Wait until you hear this...

The company recently poured its first gold bar after successfully refurbishing the Furtei Processing Plant late last year.

That officially makes Sargold a gold producing company!

And I don't know of anywhere else you can find a public gold producer trading for a quarter.

The Furtei Processing Plant, in which Sargold controls a 90% interest, was built in the mid 1990s and has a maximum annual capacity of 400,000 tons of ore. Between 1996 and 2002 the Furtei Mine produced 135,000 ounces of gold from oxide resource, after which the processing plant was converted from an oxide heap leach to a sulfide flotation plant.

After being decommissioned in 2002, the processing plant was refurbished and recommissioned at a marginal cost by Sargold in late December 2006 and was fully water tested prior to the end of the year. The local workforce completed the following refurbishments at the plant before successfully obtaining a new cyanide usage permit in January:

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* Removing the old stockpile of low grade enargite sulfide ore
* Replacing/repairing mechanical and electrical components to get mill and leach tanks operational
* Clearing solid slurry from the pipelines of the compressed air system
* Confirming reliable operation of the process computer and logic control systems
* Realizing significant value from recovering activated carbon from around the CIL floor, sumps and spent ore left settled in the tanks--enough to carry through to 2008
* Fully testing the tailing disposal system and water distribution systems

The first gold pour initiated a near-term production plan that is based on processing upgraded ore from the residual heap leach pad at the site.

The head grade of this residual ore is being upgraded by screening off oversized material from the 450,000 tons of ore remaining on the heap leach pad. The screened oversized ore is then processed through the carbon-in-leach circuit after primary crushing and fine grinding. This production is expected to yield approximately 500 ounces of gold per month for a period of several months for gross proceeds of about $330,000 per month.

Now, there's no denying that production from Furtei is modest. But this is just the beginning. Moreover, an operating mine generating operating cash flow will form a basis for growth this year.

Sargold has been conducting broad metallurgical tests to determine the best approach to processing the sulfide refractory ore contained at Furtei. The objective of these tests is to define a business plan that will realize profitable and sustainable processing of both pyrite-hosted gold and enargite-hosted copper and gold, which comprise the majority of the existing resources at Furtei. Truth is, historical processing of these ores has proven to be difficult and stalled exploration work on the property in the past, particularly at depth.

However, some significant breakthroughs have been achieved in this test program and the company is now working up an assessment to determine the optimal long-term processing strategy for Furtei.

Removing the refractory constraint will open up the Furtei area to a new generation of exploration and development. It is expected that these test programs will be completed in the second quarter of 2007. Obtaining the exploration permits will hopefully not be a problem.

Private Placement

Sargold announced last week that it has arranged a non-brokered private placement of up to 2,500,000 units at CDN$0.20 per unit. Each unit is comprised of one common share and one common share purchase warrant, which entitles the holder to acquire one common share at a price of CDN$0.25 for a period of two years. Proceeds from the private placement will be used to conduct a trial for leaching sulfide ore from the Sa Perrima open pit as the next step in the restart of the Furtei facility, in addition to general working capital.

Until next time,

Luke Burgess

Gold World