San Gold soars - Part I

Published in Manitoba Mining Review:
Year after year, investors in San Gold Corporation get new reasons to believe their investment was a wise one.
In 2006, the Manitoba miner poured its first gold brick, valued at an estimated $500,000, and discovered new deposits. The next year, the company’s exploration in the Rice Lake Gold Belt paid off with more discoveries adding significantly to the company’s known and inferred gold resource, and San Gold began about $100 million worth of development of the Rice Lake and SG #1 mines.
The most exciting news in 2008 is undoubtedly the discovery of high-grade deposits in the Hinge Zone east of the historic Rice Lake mine.
Dale Ginn, San Gold’s CEO, told the Business News Network’s Small Caps program in June that “the numbers are very strong” at the Hinge.
New York-based investment guru Jay Taylor (editor of J. Taylor’s Gold, Energy & Tech Stocks newsletter), a frequent co-host of the BNN show, considers San Gold one of the continent’s most promising small mining companies. His newsletter advised readers in mid-August to buy San Gold stock, in large part because of the exciting Hinge Zone discoveries. It was far from the first time the newsletter recommended San Gold, and likely won’t bet the last.
“It’s still early stages, because we only just found it in May,” Ginn told the Manitoba Mining Review in September, “but the Hinge Zone discovery is the most significant development to date in San Gold's history. It’s significant because the grades are higher than we’ve seen before and the gold is close to the surface. And there’s no additional capital required – the equipment is already there (at Rice Lake).”
The Hinge find is “pretty spectacular,” agrees San Gold shareholder and director Rick Boulay said. “It’s very significant to the company.”
The company is completing a ramp to the Hinge Zone from the Rice Lake mill area and aims to begin mining there in the first quarter of 2009, said Boulay, adding mining operations there will be low-cost because the gold is so near the surface.
San Gold Corporation’s two predecessor companies, San Gold Resources and Gold City Industries, acquired the Rice Lake Mine (formerly known as the Bissett Mine or the San Antonio Mine) in 2004 by purchasing 100 per cent of Harmony Gold (Canada) Inc. San Gold Resources and Gold City Industries merged in July 2005 to form the present corporation.
Located about 200 kilometres northeast of Winnipeg, the Rice Lake mine has a nearly century-long history dating back to the discovery of gold there in 1911. It produced more than 1.5 million ounces of gold and 200-plus ounces of silver in 36 years before shutting down in 1968 after a plunge in gold prices. The mine and mill reopened briefly in 1982-83 and 1998-2001 (after $130 million was spent in rebuilding the mine and mill). San Gold reopened it yet again in 2006.