Guanaco Project

These systems all strike east north east/west south west and dip steeply to the north.

Exploration drilling at Guanaco has been focused in the Cachinalito, Dumbo and Perseverancia systems. The combined measured, indicated and inferred resources of contained ounces of gold as a result of that drilling are shown on each vein.

2. Activity

• Intense gold mining activities between 1886 and 1939 with some interruptions.
• Copper was exploited between 1928 and 1930
• It is estimated that Guanaco produced in excess of a million ounces of gold until the mid 80's and 500k oz Au between 1993 and 1997.
• In 1991, Amax Gold optioned the property from Minera Guanaco and within 1 year developed a reserve of 11,5mm tonnes containing 1,77 grams per tonne gold.
• In 1992, Amax Gold leased additional properties from ENAMI. Mining began in 1993, and in 1997 was shut down due to mainly the low gold prices
• In 1999, Kinross Gold acquired Amax Gold, and the property was taken over by its local subsidiary Kinam Guanaco.
• After the acquisition, Kinam performed several exploration programs and technical reviews.
• In September 2002, Gold Rose International, a subsidiary of Austral Gold, executed an option purchase agreement to acquire the property.
• In March 2003, Guanaco Capital Holding acquired a 51% direct interest.
• In 2004 exploration activities commenced and were mainly focused in the previously known areas. Austral Gold has completed 323 drillholes with an aggregate length of 51,000 meters.
• At the beginning of 2008, an extense Geophysical (CSAMT) Program has identified over 70 high priority drill targets.
• In June 2008 drilling program has started with 30.000 meters.

 

3. Geology

3.1 Geology of the Guanaco Deposit

The Chile-Alemania Formation, represented by dacitic and andesitic tuffs and andesitic lavas of Paleocene age, has been intruded in the area by synchronous dacitic and rhyolitic domes. The deposit is located within a 5 kilometer long (E-W) and more than 1 kilometer wide hydrothermally altered zone hosted by the abovementioned formation.

Gold mineralization at Guanaco is controlled by pervasively silicified, ENE trending sub-vertical zones and related hydrothermal breccias. Silicification grades outward into advanced argillic alteration, and further into zones with propylitic alteration.

Dozens of mineralized veins have been exploited in the district, the most important veins being the Defensa, Perseverancia, Abundancia, and San Lorenzo.

In the Cachinalito vein system, most of the gold mineralization is concentrated between the 2,500 and 2,650 m levels. High grade ore shoots (up to 180 grams per tonne gold), 0.5 to 3.0 meters wide, have been mined out, but the lower grade halos, below 2 grams per tonne, can reach up to 20 meters in width.

The oxidation zone extends down some 70 to 80 meters and is relatively free of copper. Gold grades in this zone are generally high, sometimes exceeding 50 grams per tonne.

Native gold, forming dendrites, coarse and fine grains, is the most important ore mineral, although it is rarely seen. Disseminated pyrite is actually the most common mineral in the non-weathered ores, while enargite, luzonite and minor chalcopyrite are present in the deeper horizons. Chalcocite and covellite, together with copper carbonates, silicates and a number of rare copper arsenates (chenevixite, ceruleite, etc.), have been found in secondary enrichment zones.  Important gangue minerals are quartz, tabular barite, as well as pink alunite and kaolinite (in substitution of feldspars in zones affected by advanced argillic alteration), hematite, chlorite, epidote, etc.

The alteration pattern and the mineralogical makeup of the Guanaco ores have lead to its classification as a high sulfidation epithermal deposit.

 

4. Drilling Results

Read full press release 12 June 2009:
Significant increase to gold resources at Guanaco Project, Chile

Austral Gold Limited (AGD) is pleased to announce a significant increase to gold resources at its wholly owned Guanaco Project (“Guanaco”) in Chile following the Company’s successful 2008 drill campaigns. Total resources of gold at Guanaco are now 904,361 ounces, as set out in the table attached. This total excludes approximately 53,000 gold equivalent ounces from the significant silver content of mineralisation at Guanaco.

Competent Persons Statement
Dr Robert Trzebski is a Director of Austral Gold Limited. He has a Degree in Geology, a PhD in Geophysics, a Master in International Project Management and has over 13 years professional experience in mineral exploration, project management and research and development. Dr Robert Trzebski is a member of the Australian Institute of Mining and Metallurgy (AUSIMM) and qualifies as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.’ Dr Robert Trzebski consents to the inclusion of the resource figures identified in the context it has been provided in this presentation.

 

5. Geophysical Study

Starting at the end of 2007 a Geophysical Study was developed. Some infill lines of CSAMT were acquired along the Cachinalito Trend at the Guanaco Project in February 2008. This study was done in two Phases.

The Phase 1 CSAMT showed that vein trends at Cachinalito can be identified with resistivity highs interpreted to identify a loss of porosity of the host rocks from the hydrothermal event.

Actual veins are most often not detected as resistivity anomalies because their width is small compared to their depth of burial. However, the resistivity data can be useful to identify high resistivity trends into which veins may have been emplaced.

The Phase 2 results defined a 300m to 500m wide structural zone extending a strike length of over 5km that contains the known Cachinalito veins. Approximately 75 high priority CSAMT resistivity targets with similar to the response as observed over the veins identified in this structural trend. Other resistivity anomalies are identified outside the main structural trend are also prospective. Three lines of CSAMT were acquired on the west end of the Cachinalito trend where the last phase of drilling has failed to detect the vein. Four lines were acquired between the Cachinalito Central and Cachinalito Extension veins to infill coverage.

The infill CSAMT lines have shown consistent results to the previous data and better definition of the continuity of the structural trend. Well defined anomalies off the main Cachinalito vein trend suggest considerable potential for parallel veins. This has been suggested by interpretation of the ground magnetic data as well.

Little lateral structural offset is indicated west of the Cachinalito Central veins. The loss of continuity in tracing these veins is coincident with a transition to a lower resistivity environment.

Detail examination of the drill results and the trace elements may help sort out whether the projected veins are deeper or possibly have already been intersected but the mineralization is more dispersed because of a more porous host.