San Gold soars - Part II

Published in Manitoba Mining Review:
A “classic deep Canadian mine” (as Ginn likes to describe it), Rice Lake is less than 100 km away from Goldcorp’s highly productive Red Lake property in Ontario. The Rice Lake and Red Lake districts both lie within the Uchi Subprovince of the Canadian Shield’s Superior Province. Major gold occurrences occur within quartz veins or quartz vein systems related to structural deformation (folding and faulting).
San Gold also mines the near-surface SG-1 deposit a few kilometres away from the Rice Lake mine. Both mines feed the Rice Lake mill which the company intends expand in capacity from 1,250 to 1,900 tons per day by the end of 2009.
The company also announced its discovery of the Cartwright gold deposit, less than a kilometre west of the Rice Lake mine, in early 2006 and made plans for near-surface ramp development there. Those plans were put on the back burner after the high-grade Hinge Zone deposits were found, but Boulay said mining at the Cartwright deposit will happen in the not-too-distant future.
On the nearly 15,000 hectares of exploration land it owns or controls in the Rice Lake Greenstone Belt, San Gold increased its ore resources and reserves from 550,000 gold ounces (audited, all categories) in 2004 to over 1.6 million gold ounces (audited, all categories) by the end of 2006. Updated data expected by year-end will include a hefty increase in the resources and reserves tally.
Lately, San Gold stock has outperformed well above the TSX Global Gold Index and far better than its small-cap Canadian peers. That’s partly due to the excitement generated by this year’s Hinge discoveries, but Boulay notes that there are several other factors giving it a competitive edge. For one thing, the company is blessed with $300 million in infrastructure while being absolutely debt-free – quite a rarity for “small” mining companies anywhere in the world.
Then there are a host of other notable competitive advantages, including having two mines in production and a third under construction for 2009; rapidly expanding audited gold resources; the lowest electricity costs anywhere in the world (about half what Quebec mines pay, less than one-quarter of Nevada rates); easy access to infrastructure by road; and a stable environment in a province the Fraser Institute judged the world’s most pro-mining jurisdiction in 2007.
San Gold has built on those competitive advantages and forged ties with Bissett-area people via extensive recruitment from surrounding communities, in-house training for over two years, and share ownership and incentive plans for its employees.
Among corporate goals for 2008-09 are completion of a new comprehensive 43-101 resource report this December, and more than doubling annual production to more than 100,000 ounces in 2009. Ginn told BNN in June that he expects the company will post a profit by the last quarter of 2008. With gold trading at about $900 an ounce this autumn, that’s not hard to believe.
While former Harmony Gold (Canada) general manager Ginn is CEO, mining veteran Hugh Wynne is San Gold’s chairman. Founder of San Gold Resources, Wynne has more than 40 years of experience in mining, mining services and exploration – including some 25 years of exploration in the Rice Lake Greenstone Belt.
Other key senior management positions are held by Ian Berzins (COO) and Gestur Kristjansson (CFO). The company is headquartered in the Town of Bissett.
San Gold recently extended its reach to outside Manitoba by acquiring 3,754 hectares in properties west, south and east of Timmins, Ontario.