SOURCE: San Gold Corporation

July 04, 2005 09:00 ET

San Gold Corporation Amalgamation Is Completed to Form Canada's Next Gold Producer

BISSETT, MANITOBA -- (MARKET WIRE) -- July 4, 2005 -- Mr. Dale Ginn, President of San Gold Corporation (TSX-V: SGR), is very pleased to announce the completion of the amalgamation of San Gold Resources Corp. and Gold City Industries Ltd. pursuant to an amalgamation agreement dated May 16, 2005, between the two companies, that was approved by the shareholders of both San Gold Resources and Gold City Industries at their respective recent shareholder meetings. Effective June 21, 2005, Gold City Industries was continued from British Columbia to Manitoba as a Manitoba company. Effective June 30 2005, San Gold Resources and Gold City Industries were amalgamated pursuant to The Corporations Act (Manitoba) to form a new company named "San Gold Corporation." The common shares of San Gold Corporation will be listed on the TSX Venture Exchange under the symbol "SGR."

The directors of San Gold Corporation are Hugh Wynne, Fred Sveinson, Dale Ginn, Richard Boulay and Courtney Shearer. Hugh Wynne is the Chairman and Chief Executive Officer of San Gold Corporation, Dale Ginn is the President and Richard Boulay is the Chief Financial Officer. The directors, officers, technical management and operating staff of San Gold Corporation are qualified and experienced in order to develop, manage and operate a major gold mining operation and to sustain and substantially increase the gold reserve base by adding additional reserves to its existing mines and possibly adding new mines along its extensive Rice Lake Gold Belt properties in Manitoba.

Hugh Wynne, Chairman and CEO of San Gold Corporation recently commented to shareholders, "We are fully, completely committed to Manitoba's Rice Lake Gold belt. We have a grossly under-explored Archean gold belt with notably more obvious gold alteration than the neighboring Red Lake and Pickle Lake gold belts and we are located an easy three hour drive from Winnipeg's governmental and transport hub with an international airport. The belt has produced two million ounces of gold, mainly from an under-explored, reserve-rich, $120 million mine that we own free and clear together with a new-condition 1,250 ton-per-day mill with fully permitted facilities and with a new, near-surface deposit located only 3 Kms away. We also are developing new, near-surface gold zones along the belt where we hold an extensive land position. Finally, we are operating in a mining friendly province, with pro-mining law, stable government, an excellent labour pool and the lowest cost electrical power on the planet."

Dale Ginn, President of San Gold Corporation recently stated during a banking presentation in New York, "We have been completely under the investment industry radar because of our dual ownership and the disbelief that two small TSX Venture companies were able to purchase a hundred plus million dollar mining asset for under $8 million in 2004. The consolidation of the asset ownership into San Gold Corporation on July 1st and the initiation of profitable gold mining by the end of 2005, together with a steady expansion of the gold reserve base will raise our profile. We have been told by industry observers that we are grossly undervalued compared to our producing and near-producing peer companies. We expect this situation to change as we approach gold production in the 4th quarter of 2005."

Shareholder Rights Plan

During the recent shareholder meetings of San Gold Resources and Gold City, the shareholders of both companies approved a shareholder rights plan for the amalgamated San Gold Corporation. The shareholder rights plan was adopted to protect the company's shareholders from unfair, abusive or coercive takeover strategies, including the acquisition of control of the company through a takeover bid that may not treat all shareholders equally or fairly. The company is not aware of any specific takeover bid for the company that has been made or is contemplated.


Pursuant to the terms of the Amalgamation Agreement, 65,327,163 common shares of Gold City were exchanged for 33,810,875 common shares of San Gold Corporation while 43,172,136 common shares of San Gold Resources were exchanged for an equal number of common shares of San Gold Corporation. All issued and outstanding stock options, warrants and debentures of San Gold Resources and Gold City became obligations of San Gold Corporation in accordance with the terms of the Amalgamation Agreement and the policies of the TSX Venture Exchange. As a result of the amalgamation, San Gold Corporation has 76,983,012 shares issued and outstanding, 5,277,500 shares to be issued in the event that current debenture holders fully exercise their conversion rights, 4,634,536 shares to be issued in the event that stock option holders fully exercise their options for future payment to the company of $1,181,950 and 29,480,810 shares to be issued in the event that stock warrant holders fully exercise their warrants for future payment to the company of $14,735,979. The fully diluted capitalization of San Gold Corporation is 116,375,858 common shares.

The company anticipates that its development capital requirement to December 31, 2005, will be approximately $10 million. One third of the funds will be expended on exploration along the Rice Lake Gold Belt, one third will be expended developing the new San Gold #1 deposit and one third will be expended on reactivating the Rice Lake gold mine and mill complex at Bissett, Manitoba. Initial gold production is scheduled for the fourth quarter of 2005. Prior to establishing cash flow from gold production, San Gold Corporation will consider the best alternatives to meet its development capital requirements, including the sale of approximately $96 million in tax pools that remain available from the expenditure of over $120 million on plant, equipment and mine infrastructure by previous owners of the Rice Lake mine and mill complex since 1996. San Gold currently has $2.5 million in cash available for exploration and mine development.

With initial gold production only months away, together with its steadily increasing gold reserves via multiple gold deposits and its aggressive exploration programs, San Gold is now well positioned to be Canada's next gold producer. Market conditions for gold itself have improved and are continuing to do so in a global setting where existing gold mines are getting mature, deeper and more costly to operate, combined with the fact that new mines are extremely difficult to find, justify and permit. San Gold Corporation now joins a select worldwide group that includes only a handful of junior to mid-tier peers that are realistically in a position to both produce and explore for gold.

For further information contact Dale Ginn, President of San Gold Corporation, at (204) 794-5818 or visit

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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