June 30, 2006 - Quarterly ReportFrom June 30, 2006 - Quarterly Report: https://sargold.com/_resources/2006Q2FS.pdf
Directors’ Report to Our Shareholders
Sargold controls the largest precious metals exploration and exploitation land area in Sardinia, Italy. The
Company’s projects include mine infrastructure, a complete processing plant, a fully permitted tailing disposal
facility at Furtei, advanced exploration properties with existing in-ground gold resources and exploration properties
across the island. The island of Sardinia, located approximately 150 kilometers west of Rome, is the second largest
in the Mediterranean Sea covering over 24,000 square kilometers.
In addition Sargold owns the Lodestone Mountain Property in British Columbia, Canada. This property has a
magnetite deposit which the Company is examining for economic viability. The Company has not developed a time
frame.
Sargold also continues to research several potential properties in Serbia. No formal agreements have been entered
into regarding the sites in Serbia nor have negotiations been finalized.
Sargold’s interests in Sardinia Gold Mines S.p.A (“SGM”) were first acquired in 2003, and it’s taken some time to
secure a majority interest in the entire land package and identify a strategic plan to optimize these assets. In the
second quarter of 2006, key people were hired to execute this strategy, and on August 9, 2006 the Company
successfully completed the Medoro transaction. Under the terms of the deal, Sargold paid €1.0 million to complete
the purchase of 90% of the issued and outstanding shares of SGM, and for an additional €1.0 million acquired all of
Medoro’s 75% interest in SGM Ricerche SpA (“Ricerche”), the Italian company that holds the interests to the
Monte Ollasteddu gold project in Sardinia. The remaining issued and outstanding shares of SGM and 10% of the
issued and outstanding shares of Ricerche are owned by Progemisa SpA, a corporation owned by the Sardinian
regional government, whose interests are carried. The Monte Ollasteddu project is subject to an option agreement
between Medoro and Orogen Holdings (BVI) Limited (“Orogen”), a subsidiary of Gold Fields Limited, and any
interest obtained there under is subject to Orogen’s rights and obligations under the option agreement.
The Medoro transaction gives Sargold unrestricted ownership of the assets at Furtei, which includes a number of
potential open pit and underground mines, a 1,000 tonne-per-day treatment facility, and most importantly, a fully
permitted mining concession including future tailings disposal. Our efforts now are focused on conducting test work
with various technical consulting groups with the objective of creating a feasible restart plan for the Furtei operating
plant in the central part of the island in the third quarter.
The completion of the Medoro deal also puts Sargold in a position to move forward with an exploration strategy to
realize the great mining opportunities in this region. We see the potential restart at Furtei as a way for us to generate
cash flow to fund our exploration programs at Furtei, Osilo and Monte Ollasteddu. In particular, we are looking
forward to exploring the mineral tenements of the Monte Ollasteddu property, which has the potential to host a
significant gold deposit. As we move forward, our priority will be to focus on community engagement, in an effort
to obtain the required permits to conduct a comprehensive drill program at Osilo and Monte Ollasteddu.
Financing
In order to facilitate the above-mentioned acquisitions, Sargold completed a non-brokered private placement on July
28, 2006 of 17,250,000 units of the Company at a price of CDN$0.18 per unit for gross proceeds of $3,105,000.
Personnel
Sargold was pleased to announce the appointment of Mr. George Paspalas as Chairman of SGM on June 1, 2006.
Mr. Paspalas brings to the Company over 20-years of international executive and operating experience in mining,
project development and mine management. He spent the last 18 years working with Placer Dome Inc., in a number
of locations around the world including Canada, Australia, Latin America and Africa.
Before the end of the second quarter, the Company announced the appointment of Mr. Bruce Nicol as Senior Vice-
President and Chief Financial Officer of Sargold, effective September 1, 2006. Mr. Nicol is a Chartered Accountant
with 15-years of professional experience in the international mining industry, working with Placer Dome as an
officer and in senior financial roles. Mr. Nicol will replace Donald B. Clark, who has been Chief Financial Officer
of Sargold since June 2002. Mr. Clark will continue as a Director of Sargold, a position he has held since February
1996.