Southridge Enterprises Inc (SRGE)

[I-Glow]

You do realize that in a Gold mining operation silver is a by-product that is dealt with as such.

Here is an example, in the DD done on valuation of SRGE the guy doing always uses 100% recovery - in the Mexican operation of GC they have a combined recovery of 67%.

70% of silver production is a by-product of some other type of mining. There isn't nuggets or veins of silver and it is separated using electrolysis or a chemical process from gold, copper or zinc. The recovery of Silver is substantially lower than gold and is in the 20% range when mined with Gold.

Another item that is never taken into account with the pro-SRGE DD and that is the all-in cost is between $800 and $900.

With GC the cash costs are $847 - they were paid $1547/oz as this is cash costs and not all in costs they received about $700/oz. So the blue-sky picture painted by the Pro-SRGE DD/Valuation is completely wrong.

Here is a breakdown of the Goldcorp gold mine (largest in Mexico)

Gold produced (oz) 254,100
Gold sold (oz) 233,400
Ore milled/processed (t) 42,125,200
Gold grade (g/t) 0.37
Gold recovery (%) 61%
By-product cash costs(US$/oz) ($847)
Realized gold price (US$/oz) $1,576
Throughput (tpd) 86,110
Mining costs per tonne mined (US$/t moved) $1.56
Processing costs per tonne milled (US$/t milled) $8.32
Earnings from operations $376,000,000

If you look at Stervc's Valuation you can see how it is for fictional reading only and not based on facts:

Proven (Measured) and Probable (Indicated) Ore Reserves and Inferred Ore Reserves for the SRGE Cinco Minas property from the resource estimate done by Behre Dolbear de Mexico:

Measured/Indicated Gold = 89,100 oz
Measured/Indicated Silver = 12,500,000 oz

Gold = approximately $1,700.00+ per ounce as of 12/17/2012
http://www.kitco.com/charts/livegold.html
Measured/Indicated Gold = $1,700.00 oz x 89,100 oz of gold
Measured/Indicated Gold = $151,470,000

Silver = approximately $32.00+ per ounce as of 12/17/2012
http://www.kitco.com/charts/livesilver.html
Measured/Indicated Silver = $32.00 oz x 12,500,000 oz of silver
Measured/Indicated Silver = $400,000,000


Total Measured/Indicated Gold & Silver = $551,470,000

He is doing several things wrong. First the Behre-Dolbear report is a SCOPING study not a feasibility study. In mining you have the total reserves and then you have proven and minable reserves which is much lower than total reserves. Also, as you xcan see he is using 100% recovery which is complete nonsense.

The key differences between a scoping study and a feasibility study have to do with:

1. scoping study is limited to early stage projects

2. a scoping study, with strict disclosure requirements, may use inferred resources. A feasibility study would be restricted to Proven and Probable reserves plus Measured and Indicated resources.

Mexico might be a force in the mining industry but SRGE will not be.

IG