Incredibly, the Hinge Zone, located on the boundary of San Gold’s original land package, is still largely unexplored. The zone, which now lies within San Gold’s fully permitted mine lease, is open along strike to both the northeast and southwest, as well as to depth.
       The newest discoveries are just the most recent in a series resulting from a major drilling effort into the Hinge Zone, which is located just one mile northeast of the Rice Lake Mine and within view of the San Gold #1 haulage road and power line. San Gold began surface exploration drilling within the zone in 2008 and discovered multiple new gold-bearing zones containing quartz and carbonate gold mineralized veins parallel to each other, dipping to the north.
       Decline development into the zone began a drift at the 350 foot level below surface in early April in preparation for bulk sampling. Previous face sampling yielded grades averaging 1.03 opt (86 gpt). Level development continues to both the east and west as well as in numerous vein offshoots. At the same time, incline and decline development is continuing to access zones at levels above and below the 350 foot level. The east and west zones at the 350 foot level are separated by about 100 feet and have numerous vein offshoots. The veining dips to the northwest between 50 and 80 degrees.
       Throughout the spring, drill assay results continued to confirm and expand the high grade gold discovery. All of the drill hole intersections are within 350 meters (1,200 feet) of surface. Similar gold bearing zones have been intersected from holes drilled from the nearby Rice Lake Mine at a depth of about 5,500 feet, which speaks well for the probability that the Hinge Zone could extend to great depth.
       The company currently is operating four surface drills in the vicinity of the Rice Lake Mine, three of them positioned on the Hinge Zone. In addition, three underground drills are probing for deep veins in advance of the 1.5-mile-deep Rice Lake Mine ramp. Meanwhile, San Gold is mining a 7,500 ton Hinge Zone bulk sample in the adjacent Rice Lake Mill. The bulk results will further define the economics and mineability of the Hinge deposits.

       San Gold owns or controls nearly 35,000 acres of prime exploration ground in southeast Manitoba’s Rice Lake district. The company’s properties lie in the Uchi-Sub-province on Canada’s Lower Superior Shield – an area that hosts four major greenstone belts with a history of substantial gold production. More than 41 million ounces of gold have been discovered to date in the region – including Goldcorp’s Red Lake Mine (10+ million ounces of gold).
       All of the major gold occurrences in the Rice Lake area occur as quartz veins or quartz vein systems. San Gold’s land position extends over 20 km along the Rice Lake mine horizon.
       Gold was first discovered at Rice Lake in 1911. The Rice Lake Mine opened in 1932, producing 1.4 million ounces of gold and closed in 1968. The mine was upgraded and reopened in the 1990s, but closed again in 2001 when gold prices fell.
       San Gold purchased the Rice Lake Gold Mine from Harmony In 2004 for a virtual pittance – $7.5 million, a cost discounted by the subsequent sale of prior tax losses for $12 million. In reality, San Gold was paid $5 million to take the mine off Harmony’s hands.
       San Gold then invested $80 million along the Rice Lake Belt to re-open and redevelop the Rice Lake mine, re-activate the Rice Lake mill, build the nearby San Gold #1 mine, and successfully develop a million new ounces of gold resources. Prescient company geologists then decided to drill a few exploratory holes and discovered the high-grade Hinge zone and new gold zones in deep in the Rice Lake Mine.
       Deep underground drilling this spring reached below the 5400-foot level in San Gold’s Rice Lake Mine and has confirmed the down-dip extension and high grade character of the mine’s “96” vein, which remains open at depth. The drilling also led to the discovery of a new high grade vein system in the hanging wall and to the north of the ‘96” vein. This new vein system is about 100 feet north of the “96” vein and is open in all directions. Frequently, significant widths and high grades were encountered. In one drill hole, gold mineralization widths reached 28.1 meters and graded at 11.7 g/t (0.34 opt), including high grade intersections of the “96” vein at 1.6 meters (5.3 feet) grading at 34.2 g/t (1.00 opt).

       San Gold’s Rice Lake Project has a total measured, indicated and inferred resource of 1.6 million ounces of gold – more than enough to keep the mine operating for over 15 years. San Gold expects a pending new resource calculation on the Hinge zone will add significant ounces to its resource total and, because of its high grade, substantially reduce production costs.
       According to the company’s current mine plan, 50,000 ounces of gold will be produced annually starting this year at an all-in cost of $360 an ounce, increasing to an annual production rate of 250,000 ounces by 2012, at a cost of approximately $290 an ounce. Production at the Rice Lake 1,250 tpd capacity mill will ramp up to 1800 tpd by 2011.
       “We are a rapidly emerging and, as yet, unrecognized gold producer – our official gold resource count has nearly tripled and, with our recent high-grade underground discoveries and spectacular near surface Hinge zone, we soon will be adding even more gold ounces to our asset base,” says Ginn.
       San Gold has an abundance of assets: the company is well financed with $12 million in the bank; has identified multiple gold deposits in close proximity to its mill; and has over $300 million in infrastructure. Then there is San Gold’s spectacular exploration success.
       “It is the consistency of the drill results, and the underground sampling, that most impress... as almost all holes have returned not only significant widths but high grades,” comments a recent Dundee Capital Markets bulletin. “Zones like Hinge #4 are rare and offer [San Gold] the opportunity to develop a low-cost, high-margin operation. We suspect that the Hinge will continue to attract the attention of larger companies.”