El President speaksSeptember 04, 2007
PRESIDENT’S LETTER TO SHAREHOLDERS
On behalf of the Board of Directors, I am pleased to review the events of the past year and our plans for the year ahead. Soho Resources Corp. (“Soho”) remains strongly positioned as an active Mexican-focused exploration and development company poised to define its first NI 43-101-compliant resource estimate at the Tahuehueto Project in Durango State. Although well along in this process, delays associated with commencing the helicopter-supported drill program have slowed the pace of data collection within the critical area of structural intersection of the El Creston and El Perdido Structures.
Despite these setbacks, Soho is fully committed to its flagship poly-metallic (precious and base metals) project and expects to release the first resource estimate near year-end 2007. The timeline is altered, but the goal of resource definition and development at Tahuehueto remains unchanged.
On the corporate front, 2007 was a year of increased market recognition for Soho. In April, Soho closed two separate private placement financings — the largest and most significant financings of its corporate history — for total proceeds of $12.2 million.
A fully subscribed, brokered private placement led by Cormark Securities Inc. (formerly Sprott Securities) and including Westwind Partners Inc. generated gross proceeds of Cdn$10.8 million from the sale of 21.6 million units priced at $0.50 per unit.
A concurrent non-brokered private placement with Macquarie North America Ltd. generated gross proceeds of Cdn$1.4 million from the sale of 2.8 million units on similar terms. This financing enabled Macquarie to maintain its current 9.9% interest in Soho.
The involvement of Macquarie North America and its decision to maintain a 9.9% equity stake in Soho provides a base of institutional support that strengthens our ongoing efforts to advance Tahuehueto.
Soho also bolstered its management team through several recent appointments.
Hall Stewart joined Soho as Vice-President of Exploration and Development and brought to the Company more than 20 years of experience in exploration and resource development, plus an impressive track record of discovery in Mexico. Between 1995 and 2006, Mr. Stewart helped discover and define resources totaling 6.98 million gold-equivalent ounces at three separate projects within Mexico’s prolific Sierra Madre Mineral Belt.
Donald Crossley, Chief Financial Officer has more than 25 years of experience as a Chartered Accountant, including seven years with KPMG. He also served as a director and officer of several public companies, and as a self-employed consultant, provided business, management and accounting services to a wide range of corporate clients.
At the Board level, the appointment of prominent geoscientist Art Freeze as a Director was a major highlight of the past year. Mr. Freeze is President of Stillwater Enterprises Limited and Consulting Geologist for Goldcorp Inc., a leading gold and silver producer. He has more than 38 years of experience in mineral exploration, mine development and project evaluation, including extensive experience in Mexico.
Soho has a geological team that we believe is second to none in Mexico, and this collective expertise has greatly improved our understanding of the geological model and structural setting of the priority mineralized zones at Tahuehueto. Our geologists now believe that the precious metals mineralizing event at Tahuehueto is separate from and may post-date the base metals mineralizing event, based on distinct mineralogical and textural differences observable in the drill core.
More importantly, recent drilling has generated some of the best results for both precious and base metals from the structural zone formed at the intersection of the El Creston and El Perdido Structures at Tahuehueto. Two recent drill holes (DDH07-111 and 113) drilled here confirmed a minimum 100-meter continuity of high-grade poly-metallic mineralization. (See August 15 news release for complete results.)
Soho Resources recently completed the 18,000-meter drilling program focused on resource definition within five priority zones at Tahuehueto. The Company then launched both a 5,000-meter surface drill program with an independent contractor and a 3,000-meter, helicopter-supported drilling program using its own recently purchased fly-capable light drill rig.
The main goal of the helicopter-supported drill program is to test portions of the aforementioned structural zone that weren’t accessible by road because of extreme topography, including about 300 meters of strike length within the intersection area of the El Creston and El Perdido Structures. Some of the highest grade poly-metallic results from previous drilling were generated from the edge of this area, and its resource potential is sufficiently encouraging to warrant the additional effort and expense. Also, until drilled, this area leaves a 300-meter gap in the drill spacing that requires testing before completing the initial resource calculation.
Ten helicopter-supported drill sites have been established in order to complete this 3,000-meter program that started in mid-August. Once results are in hand, Soho will have the data necessary to calculate its first resource estimate for Tahuehueto.
Soho has formally registered newly staked concessions surrounding its flagship project in order to secure potential strike extensions of known mineralized structures and promising early-stage prospects in the surrounding district. Soho’s 99.4%-owned Mexican subsidiary now controls 9,081 hectares of prospective ground within the Tahuehueto District, which forms part of the mineral-rich Sierra Madre Mineral Belt. Accordingly, we continue to view Tahuehueto as a district-scale project with potential for multiple deposits and discoveries.
Another exciting development in the past year was the drilling discovery of a new zone on the Santiago Structure, a possible northeast expression of the Cinco de Mayo and/or the El Perdido Structures. The Santiago Zone, discovered in January 2007 on the northern part of the property, returned high-grade assays over significant widths (see February 7, 2007 press release). Company geologists were also successful in identifying new surface expressions of the Texcalama Structure along its southwest trend extending as far as the Rio Los Vueltas. Surface grab samples now confirm that the Texcalama Structure is mineralized over at least 1.5 kilometers. More work on this promising structure is required and planned for 2008 to realize its full potential.
Soho is pleased to report that community relations have progressed well during the past year. The Company has formalized a Surface Rights Agreement covering the core claims at Tahuehueto with Comunidad La Bufa, a legal entity held by local community residents. The 10-year term of the Agreement is extendable for another five years.
As Tahuehueto advances through the resource definition, pre-feasibility and development stages, the Company will expand its communication programs with shareholders and the investment community. An in-house Investor Relations Department has been established, headed by Manager, Glen Sandwell with Associate, Stephen Casey. This team, along with senior management representatives, will attend numerous investment and industry-related trade shows throughout the remainder of 2007 and 2008.
To enhance its newly established Investor Relations Department’s efforts, the Company has also retained the Toronto-based team, Genoa Management Limited and John Walter Communications Inc., to provide senior management of the Company with ongoing capital markets counsel. Established in 1999, Genoa Management provides Canadian-listed companies with independent capital markets counsel as well as financial communications management and targeted investor outreach support.
The coming months are sure to be exciting ones for Soho and the Tahuehueto Project. We deeply appreciate the ongoing support of our shareholders and the hard work and dedication of our Mexican and Canadian exploration and management teams.
Sincerely,
Ralph Shearing, P.Geol.
President & Chief Executive Officer