High grade discovery at San Gold’s Rice Lake mine

San Gold (SGR-V) has discovered some new high grade zones at its Rice Lake mine in southeastern Manitoba.

The new zones run parallel and to the southeast or to the footwall side of the “98” vein above the 28th level in the mine.

San Gold CEO Dale Glinn says the company has been focused on going outward and upward rather than slowly downward in search of new high grade areas at Rice Lake, and now the company has done just that.

“This effort is now resulting in new high grade discoveries in open extensions to the host Rice Lake mine unit,” Glinn said in a statement.

Drill hole 28-09-21 cut 12.2 metres grading 37 grams per tonne, extending high grade gold mineralization extensively to the east into undeveloped and unexplored territory of the mine. This intercept included 3.6 metres grading 122 grams gold per tonne and also contained visible gold.

San Gold has also taken its best chip sampled face ever at Rice Lake. Taken just above the 28th level, the sample yielded 909 grams gold over a length of 3 metres.

The company has been working on improving access and infrastructure to the 98 vein over the last two years for mining and exploration. This area of the mine will make up about one third of San Gold’s production for 2010 and is expected to help improve production grade. Development of the 98 vein now extends 142 metres in length and is open above where drilling from the 26th level is searching for extensions.

The 28th level is at about 1,370 metres depth while the 26th level is at about 1,280 metres.

Rice Lake has measured and indicated resources of 964,100 tons grading 0.29 oz. per ton. Inferred resources total 1,879,500 tons grading 0.29 ounces of gold per ton.

The Rice Lake project includes two mines — the deep underground Rice Lake mine and the nearby Hinge deposit, which is closer to surface and accessed via ramp. Ore from both mines is used as feed for the 1,250-ton per day Rice Lake mill though 2009 production averaged around 900 tons per day. San Gold aims to increase production to 1,900 tons per day by the end of 2011.

The company reported a net loss of $4.98 million for the third quarter of 2009. Revenue was $8.8 million on sales of 8,398 oz. gold, up from 2,276 oz. gold for the same period in 2008. Fourth quarter results have not yet been released.