Tri-Gold Resources Corp.

Tri-Gold Resources Corp.

October 20, 2008 17:40 ET

Tri-Gold Resources Corp.: Chairman's Report to Shareholders

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 20, 2008) - Tri-Gold Resources Corp. (TSX VENTURE:TAL) -

To All Shareholders,


Although Dickens may have written this over 150 years ago and about a time in history when the real human condition in his world was difficult to determine, there is no mistaking where we, in today's world, fit in the world economic cycle - "the worst of times" - EVER!

I won't attempt to beguile you with rhetoric on the realities of the meltdown we have all witnessed in the world financial markets in general, and the junior resource markets in particular. You are all too aware of its magnitude and no one, regardless of wealth, position, or brains has escaped its devastating effect. You only need to look at the financial markets over the past three weeks to get some idea of how volatile and disastrous this financial tsunami has been to corporations and shareholders alike, both large and small.

But before we start climbing out on the proverbial 'window ledge', let's examine this destruction of value and in analysing its origin, the extent of its destruction and its possible aftermath, see if we can learn and, more importantly, gain from this unprecedented event.

To that end, and with their approval, I reprint here a "Report to Shareholders" released October 9, 2008 by a related company, that sums up very well the present economic conditions we all find ourselves in, and which, I believe, provides a road forward for all those companies that have survived this financial tsunami. You've heard this analogy before, but given the present market condition, it is well worth repeating.

REPRINT: "This financial tsunami had its creation in August 2007 when the first sign of trouble in the subprime mortgage sector raised its ugly head. Like all tsunamis it rolled onward picking up momentum and growth wherein it inevitably began to envelope other financial institutions and financial instruments throughout the industrialised world. Unfortunately, and with subsequent dire consequences, very few people at the time recognized it as a tsunami, but rather just a financial blip relegated to one small area of the U.S. economy. Certainly a bad call by everyone, but especially the banking fraternity and the elected representatives in Washington, D.C.

And while this tsunami continued to engulf the financial markets, we in the resource industry, while aware of the collapse of these other markets all around us, completely ignored the warnings of pending disaster and thought ourselves exempt from any likewise calamity as commodity prices remained close to their all time highs so we had no need for concern, and why should we; China, India, in fact the whole world, still needed our copper, nickel, zinc, etc., and so let's not be overly worried, and heck, gold was always the 'go-to commodity' whenever financial instruments and markets hit the skids, so those of us in the Au game are insulated anyway.

Boy, were we wrong!

You see, as in a real tsunami, nothing is spared, everything is vulnerable, and everything and everyone is affected. Tsunamis are by definition indiscriminate. They rollover everything in their path and are in no way selective or play any favourites.

And if you take the time to analyse the aftermath of any tsunami, you will see that for all tsunamis there are only two types of survivors: 1) the lucky ones; those that are thrown into a tree or equivalent and hang on for dear life until the tsunami is over; and 2) the person fortunate to be on a structure that is unaffected by the power of the tsunami, like a hotel or similar building.

And when the tsunami is over and the waters have receded and the lucky one comes down from his tree and the luckier one comes off his balcony, they can do one of two things: 1) go forth and try to help the unfortunate that are barely surviving, or 2) they can seek out the dead and steal their 'gold watches'. (Certainly, the second option is exceedingly insensitive to a human tragedy but one is reminded that this is only an analogy).

The reality is the aftermath of this tsunami has left many, many juniors, and even mid-tier resource companies without the necessary funds to continue their exploration and/or development projects and therefore must be considered to be the severely damaged casualties of this tsunami and, as with all severely injured, may not make it much longer as viable resource companies." END

Tri-Gold on the other hand, has a sufficient treasury of non-flow-through cash to allow it to hold on and wait until things settle, while at the same time investigating any 'fire sale' of assets that become available in the resource market, and we are poised and prepared to do exactly that.

The other reality of today's investment climate, however, is that the depth of this financial crisis has made it virtually impossible for any junior resource company to raise capital and therefore, this certainty demands that Tri-Gold be very careful in its selection of a new exploration project. For although we have sufficient monies to fund the initial steps of an exploration project, any additional monies may be very difficult to come by and therefore any project must be selected on the basis of three important features: 1) Location: free of political and financial risk; 2) Climate: have a 12 month exploration period; 3) Level of Exploration: must be drill-ready.

It is also an actuality that Tri-Gold, with approximately 50 million shares outstanding and a share price in the pennies, must preserve cash at all costs, and insure that all funds are utilized frugally and wisely. However, if any additional monies are subsequently needed, a share consolidation would be required, as a financing would be an impossibility at our current share price and given the present market conditions. This is an option that, regardless of its unpleasantness to all shareholders, needs to be considered in these difficult times, and we are definitely in difficult times. Obviously, we would hope to avoid this option, but the truth is it will be extremely hard to avoid. One is also reminded that management has a significant ownership in the Company and would be equally affected by such a measure.

Presently, we are working our way through the investigation of exploration projects that have been brought to us by companies incapable of financing their on-going exploration. Sadly, some of these companies may, in fact, not exist this time next year. To exacerbate the problem, it does not look like the regular financing facilities through brokerage channels will become available to juniors for quite some time.

So in as much as our share price has been decimated like every other listed company, I reiterate: Tri-Gold is in a position of remaining a viable operating entity, able to entertain a purchase outright, or joint venture projects that would never have presented themselves without this tsunami of a world-wide financial crisis having happened, and we intend on taking full advantage of this unprecedented situation and involving ourselves in a project that when this market turns again to resource companies, Tri-Gold will be one of the first juniors to be recognized by the investment community.

Yours truly,

On Behalf of the Board of Directors of Tri-Gold Resources Corp.

T. Barry Coughlan, Chairman & CEO

Certain matters discussed in this press release may contain forward-looking statements. Investors are cautioned that all statements, other than statement of historical fact, involve risks and uncertainties, including but not limited to: exploration and mining risks and financing risks. There can be no assurance that such statement will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Investors are encouraged to review Tri-Gold's fillings on SEDAR at

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

Contact Information

  • Tri-Gold Resources Corp.
    T. Barry Coughlan
    Chairman & CEO
    (604) 683-3331
    (604) 685-8677 (FAX)