Cononish Gold and Silver Project

Map 2 — Click to enlarge

The Conon­ish gold and sil­ver vein is hosted by a meta-sedimentary sequence of pelites, psam­mites and cal­care­ous rocks of the Appin and Argyll groups belong­ing to the Dal­ra­dian Super­group. The gold and sil­ver occurs within a steeply-dipping quartz vein which is up to 8.3m wide and has an aver­age width of about 2m. It has a known ver­ti­cal dimen­sion of about 500m and it can be traced along strike for more than 1km.

The Conon­ish gold and sil­ver deposit was delin­eated by dia­mond drilling car­ried out between 1985 and 1988 and an under­ground devel­op­ment pro­gram was com­menced in 1990. A total of 1280m of under­ground adit devel­op­ment was also com­pleted, of which 590m was dri­ven on the vein.

The best inter­cepts from the dia­mond drilling included:

JORC Code Com­pli­ant Resource

• Mea­sured, Indi­cated and Inferred Min­eral Resource cat­e­gories total 154,000 ounces of gold and 589,000 ounces of sil­ver (using 3.5g/t gold cut off)
• Snow­den notes: “…there is strong poten­tial to prove up fur­ther resources close to mine (within a few kilo­me­tres). This is likely to be in the region of 160,000 to 320,000 ounces of gold.”

Snow­den Min­ing Indus­try Con­sul­tants Ltd (“Snow­den”) has com­pleted an inde­pen­dent JORC com­pli­ant resource report (8.3Mb) for the Company’s Gold Project at Conon­ish in the Grampian High­lands of mid-western Scotland.

The fol­low­ing infor­ma­tion is sum­ma­rized for the Snow­den report, which was com­pleted by Dr Simon Dominy and Dr Ian Plat­ten of Snowden’s Lon­don Office. The com­plete report will be avail­able for view­ing on the Company’s web­site within 30 days of this ASX Release.

Geol­ogy and Mineralization

The Conon­ish mine com­prises a gold-silver min­er­al­ized nar­row quartz-vein sys­tem, the Conon­ish Vein, which has been trenched, dia­mond drilled and devel­oped under­ground along one horizon.

The Conon­ish Vein is a steep, nar­row (6m) vein sys­tem trend­ing NE-SE and emplaced in Late Pro­tero­zoic metased­i­ments of the Cale­donides mobile belt. It shows brit­tle style defor­ma­tion and com­pletely post­dates meta­mor­phism and asso­ci­ated Cale­don­ian foli­a­tions. Quartz vein­ing is asso­ci­ated with the Tyn­drum Fault, one of a set of NE-SW trend­ing, left lat­eral, faults char­ac­ter­iz­ing the Scot­tish High­lands. The vein sys­tem was emplaced dur­ing the late to post-tectonic (late Sil­urian to early Devon­ian) episode of gran­i­toid intru­sion in the Grampian Highlands.

Gold occurs as elec­trum and some minor amounts of native gold, sil­ver occurs addi­tion­ally as minor tel­lurides and native metal. The gold/electrum is fine-grained, gen­er­ally <100 µm in size. Vis­i­ble gold up to 1,000 µm to 2,000 µm in size is rare. Assay data sug­gests that gold and sil­ver is spa­tially asso­ci­ated with sul­phides in the quartz. The main sul­phide is pyrite, but galena, chal­copy­rite and spha­lerite occur in small amounts.

Elec­trum and/or gold occur with galena in frac­tures in the pyrite and asso­ci­ated with the con­tacts between galena and pyrite grains. Some very fine-grained (<20µm) native gold occurs within the pyrite

Data

The Conon­ish resource esti­mate is based upon dia­mond drill­hole and adit face sam­ple data col­lected in the 1980’s. Most of the core, all core logs, face sheets, geo­log­i­cal maps and assay cer­tifi­cates are held by Scot­gold. Snow­den was able to review all the data and found it to be of an accept­able qual­ity for resource esti­ma­tion. Vein geol­ogy was val­i­dated through under­ground vis­its to the Conon­ish Adit. Sam­pling, QAQC and sam­ple col­lec­tion meth­ods were of an accept­able quality

Resource Esti­ma­tion

A polyg­o­nal and weighted aver­age based resource esti­mate was under­taken for both gold and sil­ver. This was pre­ceded by sta­tis­ti­cal analy­sis of the grade data.

Sta­tis­ti­cal analy­sis indi­cates that the major­ity of the gold and sil­ver is located within the quartz vein domain, with a lesser amount in the wall­rocks. Top-cut of 70 g/t gold and 200 g/t sil­ver were applied to all assay inter­vals prior to com­posit­ing for estimation.

With the cur­rent sus­tained increase in gold and sil­ver prices to over US$800/oz gold and $15/oz sil­ver, and com­bined with the poten­tial pre­mium on sales on branded ‘Scot­tish Gold’ jew­ellery. Snow­den believes that resources of a grade of 3.5 g/t gold or above (effec­tive breakeven cut-off grade) have a rea­son­able prospect for eco­nomic extrac­tion. The resource was esti­mated using a min­i­mum min­ing width of 1.2 m, giv­ing a min­i­mum metal accu­mu­la­tion cut-off of 4.2 m.g/t gold. At this level, it was found that the Conon­ish Vein has a paya­bil­ity of 85% (based on analy­sis of the close-spaced adit samples).

Resource Clas­si­fi­ca­tion

The Conon­ish Main Vein resource was clas­si­fied into the Mea­sured, Indi­cated and Inferred Min­eral Resource classes based on the JORC 2004 Code (Tables 1.1 and 1.2). It should be noted that Min­eral Resources are not Ore Reserves, and thus do not have a demon­strated eco­nomic via­bil­ity. A pre­lim­i­nary eco­nomic analy­sis was under­taken to show the like­li­hood of the Min­eral Resources hav­ing ‘rea­son­able prospects for even­tual extraction’.

The resource was defined on the basis of a man­u­ally defined bound­ary defin­ing the limit of drilling and devel­op­ment. Out­side this limit the drilling grid is too sparse or absent to allow the def­i­n­i­tion of resources with any confidence.

Con­clu­sions

Conon­ish has the poten­tial to be an eco­nomic, small, high-grade, nar­row vein under­ground min­ing oper­a­tion pro­duc­ing between 20,000 to 30,000 ounces of gold per annum. There is some poten­tial for increased gold grade locally at Conon­ish, due to a high nugget effect and an infor­ma­tion effect due to sparse drilling in areas of the Conon­ish Vein. There is some poten­tial for increased gold grade locally at Conon­ish, due to a high nugget effect and an infor­ma­tion effect due to sparse drilling in areas of the Conon­ish Vein.

Snow­den also believes that there is strong poten­tial to prove up fur­ther resources close to mine (within a few kilo­me­tres). This is likely to be in the region of 160,000 to 320,000 ounces of gold. Sim­i­larly there is also strong poten­tial to prove up resources within Scot­gold Resources’ licence areas, along the regional Tyn­drum and Loch Tay Fault Zones, gen­er­ally within 70 km of the Conon­ish site.