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San Gold has emerged
from an exploration company to a producer with two gold mines in the past two years
San Gold Corporation
P.O. Box 1000
Bissett MB Canada R0E 0J0
Dale Ginn, B.Sc., P.Geol,
President and Director
Interview conducted by:
Lynn Fosse, Senior Editor
Published December 21, 2006
Dale Ginn, B.Sc., P.Geol., President and Director
Geologist with 18 years of geology and management in gold and base metal mines in North
America including Westmin, HBM&S, GoldCorp and Granges. More recently he was the
General Manager of Harmony Gold (Canada) Inc.
CEOCFO: Mr. Ginn, how has San Gold changed under your
Mr. Ginn: San Gold has emerged from an
exploration company to a producer with two gold mines in the past two years.
Will you tell us the specifics of what is happening?
Mr. Ginn: What is happening is that in
early 2004, San Gold purchased a fully functional goldmine from Harmony Gold Mining
Company Limited (NYSE: HMY) of South Africa and it was located in Manitoba Canada. At that
time, prices were on the low side and so the purchase was made relatively cheaply. Since
that time San Gold has added a new mine to that fold, immediately adjacent to the existing
mine and has discovered an additional two gold deposits. In addition, the market
capitalization of the company has gone from about $10 million Canadian to over $200
Will you tell us about the Manitoba area and why it is a good place to be?
Mr. Ginn: It is located in eastern
Manitoba in the Canadian Shield, which is host to targets like Goldcorps Red Lake
Gold Mines (Goldcorp Inc. GG: NYSE; G: TSX) and many famous gold mines in Ontario
and Quebec. It is very perspective in that we control a whole Gold Belt, which has a
length of about 30 miles. We are the only operation within that Gold Belt on the Manitoba
site, which means that anyone else who finds anything in that vicinity will probably come
to us in order to develop and exploit it.
Will you tell us what is happening in terms of production; where you are in the mine
running and what is ahead for the next couple of years.
Mr. Ginn: Basically, we have just
begun production. We have been building the mines for the last year. We are just beginning
production and we are about half way to an ultimate rate of about 1,000 tons per day or
about 250 ounces of gold per day. Therefore, we are just under half way towards that goal.
We will have our grand opening/first official gold tour ceremony in about mid August of
this year (2006). We are basically on the verge of becoming Canadas and probably North
Americas newest gold producer.
What does San Gold know about newer techniques in mining and what gives you an edge in
what you are doing?
Mr. Ginn: Our edge is that we are a
small company that is very experienced in this kind of mining. We are not driven by large
volumes, we are a classic Canadian themed miners. We go after low volumes of rock with
high contents of gold. We probably have the most stable politics in the world, including
land tenure. We have all of our permits in place and our energy costs, which trouble a lot
of companies, are stable. We also have the lowest energy costs in North America, as Manitoba
is an energy exporter; so thats all locked in for us. We have toll road access all
infrastructure and a mining town right around our line. Therefore, we basically have it
all as far as assets, infrastructure, stability, costs and experience.
Are there any challenges to be up and running the way you would like to?
Mr. Ginn: Right now the biggest
challenge in the mining a mills sector is finding and retaining quality people and that
would include tradesmen, mechanics, electricians, welders, archeologists, geologists,
engineers. All the skilled trades and professional people in the mining sector are in very
high demand right now.
How to you attract those people to San Gold?
Mr. Ginn: Our location is relatively
civilized as far as mining projects go. We are a two drive out of Manitoba capital
city of Winnipeg, so we are relatively close to a major city and major airport. We have
toll road access so there is no schedules in which people have to live away from home for
long periods of time. We are a very small company and flat structured and it is very
rewarding to work for a company like that. I know from experience.
You are a geologist a well right?
Mr. Ginn: Yes, I am a geologist as
Please tell us about some of your new discoveries.
Mr. Ginn: We have two more gold
deposits that we have discovered in the last year. One is called the San Gold # 3 deposit
that is located about 4 miles to the east of our existing main mine and mill. The newest
is what we call the Cartwright Mill and that is right in the town of Bissett, where our
mine is located, less than one mile to the west of our mine and it is accessible from the
mine. We think we have a repeat of the mine that we are working with now and this mine has
already produced over 1½ million ounces since 1932. Therefore, we are very excited about
this new Cartwright Mill, because it could be fast tracked in the production and would
take us to basically full capacity in our mill.
How do you divide your time and resources?
Mr. Ginn: We are both a mining and
exploration company and our budget this year (2006) was over $8 million Canadian. We plan
on doing something similar to that next year, given our land package, which is huge. We
have a lot of work to do with our exploration, given that we will be profitable as well as
the current blank market for gold, we dont see any ending site as far as our
How concerned are you about the fluctuations in the gold price?
Mr. Ginn: Being Canadian, we tend to
see gold more opposite to the US dollar so when the US dollars drops, usually gold rises.
Therefore, we are somewhat evened out by that currency difference. Once gold got into the
$5 hundred range, the volatility doesnt affect us in our planning that much. Our
costs are below $3 hundred US per ounce, to produce an once of gold. Hence, anything in
the range that we are at now, we are very happy with; we see that gold will probably pass
the old 1980s high of over 800 U.S., just given the current political climate in the
world and the U.S. economy. Basically, all that adds up to higher gold prices going
Is the investment community paying attention?
Mr. Ginn: I think they paying
attention quietly in our case and we are not covered by a lot analysts, but then all of
our financing have been through private placement and not through large brokerage houses.
Therefore, we tend not to the coverage when we do that, but the fact is that we are one of
a handful of new producers and eventually there will be no choice but to have coverage
come our way.
What should potential investors now realize? Why should they be interested and what should
they realize about San Gold that might not jump off the page?
Mr. Ginn: I think that the biggest
thing is that San Gold is one of very few new producers. There are a ton of companies out
there that talk about production in three to ten years from now. However, there are many
hurdles to cross before they get there and we are there. We are in production in a climate
of rising gold prices, we have no debt and we matched cultures and finance, everything at
this point that lower gold prices. We are now in a position to benefit form a higher
price, being small, under the radar and not well known, makes us cheap.
Do you have any final thoughts?
Mr. Ginn: I think that investors
should go out there for themselves and look at how many gold companies are actually going
into production and they will realize that mines are getting harder to build, more
expensive, they are having to deal with unstable governments. To have a new gold mine
producing in Canada is a very stable and valuable thing.
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