San Gold Corporation
TSX : SGR
OTCQX : SGRCF

San Gold Corporation

August 11, 2011 06:00 ET

San Gold Provides Near-Surface Exploration Update

WINNIPEG, MANITOBA--(Marketwire - Aug. 11, 2011) - San Gold Corporation (TSX:SGR)(OTCQX:SGRCF) ("San Gold" or the "Company") provides a year-to-date update on its near-surface exploration program, as well as an update on its planned exploration activities for the remainder of the year.

San Gold is currently undertaking its largest-ever exploration program, which includes 300,000 metres ("m") of drilling utilizing 13 rigs, making it one of Canada's largest drill programs by a gold producer in 2011. The goals of this aggressive exploration program are to upgrade existing mineral resources and discover new mineral resources in preparation for an updated mineral reserve and resource statement in 2012 with the expectation of increasing mineral reserves and extending mine life.

Exploration Summary

Year-to-date, San Gold has drilled over 200,000 m in more than 500 holes at its Rice Lake Project. Drill results reported in this press release are limited to depths of up to 500 m from surface. The Company expects to provide an update on its deep drilling activities in the fourth quarter of 2011.

The Company's near-surface exploration activities in 2011 have focused on both exploration and definition drilling along the 007 trend and within the L10, L13 and Cohiba zones. The general location of these exploration target areas and drill results' pierce points reported herein are presented in figures 1 and 2 at the end of this press release, respectively.

Along the 007 trend, drilling from more than 200 holes confirms robust grades over potentially mineable widths within the mineralized envelopes. Drilling indicates that the 007 trend outcrops at surface and extends to more than 500 m in depth. Drilling also indicates that the cumulative, drill-indicated strike now exceeds 500 m and that the zone averages 5 m in width, which can swell to more than 20 m. Drilling is ongoing and continues to encounter significant extensions to the areas of known mineralization along strike and down-dip.

Within the L10 zone, drilling from more than 75 holes indicates that the mineralized envelope typically begins 250 m below surface and extends to a depth exceeding 500 m. The drill-indicated strike length of the L10 zone is approximately 100 m and varies in width from 2 to 5 m. The L10 zone remains open along strike and down-dip.

At Cohiba, drilling from more than 50 holes indicates that the mineralized envelope begins near surface and extends to a depth exceeding 300 m over a strike length of approximately 150 m. The Cohiba zone remains open along strike and down-dip and is interpreted to contain at least two lenses that vary in width from 1 to 10 m.

Within the L13 zone, exploration results have been very encouraging. Assay results from more than 50 holes and have demonstrated that the mineralized envelope has a strike of approximately 150 m and extends to at least 400 m from surface. The L13 zone remains open along strike and down-dip, and is interpreted to contain at least two lenses that vary in from 1 to 10 m in width.

007 Trend

The 007 trend, which includes the 007 Main, 007 East, and 007 Far East zones, begins approximately two kilometres ("km") northeast of San Gold's Rice Lake Project and is accessed from the Hinge Mine's decline. Nearly 400 m of the 007 and 007 East zones' strike length has been developed in preparation for mechanized mining.

Drill results from the 007 trend continue to demonstrate strong grades over potentially mineable widths within the mineralized envelopes. Mineralized zones along the 007 trend typically occur as tabular quartz veining along, or in close proximity to, the north hanging wall contact of the Shoreline Basalt Unit, strike east – west, and dip steeply to the north. The 007 trend has a drill-indicated, cumulative strike length of more than 500 m and has been drill-tested by more than 200 holes between surface and a depth exceeding 500 m. Deeper drilling designed to test for mineralized extensions along the 007 trend between 500 m and 1,500 m below surface is currently underway. Exploration results from the deep drilling program are expected to be reported during the fourth quarter of 2011.

A small selection of recent and notable assay results from the 007 trend include:

  • S915-11-048: 5.3 m grading 80.4 g/t Au

  • S922-11-036: 11.5 m grading 23.2 g/t Au, including 7.7 m grading 33 g/t Au

  • S922-11-027: 5 m grading 48.7 g/t Au

  • S922-11-013: 2.1 m grading 110.1 g/t Au

  • S915-11-033: 13.7 m grading 15.4 g/t Au, including 1.9 m grading 72.7 g/t Au

  • S915-11-050: 5.1 m grading 40.5 g/t Au, including 1.4 m grading 144 g/t Au

  • S922-11-049: 4.3 m grading 44.2 g/t Au

  • S915-11-024: 3.0 m grading 60.7 g/t Au

  • S915-11-062: 10.3 m grading 17.0 g/t Au, including 3.2 m grading 42.2 g/t Au

  • S922-11-047: 0.9 m grading 185.3 g/t Au and 3.7 m grading 11.4 g/t Au

  • S915-11-011: 13.2 m grading 11.7 g/t Au, including 5.7 m grading 24.5 g/t Au

  • CD-11-13: 2.6 m grading 56.5 g/t Au

Additional details regarding the assay results highlighted above are presented in Table 1 at the end of this press release.

L10 Zone

The L10 zone is located approximately 1.5 km northeast of the Company's Rice Lake Project and is accessed from the Hinge Mine's decline. The L10 zone is approximately 500 m west of the 007 trend and is similar to the 007 Main zone with respect to geometry and location along the Shoreline Basalt Unit. The L10 zone was initially interpreted to be an extension of the Hinge deposit, but subsequent drilling has demonstrated that the L10 is a standalone deposit.

Mine development originating from the Hinge Mine has accessed the L10 deposit and initial level development is underway. The L10 is the Company's second significant deposit to be developed along the Shoreline Basalt Unit.

Drilling from more than 75 holes within the L10 Zone indicates that mineralization typically begins 250 m below surface and extends to a depth exceeding 500 m. The drill-indicated strike length of the L10 zone is approximately 100 m and varies in width from 2 to 5 m. The L10 zone remains open along strike and down-dip.

Notable recent assay results from the L10 zone include:

  • H933-11-018: 5.0 m grading 29.1 g/t Au

  • H955-11-114: 5.0 m grading 27 g/t Au

  • H933-11-015: 1.5 m grading 37.9 g/t Au

  • H955-11-099: 3.2 m grading 10.8 g/t Au

  • H955-11-129: 2.4 m grading 14.2 g/t Au

  • H933-11-016: 3.9 m grading 8.3 g/t Au

  • H955-11-117: 1.9 m grading 16.4 g/t Au

Additional details regarding the assay results highlighted above are presented in Table 2 at the end of this press release.

Cohiba Zone

The Cohiba zone is located approximately 2.5 km northeast of the Company's Rice Lake Project and is directly north of the 007 trend. The Cohiba zone is accessed from the new Cohiba – 007 decline and pre-production mining is underway for the collection of a bulk sample. The Company has developed one level at 30 m below surface with two new lower levels under development.

The Cohiba zone occurs as tabular quartz veining within a northeast striking shear zone in intermediate volcanic rocks located to the north of the Shoreline Basalt Unit. The Cohiba zone has been drill-tested by more than 50 holes from surface to depths exceeding 300 m, has a strike length of approximately 150 m, and is interpreted to contain at least two lenses that vary from 1 to 10 m in width.

Recent and notable assay results from the Cohiba zone include:

  • C990-11-052: 2.1 m grading 105.8 g/t Au

  • C990-11-050: 5.9 m grading 17.4 g/t Au

  • C990-11-013: 8.2 m grading 12 g/t Au

  • C990-11-040: 6.4 m grading 10.9 g/t Au

  • C990-11-005: 4.2 m grading 15.0 g/t Au

  • C990-11-055: 6.0 m grading 8.2 g/t Au

  • C990-11-045: 12.8 m grading 3.6 g/t Au

Additional details regarding the assay results highlighted above are presented in Table 3 at the end of this press release.

L13 Zone

The L13 zone is located approximately one km northeast of the Company's Rice Lake Project. Development towards this zone is underway from the Hinge Mine's decline with underground access expected later this year.

The L13 zone occurs as tabular quartz veining within a north-east striking shear zone in intermediate volcanic rocks located to the north of the Shoreline Basalt Unit. The L13 zone is interpreted to be located on the same shear structure that hosts the #6 vein, one of the highest-grade veins at the Company's Rice Lake Mine. The L13 zone has been drill-tested by more than 50 holes between surface and a depth exceeding 400 m, has a strike of approximately 150 m, and is interpreted to contain at least two lenses that vary from 1 to 10 m in width.

Recent and notable assay results from the L13 zone include:

  • KL-11-026: 2.0 m grading 127.2 g/t Au

  • KL-11-034: 0.6 m grading 193.5 g/t Au

  • T923-11-008: 2.5 m grading 27.4 g/t Au and 3.1 m grading 11.8 g/t Au

  • KL-11-032: 1.5 m grading 30.4 g/t Au

  • KL-10-019: 1.7 m grading 6.3 g/t Au and 2.5 m grading 17.9 g/t Au

Additional details regarding these highlighted holes are presented in Table 4 at the end of this press release.

Exploration Activities for the Remainder of 2011

For the remainder of the year, the drilling program at the Company's Rice Lake Project will continue to focus on in-fill and step-out drilling at areas of known mineralization, plus drill-testing grassroots exploration targets.

The goals of the 2011 drill program are to upgrade a significant portion of the Company's inferred mineral resources to the measured and indicated categories; identify new inferred mineral resources; and to confirm that the near surface zones extend to a depth exceeding 1,000 m that could be potentially accessed from existing underground mining infrastructure. The Company is planning to provide an updated mineral reserve and resource statement in 2012.

In addition to its Rice Lake Project exploration programs, the Company also plans to conduct a series of high-resolution airborne geophysical surveys on its 100%-owned projects and the projects that it has under option. The Company expects to follow up on prospective geophysical anomalies with drill-testing.

QA/QC Programs

Surface drill programs are carried out under the supervision of W.W. Ferreira, B.Sc. Geology, Registered Professional Geologist. Underground drill programs are carried under the supervision of D. Ginn, B.Sc. Geology and Registered Professional Geologist. Mr. Ferreira and Mr. Ginn are Qualified Persons as defined by National Instrument 43-101 of the Canadian Securities Administrators.

Strict sampling and QA/QC protocol are followed, including the insertion of standards, blanks, and duplicates on a regular basis, plus the retention of pulps and rejects. Surface drilling core samples are sent to TSL Laboratories in Saskatoon, Saskatchewan ("TSL") for sample preparation and analysis. Analytical method is fire assay with atomic adsorption finish and gravimetric finish. Whole metallic assays are performed on samples containing visible gold. Additional QA/QC testing is provided by Accurassay Laboratories of Thunder Bay, Ontario ("Accurassay") on a routine basis.

Underground drill core samples are prepared and assayed on site in the Company's assay lab using the fire assay method with an atomic adsorption finish and gravimetric finish. Strict sampling and QA/QC protocol are followed, including the insertion of standards, blanks, and duplicates on a regular basis, plus the retention of pulps and rejects, and spot checks utilizing independent labs including TSL and Accurassay.

The core lengths reported in this press release are actual lengths as drilled and have not been adjusted for the true width of the mineralized zones.

About San Gold

San Gold is an established Canadian gold producer, explorer, and developer that owns and operates the Hinge, 007, and Rice Lake mines near Bissett, Manitoba. The Company employs more than 400 people and is committed to the highest standards of safety and environmental stewardship. The Company has over $40 million in cash and equivalents and is unhedged to the price of gold. As of August 1, 2011, San Gold had 310,966,175 common shares outstanding (327,360,186 shares fully diluted), which are traded on the Toronto Stock Exchange under the symbol "SGR" and on the OTCQX under the symbol "SGRCF".

For further information on San Gold, please visit www.sangold.ca.

Cautionary Note

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. This news release includes certain "forward-looking statements". All statements, other than statements of historical fact included in this release, including, without limitation, statements regarding forecast gold production, gold grades, recoveries, cash operating costs, potential mineralization, mineral resources, mineral reserves, exploration results, and future plans and objectives of the Company, are forward-looking statements that involve various risks and uncertainties. These forward-looking statements include, but are not limited to, statements with respect to mining and processing of mined ore, achieving projected recovery rates, anticipated production rates and mine life, operating efficiencies, costs and expenditures, changes in mineral resources and conversion of mineral resources to proven and probable mineral reserves, and other information that is based on forecasts of future operational or financial results, estimates of amounts not yet determinable and assumptions of management.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects" or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "estimates" or "intends", or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and may be "forward-looking statements." Forward-looking statements are subject to a variety of risks and uncertainties that could cause actual events or results to differ from those reflected in the forward-looking statements.

There can be no assurance that forward-looking statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's expectations include, among others, the actual results of current exploration activities, conclusions of economic evaluations and changes in project parameters as plans continue to be refined as well as future prices of precious metals, as well as those factors discussed in the section entitled "Other MD&A Requirements and Additional Disclosure and Risk Factors" in the Company's most recent quarterly Management's Analysis and Discussion ("MD&A"). Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

Exploration results that include geophysics, sampling, and drill results on wide spacings may not be indicative of the occurrence of a mineral deposit. Such results do not provide assurance that further work will establish sufficient grade, continuity, metallurgical characteristics, and economic potential to be classed as a category of mineral resource. A mineral resource that is classified as "inferred" or "indicated" has a great amount of uncertainty as to its existence and economic and legal feasibility. It cannot be assumed that any or part of an "indicated mineral resource" or "inferred mineral resource" will ever be upgraded to a higher category of resource. Investors are cautioned not to assume that all or any part of mineral deposits in these categories will ever be converted into proven and probable reserves.

Cautionary Note to United States and Other Investors Concerning Estimates of Measured, Indicated and Inferred Mineral Resources:

This press release uses the terms "Measured", "Indicated", and "Inferred" resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. "Inferred Mineral Resources" have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies. United States investors are cautioned not to assume that all or any part of Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves. United States investors are also cautioned not to assume that all or any part of a Mineral Resource is economically or legally mineable.

To view "Figure 1: Map of Rice Lake Area Identifying Near Surface Exploration Targets," please visit the following link: http://media3.marketwire.com/docs/sgc_fg1_811.jpg

To view "Figure 2: Longitudinal Section Looking North Identifying General Drill Pierce Point Locations," please visit the following link: http://media3.marketwire.com/docs/sgc_fg2_811.jpg

Table 1: Select 007 Trend Drilling Results (1)
Drill Hole
Number

Mineralized
Zone

From
(m)

To
(m)
Interval Gold Grade
(m) (ft) (g/t Au) (oz/ton)
S922-11-013 007 Main 117.0 119.1 2.1 6.9 110.1 3.22
S922-11-036 007 Main 132.3 143.8 11.5 37.8 23.2 0.68
(including) 132.3 140.0 7.7 25.3 33.0 0.96
S922-11-047 007 Main 133.2 134.1 0.9 3 185.3 5.41
(and) 144.8 148.5 3.7 12 11.4 0.33
S922-11-049 007 Main 132.6 136.8 4.3 14 44.2 1.29
S915-11-011 007 East Ext 42.0 55.2 13.2 43.4 11.7 0.34
(including) 49.5 55.2 5.7 18.7 24.5 0.72
S915-11-024 007 East Ext 50.0 52.9 3.0 9.8 60.7 1.77
S915-11-048 007 East Ext 66.8 72.1 5.3 17.25 80.4 2.35
S915-11-050 007 East Ext 51.9 57.0 5.1 16.7 40.5 1.18
(including) 55.6 57.0 1.4 4.5 144.0 4.21
S922-11-027 007 East Ext 128.9 133.9 5.0 16.5 48.7 1.42
S915-11-033 007 Far East 128.4 142.1 13.7 44.9 15.4 0.45
(including) 128.4 130.3 1.9 6.1 72.7 2.12
S915-11-062 007 Far East 111.6 121.9 10.3 33.7 17.0 0.50
(including) 115.0 118.2 3.2 10.6 42.2 1.23
CD-11-13 007 Far East 439.3 441.8 2.6 8.5 56.5 1.65

(1) Due to the exploratory nature of this exploration program and the variable orientations of the high-grade mineralized zones, the intersections presented herein may not necessarily represent the true width of mineralization.
Table 2: Select L10 Zone Drilling Results (1)
Drill Hole
Number
Mineralized
Zone
From
(m)
To
(m)
Interval Gold Grade
(m) (ft) (g/t Au) (oz/ton)
H933-11-015 L10 134.5 136.0 1.5 4.9 37.9 1.10
H933-11-016 L10 131.4 135.3 3.9 12.9 8.3 0.24
H933-11-018 L10 125.6 130.6 5.0 16.4 29.1 0.85
H955-11-099 L10 411.2 414.4 3.2 10.6 10.8 0.31
H955-11-114 L10 385.6 390.5 5.0 16.3 27.0 0.78
H955-11-117 L10 367.7 369.6 1.9 6.1 16.4 0.47
H955-11-129 L10 368.9 371.3 2.4 7.9 14.2 0.41

(1) Due to the exploratory nature of this exploration program and the variable orientations of the high-grade mineralized zones, the intersections presented herein may not necessarily represent the true width of mineralization.
Table 3: Select Cohiba Zone Drilling Results (1)
Drill Hole
Number
Mineralized
Zone
From
(m)
To
(m)
Interval Gold Grade
(m) (ft) (g/t Au) (oz/ton)
C990-11-005 Cohiba 79.7 83.9 4.2 13.8 15.0 0.44
C990-11-013 Cohiba 77.2 85.3 8.2 26.8 12.0 0.35
C990-11-040 Cohiba 88.1 94.5 6.4 20.9 10.9 0.32
C990-11-045 Cohiba 93.1 105.9 12.8 42.0 3.6 0.11
C990-11-050 Cohiba 125.6 131.5 5.9 19.3 17.4 0.51
C990-11-052 Cohiba 82.6 84.7 2.1 6.8 105.8 3.09
C990-11-055 Cohiba 126.5 132.5 6.0 19.7 8.2 0.24

(1) Due to the exploratory nature of this exploration program and the variable orientations of the high-grade mineralized zones, the intersections presented herein may not necessarily represent the true width of mineralization.
Table 4: Select L13 Zone Drilling Results (1)
Drill Hole
Number

Mineralized
Zone

From
(m)

To
(m)
Interval Gold Grade
(m) (ft) (g/t Au) (oz/ton)
KL-10-019 L13 259.5 261.2 1.7 5.5 6.3 0.18
(and) 297.0 299.5 2.5 8.2 17.9 0.52
KL-11-026 L13 330.6 332.6 2.0 6.7 127.2 3.72
KL-11-032 L13 343.2 344.7 1.5 5.0 30.4 0.89
KL-11-034 L13 343.0 343.6 0.6 2.0 193.5 5.65
T923-11-008 L13 246.6 249.1 2.5 8.2 27.4 0.80
(and) 348.1 351.2 3.1 10.3 11.8 0.34

(1) Due to the exploratory nature of this exploration program and the variable orientations of the high-grade mineralized zones, the intersections presented herein may not necessarily represent the true width of mineralization.

The TSX and the OTCQX exchanges have not reviewed and do not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • San Gold Corporation
    Tim Friesen
    Director, Communications
    +1 (204) 772-9149 ext. 202

    San Gold Corporation
    Jeremy Link
    Vice-President, Corporate Development
    +1 (416) 214-0024 ext. 201
    www.sangold.ca