BERAL, INC.
Andrew Racz
Director of Research
300 East 54 Street, Suite 26C
New York, NY 10022
Phone: (212) 319-6949
Fax: (212) 753-1944
E-mail: mlikar@aol.com

Sutter Gold Mining, Inc.

November 16, 2009

(SGM-V)

Shares Outstanding

104,000,000

Strategic Share Holdings

 

8%
50%

US Energy
South African Holding Company

Price

13¢

Price Range 2009

 

Warrants

$5.00

13,000
7,000

Warrants (exercisable at 15¢)
Options (20¢)

Assume

 

Constant Cash Needs
Company is in tits early stage of its projected history.
The financial strength of the two major recent owners has more than hidden power.

PROFILE -

Sutter Gold Mining Inc is a junior gold exploration and development company, pursuing the goal of becoming an emerging producer through the evaluation of the development of its two properties: The Sutter Gold Project on the California Mother Lode in California and the El Alamo Project in which the company holds the rights to a geologically similar, high grade property, located in the northern Baja region of Mexico.

Share Capital: as of December 31, 2008

Trading:

TSX-V

Symbol:

SGM

Shares outstanding:

103,872,038

Warrants: (average exercise price C30.15)

12,794,994

Preferred Shares (convertible at CS 1.00)

254,414

Options (exercisable between C30.11-$0.35)

$0.04 - $0.22

Sutter Gold ‘s International Connection 

Sutter Gold Mining Inc. ("SGMI" or "The Company"), is incorporated in the province of British Columbia, and its principal business activity is the exploration of mineral properties. SGMI's corporate office is in Lakewood, Colorado. Sutter Gold Mining Company is a wholly-owned subsidiary of SGMI.

SGMI was established to conduct operations on mining leases and to produce gold from the Lincoln Project, a gold mining prospect in the Mother Lode mining district of Amador County, California.

Currently, 49.9% of SGMI'S common shares are owned by Rand Merchant Bank Resources, a wholly owned unit of the Rand Merchant Bank division of FirstRand Bank and a Trustee of the Telluride Investment Trust. The other 50.1% of SGMI'S common shares are owned by private investors.

RMB
United Kingdom
20 Gracechurch Street
London EC3V OBG
United Kingdom

Rand Merchant Bank, a division of FirstRand Bank Limited (London Branch)
Rand Merchant Bank also operates from a number of other countries, including the United Kingdom, where it operates as a division of FirstRandBank Limited (London Branch). From our London base, we leverage off our expertise and relationships in South Africa, the African continent, India and London to provide relevant and effective financial solutions for our clients. In addition to foreign exchange and money market dealing and hedging, we assist our clients with direct and indirect financing to facilitate their international capital requirements, and provide Investors with an array of major currency investments for their bespoke diversification needs.

RMB Resources, a division of FirstRand (UK) Limited
RMB Resources is one of Africa's leading natural resource players, providing innovative solutions to companies operating in the mining, oil, gas and energy sectors. With a presence in each of the major resource sector capital raising centers, we have an international capability to provide equity, quasi-equity and debt funding and draw on RMB's entire skills base and financial strength for the benefit of our clients. RMB Resources has offices in Sydney, Melbourne, London, Denver and Johannesburg.

Project Finance
Positioned as a significant project lender in South Africa and Africa, we focus on niche assets, offering customized options to the private and public sectors.

We arrange, underwrite and participate in limited and non-recourse project finance in the infrastructure/public-private partnership, mining, oil and gas, power, telecommunications and Africa focus sectors.

Our flexible offering includes:

  • Senior, subordinate, mezzanine, standby and bridging debt finance
  • Project equity
  • Arrangement of export credit facilities

Sutter Gold is both an independent corporation but also a “bridge” in America for RMB for further expansion.

The recent articles indicating Chinese purchase of Newman Mining is a lend to foreign capital seeking North American based precious metal assets.

SUTTER GOLD MINING INC.

This is an interview with Mr. Robert Hutmacher
Chief Financial Office of Sutter Gold Mining Company Inc.

Bob, talking to you, two issues come up. One, what does the company do? Two, who are the best friends of the company? It is a schizophrenic relationship. That is why the stock is so interesting. So, my first question is what is the company and where is it going?

ROBERT HUTMACHER [A]:  Sutter Gold has properties in California. The main project is the Lincoln Comot project, and that's in California. We're working on a feasibility study on that, and, of course, also continuing to work on the permitting process, some of which are permitted already. Certain permits just need amendment. So that's really the main focus of the company right now.

Q:  How many people are working at the company?

A:  Nine right now.

Q:  When would you get into a drilling program?

A:  There are no plans to do a drilling program right now.

Q:  So what is the next step to bring the company forward?

A:  It's completing the feasibility technical study.

Q:  That's basically paperwork.

A:  Yes, but it's defining the resource and everything that goes into an engineering feasibility study that can be filed on the exchange.

Q:  When the feasibility study is completed, what do you expect and what do you want to do?

A:  It's really confirming what we're thinking is there, which is a resource that will be economic to support a mine.

Q:  What happens when you raise money?

A:  Again, the first step is to complete the feasibility study. Once that is completed, then the Board of Directors will have to make a production decision and say, yes, the results are satisfactory so then we'll have to raise money to build a mine.

Q:  May I ask roughly how much money you think you will have to raise?

A:  That's a difficult question. That's part of what the feasibility study will determine. But that could be anywhere from $20 to $30 million.

Q:  If the feasibility study is favorable, you get the money, when would you get into production?

A:  I think once the production decision is made, generally it's going to be at least 18 months.

Q:  Maybe it's unfair to ask, but how much production do you expect, let's say two years from today or two and a half years from today?

A:  I think the goal would be to do something around 30,000 ounces per year.

Q:  So 30,000 ounces at $1,000 per ounce is $30 million.

A:  That sounds about right.

Q:  And you can do it for five or ten years?

A:  It depends on the resource estimate but that would be the goal.

Q:  But if you go to production for ten years at $1,000 we are talking about a $300 million potential cash flow minus the production costs, so let's say it's 50 percent. We are talking about $150 million coming into the company. Thus, $15M would equally represent $600M expected revenues and $300M income. We are betting twenty to one. If gold is $2,000 per ounce in 2013 – it is already $1.120 – this yearly revenue is $60M and profit is over $30M. It is 30¢ a share after $600,000,000 revenues.

A:  Yes, we certainly believe the potential is very high at Sutter.

Q:  It's important that in two years' time you may be bringing in $30 million. And the company itself today, with 100 million shares outstanding, is selling at let's say $15 million, which is half of the first year's revenue.

A:  Right.

Q:  Is there a possibility to expand the mine's scope and operation in the years to come?

A:  Yes. There's certainly potential to have other mines in the area. For instance, we have Lincoln Comet as the initial project. The Keystone and Eureka would be other projects in that area, and my recollection is there are roughly 11 mines in that general area under our control.

Q:  So in other words, if we look three years from now and the price of gold is $1,500 you would have a revenue base of $45 million cash staying in the company to start repaying the costs, and the valuation would certainly be higher than $.15 a share.

A:  I would hope so.

Q:  The company has very powerful stockholders, people who look at bigger numbers than $15 million. And if they see the possibility of making it, then they will put in money and put in energy and expand the company. The first is U.S. Energy. What is U.S. Energy's interest in the company?

A:  It's under 10 percent. I think roughly 4 to 5 percent.

Q:  What is their interest in the situation?

A:  They're certainly an interested investor.

Q:  What can they contribute besides money?

A:  I'm not sure I can speak for them but they have always been helpful.

Q:  But they definitely have money.

A:  Their balance sheet is strong.

Q:  Yes. They are certainly not unmindful of the potential.

A:  I would think so.

Q:  Now, let's go to South Africa. They are owners of 50 percent of the company.

A:  Right.

Q:  What do they have in mind?

A:  They have provided financing here recently with the revolving line of credit and have taken the most interest through a board member who is very knowledgeable and been of great assistance. They're certainly very interested in the project and would like to see the feasibility completed and a mine built that becomes profitable.

Q:  Can you describe the South African company?

A:  They're a very large bank and investment company. They provide financing to a lot of different companies around the world.

Q:  So it's basically a finance company, like many other South African companies.

A:  I believe that is correct.

Reflections On The Funding Of “Lilliput”

Sutter is an exploration company.

Price:

12¢

Market Cap:

$15M

Potential Production is:

30,000 ounces of gold beginning 2112

Life:

2112 – 2125

Expected Cash Flow:

$45M for 12 years = $540M

8% Owners:

U.S. Energy    :    $200M Cash Potential

Rand Merchant Bank:

$10B+ asset base

SGM's future is the success of corporate planning. Paraphrasing Winston Churchill after Pearl Harbor, "I have no doubt of the future – the rest is the proper application of overwhelming forces."

Disclaimer

Information contained herein is based on data obtained from recognized statistical services, issuers reports or communications or other sources believed to be reliable. However, such information has not been verified by us and we do not make any representation to its accuracy or completeness. Any statement non-factual in nature constitutes only current opinions which are subject to change. BERAL INC. or their officers, directors, analysts or employees may have positions in the securities or commodities referred to herein, and may as principal or agent buy and sell such securities or commodities. An employee, analyst, officer or a director of BERAL INC. may serve as a director for companies mentioned in this report. Neither the information nor any comment expressed shall constitute an offer to sell or a solicitation of an offer to buy any securities or commodities mentioned herein. There may be instances when fundamental, technical and competitive opinions may not be in concert. This firm may from time to time perform investment banking or other services for or which investment banking or other businesses from any company mentioned in this report.

 

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Andrew Racz. 300 East 54 Street, Suite 26C, New York, NY 10022
Phone: (212) 319-6949 Fax: (212) 753-1944. E-mail: mlikar@aol.com

Copyright © 2011 Andrew Racz. All Rights Reserved.

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