San Gold Corporation (SGRCF)

[NYBob]

San Gold Continues to Find Significant New High-Grade Gold Zones,
Confirming Validity of New Geologic Model



Gold producer San Gold Corporation’s exploration program (OTC QX: SGRCF; TSX: SGR) -- www.sangold.ca -- continues to reveal evidence of a resource base large enough to drive mining operations well into the future.
The recently reported discovery of a high-grade eastern extension to the 007 Zone is only the latest strike for the exploration team, which now boasts eight new named zones in the past five years. Drilling at the 007 East Extension Zone intersected 415.0 g/t (12.12 oz/ton) over 3.4 meters (11.2 ft) at over 200 meters to the east of the currently developed strike length extent of the 007 Zone.
Previously, San Gold discovered the high-grade, near-surface Emperor Zone along strike just 400 meters to the east of the previously discovered 007 deposit. Drill cores obtained from a continuous quartz-carbonate vein show visible gold throughout with grades topping out at 179 g/t (5.22 oz/ton) over 2.1 meters (6.9 feet) at relatively shallow depths of 160 meters (525 feet) below surface.
San Gold’s third quarter exploration program drilled 26,942 meters from surface and 23,433 meters underground. The program is focused on further defining and extending the Hinge, 007 and RL East zones as well as new targets such as the Emperor Zone and 007 East.
“Our outstanding success in discovering new high grade gold deposits near surface has forced us to remain in a development mode longer than anticipated,” says San Gold Executive Vice Chairman Dale Ginn – a situation many mining companies would envy.

High Grade Gold Discoveries Believed Only Tip of Iceberg

The most intriguing question surrounding San Gold’s ongoing exploration results is whether these new discoveries are only showing the tip of the iceberg.
“It’s like the Energizer bunny – our model just keeps going and going,” says exploration manager Bill Ferreira.
The geologic model, first developed in 2007, is already responsible for two production areas in the past three years – at the Hinge and 007. Two additional named zones are showing excellent promise, at Cohiba and L-13, and many more targets besides the Emperor Zone are on deck awaiting further exploration.



When San Gold took over from Harmony Gold in March 2004, the exploration team started drilling at the edges of the existing exploration zone – an area that had been paying dividends for more than seven decades.
San Gold’s geologists, however, thought higher grades might be found along the San Antonio Mine (SAM) unit’s thinner portions. They were right and before long, San Gold had three new established resource zones at Cartwright, SG1 and SG2&3.
Following the same logic, they wondered if the gold-rich veins could have been forced outside the historic mining unit into nearby shears and tension fractures.
Ferreira’s team started looking at the old mine workings inside the Rice Lake Mine to see if they could find structural pathway trends that might reveal the location of these veins outside the SAM unit.
By following the mine’s old veins to the surface, two clear structural pathway trends emerged about 500 meters away from each other.
Once these pathway trends were identified, San Gold’s geologists realized they needed to radically rethink where San Gold’s resource could be found.

Rock Solid Exploration Model



Now, after thousands of core samples, many hours of field work, and one exceptional LiDAR study, Ferreira says the resulting exploration model has given rise to new drill targets that have led to new ore zones, a trend which should continue in the coming months and years.
The exploration model is based on the idea that the deposits within San Gold’s claims area are controlled by an internal structural grid.
The first part of the grid is made of the structural pathway trends that Ferreira and his team first identified in the Rice Lake Mine’s old workings.
These trend lines continue to repeat at roughly 500 meter intervals. Exploration drilling along these pathways led to the discovery of the Hinge, Cohiba, and then the 007 Zone. These trend lines also cross near old mine bulkheads and prospecting trenches.
“We knew Cohiba was going to be there before we even drilled it,” says Ferreira, adding that they struck the zone with their first core sample in the area further confirming the apparent validity of the model.
In 2009, other sets of structural lineations were found that showed the most likely locations of the deposits along the structural pathway trends.
These lineations are made up of shears and tension fractures which were identified by a 2009 LiDAR study. Shears and fractures are breaks in the volcanic rock that act as natural hosts for gold-bearing quartz deposits.
“When we saw the results, the lineations just jumped right out at us,” Ferreira recalls.
Since the model was first developed, the results have been spectacular.
Not only has the exploration team had remarkable success in striking gold, the grades have been impressive.
In the 76 years the Rice Lake Mine has been in operation, grades have traditionally hovered around a respectable 0.21 to 0.31 ounces per ton. The Hinge Zone currently has measured resources at 0.29 oz/ton while 007 has indicated resources at 0.75 oz/ton.
Since the structural pathway trends were first identified from mined out vein patterns in the depths of the old historic mine workings, the exploration team expects these near-surface deposits to also extend to depth.
For instance, the 98 Vein on 26 Level appears to share the same structures that control the 007 deposit. The two deposits also share similar geologies, which strengthens the chance there is a relationship between them.
The next step will be to cut a drift from 16 Level, the level reaching closest to the space between them, to begin exploration on the 2,600 foot unexplored gap between 007 and the 98 Vein.
While this is the most well-developed example of the relationship between the near-surface and underground discoveries, it is by no means the only one. The surface grid formed by the pathway lines and shears/fractures opens up dozens of potential places to look, all of which could reach as deep as the bottom of the Rice Lake Mine workings, and beyond.

So Much More Than Just An Exploration Company



As one of Canada’s most exciting new gold exploration companies, it is easy to forget San Gold is also a gold producer with two operating mines – Rice Lake and The Hinge. Bulk sampling of the first ore from a third mine, the 007, began in July.
San Gold operates in Manitoba, one of the world’s most politically safe and stable mining regions. Manitoba consistently places among the Top 10 global mining jurisdictions as ranked by The Fraser Institute. George Pirie, who has 29 years experience in senior management roles in the mining industry, was recently appointed San Gold’s President and CEO. Dale Ginn, who previously held those positions, has been appointed Vice Chairman of the Board.
The company owns 12,000 hectares of mining claims along the Rice Lake Greenstone Belt of southeast Manitoba. Production at the company’s 1,200 ton per day mill is expected to reach capacity this year and increase capacity in 2011.
In addition to continued production and exploration at Rice Lake, San Gold recently entered a purchase agreement with SGX Resources Inc. to jointly acquire 18 mineral claims in Ontario’s Cochrane District.

Investment Considerations

San Gold’s assets have grown steadily since 2005. The company tripled revenues from 2008 to 2009 from $8.7 million to $27.8 million. The company looks forward to lower mining costs and higher production volumes as near-surface zones increase their share of the production mix.
For investors, San Gold presents a compelling story – this is a company with large liquid assets, no debt, real and growing gold production, an expanding gold reserve, and tremendous blue sky potential.

SAN GOLD CORPORATION

OTCQX: SGRCF
TSX: SGR

Contact:
Dale Ginn, CEO

Box 1000
Bissett, Manitoba Canada R0E 0J0

Toll Free: 800-321-8564
Fax: [phone]

E-Mail: [e-mail]

Web Site: http://www.sangold.ca

by The Bull & Bear

God Bless