San Gold First Quarter Mine Production Outpaces Current Mill Capacity

TSX: SGR || OTCQX: SGRCF
www.sangold.ca

BISSETT, MB, April 5 /CNW/ - George Pirie, President and CEO of San Gold Corporation, (TSX: SGR) (OTCQX: SGRCF) is pleased to announce preliminary first quarter production and development results from the Rice Lake Project in Manitoba, Canada.

"Ore production from the company's two mines exceeded current mill capacity through the last half of the quarter, finishing the period with more than two weeks of ore stockpiled," said Mr. Pirie. "This is an important milestone for achieving steady-state production at the Rice Lake Project."

For the quarter ended March 31, 2011, San Gold milled and processed a record 82,792 tons, including both production and development ore, at a head grade of 7.1 g/tonne to produce 14,690 oz gold. San Gold mines produced 102,000 tons, an average of 1,133 tons per day, to end the quarter with nearly 20,000 tons of ore stockpiled ahead of the mill on surface (representing an additional estimated 3,500 oz gold).

Mill operations averaged 920 tons per day and achieved a recovery rate of 93.9%. Over 3,840 meters (12,600 ft) of primary development was completed during the quarter at the Rice Lake Mine, Hinge Mine, 007 Project, and the new L10 access. Thirteen diamond drills were in operation during the quarter from both underground and surface stations. Additional drills are to be deployed during the second quarter.

Modernization of the 26 Level (4,000 ft) of the Rice Lake Mine continued in order to provide fully mechanized access for mining and haulage as well as to provide drill platforms for the exploration of the potential down-dip extensions of the Hinge, L10, L13 and 007 zones at depth. Drill stations are being prepared on the 16 Level (2,400 ft) in order begin drilling downward extensions of these zones as well.

Development at the Hinge Mine continued with the main decline, diamond drill platforms and initial development towards the newly discovered L4 and L10 zones. The 007 Zone was accessed from the Hinge Mine during the quarter with initial bulk sampling completed and sill development underway. Access from the Hinge Mine is well underway towards the L10 Zone, where initial ore development is expected to begin in May.

Replacement and upgrade of the cone crusher, scheduled for early April, combined with the new jaw crusher are expected to increase mill capacity by 20 to 25 percent. These improvements are expected to cause five days of downtime for the mill but should not significantly affect second quarter results.

Major capital projects for the first quarter included:

  • Replacement and upgrade of jaw crusher to 150 hp Elrus.
  • Completion of new central maintenance facility.
  • Commence mill capacity expansion project in crushing and flotation circuits.
  • Arrival of additional mobile mining equipment.
  • Continued power distribution upgrade.

A total of 77,497 meters (254,251 ft) of diamond drilling was completed with 43,840 meters (143,830 ft) originating from underground stations and 33,657 meters (110,421 ft) from surface exploration. Underground drilling at the Hinge Mine remains focused on the discovery and delineation of the L4 and L10 zones which exhibit robust widths and grade below and in close proximity to the Hinge mine workings. Underground drilling at the 007 Zone continues to be extremely successful in extending the 007 zones to the east with consistent strong widths and grade.

Rice Lake Mine exploration drilling is concentrating on defining extensions to the Hinge, L10 and 007 zones between 4,000 and 4,500 feet (1,220 m to 1,370 m) in close proximity to the 26 Level mine workings. This target area is approximately 1,000 meters (3,280 feet) down dip and below the lowest surface drill intercepts of the Hinge, L10 and 007 zones. As well, this drilling is expanding on the large 84 and 98 vein systems located above the 26 Level. Surface drilling focused on the 007, 007 East and Emperor Zones as well as numerous new targets within a 5 km radius of the Rice Lake Mine.

"San Gold management is pleased with first quarter 2011 mining results that are in line with 2011 gold production guidance of 80,000 ounces and we are looking forward to an exciting second quarter. We anticipate a healthy news flow on the exploration front in keeping with the outstanding performance of our exploration and mine geologists," said Mr. Pirie.

The information in this release may contain forward-looking information under applicable securities laws. This forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those implied in the forward-looking information.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.


SOURCE San Gold Corporation

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