-65% of tonnage came from the new near surface zones. The Shoreline Basalt refers to the basaltic flow that runs roughly parallel and stratigraphically above the San Antonio Mine unit providing a secondary trap-rock unit acting in a similar manner as the San Antonio Mine unit for the deposition of gold.

-During Q4, exploration drilling focussed on pursuing extensions of the Shoreline Basalt and related near-surface deposits at depth from drilling stations on 26 and 28 Level. Exploration during the first half of 2011 will be divided between definition drilling in active regions such as 98 Vein and new exploration to test the extension of near-surface deposits to depth, from 10, 16, 26 and 28 Level. 50,000 metres (162,000 feet) of drilling is budgeted to occur in the RLM during 2011.

-This basalt unit provides the property with a second mining unit. The Shoreline Basalt reaches 1,400 m (4,900 feet) along strike. A previous discovery, about 2 km west of L-10 in the 3 Level of the Rice Lake Mine, known as 334 Zone appears to be part of this same system. The 2011 surface drilling program will follow the basalt unit to the west, where the basalt runs directly in front of the historic Rice Lake Mine workings, and to the east. 50,000 metres (162,000 feet) of drilling is budgeted to occur along the Shoreline Basalt in 2011.

-The Hinge and Cohiba Zones appear to share similar characteristics. Bulk sampling and commercial production commenced in the Hinge Zone in July 2009. Cohiba went into production late in 2010. About two-thirds of the drilling in these regions will be targeted toward exploration drilling, with the remaining third targeted toward definition. 27,000 metres (90,000 feet) of drilling is budgeted to occur in the Hinge and Cohiba Zones.

-2010 proved an exciting year for the San Gold exploration team. In order to provide the exploration team maximum flexibility for pursuing new targets, 152,000 metres (498,000 feet) remains as yet unallocated. All of this drilling is expected to occur from surface.

-For the year ended December 31st, 2010, San Gold processed 273,997 tons at 5.9 g/tonne to produce 43,498 oz. gold. This is an increase of 40 % over 2009 processed tonnage of 164,434 at 7.8 g/tonne and production of 35,155 oz. Ore contained a larger proportion of development muck towards the latter half of the year resulting in somewhat reduced experienced grades.

-The Company recognized revenue of $58.0 MM for the year and experienced an operating loss from operations of $4.0 MM. The comprehensive loss from operations for the year was $22.2 MM. These figures compare to revenue in the prior year of $27.8 MM, an operating loss of $11.8 MM and a comprehensive loss of $29.5 MM. In cash terms, the year was therefore close to breakeven from an operating perspective. Operating profit margin (please see discussion of Non-GAAP Financial Measures) per ounce is calculated as $326 at the Hinge mine and an operating loss per ounce of $514 at Rice Lake. Cash cost per ounce at the Hinge was $946 and $151 per ton. Cash cost at Rice Lake was $1,786 per ounce and $281 per ton. In total this meant the overall cash cost was $1,105 per ounce and $175 per ton. While this represents a 25% reduction in cash cost per ton in comparison to last year and a 12% reduction in the cash cost per ounce, management expects significant cost reductions in the coming year as operations get closer to efficient levels of production. (Please see discussion on Non-GAAP financial measures for a detailed calculation and reconciliation of these figures to our GAAP financial statements). The operations at the Hinge demonstrate better economic viability in the short term than the deeper historical Rice Lake mine. Rice Lake has utility both in expanded production of the ore body and as a platform for exploration and future access to potential extensions of the Hinge, 007, L-13 and Emperor zones at depth. It is expected that production levels across the Rice Lake Project can materially increase. Such increases are expected to bring operating costs much more in line with profitable levels. Careful scrutiny is also being applied across the Rice Lake Project to identify opportunities for efficiency improvements. Additionally, the near surface deposits of Hinge, 007, Cohiba etc. have the near term potential to feed more of the mill capacity.

-San Gold mined 81,254 tons during the quarter or the equivalent of 883 tons per day average production rate during the fourth quarter with new daily throughput records set on a number of days and a new monthly record in December of 30,416 tons. It is also noted that Hinge and 007 ore do not require as much retention time in the flotation circuit as Rice Lake ore. The Company has completed the commissioning of a 30 x 42 mobile jaw crusher to crush oversize ore from the Hinge and waste rock for roads. Also, a new cone crusher has been ordered for installation in the first quarter of next year to improve reliability of the crushing plant. On a year-to-date basis employees had 16 medical aids (MA’s) 4 lost time accidents (LTA’s) for frequencies of 4.32 and 1.08 respectively. This is the best record for safety at San Gold for the modern size operation. On a YTD basis contractors had 7 MA’s and 2 LTA’s for frequencies of 5.04 and 1.44.

-The Company recognized revenue during the quarter ended December 31st 2010 of $17,474,715 on sales of 12,675 ounces of gold. This compares to revenue of $11,719,526 on sales of 9,999 ounces in the same quarter last year. For the year, the Company recognized revenue of $57,950,671 compared to $27,808,071 in the previous year. The Company reported a net loss of $22,238,140 for the year ended December 31, 2010 compared to a net loss of $29,476,759 in the previous year. The Company reported a net loss of $9,358,516 ($0.03 per share) for the three months ended December 31st , 2010 compared to loss of $5,223,695 ($0.02 per share) for the comparable period in the prior year. This quarter produced 9,280 oz. of gold and resulted in a loss from operations of $3,739,613; this compares to 9,999 ounces produced in the same quarter last year and an operating loss of $1,139,453. Activity levels are up over 37%, with 81,254 tons being milled compared to 50,486 tons in the same quarter last year. Annualized cash costs per ounce are expected to continue their decline as grades and production levels increase.

-The fourth quarter saw approximately 65% of production ore produced from the Hinge mine and related workings. There was a higher percentage of development muck and resulted in a slightly lower grade for much of the quarter. The subsequent period saw significant grade increases resulting in improved recoveries and production levels.

-Operating profit margin per ounce is a non-GAAP measure, and is calculated by subtracting the total cash costs per ounce from the average realized gold price. For the entire year in 2010, the average realized gold price was $1,272 less cash costs at the Hinge mine of $946 for an operating profit margin of $326 at the Hinge mine and operating cash costs of $1,786 at the Rice Lake mine for an operating loss of $514 at Rice Lake, combined the San Gold had an operating profit margin of $167 in 2010 in comparison to 2009 operating profit loss of $118 (given realized price per ounce of $1,103).

-As of March 28, 2011, the date of this report, the Company had 309,115,841 common shares outstanding and an unlimited number of authorized common shares.