San Gold Updates Mineral Resource and Mineral Reserve Estimate
WINNIPEG, MANITOBA -- (Marketwire) -- 06/14/12 -- San Gold Corporation (TSX: SGR)(OTCQX: SGRCF) today announced an updated mineral resource and mineral reserve estimate for the Company's 100% owned Rice Lake Project located in Bissett, approximately 235 kilometres northeast of Winnipeg, Manitoba, Canada. The Rice Lake Project has a permitted, modern gold mill currently processing ore at a capacity of 2,500 tons per day, as well as modern surface infrastructure, including a licensed tailings management facility and is connected to the Manitoba power grid system.
Highlights
-- 93% increase in inferred mineral resources to 3.5 million ounces of
gold.
-- Drilled approximately 350,000 metres in 925 holes in 2011.
-- To date, exploration costs have been approximately $26 per ounce of
resource discovered.
-- Current measured and indicated resources will allow mid-term production
planning.
-- Measured and indicated resources will be upgraded to proven and probable
reserves as detailed mid-term to long-term mine plans are developed.
-- Exploration success on Shoreline Basalt Unit continues.
-- All deposits remain open along strike and at depth.
Mineral Resource and Mineral Reserve Summary, as of March 31, 2012
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Grade Contained
Short Tons (g/tonne) Ounces
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Mineral Measured + Indicated
Resources (Inclusive of Reserves) 2,395,000 8.05 562,000
Inferred 15,402,000 7.78 3,497,000
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Mineral
Reserves Proven and Probable 1,191,000 6.03 209,000
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"The sheer scale of the increase in inferred mineral resources announced today for our Rice Lake Project confirms the immense value being realized by our aggressive approach to exploration. In addition to greatly improving the understanding of the region's geologic structure, this drilling continues to prove invaluable for developing and refining our current mine plans. The knowledge accumulated during the past few years of mining has also helped us construct a mineral reserve profile that is congruent with our operational plans and marks a significant step forward for the Company. We've achieved our stated goal of significantly increasing our inferred mineral resources, which are high-quality resources as they are readily accessible from existing infrastructure. This will allow us to produce mid-term to long-term mine plans over the next year," said San Gold President and CEO, George Pirie.
The following table provides a detailed summary of the Company's mineral resources and mineral reserves, as of March 31, 2012:
San Gold Rice Lake Project Mineral Resources and Mineral Reserves, as of March 31, 2012
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Mineral Resources
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Tons Grade Contained
oz/ton (g/tonne) ounces
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Rice Lake Mine
Measured Resource 325,514 0.21 (7.24) 68,733
Indicated Resource 467,581 0.28 (9.49) 129,367
------------------------------- ---------- ---------- ----------- ----------
Measured and Indicated 793,095 0.25 (8.56) 198,100
Inferred Resource 1,690,997 0.28 (9.55) 471,091
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Hinge District
Measured Resource 91,377 0.19 (6.51) 17,362
Indicated Resource 73,630 0.21 (7.09) 15,232
------------------------------- ---------- ---------- ----------- ----------
Measured and Indicated 165,007 0.20 (6.77) 32,594
Inferred Resource 3,362,500 0.18 (6.16) 604,604
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007 Deposit
Measured Resource 154,090 0.34 (11.74) 52,772
Indicated Resource 367,900 0.22 (7.63) 81,882
------------------------------- ---------- ---------- ----------- ----------
Measured and Indicated 521,990 0.26 (8.84) 134,654
Inferred Resource 5,707,280 0.26 (8.91) 1,483,893
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Hanging Wall Deposits (Cohiba,
Cartwright L13)
Measured Resource 20,622 0.17 (5.86) 3,526
Indicated Resource 506,826 0.21 (7.20) 106,410
------------------------------- ---------- ---------- ----------- ----------
Measured and Indicated 527,448 0.21 (7.15) 109,936
Inferred Resource 3,508,880 0.19 (6.64) 679,722
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Normandy Shear (SG-1, SG-2, SG-
3)
Measured Resource - - - -
Indicated Resource 387,300 0.22 (7.70) 86,935
------------------------------- ---------- ---------- ----------- ----------
Measured and Indicated 387,300 0.22 (7.70) 86,935
Inferred Resource 1,132,100 0.23 (7.79) 257,236
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Total Project
Measured and Indicated 2,395,000 0.23 (8.05) 562,000
Inferred 15,402,000 0.23 (7.78) 3,497,000
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Mineral Reserves
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Tons Grade Contained
oz/ton (g/tonne) ounces
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Rice Lake Mine
Proven Reserves 82,358 0.20 (6.77) 16,261
Probable Reserves 114,173 0.15 (5.16) 17,174
------------------------------- ---------- ---------- ----------- ----------
Proven and Probable 196,531 0.17 (5.83) 33,435
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Hinge District
Proven Reserves 117,319 0.15 (5.07) 17,362
Probable Reserves 99,469 0.15 (5.25) 15,232
------------------------------- ---------- ---------- ----------- ----------
Proven and Probable 216,788 0.15 (5.15) 32,594
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007 Deposit
Proven Reserves 216,183 0.24 (8.37) 52,772
Probable Reserves 426,005 0.17 (5.93) 73,738
------------------------------- ---------- ---------- ----------- ----------
Proven and Probable 642,188 0.20 (6.75) 126,510
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Hanging Wall Deposits (Cohiba,
Cartwright L13)
Proven Reserves 23,507 0.15 (5.14) 3,526
Probable Reserves 111,959 0.12 (4.10) 13,388
------------------------------- ---------- ---------- ----------- ----------
Proven and Probable 135,466 0.12 (4.28) 16,914
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Normandy Shear (SG-1, SG-2, SG-
3)
Proven Reserves - - - -
Probable Reserves - - - -
------------------------------- ---------- ---------- ----------- ----------
Proven and Probable - - - -
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Total Project
Proven and Probable 1,191,000 0.18 (6.03) 209,000
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NOTES TO MINERAL RESOURCE AND MINERAL RESERVE ESTIMATE TABLE:
-- Mineral resource and mineral reserve estimate has been made in
accordance with the Standards of the Canadian Institute of Mining,
Metallurgy and Petroleum and National Instrument 43-101.
-- Tonnage and in situ ounce estimates have been rounded to the nearest
thousand.
-- Proven and probable mineral reserves are included in the measured and
indicated mineral resources.
-- The mineral reserve estimate is based on a 2.7 metre minimum mining
width, a tonnage factor of 11.4 cubic feet per ton (SG 2.7 to 2.8), a
gold price of US$1,260 per ounce (100% exchange) and a 93% mill
recovery.
-- A 5.14 g/tonne (0.15 ounce/ton) cut-off grade has been applied to
deposits accessed from the Rice Lake mine shaft, while a 3.09 g/tonne
(0.09 ounce/ton) cut-off grade has been applied to deposits accessed via
the Hinge/007 ramp.
-- Mineral resources were estimated with a block model utilizing inverse
distance squared methodology on a block size of 3 feet x 3 feet x 3
feet.
-- Assays were capped at 102.9 g/tonne (3.0 ounces/ton) for drill holes and
34.3 g/tonne (1.0 ounce per ton) for chip samples.
-- Inferred mineral resources are not in the current mine plan and
therefore do not have demonstrated economic viability.
-- As per section 4.2(1) J (ii) of National Instrument 43-101, the change
in mineral reserves for the Rice Lake Project does not constitute a
material change in the affairs of the Company. Refer to the National
Instrument 43-101 Technical Report filed on SEDAR, dated October, 2010,
by GeoEx Limited.
-- The mineral resource and mineral reserve estimate as of March 31, 2012
was prepared under the supervision of Dale Ginn, P.Geo, a Qualified
Person within the meaning of National Instrument 43-101.
-- The data in this table was prepared by the Company's Rice Lake Project
geology and engineering teams led by: Chief Geologist, Doug Berthelsen
(P.Geo); Chief Engineer, Joe Hunter (P.Eng); and Resource Geologist,
Shawn Horte.
-- The company is a producing issuer as per National Instrument 43-101
section 5.3.
MINERAL RESOURCE AND RESERVE ESTIMATE
Historically, resources at the Rice Lake Project were estimated using the polygonal method. More recently, with the use of Amine® software, the measured and indicated mineral resource estimate is derived by creating a block model.
The construction of the block model begins by creating 3D wireframes or meshes around mineralization as determined from both underground and surface drilling, underground mapping and sampling, and/or surface mapping and sampling. Once constructed, the drill hole and chip assays enveloped in the meshes are composited by the software and used to interpolate grade blocks. The resource block model was estimated utilizing inverse distance squared methodology on a block size of 3 feet x 3 feet x 3 feet.
The mineral resources at the Rice Lake Project are classified as measured, indicated, and inferred categories based on the following criteria:
1) Measured Mineral Resource:
A resource block can be classified as measured if its vertical and lateral extents are bounded by mine development including sills, lifts, and benches that has been sampled; or the block has been projected to a maximum of one mine level (approximately 50 feet) from mine development and there are diamond drill hole intersections to indicate the continuity of the structure below or above the development.
2) Indicated Mineral Resource:
A resource block can be classified as indicated if it has been projected to a maximum of one mine level (50 feet) from development if there is no drilling beyond to indicate its continuity, or the block has been sampled by tightly spaced diamond drill holes on structures that have either been previously mined or mapped and sampled at surface. A closely spaced diamond drill program is generally less than 100 feet between drill hole intersections.
3) Inferred Mineral Resource:
Inferred mineral resources are determined using the polygonal method from widely spaced diamond drill holes (greater than 100 feet between intersections) whose structure can be extrapolated from previous production history and relevant geologic data.
The Company's mineral reserve estimate is developed by incorporating measured and indicated mineral resources on which detailed near-term mine planning has been applied to date for the Rice Lake Project. Each mining area has been analyzed and a distinct extraction ratio and dilution factor was calculated using a minimum mining width of 2.7 metres with a mill recovery of 93%. Mineral resources which can be shown to be economically extracted at a gold price of US$1,260 per ounce are assigned to proven and probable mineral reserve status based on geological confidence and professional opinion within the near-term mining plan. As the mid-term to long-term mining plan is developed, further measured and indicated mineral resources are anticipated to convert to mineral reserves.
2011 Exploration Program
During 2011, the Company undertook its largest ever exploration program, which included drilling of approximately 350,000 metres in 925 holes. The Company had up to 14 drill rigs operating in 2011, with exploration activities focused on the San Antonio Mining Unit, the Shoreline Basalt Unit, an intermediate volcanic rock unit north of the Shoreline Basalt Unit, and the Normandy Creek Shear Zone, in addition to other exploration activities.
The San Antonio Mining Unit (or the Historic Mining Unit) is a gold bearing, moderately dipping, mafic sub-volcanic rock unit. Gold mineralization in the San Antonio Mining Unit is associated with gold-bearing quartz veins and stockwork related to shear zones and tensional fractures near the hanging wall contact. The San Antonio Mining Unit was originally discovered in 1911 and intermittent mining operations since 1927 have produced more than 1.5 million ounces of gold. Mineralization in the San Antonio Mining Unit has been traced to a depth of 1,500 metres.
In 2011, exploration activities in the San Antonio Mining Unit focused on underground exploration and definition drilling of the ore envelope ahead of mining crews for near and mid-term production planning purposes in proximity to the 26 and 28 levels. In 2011, the Company drilled 59,523 metres in the San Antonio Mining Unit.
The Shoreline Basalt Unit is a steeply dipping, mafic volcanic rock unit that is geologically similar to the San Antonio Mining Unit. In late 2010, the Company determined that a system of stacked lenses containing several significant, near-surface, high-grade gold-bearing zones, including the Company's 007 and L10 deposits, was associated with the Shoreline Basalt Unit. Gold mineralization is typically associated with tabular quartz veining along, or in close proximity to, the north hanging wall contact of the Shoreline Basalt Unit, that strike east-west, and dip steeply to the north.
Drilling from both surface and underground locations over the past two years has demonstrated that the Shoreline Basalt Unit has a strike length of more than two kilometres, a plunge that has been traced to more than 1,400 metres from surface, and that it remains open along strike and to depth. Recent geophysical surveys and other geologic evidence suggest that the Shoreline Basalt Unit may extend for at least another three kilometres east of the 007 deposit towards the Company's SG-1 mine near the Normandy Creek Shear Zone.
Exploration activities in 2011 along the Shoreline Basalt Unit consisted of both surface exploration drilling and underground definition and exploration drilling to locate the down-dip extensions of the near-surface Shoreline Basalt Unit deposits and to determine the degree of continuity between them. Drilling repeatedly intersected high-grade gold mineralization over mineable widths along the Shoreline Basalt Unit in close proximity to the L10 and 007 deposits. The Company is very encouraged by the results of the Shoreline Basalt Unit drilling program as it continues to demonstrate the potential for the expansion of existing mineralized zones and the discovery of new zones along the Shoreline Basalt Unit both east and west and at depth.
The Company expects to continue its aggressive drilling program along the Shoreline Basalt Unit for the next several years.
The Company's L13, Hinge and Cohiba deposits are near-surface, epithermal gold deposits contained within an intermediate volcanic rock unit located to the north of the Shoreline Basalt Unit. To-date, the epithermal deposits delineated along this trend typically occur as tabular quartz veining within a northeast striking shear zone and have individual drill-indicated strike lengths between 100 and 150 metres, vary in width from one to 10 metres, and have been located at a depth of up to 400 metres below surface.
During 2011, drilling activities within this intermediate volcanic rock unit have focused primarily on underground definition drilling of the L13 and Hinge deposits, and exploration drilling in close proximity to the Hinge deposit.
Late in 2011, a new Hinge-like deposit (L8) was discovered immediately to the northwest of the original Hinge deposit. It has been traced vertically from 300 to 700 metres below surface and is in close proximity to both the Hinge deposit and Rice Lake mine workings (at 16 Level).
The Company continues to be encouraged by exploration results from within this intermediate volcanic rock unit and considers this southwest - northeast corridor to be very prospective for the discovery of new epithermal gold deposits.
The Normandy Creek Shear Zone is a long splay fault of the Wanipigow Fault, a large east-west regional fault that forms the northern border of the Rice Lake greenstone belt that is associated with the Wanipigow Plutonic Complex to the east of the Rice Lake Project. This zone of intense ductile deformation is in close proximity to the northwestern edge of the Ross River Pluton. Gold mineralization along the Normandy Creek Shear Zone is typically strata-bound and tabular.
The 100%-owned SG-1 mine is located approximately 4.5 kilometres northeast of the Rice Lake mill and has a dedicated decline. Near surface production at the SG-1 mine commenced in 2006, however, the mine was placed on care-and-maintenance in October 2008 when the Company reallocated mining and exploration resources to develop the higher grade and lower cost Hinge deposit. Historically, gold mineralization in the SG-1 mine and the SG-2 and SG-3 deposits has been interpreted to be associated with the Normandy Creek Shear Zone. The drill-indicated mineralized envelope of the SG-1 mine extends from surface to a depth of approximately 200 metres.
Recent drill results, combined with other geological evidence and geophysical interpretation, suggest that the Company may have found a new horizon for gold mineralization along the Normandy Creek Shear Zone that may be associated with an eastern limb of the Shoreline Basalt Unit.
Outlook
The Company continues its aggressive drill program at the Rice Lake Project and remains on track to complete 250,000 metres of surface and underground diamond drilling in 2012. A large portion of the 2012 program will be targeted toward converting mineral resources to mineral reserves. The Company will also continue to extend its overall mineral inventory. The Company remains extremely excited about the potential of the currently known ore bodies as none have yet been tested below 1,500 metres depth, which is approximately half the vertical extent of similar known Archean greenstone deposits.
The Shoreline Basalt Unit remains a top exploration priority as exploration drilling along the unit represents approximately half of the Company's current drill program. The Company will also continue testing prospective targets along the Normandy Creek Shear Zone and examining the potential of the Company's recently acquired local property package which is within an economic radius of the Company's expanded processing facility.
For further information on the Company, please visit www.sangold.ca.
Cautionary Note
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.
Drill core obtained as part of the surface drill program was split, with half sent to TSL Laboratories in Saskatoon, SK and fire assayed followed by an Atomic Absorption and gravimetric finish. Whole metallic assays were performed on samples containing visible gold. Underground drill core samples were assayed on site in the Company's assay laboratory using the fire assay method with an Atomic Absorption and gravimetric finish. The Company's quality control and assurance program includes the insertion of standards, the retention of pulps and rejects, and spot checks utilizing independent laboratories including TSL Laboratories in Saskatoon, SK and Accurassay Laboratories of Thunder Bay, ON.
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.
No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.
Contacts:
San Gold Corporation
Dale Ginn, P.Geo
Qualified Person and Executive Vice Chairman
Toll Free: 1 (855) 585-4653
San Gold Corporation
George Pirie
President and CEO
Toll Free: 1 (855) 585-4653
info1@sangold.ca
www.sangold.ca