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Sage Gold already with
properties in Ontario and Quebec in Canada and Arizona and Nevada in the U.S. has a group
of directors and management with tremendous experience that has them positioned for even
Sage Gold Inc.
Suite 500, 365 Bay Street
Toronto, ON Canada M5H 2V1
C. Nigel Lees
President & CEO
Interview conducted by:
Lynn Fosse, Senior Editor
August 3, 2006
Mr. C. Nigel Lees President, Chief Executive Officer and Director. Mr. Lees
is a founder and past director TVX Gold Inc., a significant gold producer in North and
South America, listed on the TSX and the New York Stock Exchange. TVX Gold Inc. has since
merged with Kinross Gold Corporation. Mr. Lees has over 30 years experience in the
Canadian investment industry and is currently a director of Yamana Gold Inc. and URSA
Major Minerals Inc.
Sage Gold Inc. is a mineral exploration and development company which has interests in
exploration properties in Ontario, Quebec, Nevada and Arizona. Its main properties are the
Kerrs property located in the northern part of the Larder Lake Mining Division in
north-eastern Ontario, the Onaman, Jacobus and Lincoln properties near Beardmore, Ontario
and the Dixie Fork, Triple Junction, Pony Spur, Dike, Corridors and Sugarloaf properties
which are located in north-eastern Nevada within Elko County. The Big Bend Gold Property
is located in Yavapai County, Arizona.
CEOCFO: Mr. Lees, you have a long background in the industry,
why are you with Sage today?
Mr. Lees: When the cycle started to turn in early 2000,
I was involved on the boards of two mining companies and as the commodity cycle started to
gain momentum, I invested in several small exploration companies. One particular company
with an excellent board was looking for somebody with experience in previous gold bull
cycles and some energy and enthusiasm. So I agreed to take on the position of CEO from a
CEOCFO: You have many
properties; will you tell us about them?
Mr. Lees: Our focus geographically is North and South
America, although our properties are entirely in North America right now; they are in
Ontario, Quebec, Nevada and Arizona. I have a lot of experience in the mining business in
terms of other parts of the world, which are very popular right now, but there are still
some great opportunities within North and South America. Our properties are primarily
precious metal properties, although we regard ourselves as a mineral exploration and
CEOCFO: Is there a
common thread among the properties?
Mr. Lees: The common thread is that they are
exploration properties in stable and well known and highly regarded areas. We want to
build a portfolio of resources so that we can be in the position to generate cash flow in
the relatively near future. We are in the process of constantly upgrading with a
combination of acquisitions, joint ventures, and exploring existing and other
CEOCFO: Will you tell us about where you are in the process
with the properties?
Mr. Lees: Our concentration in Canada has been on the
Kerrs gold property; this property is near Lake Abitibi. It was drilled and worked on
primarily by Noranda Exploration Co. Ltd. (Noranda) in the 80s. They had success in
drilling for gold discovering a green carbonate gold zone. Those who follow the industry
closely know that in the late 80s and 90s and into the early 2000s,
because the commodity prices were low, a lot of the major companies decided not to do
further exploration. This property was passed on to Newmont Canada Limited (a subsidiary
of Newmont Mining Corporation NYSE: NEM; TSX: NMC) and SAGE acquired it for shares,
along with six other properties in Quebec. The interesting thing about the Kerrs property
is that it was originally found by a couple of prospectors that assayed some boulders just
south of our property. They found that they had some high-grade assays in the 2-4 oz/
tonne range in these glacier boulders. Noranda Exploration Co. also did a fair amount of
exploration in the area. The purpose of the exploration was to try to find the source of
these boulders that had clearly moved through glacier activity. We conducted a drill
program in the fall of 2005 and the winter of 2006, which identified a new zone called a
mafic replacement gold zone. We also extended the mineralized zone to a strike length of
about 1200 meters. There is good thickness in the zone; between 10 and 25 meters. We
drilled some very high-grade sections up to two ounces a ton, but they are narrow. There
are fairly good intercepts of 2 to 3 meters in the 3 to 5 gram range. It is an interesting
property and it looks as though there is good tonnage. We are in the process of compiling
the information and deciding on the next phase of exploration.
With regards to Quebec, we have a property in the Malartic region, and plan to do some
exploration this summer. As well as 2 properties in Chibougamau, which total more than 19
claims. That is the Canadian side. In the United States, the emphasis is the Carlin Trend
in Nevada. We have four properties in the southern Carlin Trend and two in the northern
Carlin Trend. Our concentration is in the southern Carlin Trend, particularly on a
property Pony Spur, which is adjacent to the Pony Creek property, which has a gold
resource of 1.4 million ounces. While it is relatively low grade it is a surface deposit.
The property at Pony Creek is under option by Grandview Gold Inc. (TSX: GVX), and they
intend to have an extensive drilling program this summer. They will be drilling for
similar geological targets. We plan to drill later this summer. We have 3 other properties
within a 10 mile radius; all early-stage, but with interesting exploration potential.
Recently we acquired a property in Arizona called the Big Bend Gold property, where
surface sampling has identified high grade gold. We are going to be looking at that
property this summer to determine whether it can be profitably heap leached. We are going
to have a very active programs in the main areas of Ontario, Quebec, Nevada and
CEOCFO: Do you prefer
the joint venturing to 100% ownership or is it just what happens to be available?
Mr. Lees: Small companies do not have limitless
resources. As we see good properties or develop properties, we cannot actively explore all
of them. It makes sense to have a combination of properties some of which we directly
explore and others we joint venture. It is not only a question of funding needs but
technical needs. Having a partner with different skills such as production and financial
expertise becomes very critical. The mining, and exploration business is a highly risky
business. Therefore, spreading your risk makes sense to all companies, including small
CEOCFO: What is your
financial position today?
Mr. Lees: We have almost $2 million dollars in working
capital, mostly cash which should suffice for our capital needs for the next twelve
months. Weve just completed a financing, have no debt and have a good balance sheet
for a small company.
CEOCFO: Given the
interest in precious metals today, how do you find properties that are priced right and
havent been gobbled up?
Mr. Lees: I think it takes time and contacts in the
industry. It takes dedication, focus and luck. I think one needs all three. Contacts and
experience as well as recognition in the market place that SAGE is active in farming in
and out all help to attract potential deals. As a result, we are in an active period of
acquisition. I believe we are in the middle of the commodity bull cycle and have several
more years of the cycle to go. I believe there is still an opportunity to acquire good
properties, do good ventures and guide the company into a positive cash flow position. We
are aggressive at looking at deals.
CEOCFO: Why should
potential investors be looking at gold and precious metals, and what is it about Sage that
perhaps does not jump off the page?
Mr. Lees: We have just completed and announced
the optioning of three properties in Ontario; Onaman, Jacobus and Lincoln. Both Onaman and
Jacobus have historical resources. The Onaman has copper gold historical resources
and includes the Tashoda-Nipigon gold mine, which operated briefly in the 1930s.
Jacobus has a copper-nickel historical resource of 1.0 million tons. With the current
prices of metal commodities, we will be studying the feasibility of mining the high-grade
These new deals illustrate the upgrading of our
properties and are desire to look at near term ways of generating cash flow, which we do
not believe the market place as fully appreciated.
Gold peaked in 1980 at about $800.00 an ounce and today it is about $630 an ounce but has
not yet reached the peak of over twenty years ago. We have the same set of circumstances
today that propelled gold the last time: government spending, deficits, inflation and
weakness in the U.S dollar. Base metals tend to peak first because they are economic
metals and the precious metals continue to appreciate as they become regarded as monetary
metals. The base metals are still appreciating. I think there is still time in this
commodities cycle. However, if one can be in production and selectively mine over the near
term to take advantage of these prices, I think there are some excellent opportunities.
In answering the question of why Sage, I would say, that Sage is a very small company in
terms of its market capitalization. We have tremendous exposure in terms of exploration.
We are actively planning to acquire other properties. We have a group of directors and
management with tremendous experience in the industry. I have been involved directly and
indirectly for almost 30 years. I started a company called TVX Gold Inc. (TSX: TVX &
NYSE: TVX) in the late 1970s, and then was listed on the NYSE. At the height of its
market, it was a gold exploration company that achieved a $1.5 billion dollar U.S. market
capitalization. The other directors are involved in several other public mining companies
and they have been involved in senior as well as junior companies. We have a management
team and a geological team; a tremendous one in both Canada and U.S. If you take the
package of a company that has a market capitalization of $10 million Canadian and look at
the companys properties, prospects, directors and management team, do a comparison
of small exploration companies, there are very few like SAGE listed. I think it represents
a very interesting opportunity for an investor.
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