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Tuesday, July 31, 2007
President's Message To Shareholders
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This has been an exciting year for Serengeti Resources Inc. - the Company's exploration strategy, to focus on copper-gold and molybdenum projects in the Quesnel Trough area of British Columbia, has paid off handsomely. We have seen unprecedented increases in market activity and share capitalization with drill results indicating the discovery of a significant new copper-gold porphyry system on the Kwanika property. Serengeti currently holds a 100% interest in 17 porphyry-copper gold properties, including Kwanika and one 50% JV property in the Quesnel Trough region of northern British Columbia; which is host to the Kemess, Mt. Milligan and Mt. Polley porphyry copper-gold deposits.
Kwanika Porphyry Copper-Gold Property
In December 2006, a five-hole, 1,257 meter exploratory drill program was completed to test the area around hole K-06-04, located in the central portion of a large induced polarization (IP) geophysical anomaly on the Kwanika property. On January 9, 2007 we announced the assay results of the southernmost 'discovery' hole K-06-09 where drilling intercepted 111.1 meters of 0.69 % copper and 0.54 g/t gold including a high grade zone averaging 1.49% copper and 1.90 g/t gold over 22.1 metres. Results of holes K-06-06, 07, 08 and 10 followed on February 21, 2007. These results were exceptionally well received by the marketplace, resulting in a dramatic increase in Serengeti's share price and enabling a $5.2 million private placement financing in February.
A 15 hole, 6,000 meter follow up program commenced in March and assay results for step-out holes K-07-11 through 15 (around hole K-06-09) were announced in May. Yet again, the assay results were very significant, for example, Drill Hole K-07-15 returned 0.61% copper and 0.72 g/t gold over 328.3 metres. Serengeti's share price increased dramatically with this announcement and subsequently resulted in a $20.0 million bought-deal financing lead by Canaccord Adams Corporation of Vancouver, BC, which closed on June 8, 2007. These financings have provided Serengeti with an abundant working capital position for 2007 and 2008 and have provided the funding for an aggressive 45 hole, 16,000 to 18,000 meter follow-up Diamond drill program on the Kwanika project, which has already commenced as of the date of this message.
The remaining 11 holes (holes K07-16 to 26) were released on July 10, 2007. Results include Hole K-07-20 which returned 0.76% copper and 0.91.g/t gold over 107.7 meters. The mineralized holes to date indicate a potentially large zone of porphyry-style, copper-gold mineralization, with a central high-grade core. Given the grade, the nature of the mineralization and the potential size of the system, we are convinced that we are at the early stages of an exciting and rapidly developing project.
Drilling to date at Kwanika indicates a mineralized zone extending from near surface down to a 500 meter depth in the deepest hole, with a width in the order of 200 meters along the central section and a 750 meter strike length. The upcoming drill program will systematically assess the grade distribution within this large, open-ended copper-gold system.
The Kwanika property is 100% owned by Serengeti, consisting of approximately 94 sq. km, situated in the northern portion of the Quesnel Trough, 85 kilometres north of Mt. Milligan. The property is road accessible from Fort St. James and can be drilled year-round with field activities supported by a large all-season camp that has been constructed on the property.
Summary of Other Properties
In addition to Kwanika, Serengeti currently holds an interest in 17 other porphyry-copper gold properties, totaling 974 sq. km in the Quesnel Trough region of northern British Columbia; host to a number of copper-gold deposits and active mines. All the properties in the Quesnel Trough have been acquired because they demonstrate excellent potential to host significant porphyry copper, gold, copper-gold or, in the case of Davie Creek, molybdenum deposits. Most of the properties in the portfolio have had prior exploration work that has helped define but not adequately test these targets; giving each one of them excellent discovery potential.
Pursuant to an agreement dated July 7, 2004 with the Minematch Partnership, Serengeti also has an option to earn a 100% interest in the 1,007 hectare Twin Property, located in the Stewart area of Northwestern British Columbia. Portions of the Fleet, Darby and Croy-Bloom properties were also acquired under this agreement.
The Twin property hosts several strong gold-silver-copper geochemical anomalies and vein style mineralization similar to the Snip Gold Mine and the Scottie Gold Mine. A high grade gold-silver surface showing of 11.5 g/t gold, 93 g/t silver over 1.7 metres and 11.6 g/t gold and 141 g/t silver over 3 metres was discovered on the Twin Property.
During the early summer of 2007, Serengeti acquired a 100% interest in two properties totalling 32 sq km in the Nechako Plateau of central British Columbia. The properties cover several of the top-rated gold and partially coincident copper lake sediment anomalies from a recent government sponsored regional geochemical survey. Follow-up reconnaissance work is planned for these properties.
Following the discovery at Kwanika in December 2006, Serengeti staked an additional 392 sq km of holdings in the Quesnel Trough region, including an additional 66 sq. km to expand the Kwanika property, as well as the new 185 sq. km Osilinka property.
In November of 2006, Serengeti closed the sale to American Creek Resources Ltd. of its right to earn from Rimfire Minerals Corporation a 51% interest in the Tide project. On closing, American Creek paid Serengeti $75,000 and issued it 354,000 shares, with a June 15, 2007 market value of $1.05 per share, as well as reimbursing Serengeti $75,192 for costs of a fall 2006 exploration program previously funded by Serengeti. In addition Serengeti retains a 1% NSR on 51% of any eventual mine developed on the property by Rimfire and American Creek.
Exploration Outlook - 2007
As a result of the financings closed in February and June 2007, we are abundantly funded for ongoing exploration on all our key projects. Kwanika has a 2007 budget of approximately $7.0 million to aggressively pursue Diamond core drilling and advanced exploration to move the project towards potential resource estimation. In addition, a budget of approximately $1.0 million has been assigned for airborne and ground-based geophysics on our other Quesnel Trough properties during the summer and fall exploration seasons. We are able to work on the Kwanika project year-round and we expect to continue to do so.
Serengeti's working capital at February 28, 2007 was $6,124,423 and as of July 20, 2007 has significantly increased to approximately $23,670,000. Common shares outstanding as of the date of this message, July 20th, are 44,030,222 and fully diluted at 52,021,630.
The 2007 exploration season promises to be very exciting for Serengeti, focusing principally of course at Kwanika, but also continuing development of our extensive portfolio of other carefully selected target prospects along the Quesnel Trough. The exciting development at Kwanika reinforces our corporate and exploration strategies set out in mid-2004.
On behalf of the Board of Directors, I would like to take this opportunity to thank our dedicated, hard working management, staff and consultants. All have contributed to the advancement and development of our strategic land holdings in British Columbia. Most importantly, I would like to thank our shareholders for supporting Serengeti's exploration endeavours. Your Company has come a long way this year. Our efforts at Kwanika have been rewarded and we are confident of the prospect for continued growth over the months and years ahead.
Sincerely,
David W. Moore,
President & CEO
Serengeti Resources Inc.
July 20, 2007
Serengeti Resources Inc.
KWANIKA PROPERTY - 2006/2007 DRILLING TO DATE
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