SOURCE: San Gold Corporation

August 03, 2005 09:00 ET

San Gold Corporation Update - Drilling Success in New Zones, Development on Track

BISSETT, MB -- (MARKET WIRE) -- August 3, 2005 -- Mr. Dale Ginn, President of San Gold Corporation (TSX-V: SGR) (www.sangoldcorp.com), is pleased to report on the following corporate activities.

San #2 and San #3 Deposits

This mineralized subset of the 15 km long east-west "mine" horizon, which includes the Rice Lake Gold Mine and the San Gold #1 deposit, is located 6 km east of the Rice Lake Gold Mine by road. It appears that the San Gold #2 and San Gold #3 zones, which have so far been intersected by drill holes over a 1,100 meter strike length between sections 2300 East and 3400 East, may be continuous and represent one single large zone of gold mineralization. These zones remain open in all directions. Results obtained during this year's drilling to date include:

Hole #   Section      From       To       Length             Gold g/tonne
                                                                (oz/ton)

SG-05-34    2850    232.6 m    235.2 m    2.6 m   (8.4 ft)     5.2   (0.15)
SG-05-35    2900    281.6 m    282.3 m    0.7 m   (2.0 ft)    11.3   (0.33)
SG-05-41    3100    259.7 m    263.0 m    3.3 m   (10.7 ft)    3.5   (0.10)
SG-05-40    3125    304.2 m    305.7 m    1.5 m   (5.0 ft)     4.5   (0.13)
SG-05-39    3150    294.5 m    297.3 m    2.8 m   (9.1 ft)    11.0   (0.32)
including           294.5 m    295.5 m    1.0 m   (3.3 ft)    29.0   (0.85)
SG-05-38    3250    241.3 m    242.8 m    1.5 m   (4.7 ft)     7.3   (0.21)
Drilling will now focus on extending these zones to depth, as well as infilling the sections between #2 and #3 zones. A second drill rig has been added to the #2 and #3 zones as a result of continued encouraging results. Further assay results are pending.

San Gold #1 Deposit

Located 3 km east of the Rice Lake Gold Mine, the San Gold #1 gold resources were recently upgraded to 225,000 ounces by ACA Howe in June of this year. The portal entrance for the mine access was completed in June and development of the decline ore access is progressing well with 100 meters completed to date. Mining crews are now operating on a 24 hour-per-day, 7 day-per-week basis in order gain access to the San Gold #1 orebody by the end of August. Initial ore development will take place at the 55, 85 and 115 meter (vertical) levels. Anticipated production from this deposit is 300 tons per day.

Rice Lake Gold Mine and Mill

The minesite has been transformed from a care and maintenance status to headquarters for two mining projects and multiple exploration projects along the Rice Lake gold belt. Mining equipment that was purchased and reconditioned over the past year has been deployed in preparation for mining operations. The main underground infrastructure components are being fully re-activated by shaft and maintenance crews, including the two shafts and the high-speed haulage railway. Mill crews arrive this week in order to re-activate the mill, as well as add an additional gravity concentrator in order to recover more free gold at the front end of the circuit. Current mine gold resources stand at over 550,000 ounces, and it is anticipated that the mine's planned production contribution will be over 450 tons per day. It is anticipated that the first gold will be poured by the end of October, 2005.

Other Exploration

In addition to the drill intensive exploration on the 15 km-long "mine" horizon gold properties, the Company is conducting exploration operations on 3 additional properties in the Rice Lake Greenstone belt. An initial phase drill program has been conducted at the Greenbelt property, located 2 km south of the Rice Lake Gold Mine. 3000 meters were drilled in and around high grade surface showings with assay results pending. Surface trenching and mapping are now ongoing with further drilling being planned, the focus being on developing near surface high-grade zones. The work currently ongoing at the Wingold zone, located 1 km north of the minesite is of a similar nature. The Oro Grande property, located 30 km east of the minesite, will undergo a major drilling program this fall under and along strike from the high grade past producer.

Financial

During the past two months the company has raised approximately $3.5 million in equity capital to finance exploration and mine development operations. An additional $6 million will be required in order to achieve commercial production at the rate of 750 tons per day. The Company has entered into an interim participation agreement to monetize approximately $102 million in tax pools that formed part of the Rice Lake Mine asset package that was purchased for $7.5 million in 2004. It is anticipated that up to $12 million can be realized by the monetization of the tax pools over the next six months.

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

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

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