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Investor
Summary
The writer visited SUR's
exploration prospects at COMVAL and BATOTO on the 8th and 9th
of January, 2005. This brief report summarizes the key findings.
SUR has assembled an impressive ground holding
portfolio of some 90 km2 in the highly prospective Compostela
Valley of South Eastern Mindanao, Philippines, located just 40 km SSW of the world
class DIWALWAL low sulfidation epithermal gold vein
system (between 4 to 5 million ounces assumed mined to date by some 40,000
local miners).
SUR's licenses cover
a major splay fault developed off the eastern side of the Philippine Fault. This
fault system traverses a large, coarse grained, virtually equigranular,
diorite porphyry in which late, mesothermal,
structurally controlled, quartz - pyrite - gold vein stockwork
veining and vein array systems are developed about NNE and NW striking shear
structures.
The company has undertaken a large program of
channel sampling along prospect tracks, and excavated a system of prospect adits, in particular the Clark Exploration adit (crosscut) and the Tarale
11 adit at the TARALE - BATOTO prospect. The Clark crosscut has intersected a NNE striking shear
vein array system with a true width of at least 30 metres at a very
encouraging average grade of 3.10 g/t Au over the mineralized width. The
crosscut is still within this structure and its eventual true width has not
yet been determined.
In this locale, the entire diorite intrusive
is mineralized at a relatively low level, with structural stockwork
of hairline quartz veins and veinlets, containing
heap leacheable grades of between 0.25 g/t Au and
10 g/t Au with a weighted average of about 2g/t gold for the entire 111 metre length of the
crosscut. The crosscut is still in progress. The scope for parallel systems
to be discovered nearby is considered by this writer as excellent. Cumulatively,
these may comprise a sizeable bulk tonnage resource target.
At the Tarale 11 adit, SUR is bulk testing another shear vein array
system in a near horizontal structure. Overall sample returns from this vein
average better than 30 g/t Au over a 1m to 2.0m mined width from at least 100 m of exploration
workings. A halo of lower grade 1.0 g/t to 2.0 g/t Au surrounds the main vein
for at least two meters on either side. Parallel vein systems can be observed
in exposed hillside cuts. SUR is also bulk
testing another 8 veins in the same area.
Therefore, scope to discover stacked systems can be
considered as good. The big question is, "are there sufficient veins for
a bulk tonnage deposit".
SUR is headed up by President and CEO, Rennie Blair, former Chief Geologist for Australia's huge Mt Isa
Mine in Queensland, Australia.
 
Above l-r:
Mining Engineer Wally Abaga and Geologist Nonoy Estoque,
vein at the Clark Adit
and Stockwork at Batoto
Rennie is a real
professional who is not inclined to "guild the lily". Most
importantly Rennie has an excellent local team
headed up by a highly experienced, low key, competent Australian, Brett
Taylor and Atty Melanio T
Andresan, a well known indigenous lawyer and is the
recognised Datu Sangkupan
of the Mandayan Tribe. The technical team comprises
equally experienced, Filipino geologist, Nonoy Estoque, Mining Engineer Wally Abaga
and miners and samplers many of which have been recruited from indigenous
peoples.
SUR's approach has
been very much the right one for the Philippines,
with a slow, step like, build up in exploration, keeping costs under tight
control and limiting the expected negative financial impact of operating in
the Philippines.
The complex and delicate political issues in the Philippines have been sensitively
and intelligently handled, so that the company has achieved local acceptance,
without attempting to buy influence, and is now poised to steadily rack up
the exploration without attracting problems caused by insensitive and unintelligent
management in this regime.
SUR's exploration
assets comprise part of a large mineralized porphyry type system, with a
superimposed complex structural array of mesothermal
gold quartz vein and stockwork targets. These could
host gold mineralization in several open cut gold deposits of varying
dimensions which collectively may have substantial total gold potential, in a
strongly hydrothermally altered and mineralized
area measuring at least 3,500
meters by 2,500 meters.
SUR's next move,
following a detailed structural analysis of the various vein systems, must be
to complete the infill exploration program, involving grid controlled soil
sampling, trenching and a staged program of surface drilling to tie seemingly
disparate areas together, and define its first open cut resource. This will
enable it to raise more capital for what will hopefully be a big expansion in
exploration and evaluation drilling later on in 2005 and 2006.
SUR has another exciting, and geologically
similar, prospect in this area, which the writer did not visit, at T'Boli. This prospect already has 7,000m of exploration
drilling completed, and should be a target for further exploration and
evaluation drilling over the coming year.
In the writers view, SUR is a well managed
junior exploration company with considerable upside potential, and, as such,
constitutes an exciting exploration play for the investor prepared to accept
reasonable business risks, and to hold for the longer term upside potential
gains.
IMPORTANT NOTE
The writer has no stock in SUR AMERICAN GOLD
CORPORATION, and has accepted no remuneration or any other form of gifts,
etc. for compiling this article. The article is, therefore, entirely unbiased
and objective. SUR paid for the writer's air ticket, transportation and
food whilst on site.
February, 13, 2005
Nigel H. Maund
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