President's Communications
| Aug 11, 2008 President's Letter to Shareholders July 28, 2008 The last 18 months
As you know our share price has been very volatile over the last 18 months since we announced the discovery of significant copper-gold mineralization at Kwanika in December 2006. The investor interest created by a series of positive drill hole announcements through the winter and spring of 2007 led to Serengeti's share price running up to an intra-day high of $4.80 and enabled the Company to complete two major financings: $5.2 million at an average price of $0.84 in February 2007; and $20 million at an average price of $3.22 in June 2007. Investor sentiment turned negative in August 2007 with the US "Subprime Crisis" and its Canadian "ABCP" equivalent. Arguably we have been in a bear market since that time. Several events through the fall of 2007 including Teck Cominco Ltd. and NovaGold Resources stepping back from the Galore Creek project contributed to this negative sentiment not just in the junior markets, but across the mining world. Meanwhile we continued drilling at Kwanika and in late March 2008 and released a spectacular drill hole, K-08-62 which graded 0.74% Cu, 0.78g/t Au over 610 meters. This release rekindled investor interest with 18.5 million shares changing hands in three days! The recent announcement of a very significant option agreement with Newcrest Mining Limited possibly investing up to CDN $35 million in Serengeti's Croy-Bloom/Davie Creek properties also had a positive effect on the stock. In terms of metal prices for the principal commodities we explore for, copper and gold, both have appreciated significantly over the period. Gold, which began 2007 at $636/oz, traded over $1,000/oz and is currently at $929/oz. Copper began the period at $2.50/lb, traded as high as over $4.00/lb and is currently at $3.72/lb. We cannot do much about all these external factors, but...... Where are we now? To the end of June 2008 we had invested $13 million in the Kwanika property. To date we have completed more than 50,000 meters of drilling in 118 holes outlining a significant body of copper-gold mineralization in the main zone as well as a potential copper-molybdenum zone about 2.5 km to the south. We will be wrapping up this current phase of drilling at Kwanika in early August and through the fall will be moving towards a resource calculation. We continue to be very active delineating drill targets on our extensive property portfolio which now exceeds 2,000 square kilometers in the mineral rich Quesnel Trough of North-Central British Columbia. Some of this activity is jointly funded with our partners Fjordland Exploration Inc. on the Quest JV, or in the case of the recent option agreement for the Croy-Bloom/Davie Creek property, fully funded by our partner Newcrest Mining. Fortunately, we are well financed with $12 million in the treasury at the end of June and estimate we will close out 2008 with approximately $8 million. We have a very reasonable share structure with 44.8 million shares outstanding. At a recent closing price of $0.41 per share, our market capitalization is approximately $18.4 million. Given what we have invested at Kwanika, the quality of the project, its favorable location with respect to infrastructure, the discovery potential within the balance of the extensive property portfolio and the cash on hand, I believe Serengeti currently represents a compelling value proposition, so.... Where to next? We believe we have a high quality copper-gold asset at Kwanika. As mentioned, above it is our intention to complete a resource calculation by year end 2008 at Kwanika with the assistance of the respected firm of Scott Wilson RPA who will also complete an independent N.I.43-101 report on the property. We will also complete an initial VEC (environmental) study at Kwanika by year end, as well as continue discussions with the local First Nations as we move towards a memorandum of understanding for a potential mining project. In addition, an initial metallurgical test program will be commissioned this fall. We will then take all of this project information and advance towards a scoping study/preliminary economic assessment of the Kwanika project in the first half of 2009. Meanwhile we will continue to advance the balance of the exploration portfolio either alone or with partners and may consider additional partnerships on these other properties to meet this objective. Thank-you for your patience and support over the past year. Sincerely,  D.W. Moore President & CEO SERENGETI RESOURCES INC. | |
