Interesting. SGR just lined up an additional $10 million LOC with Resource Income Fund LP(good luck finding info on who they are)on Jan 25 secured by 4000 ounces of gold, senior in debt to the debenture.

From the debenture short form prospectus:

"In connection with the Line of Credit, the Corporation entered into a call option agreement with Resource Income Fund, L.P. whereby the Corporation granted Resource Income Fund, L.P. the one time option to purchase 4,000 troy ounces of gold bullion from the Corporation at a price of $1,665 per troy ounce on March 26, 2013"

My guess is the Resource Income Fund went short gold in the paper market and hedged with ability to take delivery of actual physical from San Gold. Does this mean they think after March 26 options expiry in the paper market that gold will be on its next move up?

There's 100 troy ounces in a Comex contract.

Intriguing.

and a few other details:

USE OF PROCEEDS

General

The net proceeds from the Offering (without giving effect to the Over-Allotment Option) will be approximately $47,750,000, after deducting the Underwriters’ fee of $2,250,000, but prior to the deduction of the expenses of this Offering estimated at $575,000. In the event that the Over-Allotment Option is exercised in full, the net proceeds from the Offering would be approximately $54,912,500, after deducting the Underwriters’ fee of $2,587,500, but prior to the deduction of the expenses of the Offering estimated at $575,000.

The Corporation intends to use the net proceeds of the Offering to fund the continued development of the mineral properties of the Corporation, in particular the Rice Lake Complex, and for general working capital purposes. None of the net proceeds of the Offering are intended to be used to fund exploration expenditures by the Corporation or any obligations of the Corporation under option or other agreements.

The intended use of the net proceeds of the Offering was determined by Dale Ginn, Executive Vice-Chairman of the Corporation and Ian Berzins, Chief Operating Officer of the Corporation, both Qualified Persons pursuant to National Instrument 43-101. Mr. Ginn and Mr. Berzins will supervise and direct the expenditure of the net proceeds of the Offering on the development of the Rice Lake Complex.

The Corporation expects to use the net proceeds of the Offering as described above. However, there may be circumstances where, on the basis of results obtained or for other sound business reasons, a reallocation of the net proceeds of the Offering may be necessary or advisable. Accordingly, management of the Corporation will have broad discretion in the application of the net proceeds of the Offering. In the event that the Over-Allotment Option is exercised, the additional net proceeds received by the Corporation will be added to the working capital of the Corporation.

Unallocated funds will be deposited in the Corporation’s bank account(s) and added to the working capital of the Corporation. The Chief Financial Officer of the Corporation is responsible for the supervision of all financial assets of the Corporation. Based on the Corporation’s cash flow requirements, management will determine the appropriate level of liquidity required for operations and will draw down such funds as necessary.

It should be noted that the Corporation had negative operating cash flow for its financial year ended December 31, 2011 and the subsequent nine month period ended September 30, 2012. To the extent that the Corporation has negative cash flow in future periods, the Corporation may use a portion of its general working capital to fund such negative cash flow.

Business Objectives and Milestones

The main business objective that the Corporation hopes to accomplish using the net proceeds of the Offering is to continue to increase the ore production from the Rice Lake Complex to eventually match the current capacity of the Rice Lake Mill. In order to meet this business objective, the Corporation must complete a significant amount of development work on the Rice Lake Mine, 007 Mine, Hinge Mine and elsewhere in the Rice Lake Complex over the next 18 to 24 months in order to integrate the mines and increase their efficiency. Notwithstanding the foregoing, it is difficult for the Corporation to estimate the time period in which the business objectives of the Corporation will be accomplished due to many factors.

PLAN OF DISTRIBUTION

Pursuant to the Underwriting Agreement, the Corporation has agreed to sell and the Underwriters have agreed to purchase as principals, on the Closing Date, being on or about March 6, 2013, subject to compliance with all necessary legal requirements and the terms and conditions contained in the Underwriting Agreement, $50,000,000 aggregate principal amount of Debentures at a price of $1,000 per $1,000 principal amount of Debentures payable in cash to the Corporation against delivery of such principal amount of Debentures. The Underwriting Agreement provides that the Corporation will pay to the Underwriters a fee of $2,250,000 ($45 per $1,000 principal amount of Debentures) in consideration for their services in connection with the Offering. The distribution price of the Debentures was determined by negotiation between the Corporation and the Co-Lead Underwriters, on their own behalf and on behalf of the other Underwriters.

The obligations of the Underwriters under the Underwriting Agreement are several (and not joint or joint and several) and may be terminated in certain circumstances upon the occurrence of certain stated events. If an Underwriter fails to purchase the Debentures that it has agreed to purchase and the aggregate principal amount of such Debentures is equal to not more than 5% of the aggregate principal amount of all Debentures to be purchased by the Underwriters, the other Underwriters are obligated to purchase such Debentures. If an Underwriter fails to purchase the Debentures which it has agreed to purchase and the aggregate principal amount of such Debentures is equal to more than 5% of the aggregate principal amount of all Debentures to be purchased by the Underwriters, the other Underwriters may, but are not obligated to, purchase such Debentures. The Underwriters are, however, obligated to take up and pay for all of the Debentures if any are purchased under the Underwriting Agreement. The Corporation has agreed to indemnify the Underwriters and their respective directors, officers, employees and agents against certain liabilities, including civil liabilities under Canadian provincial securities legislation, or to contribute to any payments the Underwriters may be required to make in respect thereof.

The Corporation has granted to the Underwriters the Over–Allotment Option which entitles the Underwriters to purchase up to an additional $7,500,000 principal amount of Debentures, representing up to 15% of the aggregate principal amount of Debentures sold under the Offering, for purposes of covering over–allocations, if any, and for market stabilization purposes, on the same terms as described above, exercisable in whole or in part at any time up to the date that is 30 days from the Closing Date. This Prospectus also qualifies the grant of the Over–Allotment Option to the Underwriters and the distribution of any Debentures that are issued pursuant to the exercise of the Over–Allotment Option. The Underwriting Agreement provides that the Corporation will pay the Underwriters a fee of 4.5% of the gross proceeds from the sale of additional Debentures pursuant to the exercise of the Over–Allotment Option. A purchaser who acquires Debentures forming part of the Underwriters’ over-allocation position acquires those Debentures under this Prospectus, regardless of whether the over-allocation position is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases.

The Corporation has agreed with the Underwriters that it will not, for the period commencing February 13, 2013 and ending 90 days after the Closing Date, directly or indirectly, issue, sell, agree or offer to sell, grant any option for the sale of, or otherwise dispose (or announce its intention to do any of the foregoing) of any Common Shares or securities convertible or exchangeable into Common Shares, without the prior written consent of Co-lead Underwriters, such consent not to be unreasonably withheld, except for the purposes of: (a) granting employee, consultant and director compensation and incentives; (b) in connection with the exercise of any options previously issued under the Stock Option Plan; (c) the issuance of any securities pursuant to the terms of the Debentures; (d) the issuance of securities under the rights plan of the Corporation; or (e) the issuance of securities in satisfaction of obligations under any agreement or instrument of the Corporation already existing or issued as of February 13, 2013.

This Offering is being made by way of short form prospectus in all of the provinces of Canada other than Québec.

There is currently no market through which the Debentures may be sold and purchasers may not be able to resell the Debentures purchased under this Prospectus. This may affect the pricing of the Debentures in the secondary market, the transparency and availability of trading prices, the liquidity of the securities and the extent of issuer regulation. See “Risk Factors”. The issued and outstanding Common Shares are currently listed on the Exchange under the symbol “SGR”. The Corporation has applied to the Exchange for the listing of the Debentures distributed under this Prospectus and the Common Shares issuable upon conversion, redemption or maturity of the Debentures (including the Common Shares issuable on a conversion premium in the event of a Cash Change of Control). Listing will be subject to the Corporation fulfilling all the listing requirements of the Exchange.

After the Underwriters have made a reasonable effort to sell all the Debentures offered by this Prospectus at the Offering Price specified herein, the Offering Price may be decreased, and further changed, from time to time, to an amount not greater than the Offering Price specified herein in accordance with the procedures permitted by National Instrument 44-101 - Short Form Prospectus Distributions and the compensation realized by the Underwriters will be decreased by the amount that the aggregate price paid by the purchasers for the Debentures is less than the gross proceeds paid by the Underwriters to the Corporation.

Pursuant to rules and policy statements of certain Canadian securities regulators, the Underwriters may not, at any time during the period ending on the date the selling process for the Debentures ends and all stabilization arrangements relating to the Debentures are terminated, bid for or purchase Debentures or Common Shares of the Corporation. The foregoing restrictions are subject to certain exceptions including: (i) a bid for or purchase of Common Shares if the bid or purchase is made through the facilities of the Exchange in accordance with the Universal Market Integrity Rules of the Investment Industry Regulatory Organization of Canada; (ii) a bid or purchase on behalf of a client, other than certain prescribed clients, provided that the client’s order was not solicited by the Underwriter or if the client’s order was solicited, the solicitation occurred before the commencement of a prescribed restricted period; and (iii) a bid or purchase to cover a short position entered into prior to the commencement of a prescribed restricted period. In connection with this Offering, the Underwriters may over-allot or effect transactions that stabilize or maintain the market price of the Debentures at levels other than those which otherwise might prevail on the open market, including: stabilizing transactions; short sales; purchases to cover positions created by short sales; imposition of penalty bids; and syndicate covering transactions.

Stabilizing transactions consist of bids or purchases made for the purpose of preventing or retarding a decline in the market price of the Debentures or Common Shares while this Offering is in progress. These transactions may also include making short sales of the Debentures or Common Shares, which involve the sale by the Underwriters of a greater number of Debentures or Common Shares than they are required to purchase in this Offering. Short sales may be “covered short sales”, which are short positions in an amount not greater than the Over- Allotment Option, or may be “naked short sales”, which are short positions in excess of that amount.

The Underwriters may close out any covered short position either by exercising the Over-Allotment Option, in whole or in part, or by purchasing Debentures in the open market. In making this determination, the Underwriters will consider, among other things, the price of Debentures and Common Shares available for purchase in the open market compared to the price at which they may purchase Debentures or Common Shares through the Over-Allotment Option. The Underwriters must close out any naked short position by purchasing Debentures or Common Shares in the open market. A naked short position is more likely to be created if the Underwriters are concerned that there may be downward pressure on the price of the Debentures or Common Shares of the Corporation in the open market that could adversely affect investors who purchase in this Offering.

The Debentures (and the Common Shares issuable upon the conversion, redemption or at maturity of the Debentures) offered hereby have not been and will not be registered under the 1933 Act, or any state securities laws, and accordingly may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the 1933 Act and applicable state securities laws. The Underwriting Agreement permits the Underwriters to offer and resell, through their United States registered broker-dealer affiliates, the Debentures that they have acquired pursuant to the Underwriting Agreement to “qualified institutional buyers” (as defined in Rule 144A under the 1933 Act) in the United States, provided such offers and sales are made in transactions exempt from the registration requirements of the 1933 Act in accordance with Rule 144A and similar exemptions under applicable state securities laws. The Underwriting Agreement also permits the Underwriters to offer, through their United States registered broker-dealer affiliates, the Debentures to “accredited investors” (as defined in Rule 501(a) of Regulation D under the 1933 Act) in the United States, for sale directly by the Corporation to substituted purchasers, provided such offers and sales are made in transactions exempt from the registration requirements of the 1933 Act in accordance with Rule 506 of Regulation D and similar exemptions under applicable state securities laws. Moreover, the Underwriting Agreement requires that all offers and sales of the Debentures outside of the United States shall be made in accordance with Rule 903 of Regulation S under the 1933 Act.