San Gold Corp. (SGR-V) C$1.60 BUY; Target C$3.00 (Prior: C$2.25)

Transformation Underway

• The company reported that its decline has reached the high-grade Hinge Zone and that

development has commenced in advance of a 15,000 ton bulk sample which expects to be

batch processed in the Rice Lake Mill throughout Q2.

• TD is expecting the initial resource estimate for the Hinge Zone in May to come in on the

order of 1.5 million ounces grading 0.45 opt (all veins), up from their prior estimate of

750,000 oz grading 0.66 opt on the basis of the #4 Vein alone. Incorporating this forecast

effectively doubles the company’s Rice Lake resource inventory to 3.0 million ounces

globally.

• To reflect a slower than anticipated ramp-up in production, TD is lowering production

forecasts for this year to 71,000 oz and next year to 119,000 oz.

• TD's core thesis is that the Hinge Zone may transform San Gold from a moderate grade

producer into a high grade producer, with a commensurate improvement in production and

operating costs. Their conviction has increased as a result of the company accessing the zone

and providing encouraging pictures and potentially positive sampling results. With an 88%

return to their target price, they maintain their BUY recommendation