Crocodile Gold Corp.

Crocodile Gold Corp.

January 25, 2010 07:30 ET

Crocodile Gold Grows Resources at Howley for US$6 Per oz-Indicated Resource Increase of 29% at Higher Grade-Inferred Resource Increase of 32%

TORONTO, ONTARIO--(Marketwire - Jan. 25, 2010) - Crocodile Gold Corp. (TSX:CRK)(FRANKFURT:XGC) ("Crocodile Gold" or the "Company") is pleased to announce a significant resource increase at its Howley project (former Chinese project – see Crocodile Gold press release dated January 13, 2010) in the Northern Territory of Australia (refer to Figure 1 below for location map). The project is currently the site of an ongoing 40,000 metre (US$4.4 million) reverse circulation drill program which is part of the previously announced US$8.4 million exploration program being conducted on the Company's extensive landholdings in the Northern Territory (refer to Crocodile Gold press release dated November 12, 2009).

Highlights of this resource increase, which is measured relative to the resource estimate in the currently filed NI 43-101 compliant technical report dated July 12, 2009, are:

  • Total Indicated Resources have grown by 29% to 566,545 ounces;
  • The grade of the Indicated Resources increased 7% to 1.54 g/t Au;
  • Total Inferred Resources have grown by 32% to 257,361 ounces;
  • The grade of the Inferred Resources increased 9% to 1.52 g/t Au;
  • Resource ounces were added at an approximate cost of US$6 per ounce;
  • Ongoing pit optimization suggests a substantially larger open pit is probable; and
  • Additional drills to be added to accelerate further resource expansion, budget increase likely.

The resource estimate increase has resulted from the successful initial results from the current drill program at the Howley project, details of which were outlined in the Crocodile Gold press release dated January 14, 2010. This program is still ongoing with approximately 30% of the planned drilling completed at this time.

The bulk of the mineralization has been added in the Western Zone Area (Figure 2), although resources have been increased under the main pit #2 area, where mining has already commenced.

Table 1: Updated Resources* for Howley Project as at January 12, 2010

Resources Indicated Resources Inferred Resources
   Deposit Cut-off (g/t) Tonnes Gold Grade (g/t) oz Gold Cut-off
Tonnes Gold Grade (g/t) oz Gold
Howley 0.7 11,448,000 1.54 566,545 0.7 5,274,000 1.52 257,361
*Resources include reserves
Note: The above resource classifications conform to CIM Standards on Mineral Resources and Reserves referred to in National Instrument 43-101. A cut-off grade of 0.7 g/t Au has been applied for reporting of the resource estimates that are to be extracted by open pit and have been used since the 2005 technical report.

The July 2009 mineral reserve estimate for Howley includes a Probable Reserve of 1,000,000 tonnes at a grade of 2.1 g/t gold and 68,000 ounces of gold calculated at a gold price of US$775 per ounce at an exchange rate of $A:$US0.80. However, with the updated resource estimate, Crocodile Gold also expects an increase in the reserve estimate.

The extent of the resource estimate increase is illustrated in Figure 3 by a representative cross section (4475N) which shows the new resource estimate relative to the one estimated within the Crocodile Gold technical report dated July 12, 2009. This section shows that the Western Zone Area now covers a width of approximately 300 metres, compared to the previous measured width of approximately 100 metres, and remains open to the west and south (to the northeast it merges into the main Howley mineralization (Figure 2)). Resources extend to a vertical depth of almost 150 metres and remain open at depth.

Figure 3 illustrates that the resources have grown with increased drill density. One of the principal goals going forward will be to infill areas without sufficient (if any) drilling – this includes areas to the north, south, east and west.

The resource update resulted from the completion of less than 30% of the planned program.

In releasing this information, President and CEO, Mike Hoffman, stated, "We are thrilled to be able to announce an increase in resources at the Howley Project area so quickly after starting our exploration work there. We believe these results confirm that the project has the potential to host one large pit, compared with the multiple small pits currently present.

Mineralization occurs within a corridor which is almost 600 metres wide and in excess of 3 kilometres long and which remains dramatically underexplored. It remains open in all directions. It is imperative that we adequately define the mineralization as quickly as possible in order to optimize the production levels and determine appropriate plant sizing. To this end we aim to significantly increase the number of drills working on the project, currently only one, and are investigating the potential to increase the exploration budget.

We outlined the additional ounces for approximately US$6 per ounce. The initial acquisition of these assets was made for US$9 per ounce. Our extremely low cost of finding and acquiring, and modest capital requirements, mean that our total costs of production are expected to be competitive with the rest of the gold industry.

The Company is on track to meet its production target of more than 100,000 ounces of gold in 2010 from the Howley #2 Pit and the Brocks Creek Underground Mine."

Qualified Person

Alfred John Gillman of Odessa Resources Pty Ltd and Farshid Ghazanfari are "qualified persons" as such term is defined in National Instrument 43-101 and has reviewed and confirmed the technical information and data included in this press release.

The mineral resource estimate was prepared by Farshid Ghazanfari and reviewed by Alfred John Gillman.

The mineral resource estimate was generated using Au assays data from 1425 RC and diamond drill holes (from past programs and the current program). The deposit was modeled into several gold lodes and estimation domains using Surpac and Gemcom mining software. All assay data in the database was cut and then composited in 1m intervals starting at the collar. Three different top cuts of 29.0 g/t, 23.7 g/t and 45.0 g/t were chosen in the #2 pit area, Western Zone, and the #3/#4 pit area, respectively, based on statistical analysis. Au grades were interpolated into estimation domains using Inverse Distance (ID3) method.

Drill holes were assayed at Northern Australian Laboratories (NAL).

About Crocodile Gold

Crocodile Gold is a Canadian company that has completed the acquisition of recent past producing gold assets in the Northern Territory of Australia. The assets comprise an area greater than 3,500 square kilometres and are located approximately 90 to 285 kilometres south of the capital city, Darwin, and include the Burnside Project, Tom's Gully Project and Maud Creek Project. The property contains 3.09 million ounces of NI 43-101 compliant measured and indicated resources (42.9 million tonnes at an average grade of 2.3 g/t gold), and 1.94 million ounces of inferred resources (26.7 million tonnes at an average grade of 2.3 g/t gold) (See Management Information Circular dated October 5, 2009 and Crocodile Gold Press Releases dated September 8, 2009 and January 25, 2010). The Burnside Project includes the Brocks Creek underground mine, the Howley open pit mine and several additional deposits along the Cosmo/Howley corridor, including the undeveloped Cosmo underground deposit. The Tom's Gully Project includes the Tom's Gully underground mine and the former Mt Bundy (Rustler's Roost) Mine. Crocodile Gold owns the 8,000 tpd Union Reefs mill and the 800 tpd Tom's Gully mill. Crocodile Gold trades under the symbol CRK on the Toronto Stock Exchange.

Cautionary Note

Certain information set forth in this press release contains "forward-looking statements", and "forward-looking information" under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements which include management's assessment of Crocodile Gold's future plans, operations and mineral reserve and resource estimates and are based on Crocodile Gold's current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking statements may be identified by words such as "expects" "anticipates", "believes", "projects", "plans", and similar expressions. These statements are not guarantees of future performance. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause Crocodile Gold's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: liabilities inherent in mine development and production; geological, mining and processing technical problems; Crocodile Gold's inability to obtain required mine licenses, mine permits and regulatory approvals required in connection with mining and mineral processing operations; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; changes in commodity prices and exchange rates; currency and interest rate fluctuations; various events which could disrupt operations and/or the transportation of mineral products, including labour stoppages and severe weather conditions; the demand for and availability of rail, port and other transportation services; the ability to secure adequate financing and management's ability to anticipate and manage the foregoing factors and risks. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Crocodile Gold undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.

To view Figure 1 (Crocodile Gold Northern Territory Location Map), Figure 2 (Cosmo/Howley Plan View) and Figure 3 (Representative Cross Section (4475N) showing comparison of updated to previously announced resources), please visit the following link:

Contact Information

  • Crocodile Gold Corp.
    Michael Hoffman
    President and CEO
    Crocodile Gold Corp.
    Ashleigh Clelland
    Manager, Investor Relations