San Gold had previously reported an indicated resource of 277,000 tonnes grading 25.7 g/t (230,330 oz) plus

additional inferred resources of 361,000 tonnes grading 16.1 g/t (186,980 oz). We expect the latest drill

intersections to result in significantly higher tonnage for 007; however, mineable (that is diluted and cut)

grades are likely to be lower than the last resource grade but, at our estimate of over twelve grams per tonne,

are likely to be considerably higher than the six to seven gram per tonne grades currently going to the mill.

The company noted in its press release that it expects the 007 Zone to contribute 50% of the mill feed "into

the foreseeable future".

The 007 results continue to support our contention that there is more to Rice Lake than

presently quantified. We expect the company's next resource update, which will utilize

results from this year's 300,000m drill program, to suggest both more tonnes and ounces

and increased confidence (upgrading resources to reserves) in the resources at the property.

We are, therefore, maintaining our

BUY rating and 12-month price target of C$4.00/share.