San Gold rises sharply on drill review

A review of drilling results at San Gold’s (SGR-T) Rice Lake mining complex in Manitoba did the trick, as the release seemed to remind the market of the projects prospectivity.

In Toronto on Dec. 20 the company’s shares shot up 40% or 55¢ to $1.93 on 4.7 million shares traded.

The key results came out of 215 drill holes from the 007 zone. The company set out to extend the 200 metre strike length and test the body of the zone at depth, but in the process it discovered the Emperor Zone, which sits roughly 300 metres east of 007 and then it found the 007 East zone and the 007 Far East zone.

The company interrupts each of the four zones as part of a continuous stretch of mineralization with a strike length of 500 metres and says the deposit will be able to satisfy half of its planned mill capacity

Highlight intercepts included: 23.2 grams per tonne grams gold over 11.5 metres; 110.1 grams gold over 2.1 metres; 44.2 grams gold over 4.3 metres; and 63 grams gold over 2.8 metres.

“These results provide a detailed account of one of the richest gold deposits ever discovered in Manitoba,” George Pirie, San Gold’s president and chief executive said in a statement. “It’s extremely impressive that a gold deposit that wasn’t even known about two years ago will be contributing 50% of our mill feed well into the foreseeable future.”

By October of this year San Gold had finished 300,000 metres of drilling at Rice Lake.

For next year it says it will follow 007 westward toward the L10 Zone, and eastward towards the SG-I Zone. The company says the area between the 007 and SG-I hasn’t been sufficiently tested yet.

Rice Lake is made up of three high-grade underground mining operations with a central milling facility. The project is located 100-km west of Red Lake.

For the first three quarters of 2011 the company produced 54,000 oz. of gold at total cash costs of $813 per oz. Its plan is to be producing 120,000 oz. of gold by 2013 with cash costs coming down to the $650 per oz. range.

To achieve those stronger metrics the company is in the process of modernizing the Rice Lake mine, expanding its tailings area and increasing its mechanized mining fleet.