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