AUSTRALASIA GOLD LIMITED - geoscience.nt.gov.au · The resource estimate was based on a standard Surpac block model using ID² grade interpolation. Block dimensions were 2m (N-S)

AUSTRALASIA GOLD LIMITED

MCN 20–25, 3578, 4248

GLENCOE PROJECT

NORTHERN TERRITORY

Report for 1st January 2004 to 31st December 2008

KEY WORDS: Pine Creek SD52-08 1:250,000 Sheet,

Batchelor 5171 1:100,000 Sheet, Exploration, Glencoe, Gold, Pine Creek Orogen, Australasia Gold Ltd

By V. Draganuta

January 2009

Report for MCN 20-25, 3578, 4248 from 1st January 2004 to 31

st December 2008

CONTENTS

1. SUMMARY

2. TENEMENT AND OWNERSHIP

3. OBJECTIVES OF EXPLORATION

3.1. Generalised Geology

3.2. Historical Exploration

3.3. Program Objectives

3.3.1. Historical Data review and Mineral Resource Estimate

3.3.2. Survey

3.3.3. IP and Resistivity survey

3.3.4. Review of deposit geology

3.3.5. Reverse Circulation and Diamond Drilling Program

4. WORK COMPLETED

4.1. Historical Data review and Mineral Resource Estimate

4.2. Survey

4.3. IP and Resistivity survey

4.4. Review of deposit geology

4.5. Reverse Circulation and Diamond Drilling Program

4.6. Rehabilitation

5. RESULTS AND INTERPRETATIONS

5.1. Historical Data review and Mineral Resource Estimate

5.2. IP and Resistivity survey



6. PROGRAMME RECOMMENDATION

7. EXPENDITURE


st December 2008

Figures

Figure 1 Glencoe MCN20-25_3578_4248 – Location and Access.

Figure 2 Glencoe MCN 20-25, 3578, 4248 Tenements

Figure 3 Glencoe Drilling Program 2007-2008 – GDA94

Figure 4 Glencoe Drilling Program 2007-2008 – Local coordinates

Attachments

MCN20-25_3578_4248_2008_A_02_DrillCollars.txt MCN20-25_3578_4248_2008_A_03_Lithologs.txt MCN20-25_3578_4248_2008_A_05_DownholeSurvey.txt MCN20-25_3578_4248_2008_A_06_LithologyCodes.txt MCN20-25_3578_4248_2008_A_07_Structure.txt MCN20-25_3578_4248_2008_A_08_Alteration.txt MCN20-25_3578_4248_2008_A_09_Vein.txt MCN20-25_3578_4248_2008_A_10_Mineralisation.txt MCN20-25_3578_4248_2008_A_11_SG.txt MCN20-25_3578_4248_2008_A_12_ResEval.pdf MCN20-25_3578_4248_2008_A_13_SurveyReport.pdf MCN20-25_3578_4248_2008_A_14_ZongeLogistics.pdf MCN20-25_3578_4248_2008_A_15_GeophysGlencoeReport.pdf MCN20-25_3578_4248_2008_A_16_Glencoe_DFielding.pdf MCN20-25_3578_4248_2008_A_17_CrossSectionGeophys.pdf MCN20-25_3578_4248_2008_A_18_PlansGeophys.pdf MCN20-25_3578_4248_2008_A_19_FileListing.txt


st December 2008

1. SUMMARY

This report covers the exploration work carried on MCN’s 20-25, MCN3578 and MCN4248 for the period of 1st January 2004 to 31st December 2008.

The Glencoe Project is situated on pastoral land approximately 140 kilometres south east of Darwin in the Pine Creek Geosyncline of the Northern Territory. Access is via the Stuart Highway and the old Woolwonga haul road (sealed) that passes within metres of the Project.

The deposit was a geochemical discovery made in the mid 1980s, and further exploration defined a gold mineralised vein system over a strike length of 1800 meters.

During the reporting period, Australasia Gold completed the following exploration work:

• During 2004 and 2005, a comprehensive review of the existing project

database and assimilation of understanding of the Glencoe deposit and

project potential, supported by periodic site visits;

• Completed Resource estimate calculations (in 2006);

• Re-established the local grid, initially surveyed in 1987 by Geo-Spectrum;

• Conducted the first IP and Resistivity survey on 9 profiles for a total of 12,775

meters (in 2007);

• Reviewed the deposit geology and generated a new series of cross-sections,

improving the previous geological model (in 2007);

• Conducted a new drilling program consisted of 12 Reverse Circulation holes

and 8 Diamond holes (HQ core) with RC precollars, for a total of 2155.2

meters (in 2007 and 2008).

The scope of the drilling program at Glencoe was to test the extent of mineralisation beneath the existing resource estimate, including a number of exploratory holes and also for testing the IP anomalies revealed by the geophysical survey.

The drilling program, achieved in two stages, in December 2007 and August-September 2008, confirmed and extended the results of previous drilling programme from the mid 1980s.

The coring program at Glencoe has shown that the limits of mineralization continue to almost 200m below surface.


st December 2008

Figure 1 Glencoe MCN 20-25, 3578, 4248 – Location and Access

2. TENEMENT AND OWNERSHIP

The Mineral Claims were originally issued to Magnum Gold NL on 16 May 1983 (MCN 20-25), 7 August 1990 (MCN 3578) and on 13 March 1992 (MCN 4248).

All MCN’s (apart from MCN 25) were transferred on 20th of September 1999 to the Australian Land Company Pty Ltd.

Australasia Gold Ltd acquired all the shares in the titleholder The Australian Land Company Pty Ltd on 22nd April 2004, and formally assumed responsibility for activities on these tenements.

MCN’s 20 to 25 and MCN3578 were renewed on the 8th November 2006 and will expire on the 5th October 2010. MCN4248 was renewed on the 8th October 2006 and will expire on the 31st December 2011.

3. OBJECTIVES OF EXPLORATION

3.1. Generalised Geology

The Glencoe deposit belongs to Palaeo-proterozoic Mount Bonnie Formation, the upper part of the South Alligator Group, in the Pine Creek Inlier.

The lithological characteristics were interpreted to be consistent with a stratigraphic position in the Mt Bonnie Formation rather than the overlying Burrell Creek Formation because of the relatively higher proportion of carbonaceous and pyritic sediments.


st December 2008

The mineralisation is hosted mainly by pelites followed by medium to coarse greywackes and siltstones (all being metamorphosed in a low grade) and contained within a complex of quartz veining or as stratabound bodies (“saddle reef” geometry) and shearing, spatially associated with the axial regions of shallow plunging anticline; within the Glencoe area the interpreted structure is trending NW to SE.

Minor biotite-chlorite rich mafic dykes (lamprophyres) intrude the sediments and may themselves be altered and mineralised.

3.2. Historical Exploration

The following event sequence summary is:

(1) 1985 – 1986. Discovery process, followed by definition drilling completed by end 1988, overseen by Earth Resources Australia Pty Ltd (ERA) on behalf of Magnum Resources Ltd/Magnum Gold NL.

Anomalous gold values from an initial auger drill program of 11 holes (56m) was followed up by costeaning to enable more intensive bedrock sampling.

Costean excavation to maximum depth of 4.5 metres was done in two phases, consisting of 1050 metres in 1985 (7 costeans) and 1060 metres in 1986 (17 costeans).

The next phase consisted of shallow RAB drilling (to a depth of 6 to 9 metres) over a broader area, on north-south prospect grid lines at 20 metre spacing. This was conducted in two phases, totalling 2405 metres in 386 holes.

Following the RAB drilling, an intensive reverse circulation and diamond drilling program was carried out. 310 RC holes and 59 diamond holes were completed.

(2) 1988 – 1989. Initial resource estimates by ERA on behalf of Magnum, with results achieved considered inadequate to support a standalone operation. Results of preliminary metallurgical test work by Normet Pty Ltd reported in July 1988.

(3) 1989 – 1990. A bulk sampling/trial mining operation by Magnum, consisting of four small pits and the extraction of around 49 000 tones for processing through the nearby Mt Bonnie plant operated by the Tanami Joint Venture.

(4) 1990 – 1997. Discussions were held with several other parties regarding development of the deposit, without success. In early 1995 a second limited trial mining exercise was initiated under an agreement between Magnum and Territory Goldfields NL. This exercise was aborted after extraction of a further some 10 000 tones of ‘ore’ grade material and 13 500 tones of ‘low grade’ material from one of the four initial pits. This material remains on site as surface stockpiles.


st December 2008

3.3.Program Objectives

3.3.1. Historical Data review and Mineral Resource estimate

In order to determine how much of the Glencoe deposit may be economic to mine as the first stage of the Pre-Feasibility study, a Mineral Resource estimate using a 3D block method was proposed.

Resource Evaluations Pty Ltd (ResEval) was contracted by Australasia Gold Limited (in 2006) to complete a resource estimate for the Glencoe Gold deposit.

Data provided to ResEval by Australasia Gold Limited included reports, interpreted geology sections and some resource outlines generated by Magnum (1989) / Ore Reserve Evaluation Services (2003). A database of exploration and grade control drill holes was also provided.

3.3.2. Survey

A survey to establish photogrammetric mapping control at the Glencoe project site was undertaken by Geo-Spectrum Pty Ltd in August 1987 for Earth Resources Australia Pty Ltd. The survey was related to the Australian Map Grid (AMG 66) and to the Australian Height Datum (AHD). Concomitant with this the survey was also connected to the local exploration grid at the project site by tying into a number of stakes on the grid baseline.

In order to re-establish the local grid and a correspondence between local grid system (previously correspondence was with AMG 66) and GDA94, Ausurv Pty Ltd was contracted by Australasia Gold Limited (in 2007) to complete a survey for the Glencoe Gold deposit.

3.3.3. IP and Resistivity Survey

A detailed IP and Resistivity survey was planned to acquire more data for generating new drilling targets and to be a support in reviewing the geological structure of the deposit.

3.3.4. Review of deposit geology

Based on existing geological database, a review of geological interpretation consisting of a new set of cross-sections for covering all the explored area (outlined by the RC and DD drill holes) has been planned.

3.3.5. Reverse Circulation and Diamond Drilling Program

Australasia Gold Limited proposed to conduct RC and diamond drilling at Glencoe to test the extent of mineralisation beneath the existing resource and also to collect metallurgical and geotechnical information to assist in evaluating economic potential of the Glencoe Project.

The proposed drilling was to involve; • 8 diamond core holes ranging from 120 to 250 metres total depth (each

consisting of approximately 60 to 120m RC precollar, 60m to 120m HQ/HQ3 diamond tail) to test the extent of known mineralisation;

• 12 RC holes of 60 to 80 metres to test shallow mineralisation and geophysical targets defined by the IP survey.

Total metres: 1550m RC, 600m HQ/HQ3 core.


st December 2008

4. WORK COMPLETED

4.1. Historical Data review and Mineral Resource estimate

The current resource estimate was carried out in the ResEval Perth office during April and May 2006.

The resource estimate was based on a standard Surpac block model using ID² grade interpolation. Block dimensions were 2m (N-S) x 10m (E-W) x 2m (vertical), with sub blocking of 1m x 5m x 1m. A 20g/t Au top assay cut was applied, and the resource was reported using 1g/t Au as block grade cutoff.

Drill holes used in the resource estimate included 157 surface RC holes (from a total of 310 RC holes) and 53 surface diamond holes (from a total of 59 holes) for a total of 9,673m of drilling. All holes were drilled by Magnum Resources between 1986 and 1988. Holes were generally drilled at 20m spacing throughout the deposit and orientated at 60° to the horizontal.

The block model was constrained by an interpreted resource envelope or wireframe based on a nominal 0.5g/t Au cutoff grade. A minimum downhole width of 2 metres was used for the main ‘shears’, while some intervals of 1 metre width were included in the model from the surface layer of mineralization, and from the interpreted flatter lying veins flanking the main shears, and described as ‘saddle reef ’ mineralization (see attached report MCN20-25_3578_4248_2008_A_12_ResEval.pdf).

4.2. Survey

During May 2007, AUSURV Pty Ltd re-established the local grid, initially surveyed in 1987 by Geo-Spectrum.

The north-east boundary of the grid was marked as a baseline and pegged every 100 metre. Consequent and parallel with this line, lines were pegged every 200 meters east-west. All pegs were marked with long life paint pens.

Limits of required local grid were: 1400N – 2600N and 2800E – 4800E.

The transformation parameters to convert between GDA94 and local grid datum are as follows (see attached report MCN20-25_3578_4248_2008_A_13_ SurveyReport.pdf):

GDA94 to Local (origin point 1001)

Local to GDA94 (origin point 1001)

Rotation 34°28’37” Rotation -34°28’37” Scale 0.999494259 Scale 1.000505997

Shift East -768425.534 Shift East 768425.534 Shift North -8510174.325 Shift North 8510174.325


st December 2008

Figure 2 Glencoe MCN 20-25, 3578, 4248 Tenements and re-established grid position

4.3. IP and Resistivity Survey

During June of 2007, Zonge Engineering and Research Organization (Zonge) completed an IP and Resistivity survey on Glencoe deposit.

The survey commenced on the 22nd of May and was completed on the 20th of June, 2007. In this time DDIP data were collected along nine lines at 50m a-spacing, producing 1864 points of data over 12.775 line kilometers (see attached report MCN20-25_3578_4248_2008_A_14_ZongeLogistics.pdf).

The apparent resistivity and chargeability data was collected using a dipole-dipole array with a 50m dipole to a depth of level n = 6. The line separation is 200m. The lines were arranged to avoid the open pits which are now full of water.

The depth of investigation is at least 160m and perhaps 200m in many places (see attached report MCN20-25_3578_4248_2008_A_15_ GeophysGlencoeReport.pdf).


In order to have a more detailed interpretation on Glencoe deposit’s structure a new set of cross-sections has been achieved. The previous set of cross-sections targeted only the central part of the Glencoe deposit, being used for outlining the resource area (see attached report MCN20-25_3578_4248_2008_A_16_ Glencoe_DFielding.pdf).


st December 2008

The revised geology extended and improving the previous interpretation, comprising almost all the drilled holes.


The drilling program at Glencoe Gold deposit consisted of 12 RC holes and 8 diamond holes with RC precollars, being achieved in two phases: in December 2007 and August-September 2008.

The scope of the drilling program was to test the extent of mineralisation beneath the existing resource outline, including the induced polarised anomalies revealed by the geophysical survey.

In December 2007, the following drill holes were completed: • GRC 001 and GRC 002; • GLD 001; • Precollars for GLD 002 and GLD 003.

During August-September 2008, the following drill holes were completed: • GRC 003 to GRC 012; • Diamond tails for GLD 002 and GLD 003; • GLD 004 to GLD 008.

All holes were drilled at an average angle of 60o and average azimuth of N30o and N210o (GRC012 and GLD 006); all were logged during drilling and sampled at 1 meter interval with duplicates at 20 m interval. The drilling contractor for RC holes and RC precollars was Johanssen Drilling and for diamond tails was H2O Drilling.

Details of the completed RC and diamond holes are tabulated below:

Hole No. Northing Easting RC Precollar Core

Total Depth

m m m m

GRC 001 770 766 8 512 754 49.0

49.0 GRC 002 770 752 8 512 733 85.0 85.0 GRC 003 770 765 8 512 982 84.0 84.0 GRC 004 770 816 8 512 932 90.0 90.0 GRC 005 770 481 8 513 399 90.0 90.0 GRC 006 770 885 8 513 279 90.0 90.0 GRC 007 771 119 8 512 851 60.0 60.0 GRC 008 771 129 8 512 826 54.0 54.0 GRC 009 771 173 8 512 816 60.0 60.0 GRC 010 771 194 8 512 811 60.0 60.0 GRC 011 771 056 8 512 822 84.0 84.0 GRC 012 771 154 8 512 620 90.0 90.0

GLD 001 770 826 8 512 907

55.2 46.8 102.0 GLD 002 770 845 8 512 888 60.0 28.6 88.6 GLD 003 770 866 8 512 873 77.5 33.5 111.0 GLD 004 771 155 8 512 790 72.0 60.0 132.0 GLD 005 771 166 8 512 770 84.4 62.7 147.1 GLD 006 771 140 8 512 630 54.6 53.6 108.2 GLD 007 771 403 8 512 618 108.7 131.5 240.2 GLD 008 770 638 8 512 921 102.4 227.7 330.1

Total RC (including Precollar) – 1510.8 m; Total Core – 644.4 m.

TOTAL GLENCOE PROGRAM – 2155.2 m


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Figure 3 Glencoe Drilling Program 2007-2008 – GDA94


st December 2008

Figure 4 Glencoe Drilling Program 2007-2008 – Local coordinates

RC/precollar and core samples were dispatched to ALS Chemex, Adelaide for sample preparation and then forwarded to their Perth facility for analysis.

Samples were dried and entire sample was pulverised (Method PREP-21). Consequently were analysed for:

• Multiple element: ME – ICP43;

• Gold by either of: o aqua regia extraction: Au – OG43; o fire assay extraction: Au – AA25.

Elements and detection ranges are;

Au – 0.01- 100 ppm, Ag – 0.2 – 100 ppm, As – 1- 10,000 ppm, Cu – 1- 10,000 ppm, Pb – 1- 10,000 ppm, Zn – 1- 10,000 ppm, S - 0.01 – 10 %.

4.6. Rehabilitation

All PVC drill collars have been capped and await final receipt of assay results before being cut and plugged below surface. Sumps are yet to be back filled. All RC samples are bagged and remain on site, again awaiting receipt of assays before a decision to dispose of them can be made.

Seven small costeans/pits that were located adjacent to the South West waste dump and listed in a report by the then Department of Mines and Energy in May 2000 as a hazard to humans and animals, have been filled during site preparations for drilling.


st December 2008

5. RESULTS AND INTERPRETATION

5.1 Historical Data review and Mineral Resource estimate

The Mineral Resource was largely classified as Indicated due to the reasonable continuity of the mineralized zones and the adequate drillhole spacing. However, zones that contained wider spaced drilling (>20-30m), poor continuity and therefore lower confidence were classified as Inferred (including deeper portions of the main lodes). Small, discontinuous zones of peripheral mineralization intersected by less than 3 drill holes were also classed as Inferred.

The resource estimated by ResEval for the Glencoe Deposit represents moderate mineralization adjacent to and below existing open pits. The mineralization remains open in all directions.

Glencoe Deposit April 2006 Mineral Resource Estimate 1.0g/t Cutoff, High Grade Cut 20g/t

Zone Indicated Inferred Total

Tonnes Cut Au Tonnes Cut Au Tonnes Cut Au Cut Au T g/t T g/t T g/t Ounces

Oxide Fresh

208,000 2.1 45,000 2.4 253,000 2.2 17,700 174,000 2.0 277,000 1.9 451,000 1.7 25,200

Total 382,000 2.1 322,000 1.7 704,000 1.9 42,900

The Mineral Resource estimate complies with recommendations in the Australasian Code for Reporting of Mineral Resources and Ore Reserves (2004) by the Joint Ore Reserves Committee (JORC).

5.2 IP and Resistivity Survey

The nine lines of IP/resistivity have located variations in rock type, one main continuous zone of anomalous chargeability and a number of subsidiary zones of chargeability.

Based on chargeability anomalies, were selected and drilled five locations situated on following lines (according to local grid):

• 3,100 E: GRC 005, • 3,500 E: GRC 006, • 3,700 E: GRC 001 and GRC 002, • 3,900 E: GRC 011, • 4,300 E: GLD 007.

All holes encountered either weakly graphite-pelitic schist or significant sulfides (up to 5%) to explain the subsidiary zones of chargeability.

5.3 Review of deposit geology

Based on the revised geology together with the geophysical survey, a drilling program consisting of reverse circulation and diamond holes (RC precollars/diamond tail) has been designed.

5.4 Reverse Circulation and Diamond Drilling Program

An 18 holes program of reverse circulation (RC) drilling and RC-precollared diamond drilling (DD) has been completed at Glencoe. The program was designed to test the extent of mineralisation beneath the existing resource and also the new targets given by the IP anomalies.


st December 2008

The Glencoe area is interpreted as a sheared and folded structure (anticline zone) trending NW to SE; the lithology is represented by fine to coarser sedimentary rock types, all metamorphosed in a low grade (Mt Bonnie Formation is developed in Glencoe area).

The mineralization is hosted mainly by pelites subsequent to medium to coarse greywackes and siltstones and contained within a complex of quartz veining or as stratabound bodies (“saddle reef” geometry) and shearing, spatially associated with the axial regions of the shallow plunging anticline; this structure is developed almost continues, along Glencoe EL perimeter. The mineralised intervals consist of presence of sulphides together with chlorite-epidote alteration; the different orientations of the quartz veins are interpreted to be in relation with shear movements.

The lithology exhibits a low grade of metamorphism and all the rocks are weakly transformed. Based on this, the fine grained terms correspond to a quartz-sericite schist (siltstone) and graphite-pelitic schist (mudstone with different content of graphite/carbon) whilst the coarser terms (sandstone, greywacke) correspond to a low grade meta-sandstone.

The interpreted structure and the presence of the mineralization to depth are sustained by the results of the geophysical survey. The nine lines of IP/resistivity have located variations in rock type, one main continuous zone of anomalous chargeability, between line 3100E and 4700E (on local coordinates) and a number of subsidiary zones of chargeability.

All holes intersected expected widths of the mineralised zone, at or close to expected depth. This series of intersections demonstrates that the Glencoe mineralised system continues beyond the depth of previous drilling program (Magnum, 1980). The Glencoe lode structure seems to extend at apparently constant width, to an intersection depth 180m below surface, double the depth of the deepest pre-existing intersection at Glencoe.

6. PROGRAMME RECOMMENDATION

The next phase of work is yet to be determined. It will be based on a full review of assay results and interpretations from recent drilling, and will include metallurgical testing of samples of mineralisation retained from the drilling.

7. EXPENDITURE

Wages/Salaries $267,475 Consultants $ 58,758 Geophysics $ 90,381 Drilling $422,777 Assay $ 42,590 Travel & Accommodation $104,658 Consumables $ 12,462 Earthmoving $ 9,582 Sundry $ 3,647 Administration (10%) $101,233

Total $1,113,563

Documents

AUSTRALASIA GOLD LIMITED - geoscience.nt.gov.au · The resource estimate was based on a standard Surpac block model using ID² grade interpolation. Block dimensions were 2m (N-S)