Name and Location
Katanning gold project (KGP), Australia.

Client
Ausgold.

Project Description
The results of a scoping study on the KGP, which comprises the Jinkas and Dingo deposits, have proved positive and indicate the potential for initial openpit gold production of 189 370 oz of gold.

Jinkas and Dingo have estimated resources of 10.3-million tonnes grading 1.27 g/t of gold.

The scoping study envisages development of the Jinkas and Dingo deposits through conventional openpit mining, comprising drill, blast, load (excavator) and haul (truck fleet) methods. The study assumes a contract mining fleet using a 120 t to 200 t hydraulic excavator and 60 t capacity dump trucks.

The study also assumes that mineralisation at KGP will be treated by a conventional carbon-in-leach process route, comprising crushing, grinding, leaching, elution/electrowinning and smelting to produce gold bullion at the project.

Further, preliminary economic studies conducted by Ausgold have indicated attractive metrics, with potential gross revenue of $316-million and potential operating cash flow of $140-million.

Net Present Value/Internal Rate of Return
Not stated.

Value
The scoping study estimates total preproduction capital costs at $70-million, comprising process plant and indirect capital costs of $57-million, and nonprocess plant-related capital of $13-million (for waste material prestrip, and upgrading of the tailings storage facility, run-of-mine pad and haulage roads).

Duration
Not stated.

Latest Developments
Ausgold believes there is significant potential for growth of the mineral resource available to openpit mining through extensional drilling around the Jinkas and Dingo desposits and other known targets.

A Whittle pit optimisation of the Jackson resource is planned, with mineralisation outcropping and down to a maximum of 80 m below surface.

Ausgold has previously highlighted the priority for drilling the White Dam mineralisation in the footwall of the Jinkas resource. With the proximity of the White Dam mineralisation to the Jinkas inventory, located 80 m below Jinkas, drilling success here is expected to have a positive impact on overall pit metrics.

Ausgold also proposes further exploration drilling to test targets at Datatine and Jinkas West, which have been identified through recent structural studies by SRK Consulting.

Key Contracts and Suppliers
SRK Consulting (scoping study).

On Budget and on Time?
Not stated.

Contact Details for Project Information
Ausgold investor relations, Denis Rakich, tel +61 8 9220 9890 or email drakich@ausgoldlimited.com.
SRK Consulting, tel +61 8 9288 2000, fax +61 8 9288 2001 or email perth@srk.com.au.