Continental Gold Ltd.
TSX : CNL

Continental Gold Ltd.

March 22, 2011 06:30 ET

Continental Gold Drills 10.8m @ 43.97 g/t Gold and 54 g/t Silver in New Deep High Grade Subzone at Veta Sur and 4.0m @ 135.88 g/t Gold and 114 g/t Silver at Yaragua, Buritica Project, Colombia

TORONTO, ONTARIO--(Marketwire - March 22, 2011) - Continental Gold Limited ("Continental" or the "Company") (TSX:CNL) is pleased to announce results from fifteen diamond drill-holes from the Company's ongoing program at its Buriticá Project in Antioquia, Colombia. Over 51,000 metres of diamond drilling have been completed on the property to date and eight drills are currently working on a 60,000-metre surface and underground drill program for 2011.

Highlights

Significant new drilling intercepts on the Veta Sur system include:
  10.8m @ 43.97 g/t Au and 54 g/t Ag including
  3.44m @ 123.08 g/t Au and 131 g/t Ag in drill-hole BUSY-146,
  10.7m @ 17.17 g/t Au and 214 g/t Ag in BUSY-140 and
  1.25m @ 364.49 g/t Au and 154 g/t Ag in BUSY-142

Drill-hole BUSY-146 includes a newly discovered high grade subzone in the deepest part of the Veta Sur system drilled to date. BUSY-142 further delineated a very high grade steeply plunging shoot in the "core" of the Veta Sur system which remains open to depth in high gold grades.

•  Significant intercepts from drilling at the Yaragua system include:
  4.0m @ 135.88 g/t Au with 114 g/t Ag including
  1.2m @ 449.90 g/t Au and 373 g/t Ag in drill-hole BUSY-120 and
  3.25m @ 22.79 g/t Au with 21 g/t Ag in BUSY-125

These and other results for the Yaragua system continue to demonstrate the continuity of potentially economic grade-thicknesses of several of the Yaragua vein sets over a substantial depth range and strike length.

Details

Continental's 100%-owned 18,000-hectare Buriticá project has several known areas of high-grade vein mineralization. The two most extensively explored of these areas are the Yaragua System which has been drill-tested along 550 metres of strike and 600 vertical metres, and the Veta Sur system which has been intersected along 500 metres of strike and 375 vertical metres. Both systems are characterized by multiple veins and both remain open at depth.

Veta Sur System

Table 1 presents summary results for seven new drill-holes on the Veta Sur system of veins. The holes confirm the continuity of multiple precious metal veins in the central 120 metres of the known 500-metre strike extent of the system and extend the vertical range of high grade mineralization to 375 vertical metres.

BUSY-146 demonstrates a new high grade (10.8m @ 43.97 g/t Au and 54 g/t Ag) sub-zone at 1425-metre elevation, almost 300 metres below the shallowest bonanza grade gold intercepts in Veta Sur and 200 metres below this system's very high grade "core" (Figure 1). An even deeper (1339-metre elevation) high-grade intercept in BUSY-146 also exhibits Stage–II style mineralization characteristics (low base metals, free gold & significant silver values), extending the vertical range over which Stage II mineralization overprint has been observed. Between these two intervals, at 1352-metre elevation, high grade Stage-I style mineralization exhibits pyrrhotite in addition to pyrite and also high Ag/Au and is interpreted to reflect deposition from more reduced hydrothermal fluids in the vicinity of Cretaceous carbonaceous metasediments abutting the Buritica intermediate intrusions. BUSY-146 also demonstrates that the Veta Sur system is open to depth in high grade gold.

Bonanza grade gold intercepts in BUSY-142 (Table 1) extend the region of very high grade intercepts (>100 g/t Au), in the central upper part of Veta Sur (Figure 1). This high grade "core" of the system, which exhibits strong Stage II-style mineralization overprints, is interpreted to represent a steeply plunging shoot with a length of more than 100 metres, open to depth and towards the surface.

BUSY-136 intersected two intervals of high Ag/Au (including 1.57m @ 6.13 g/t Au and 327.2 g/t Ag and 0.9m @ 66.17 g/t Au and 526.4 g/t Ag) on the northern side of Veta Sur system, as well as possible new vein to the southeast. BUSY-106, also drilled to the south but lost before target depth, intersected high Ag/Au intervals including 1.5m @ 233 g/t silver. On the southern side of Veta Sur, BUSY 146 intersected high Ag/Au intervals including 0.4m @ 64.33 g/t Au and 1195 g/t Ag. Further drilling into both sides of the Veta Sur corridor is expected to confirm high grade gold-silver veins.

A 19.2m intercept at 3.75 g/t gold with 19 g/t silver in BUSY-104 is the first indication of potentially bulk underground minable, lower grade material in the Veta Sur system. This style of mineralization has been well-documented at Yaragua with numerous thick intercepts at similar grade in the breccia.

Table 1 - Veta Sur drilling results
 
Hole ID From To Interval Gold Silver Zinc Elevation
  (m) (m) (m) (g/t) (ppm) (ppm) (m)
               
BUSY-104 122.60 130.50 7.90 10.28 26.0 1350 1610
  163.90 165.50 1.60 17.29 36.9 434 1574
  188.10 207.30 19.20 3.75 19.9 376 1550
  250.00 255.60 5.60 4.60 23.8 1880 1491
  282.30 282.75 0.45 22.89 71.0 558 1462
               
BUSY-112 111.70 113.10 1.40 15.05 8.6 1931 1629
  156.00 162.30 6.30 8.40 94.2 877 1586
including 156.30 159.40 3.10 13.92 163.8 1243  
               
BUSY-131 93.80 95.30 1.50 39.12 71.6 4416 1648
               
BUSY-136 128.70 130.27 1.57 6.13 327.2 4561 1675
  177.50 178.40 0.90 66.17 526.4 1037 1635
  181.50 189.00 7.50 5.02 17.3 521 1631
  270.00 271.50 1.50 6.35 10.9 2509 1558
               
BUSY-140 107.30 109.30 2.00 7.76 5.7 1005 1629
  113.40 116.35 2.95 4.18 30.1 2300 1622
  154.00 164.70 10.70 17.17 214.5 939 1586
including 154.00 156.00 2.00 46.05 956.0 836  
  172.30 177.50 5.20 3.24 8.1 1731 1568
  180.50 183.50 3.00 4.78 11.2 826 1561
  204.00 212.50 8.50 15.50 48.2 589 1540
               
BUSY-142 116.75 117.35 0.60 104.35 53.5 931 1619
  127.40 128.65 1.25 364.49 154.6 1996 1609
  139.00 144.55 5.55 8.89 17.5 451 1597
  159.00 162.10 3.10 5.52 4.5 218 1579
  168.20 169.70 1.50 10.08 18.0 185 1571
  170.70 175.40 4.70 7.33 126.0 247 1567
               
BUSY-146 141.40 141.80 0.40 64.33 1195.0 16900 1594
  296.50 302.60 6.10 4.80 25.3 4417 1445
  315.30 326.10 10.80 43.97 54.0 5957 1425
including 317.30 320.74 3.44 123.08 131.4 16576  
  393.90 397.70 3.80 22.57 152.5 3630 1352
  407.60 408.60 1.00 66.91 58.0 827 1339
     
(a)   True widths not known but estimated at 50% or higher of the quoted intercept
(b)   Grades are uncut and an external grade cutoff of 1.0 g/t Au used to determine intersection length and grade
(c)   BUSY- sequence drilled from the surface, BUUY- sequence from underground
(d)   Holes Busy-106 and Busy-126 lost above target depth
(e)   Awaiting final assays for Busy-109, 111, 116, 123-124, 132, 135, 137, 143-145 

Yaragua System

The results of eight new Yaragua drill-holes are summarized in Table 2. These drill-holes covered about 100 metres strike length in the central part of the known 550 metres of strike of the multi-vein Yaragua corridor and included a step-out drilled in the eastern part of the system (Figure 2). All drill-holes intersected several vein sets exhibiting potentially economic grade-thicknesses.

BUUY-54 was an underground hole drilled to the north crossing much of the width of and penetrating deeply into the Yaragua corridor. It cut several veins at potentially economic grades and widths including the San Antonio-FW-Vein A packages at elevations below 1200 metres, some of the deepest intersections drilled to date in the Yaragua system. Substantial widths of the potentially bulk minable Yaragua breccias were encountered higher in the drill-hole.

BUSY-110 showed good grade- thicknesses in the San Antonio—FW-Vein A packages, some 50 metres east of and at 300-350 metres higher elevations than in BUUY-54.

BUSY-120 intersected 4.0m @ 135.88 g/t gold, 114 g/t silver and 4.1% zinc in the San Antonio vein extending a very high grade segment of this vein set outlined by underground sampling (Ref. to the Company's March 3, 2011 news release). BUSY-125 intersected good grades and widths in the San Antonio vein set at RL's well above the underground sampling.

In the sparsely drilled eastern part of the Yaragua system, BUSY-119 cut the Murcielagos vein exhibiting gold grades comparable to those historically mined in this area. Further to the north and deeper this drill-hole also intersected a silver-rich vein and several other as- yet-uncorrelated auriferous veins.

Table 2 - Yaragua system drilling results
               
Hole ID From To Interval Gold Silver Zinc Subzone
  (m) (m) (m) (g/t) (ppm) (ppm)  
               
BUSY-110 85.75 87.30 1.55 5.16 9.0 975 Vein A
  126.60 128.10 1.50 27.95 11.0 6674 FW
  133.40 135.05 1.65 4.96 6.8 6975 Split
  140.65 141.35 0.70 55.64 316.0 41300 San Antonio
               
BUSY-119 112.50 114.00 1.50 11.95 36.0 8851 Murcielagos
  290.50 291.10 0.60 3.39 574 37800  

BUSY-120
137.00 141.00 4.00 135.88 114.0 41387 San Antonio
including 137.00 138.20 1.20 449.90 373.8 134475  
               
BUSY-125 71.80 75.05 3.25 22.79 21.1 17447 San Antonio
  116.40 118.30 1.90 10.35 6.9 6036 Sofia
  120.75 122.25 1.50 8.79 9.8 2500 Sofia
               
BUSY-128 89.20 91.60 2.40 12.33 8.8 6053 FW
  94.60 98.10 3.50 4.60 11.0 4646 San Antonio
               
BUSY-134 83.80 86.15 2.35 5.57 9.4 4252 FW
  136.40 142.35 5.95 4.45 15.2 7995 HW
               
BUSY-138 132.75 136.70 3.95 11.66 30.0 10803 San Antonio
               
BUUY-54 11.00 25.00 14.00 2.48 13.3 21071 Yaragua breccia
  27.00 35.50 8.50 2.89 4.3 4952 Yaragua breccia
  182.00 185.00 3.00 23.34 2.8 715 Vein B
  194.00 197.00 3.00 4.69 4.0 2202  
  222.50 223.00 0.50 18.20 81.0 9526 Vein C
  341.80 342.40 0.60 25.09 283.0 58300 San Antonio
  369.00 370.50 1.50 11.82 2.3 726 FW
  393.30 397.60 4.30 5.04 12 489 Vein A
     
(a)   True widths not known but estimated at 50% or higher of the quoted intercept
(b)   Grades are uncut and an external grade cutoff of 1.0 g/t Au used to determine intersection thickness and grade
(c)   BUSY- sequence drilled from the surface, BUUY- sequence from underground

Other areas

Two holes were drilled to the north into the Yaragua North area. Both holes encountered extensive intercepts of low grade gold (averaging about 0.1 g/t and with high Ag/Au) which are highly anomalous in copper and variably anomalous in molybdenum, antimony and tellurium. Both BUSY-114 and BUSY-139 each exhibited several metre-plus intersections of 1-3 g/t gold and up to 35 g/t silver within the lower grade envelopes. Further work is needed to evaluate the significance of this mineralization.

BUSY-141 was drilled primarily for geotechnical purposes near the path of a proposed underground access decline and encountered no significant mineralization.

Corporate Update - Approaching Expiry of Warrants

Continental Gold would like to take this opportunity to remind holders of its warrants issued pursuant to the Company's private placement completed in January and February 2009 (the "Warrants") that the Warrants will expire at 4:00 p.m. (Toronto time) on Wednesday, March 30, 2011. Any Warrants remaining unexercised after the expiration deadline will be cancelled and will thereafter be of no force or effect.

As of March 18, 2011, there were 3,557,813 Warrants outstanding. The Warrants have an exercise price of $2.25 per share. Assuming all Warrants are exercised, net proceeds to the Company would be C$8,005,079 million.

How to Exercise Warrants

Warrant holders who wish to exercise their Warrants should instruct their investment advisor to effect an "immediate exercise" and be prepared to provide payment (by certified cheque, bank draft or money order payable to Continental Gold Limited) to the investment advisor firm equal to the exercise price for each Warrant exercised. Once Olympia Transfer Services Inc. receives payment and the required documentation, the Warrants will be cancelled and the Warrant holder will receive Continental common shares.

Investors should consult with their investment advisor to confirm the time required to complete this process and other costs associated with the exercise, if any.

Warrant holders who hold a physical certificate wishing to exercise Warrants are required to provide Olympia Transfer Services Inc. with a certified cheque, bank draft or money order payable to Continental Gold Limited, and the Warrant certificate with the subscription form on reverse completed.

Technical Information

The results of the Company's drilling program have been reviewed, verified and compiled by Vice President Exploration, Stuart Moller, P.Geol., a qualified person for the purpose of Canadian 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.

The company utilizes an industry-standard QA/QC program. HQ and NQ diamond drill-core is sawn in half with one-half shipped to a sample preparation lab in Medellín run by SGS Colombia. Samples are then shipped for analysis to SGS certified assay laboratory in Lima, Peru. The remainder of the core is stored in a secured storage facility for future assay verification. 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.

About Continental Gold Limited

Continental Gold Limited (TSX:CNL) is an advanced-stage exploration company with nine gold projects covering approximately 124,450 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. 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 estimation of mineral resources, exploration results, potential mineralization, exploration and mine development plans, timing of the commencement of operations and estimates of market conditions, and is based on current expectations that involve a number of business risks and uncertainties. Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to, failure to convert estimated mineral resources to reserves, capital and operating costs varying significantly from estimates, the preliminary nature of metallurgical test results, delays in obtaining or failures to obtain required governmental, environmental or other project approvals, political risks, uncertainties relating to the availability and costs of financing needed in the future, changes in equity markets, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of projects and the other risks involved in the mineral exploration and development industry 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 "Figure 1 - Longitudinal Section of Veta Sur System" please visit the following link: http://media3.marketwire.com/docs/1cnl322.pdf

To view "Figure 2 - Plan View of New Drilling" please visit the following link: http://media3.marketwire.com/docs/2cnl322.pdf

To view "Figure 3" please visit the following link: http://media3.marketwire.com/docs/3cnl322.pdf

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