AUSTRALASIA GOLD INCREASES OWNERSHIP IN S.A. COPPER-GOLD PROJECT

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AUSTRALASIA GOLD INCREASES OWNERSHIP IN S.A. COPPER-GOLD PROJECT Powered By Docstoc
					Monday, 28 May 2007

Company Announcements Office
Australian Stock Exchange Limited
20 Bridge St
SYDNEY NSW 2000


        AUSTRALASIA GOLD INCREASES OWNERSHIP IN S.A.
        COPPER-GOLD PROJECT – PLANS FURTHER DRILLING

Highlights

       Australasia Gold increases ownership of Murninnie project to 90%.

       Initial drilling of the principal gravity anomalies at Murninnie did not reach the target.

       Testing for depth extensions of the Murninnie lode appear to have been unsuccessful

       Further drilling to be undertaken to identify the source of gravity anomalies

Increased project ownership

Australasia Gold Limited is pleased to announce that it is to increase its ownership in the
Murninnie copper-gold project, 45 kilometres southwest of Whyalla on South Australia’s Eyre
Peninsula.

Australasia Gold currently owns 45% of the Murninnie project with an option to acquire 85%.
It has renegotiated these arrangements to increase its ownership of the Murninnie project to
90% by agreeing to issue, subject to shareholder approval, 1.1 million shares.

The decision to increase project ownership is based on Australasia Gold’s ongoing
assessment of the prospectivity and potential of the Murninnie tenements. The Project Area
comprises:

   •   The 140-year old formerly privately owned and essentially untested Mine PM 156,
       which has produced 1,000 tonnes of high grade copper ore from shallow depths
   •   The surrounding 64 square kilometre EL 3542 licence area within the Gawler Craton,
       and
   •   Geological characteristics, geophysical features and geochemical anomalies
       indicating widespread prospectivity for multiple styles of copper mineralisation (with
       associated metals) and uranium mineralisation.


Results of Initial Drilling Program at Murninnie
The following is a preliminary interpretation from drill core and drill chip sample observations
and must await the results of assays, which are not expected for several weeks



1) Gravity anomalies (southwestern quarter of the EL):
Gravity anomalies indicate the occurrence at moderate depth of relatively dense rocks not
exposed at surface and possibly caused by iron oxide copper gold mineralisation. Two
vertical precollared diamond drill holes targeting each of the two main gravity anomalies were
completed at depths of 249 and 518 metres. Both holes were extended a little deeper than
the interpreted depth of the target source rocks. In each case, the majority of the hole
intersected rocks typical of the surrounding terrain - granitic gneiss with minor magnetite and
mafic lenses. No dense rocks were observed which could explain the gravity anomalies.
Locally in both holes the occurrence of minor chloritic alteration, hematite dusting of
feldspars, and pyrite with trace chalcopyrite in fractures suggest the possible proximity of an
iron oxide copper gold (“Olympic Dam style”) mineralising system which could be the source
of the gravity contrast.

Future drilling is scheduled and will rely upon more detailed gravity surveying and
interpretation of detailed data still to be collected from drill core

2) IP anomalies (Murninnie depth extensions):

In targeting depth extensions of the oxidised Murninnie deposit, an induced polarisation
geophysical survey had indicated the continuation into the primary zone of conductive
minerals, potentially the sulphide precursor of the oxidised mineralisation seen in the shallow
workings. Three angled precollared diamond drill holes were completed testing the strong IP
responses previously reported from the depth extensions of the Murninnie mineralisation.
The target zone was intersected at depths of between 50 and 150 metres below surface in
these holes. No visible sulphide mineralisation has been identified. The observed rock
characteristics and in particular the dissemination of conductive crystalline graphite appear to
provide sufficient explanation of the conductive IP response. Further assessment will be
made when assays and supporting data are available.

3) Soil geochemical anomaly:

This soil geochemical anomaly extends at least 1.5 km north and 2.5 km south of the
Murninnie deposit. Five traverses of shallow rotary air blast drillholes totalling 1,572 metres
were completed at approximately one kilometre intervals across the soil geochemical
anomaly extending along the line of the Murninnie host structure. While signs of alteration
potentially associated with mineralisation were apparent in places in the drill cuttings of
oxidised rock, assessment of results must await receipt of assays.

Conclusion
Australasia Gold remains enthusiastic about the potential of the Murninnie project to produce
economic mineralisation particularly from both the targeted gravity anomalies and from the
uranium potential in the eastern part of the tenement. The acquisition of the additional equity
in the project is viewed very positively by the directors.


The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on
information compiled by Trevor Ireland who is a fellow of the Australasian Institute of Mining & Metallurgy. Mr
Ireland is an employee of Australasia Gold Limited and has sufficient experience relevant to the styles of
mineralisation under consideration and to the subject matter of the report to qualify as a Competent Person as
defined in the 2004 edition of the Australasian Code for the Reporting of Exploration Results, Mineral Resources
and Ore Reserves (JORC Code). Mr Ireland consents to the inclusion in the report of the matters based on his
information in the form and context in which they occur.
For further information please contact Trevor Ireland on 08 8339 0580; tireland@australasiagold.com,au

				
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