Maiden Resource Statement - Mallappakonda (2361F)

TIDMKGLD

RNS Number : 2361F

Kolar Gold Limited

13 June 2012

Kolar Gold Limited

("KGL" or the "Company")

Maiden Resource Statement

220 per cent. Increase in JORC Compliant Resource to 195,000 oz Gold at Mallappakonda Deposit, South Kolar Licence Area (GP13)

Kolar Gold Limited ("KGL or the "Company"), the Indian focussed gold exploration and development company, today announces an upgrade of the JORC compliant gold resource at its Mallappakonda deposit in the South Kolar licence area (GP 13) in India from 61,527 to 195,000 ounces of gold. The new resource is derived from a combination of historic underground channel samples, historic Mineral Exploration Corporation Limited ("MECL") drilling and new validation drilling by KGL as part of a 8,000m drill programme completed over the South Kolar licence area since Kolar was admitted to AIM last year.

Highlights

-- New JORC compliant gold resource for Mallappakonda of 3.46 million tonnes at an average grade of 1.76 g/t gold containing 195,000 oz of gold independently compiled by Mining Associates Ltd

   --      An increase of 220 per cent. of the previous resource estimate 
   --      Drilling at Mallappakonda has validated historic MECL data; 

-- Sample results at KGL validation diamond drill hole KMK-02 include a 21.5m wide mineralised zone averaging 5.5 g/t gold (previously reported);

-- East and south of the main zones are several sub-parallel lodes that require further drill testing.

Commenting today, Richard Johnson, Chief Operating Officer, of Kolar Gold Limited, said:

"I am very pleased to announce Kolar's maiden resource statement at our Mallappakonda deposit since the Company was admitted to AIM last year. The historic gold resource of 61,527 oz gold defined by the MECL in 1984 has been more than trebled to 195,000 oz gold. There remains considerable scope to add additional ounces to the Mallappakonda deposit and resource drilling will continue as part of the Company's new 160 hole drill programme at South Kolar. We look forward to providing investors with further operational updates once additional assay results are received."

Mallappakonda Deposit Gold Resource

The Mallappakonda deposit ("Mallappakonda") was first identified during regional exploration conducted by the Geological Survey of India to the south of Kolar Gold Fields in 1975-79. Mineralisation occurs over 800m of strike length at the end of the prominent Mallappakonda Hill with only 150m having been evaluated with drilling and three levels of exploration development.

Mineralisation at Mallapakonda dips steeply to the west and is located on the western side of an upright, regional anticline. The anticlinal axis is marked by a prominent north-south trending ridge with locally steep slopes. Gold occurs within multiple, en-echelon sulphidic zones associated with beds of banded iron formation within mafic units.

Several substantial ancient workings are seen at surface. The underground exploratory work by MECL and Bharat Gold Mines Limited included two adits, three levels of drives, limited rise development and approximately 380m of underground diamond drilling. The historical data was sourced from the original documents by Mining Associates Ltd ("MA" or "Mining Associates") and entered into a Gemcom Surpac resource and mining data set with drill and channel sample database, scanned surface and level plans, digitised mine workings, interpreted resource domains and resource estimation block model. Higher grade zones are defined as over 2.5 g/t Au and located in tight parasitic folds with a vertical plunge within a well mineralised zone of an area 150m long, 30m wide and to a depth in excess of 300m. There is associated silver at slightly higher values than the gold.

The Mallappakonda gold resource, which was calculated from recent and historical drill data, is 3.46 million tonnes of ore at an average grade of 1.76 g/t gold, containing 195,000 ounces of gold. The revised resource estimate has been compiled by the Company's Competent Person, Mr Andrew J Vigar of Mining Associates and all work has been conducted under JORC guidelines.

Further work is proposed at Mallapakonda deposit via an underground programme of resource drilling from the two existing adits. Clearing work has been undertaken and approvals have been sought to reopen the adits in preparation for underground drilling.

http://www.rns-pdf.londonstockexchange.com/rns/2361F_-2012-6-12.pdf

Figure 1: Mallappakonda Mine - 3D resource models and drilling, looking north

Table 1. Mallappakonda Deposit - Historic Resources Estimated by MECL 1984

 
 JORC Equivalent Category    Resource (Mt)   Au (g/t)   Au (oz) 
--------------------------  --------------  ---------  -------- 
 Measured                            0.141       2.73    12,376 
--------------------------  --------------  ---------  -------- 
 Indicated                           0.206       2.21    14,637 
--------------------------  --------------  ---------  -------- 
 Inferred                            0.426       2.52    34,514 
--------------------------  --------------  ---------  -------- 
 Total Resource                      0.773       2.48    61,527 
--------------------------  --------------  ---------  -------- 
 

Table 2. Mallappakonda Deposit - Resource Statement - June 2012

 
 Resource Category    Resource (Mt)   Au (g/t)   Au (oz) 
-------------------  --------------  ---------  -------- 
 Measured                     0.534       1.95    33,000 
-------------------  --------------  ---------  -------- 
 Indicated                    1.486       1.74    83,000 
-------------------  --------------  ---------  -------- 
 Total Measured & 
  Indicated                   2.021       1.80   117,000 
-------------------  --------------  ---------  -------- 
 Inferred                     1.436       1.72    79,000 
-------------------  --------------  ---------  -------- 
 Total Resource               3.457       1.76   195,000 
-------------------  --------------  ---------  -------- 
 

Note - Reported tonnage and grade figures have been rounded off from raw estimates to the appropriate number of significant figures to reflect the order of accuracy of the estimate. Minor variations may occur during the addition of rounded numbers.

Notes to Accompany the Mineral Resource Estimate

-- Geological model was developed using level and sectional interpretation for 3D wireframes, mineralised (>1.0 g/t Au) and a core high (>2.5 g/t Au) separately.

-- Underground test work by MECL, and BGML included 4,153m of adit, level, sub-level and rise development, 380m of underground diamond drilling, 6861 assay samples.

   --     Data base consisting of 757 channels for 3568.83m and 40 historical drill holes for 4937.2m 

-- Three confirmation holes drilled by KGL totalling 646.5m and intersecting all lodes (except e5).

-- All drills composite down-hole to 2m within domains to give informing samples of hg (411), lg (650), e3 (45), e4(16) and e5(5). Each composite only used for one domain.

   --     Missing samples or intervals not used. 
   --     Top cap of 30 g/tAu applied to informing samples. 
   --     Total number of informing samples (composites) is 72 drills and 787 channels 

-- Estimates made using Ordinary Kriging with validation via Nearest Neighbour (3D polygonal) and Inverse Distance Squared estimates.

-- Block size of ; 4 m(E) by 25m(N) by 25 m(RL) and sub-blocks for volume 1 m(E) by 6.25m(N) by 6.25 m(RL).

   --     Directional anisotropy varied by domain. 
   --     Maximum search 200m all categories 
   --     Inferred resource category - minimum of 3 informing samples. 

-- Indicated resource category - at least 20 informing samples at an average distance of no more than 125m for hg and 100m for all other domains.

-- Measured resource category - was calculated for the domains hg and lg with at least 20 informing samples, within an average distance of no more than 50m and an elevation range of 790 to 870 mRL.

   --     Underground voids factored for each block 
   --     Removed all blocks within 20m of the surface, to allow for Ancient Workings. 
   --     Bulk Density of 3.0. 
   --     No mining dilution or loss, or metallurgical factors applied. 
   --     Cut-off grade used for resource reporting 1 g/tAu 

Competent Person

The summary review of geology and drilling results was conducted by Mr Andrew J Vigar who has sufficient experience which is relevant to the Archaean gold style of mineralisation and deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' (Australia) and is a Qualified Person as defined in NI43-101 (Canada). He is a Fellow of The Australasian Institute of Mining and Metallurgy (Melbourne) and a Member of the Society of Economic Geologists (Denver). Mr Vigar is employed by Mining Associates Limited of Hong Kong. Mr Vigar conducted a site visit to the Kolar Gold Projects and adjacent properties from 28 June to 2 July 2010 and February 2012. Mr Vigar does not have any interest (current or past) in any of the assets covered by this report.

About Kolar Gold Limited

Kolar Gold Limited is an Indian gold exploration and development company, listed on the AIM market (KGLD), which has an experienced international board and strong local partners. KGL has rights to explore and develop one prospecting licence and 13 further licence applications in the Kolar Gold Belt, an 80 kilometre long Archaean Greenstone Belt, in Southern India. The Kolar Gold Belt is one of the most prospective underdeveloped Archaean Greenstone Belts in the world and is regarded by Mr Andrew J Vigar of Mining Associates Limited, the Competent Person, as comparable to the Archaean Greenstone Belts of South Africa, Canada and Western Australia which have similar geology, structure and style of mineralisation. This project area includes 32 known mineralised prospects and covers 568 square kilometres in the southern states of Andhra Pradesh, Karnataka and Tamil Nadu. KGL commenced exploration on the first Prospecting Licence in South Kolar in February 2011. KGL is also jointly pursuing, with the mine employee unions, the acquisition and revival of the neighbouring historic Kolar Gold Fields which has produced 25 million ounces of gold at 15.9 grams per tonne over 120 years until closure in 2001.

For further information please contact:

 
 Kolar Gold Limited 
----------------------------  ----------------- 
 Nick Spencer                  [phone] 
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 Singer Capital Markets 
----------------------------  ----------------- 
 Nomad and Joint Broker 
----------------------------  ----------------- 
 James Maxwell/Jenny Wyllie    [phone] 
----------------------------  ----------------- 
 
 Ocean Equities Limited 
----------------------------  ----------------- 
 Joint Broker 
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 Will Slack                    [phone] 
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 Tavistock Communications 
----------------------------  ----------------- 
 Ed Portman/Lydia Eades        [phone] 
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This information is provided by RNS

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