San Gold

If you're not familiar with San Gold, you can read my previous posts, or visit the website. For some reason, this one has been an underperformer, even though it is my favourite gold stock. My nickname for SGR, is Rodney..aka: Rodney Dangerfield, never gets any respect! :) ☺

San Gold had news today of a bulk tonnage estimate, and started off in the green, only to close red. I've followed this story for a very long time, and will give you my take.

This company has issued too many shares, plain and simple. The story started off well, with lots of gold, low costs, and a friendly political jurisdiction. What SGR did was raise capital too many times for exploration, instead of ramping up production. At this point (and keep in mind it's only my take on things) they need to prove they can actually make money. How is that possible if they're still concentrating on exploration?? We all know there's gold there, but is it viable.

That being said, let me reiterate some items from their PR released today.

This was a bulk tonnage test for the 007 zone, which isn't the main Rice Lake Mine.

Over 305 meters (1,000 ft) of strike length has been developed so far at this elevation with three distinct zones identified having strike lengths of 76 meters (250 ft) to 92 meters (300 ft) each. 15,405 tons have been processed in the Rice Lake mill so far this year from the 007 zones giving a mill head grade of 11.3 g/tonne (0.33 oz/ton).

One troy ounce = 31.10 grams.

So according to this press release they did:
15,405 tons x 11.3 g/tonne = 174,076 grams / 31.1 = 5,597 ounces from this bulk sampling.

In my opinion, the problem with San Gold is a number of things.
1. too many shares issued
2. concentrating on drilling rather than operations
3. they need to prove this is a profitable mine

The purpose of a bulk tonnage sampling is to actually get an idea of the true grade, over a large area of tonnage. The Grade from the 007 is extremely high.

I still like this company, the management and the properties. What bothers me, is the constant erosion in the share price and value from dilution. It'll go one day...sure as heck the day I sell. ☻☻

Games are being played with this one.