Continental Gold Ltd.
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Continental Gold Ltd.

March 03, 2011 06:30 ET

Continental Gold Announces Continuous High-Grade Gold in Systematic Sampling of the Yaragua System at the Buritica Project, Colombia

TORONTO, ONTARIO--(Marketwire - March 3, 2011) - Continental Gold Limited ("Continental" or the "Company") (TSX:CNL)(OTCBB:CGOOF) is pleased to announce results from the Company's ongoing underground sampling of parts of the Yaragua Vein System at its Buriticá project in Antioquia, Colombia. These results complement the drilling program at Buriticá in which 50,000 metres of underground and surface diamond drilling have been completed to date and an additional 60,000 metres are scheduled in 2011.

Highlights 

  • Underground (drift) sampling on the San Antonio subzone/vein set has yielded the following average grades across average widths along substantial strike lengths at the given elevations
  52.9 g/t Au, 65 g/t Ag, 2.0% Zn across 1.77m, along 52m: RL 1555m
  99.3 g/t Au, 306 g/t Ag, 2.3% Zn across 1.56m, along 43m: RL 1540m
  134.0 g/t Au, 147 g/t Ag, 2.4% Zn across 1.26m, along 40m: RL 1515m
  203.1 g/t Au across 1.39m along 31m: RL 1495
  75.0 g/t Au, 405 g/t Ag, 0.5% Zn across 1.45m, along 62m: RL 1440m  

 

  • Sampling on San Antonio in raises above drifts has also demonstrated strong grade continuity between levels, for example
  49.0 g/t Au, 90 g/t Ag, 1.9% Zn across 1.23m along 24m above RL 1515m
  35.1 g/t Au, 41 g/t Ag, 0.7% Zn across 1.17m along 15m above RL 1495
  • In addition to high grade gold, several segments of the San Antonio vein set exhibit high grade silver, up 411.43 g/t over substantial intervals

  • The underground sampling has demonstrated continuous high gold grades along up to 500 metres of strike length and vertical extents of up to 115 metres of the San Antonio vein set

  • The results have generated confidence in the interpolation of drilling results for resource estimation and that substantial parts of the Yaragua System contain high-value precious metal mineralization potentially mineable over metre-plus widths.

Details

Continental Gold's 100%-owned, 18,000 hectare Buriticá gold project in Colombia, is characterized by widespread, high-grade gold mineralization in multiple vein packages as well as extensive gold-in-soil anomalies. Drilling (50,000m.) to-date has focused on the Yaragua (from surface and underground) and Veta Sur vein systems (from surface). The Yaragua system consists of families of sub-parallel, steeply-dipping base metal-carbonate type precious metal veins which occur within a 150-meter wide structural corridor over a minimum 550-meter strike length. This package has been drill intercepted to depths of up to 560m. The upper levels of the Yaragua system have also been the subject of 4500 metres of development comprising drifts (largely along veins), cross cuts, raises and other underground access, including historical stopes on the Murcielagos veins. These underground openings provide platforms for exploration and delineation drilling and for detailed characterization of the geometries and grade variations of the vein sets, including bulk sampling and treatment of ore parcels in the Yaragua pilot plant. This release examines the results of the ongoing program of systematic sampling of the underground openings. Figure 1 (plan view) shows the extents of results to date for over 5200 assay samples.

Channel sampling averaged three metres spacing and 1.5 metres across the drifts and raises. The (strike) lengths of sampled segments totaled 726 metres. Raise sampling, to examine vertical continuity, totaled 140 vertical metres. The average widths in Table 1 (below) are true widths and represent the assay intervals at zero and 3 g/t gold cut-off grades. In areas of vein splits or where development is "off-vein", mineralization may extend into the walls of the underground openings hence the stated widths are minimal. For example in the area of Segment 1 of the San Antonio vein set surface drill holes BUSY-11 and BUSY-31 respectively obliquely intersected 7.0m @ 88.3 g/t Au and 19.2m @ 79.7 g/t gold. Further sampling is being undertaken by "bazooka" drilling from the underground openings in such areas.

Table 1
 
      0 g/t Au cut-off   3g/t Au cut-off  
      Average       Average      
Segment  RL(m) Length Width Au Ag Zn Width  Au  Ag  Zn
/ID   (m) (m) (g/t) (g/t) (%) (m) (g/t) (g/t) (%)
San Antonio Vein set                
1/1 1555 52 1.77 52.9 65 2.0 1.39 67.1 85 2.4
1/3 1555 42 1.70 28.7 52 1.5 1.32 36.3 65 1.8
1/5 1555 41 1.89 14.5 32 1.2 0.89 29.0 59 1.9
1/2 S1555 9 1.35 22.1 33 1.4 0.98 29.6 41 1.9
1/4 S1555 9 1.10 30.0 56 2.7 0.57 57.0 104 5.0
 
1/6 1540 43 1.56 99.3 306 2.3 1.19 129.3 399 2.9
1/7 1540 9 1.16 65.0 72 1.6 0.92 81.1 89 1.9
1/8 1540 12 1.15 27.9 90 1.4 0.42 74.0 239 3.6
1/9 S1540 9 1.35 32.7 33 1.1 1.35 32.7 33 1.1
 
1/10 1515 40 1.26 134.0 147 2.4 0.74 227.3 246 3.7
1/12 1515 38 1.03 80.6 78 1.4 0.55 150.9 142 2.5
1/14 1515 35 1.28 43.8 104 2.1 0.56 98.8 233 4.6
1/16 S1515 24 1.23 49.0 90 1.9 0.82 73.6 134 2.8
1/11 S1515 23 1.22 21.1 46 0.6 0.80 31.6 69 0.9
1/15 S1515 18 1.17 19.4 108 1.3 0.53 41.4 232 2.5
1/13 S1515 24 1.33 4.7 45 1.6 0.59 9.5 97 3.2
 
1/17 1495 6 1.80 61.7 348 8.6 0.20 137.6 778 18.9
1/18 1495 31 1.39 203.1 na na 0.87 325.3 na na
1/19 1495 90 1.64 22.7 na na 0.81 45.0 na na
1/20 1495 36 1.50 13.8 54 1.3 0.84 24.1 94 2.2
2/22 1495 46 1.26 9.0 31 1.2 0.31 35.3 111 3.8
 
2/21 S1495 9 1.05 15.6 57 3.5 0.85 18.9 69 4.1
2/25 1495 14 1.39 16.6 303 0.7 0.41 55.4 1017 2.3
1/23 S1495 15 1.17 35.1 41 0.7 0.23 178.6 198 2.9
 
2/26 1440 32 1.32 23.6 56 0.3 0.35 87.8 190 0.5
3/27 1440 62 1.45 75.0 405 0.5 0.50 217.3 1142 1.4
3/28 1380 42 1.46 6.7 na na 0.40 24.0 na na
 
Centena Orientation                 
2/29 1495 9 1.14 18.7 148 2.3 0.63 33.5 264 4.0
2/30 1495 23 1.51 11.4 74 0.2 0.15 106.1 643 1.2
2/31 1440 28 1.28 8.9 183 0.8 0.20 53.3 1098 4.2
 
HW split                  
2/24 1495 45 1.37 16.9 28 1.1 0.22 102.0 135 4.5
1/32 1440 62 5.9 12 12 0.8 0.38 20.6 37 2.5
  1. RL denotes the average elevation of the drift samples
  2. RL's labeled Sxxxx represent the bottom of raises and length of sampling represents the vertical interval above this
  3. Some of the sampling in this table has been previously reported in presentation materials on the CNL website, but has been systematically re-processed to provide a more complete view
  4. Grades are uncut and widths are true (but locally minimal)
  5. Some old sampling did not include Ag and Zn assaying (na) and these arase being infilled for these and other elements.

San Antonio vein set

This vein set has been the most extensively underground sampled to date, involving 569 metres of strike length partially over five levels through a vertical interval of 115 metres and also by sampling on several raises between these levels (Table 1, Figures 1 and Figure 2).

On each of these levels there are substantial intervals (up to 90 metres) of continuous high grade gold over 1-2m (potentially mineable) widths, including some long intervals of bonanza grades, see Highlights for examples. In Segments 1 and 2, these intervals also correlate between levels. Vertical continuity is further demonstrated by the sampling in raises above RL's 1495, 1515, 1540 and 1555.

Some sectors of each Segment also exhibit high Ag/Au and may show very high silver grades in association with high grade gold. Assaying for silver and zinc is incomplete and these areas is currently being in-filled with additional sampling. The silver-rich sectors appear to be near, or partitioned by, circa. N-S faults, which also appear to partition gold grade patterns in the Yaragua system.

San Antonio drill intercepts also commonly exhibit high grade gold (and some high grade silver) in substantial intervals over much of the extents of current drilling (Figure 2).

These drilling results and the continuity shown by the channel sampling generate confidence that San Antonio will contribute significantly to Yaragua precious metal resources and to first stage mining blocks.

Centena orientations

In Segment 2, Centena-style veins diverge to more north-westerly strikes and may cross-cut San Antonio-style veins (Figure 1). Centena style-vein orientations are difficult to recognize in drilling and are probably more common than currently mapped. The underground sampling to date on three intervals of Centena veins on two levels exhibits moderate grades over metre-plus widths and high Ag/Au. (Table 1, Figures 1 & 2) Historical back-filled stopes of Centena orientations encountered in some near-surface Yaragua developments are interpreted to indicate high precious metal grades in these areas.

HW split vein

Sampling on this vein on two different levels (Table 1, Figures 1 & 2) has demonstrated long intervals of around 17 g/t gold over significant average widths. Drill intercepts to the west and at depth from the underground openings suggest higher grades for the HW vein in these areas, although these results may include the adjacent high grade Sofia vein which has not been sampled in underground openings.

Murcielagos vein family

This most southerly of the Yaragua vein sets has been partially mined around the three levels depicted in Figure 1. Systematic drift sampling results are only available on few parts of the Murcielagos vein set, but sampling was mostly along vein and assay results have not been adequately checked, so details are not provided herein. Figure 1 shows the colour gold grades from the historical sampling. This sampling shows good grade continuities consistent with the reported recovered grades of 7-15 g/t Au recovered in historical mining operations. Drilling in the Murcielagos vein family is sparse, but some recent drilling results are also shown in Figure 1. Taken together with the underground sampling and mining, these may be interpreted to indicate considerable potential for moderate to high grade precious metal resources in the Murcielagos vein family to depth below the current underground openings.

Cross-cuts

Cross-cuts at Yaragua exhibit numerous high grade intervals (Figure 1), some of which correlate with vein sets modeled from drilling and others which also require further investigation. Some of these veins may represent splits off major veins and are unknown strike length/depth extents but it is likely that some may contribute "opportunity ounces" in future mining operations.

In summary the underground sampling has demonstrated high gold grades that are remarkably continuous along strike and within the vertical range sampled for several of the Yaragua vein sets. Furthermore these gold grades are across potentially mineable widths. The continuity of the channel sampling data facilitates a significantly higher confidence level in resource modeling, a major plus in this high grade vein environment.

Similar high grades have been encountered in more widely spaced drilling on several vein sets for up to 300 vertical metres below the deepest channel sampled levels. Given the vertical continuity of the channel sampling data, these deeper drill intercepts can be correlated and grades interpolated with greater confidence.

Most of the 2011 scheduled underground development in Yaragua is geared towards creating platforms for deeper underground drilling. Much of this development will be on the Murcielagos vein system on Level 3, facilitating underground sampling of this vein system and also more systematic drilling to the north across the entire Yaragua corridor of veins down to the 1100 metre level.

Other Corporate Updates

The Company is also pleased to announce that it has entered into a letter agreement with Robert Allen relating to the purchase of (i) title to six mineral concession contracts and rights to two mineral applications totaling approximately 6,950.6 hectares adjacent to the Buriticá project; and (ii) title to three concession contracts totaling approximately 2,293 hectares adjacent to the Dominical project (the "Properties"), located in Colombia. Pursuant to the terms of the letter agreement, the Company has agreed to pay Mr. Allen a cash payment in the amount of US$2,000,000 and issue to Mr. Allen 495,106 common shares of the Company (having a deemed value of US$4,500,000). Mr. Allen is a director of the Company and beneficially holds 26,105,031 common shares of the Company (before giving effect to the transaction). The Company anticipates that it will enter into a definitive purchase and sale agreement (the "Definitive Agreement") in respect of the Properties containing customary representations, warranties, covenants, conditions and agreements on or before March 22, 2011. In the event that the Definitive Agreement is not executed, the letter agreement shall remain a legally binding and enforceable agreement. Closing is expected to occur on March 22, 2011, and is subject to receipt of all necessary regulatory approvals including that of the Toronto Stock Exchange.

Technical Information

Channeling was done every three metres along strike across the full width of the roof of the tunnel and across raises. Each 15cm.-wide channel involved three or more samples, mostly one on-vein and two adjacent samples. The trace of the sampling site was cleaned of any accumulated oxide material and a fresh channel was hand cut a minimum of two centimeters deep across a 15cm width. Samples were prepared by SGS Colombia in Medellín and then shipped for analysis to SGS certified assay laboratory in Lima, Peru. The company utilizes an industry-standard QA/QC program Blanks, duplicates and certified reference standards are inserted into the sample stream to monitor laboratory performance and a portion of the samples are periodically check assayed at ACME laboratories in Vancouver and/or Inspectorate Labs in Reno.

The results of the Company's underground sampling and drilling programs have been reviewed, verified and compiled by Vice President Exploration, Stuart Moller P.Geol., a qualified person for the purpose of NI 43-101. Mr. Moller has over 30 years of mineral exploration experience and is a Licensed Professional Geologist in the Province of British Colombia and a Fellow of the Society of Exploration Geologists.

About Continental Gold Limited

Continental Gold Limited is an advanced-stage exploration company with eight gold projects covering approximately 166,207 hectares in Colombia. Spearheaded by a management team with over 40 years of exploration and mining experience in South America, the Company has begun an aggressive exploration program on its extensive portfolio of properties with a focus on its flagship high-grade gold project, Buriticá and the highly prospective Berlin gold project. Additional details on the Buriticá project and the rest of Continental Gold's suite of gold exploration properties is available at www.ContinentalGold.com.

Forward-Looking Statements

This press release contains or refers to forward-looking information, including statements regarding the expected listing date of the Warrants and is based on current expectations that involve a number of business risks and uncertainties. Forward-looking statements are subject to significant risks and uncertainties, and other factors that could cause actual results to differ materially from expected results. Readers should not place undue reliance on forward-looking statements. These forward- looking statements are made as of the date hereof and the Company assumes no responsibility to update them or revise them to reflect new events or circumstances other than as required by law.

To view Figures 1 and 2, please visit the following link: http://media3.marketwire.com/docs/Continental_Figures.pdf.

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