Lake mill, build the nearby San Gold #1 mine and successfully develop a million new ounces of gold resources near its existing operations.

As San Gold continues to discover new high-grade gold zones deep within the Rice Lake Gold Mine, this seems to confirm the mine’s similarity to Goldcorp’s famed Red Lake Mine in both geology and gold grades that increase significantly with depth.
The Rice Lake Gold Mine extends a mile below surface via two shafts and is characterized by numerous spectacular vein systems. Many of the newly discovered veins grade between one and two ounces of gold per ton. The mine’s newly developed exploration geology model, validated by the new discoveries, points to the strong potential for continued high-grade mineralization at depths below 5,000 feet.
San Gold sold its first gold bullion from Rice Lake Gold Mine in April 2007. The mine currently has 15 years of mineable gold reserves and, according to a conservative base-case mine plan, will produce 100,000 ounces of gold annually by 2009 at an all-in cost of $360 an ounce.
The Rice Lake 1,250 tpd capacity mill complex produces gold from both the Rice Lake Gold Mine and the nearby San Gold #1 Mine. The mill uses gravity concentration systems to produce half of the gold and flotation and carbon in-leach circuits to produce the remainder. The mill can pour dore gold bricks on-site. New crusher equipment, paid for and onsite, will expand the mill’s capacity to 1,900 tpd in 2009. Unlike many other mining companies, San Gold’s access to unlimited, unbelievably low-cost power, has kept mining costs to a low $380 an ounce.
Looking forward, San Gold expects to add new ore feed to the mill as newly discovered, higher grade deposits are brought online to boost mill throughput, now approaching 800 tpd, to 1,250 tpd. The company expects new discoveries will extend mine life at least another ten years.

San Gold owns or controls nearly 35,000 acres of prime exploration ground in southeast Manitoba’s Rice Lake district. The company’s properties lie in the Uchi-Sub-province on Canada’s Lower Superior Shield – an area that hosts four major greenstone belts that have a history of substantial gold production (Rice Lake, Red Lake, Musselwhite and Pickle Lake gold camps). All of the major gold occurrences in the Rice Lake area occur as quartz veins or quartz vein systems.
The company’s land position extends over 20 km along the Rice Lake mine horizon. A large zone of alteration and several old mining shafts dating from the early 20th Century lie along the belt.
Earlier this year, San Gold reported that surface exploration drilling discovered multiple new gold-bearing zones, the Hinge zones, just 1 mile northeast of the Rice Lake Mine and within view of the San Gold #1 haulage road and power line. This new Hinge Zone contains quartz and carbonate gold mineralized veins parallel to each other, dipping to the north. San Gold has moved a second surface drill rig to further explore numerous targets identified in the area, which is largely unexplored because it was located on a property boundary before San Gold assembled its large land package.
“It looks like this may develop into another mine. We are getting some very exciting results there – some of the best looking drill core to come out of the Rice Lake belt so far – the drill core is peppered with visible gold. Drilling to the end of May 2008 has yielded spectacular results – extremely high, multi-ounce gold grades over thicker mining widths than ever before encountered in the Rice Lake area.” says Director Richard Boulay.
The Hinge Zone ramp decline, scheduled to be completed in October, will allow Hinge zone ore to be trucked up to surface. The distance from the ramp portal to the Rice Lake mill is approximately a quarter mile.

San Gold offers investors the best of all gold mining scenarios – multiple producing mines creating a solid cash flow to fund continued exploration and property acquisition, a portfolio of high grade deposits under development, and virtually untapped exploration ground in a highly prolific gold belt in one of the world’s most politically stable, safe and mining friendly jurisdictions.

The company describes itself as a pure gold play with no hedging against the price of gold. The company raised more than $100 million over the past two years and recently closed a $40 million financing last November.
The company is armed with some $200 million in modern assets, a market cap of more than $300 million, more than $20 million cash in hand, a 15-year (and growing) mine life, and absolutely zero political risk.

San Gold is led by an exceptional management team. Executive Chairman Hugh Wynne, who has over 40 years experience in the mining sector and over 25 years as an explorer on the Rice Lake and Red Lake Gold Belts, was largely responsible for assembling San Gold’s exploration properties. CEO Dale Ginn is a geologist and previously worked at Hudson Bay Mining and Smelting, Goldcorp, Granges and Westmin. Most recently he was general manager of Harmony Gold (Canada), the previous owner of the Rice Lake Gold Mine.

San Gold, which expects to become profitable this year, has budgeted $8 million for exploration along the Rice Lake belt. Currently, the company has four drills active on surface and another three drills active underground. The company’s strategy is clear – by aggressively exploring its potentially rich property, growing its gold reserves and bringing newly discovered deposits into production, the company will be recognized as being grossly undervalued resulting in a positive market price adjustment.

Noted gold stock analyst Jay Taylor equates the company’s Rice Lake project to Goldcorp’s famed Red Lake discovery and this summer upgraded his stock rating for San Gold from a “Buy” to a “Top Pick”.