Greencastle Resources Ltd.

Greencastle Resources Ltd.

August 31, 2007 09:48 ET

Greencastle Provides Second Quarter Update and Drills 1.22g/t Gold Over 6.1 Metres at Jewel Ridge

TORONTO, ONTARIO--(Marketwire - Aug. 31, 2007) - Greencastle Resources Ltd. (TSX VENTURE:VGN) is pleased to provide the following summary of second quarter 2007 operations. The Company's second quarter Financial Statements and Management Discussion and Analysis to June 30, 2007, are available on SEDAR at

Revenues declined in the second quarter to $224,017 for the three months ended June 30, 2007 versus $519,856 for the same period in 2006. For the six months ended June 30, 2007, revenues were $774,692 versus $762,819 for the same period in 2006. The second quarter revenue decline was primarily due to lower royalty income derived from heavy oil production on the Primate property in Saskatchewan. Production difficulties occurred in one of the main producing wells following completion of a nearby infill well on the section. The operator is working diligently to bring the wells back on stream. While the decline in revenues from oil and gas in the second quarter is disappointing, management is optimistic that revenues should improve from these levels as new wells are added and production difficulties are addressed. During the three months ended June 30, 2007, 2 additional wells, currently undergoing testing, were drilled at Primate.

For the three months ended June 30, 2007, the Company recorded a net loss of ($137,199) versus a net income of $367,864 for the same period in the previous year. The decrease in net income for the current quarter was largely due to a depletion expense amount of $138,000 on oil and gas assets (no depletion taken in the 2006 quarter) as well as a royalty income decline as described previously. All depletion in 2006 was recorded in the fourth quarter, however, the Company now records an estimated depletion amount each quarter in order to provide a more balanced picture of earnings and cash flow on a quarterly basis. For the six months ended June 30, 2007, net earnings were $150,929 versus $437,476 for the same period in 2006.

Excluding non cash costs for depletion and stock based compensation, Greencastle generated positive cash flow of $64,444 for the three months ended June 30, 2007, compared with $391,699 for the same period in the previous year. For the six months ended June 30, 2007, Greencastle generated positive cash flow of $469,725 compared with $485,146 for the same period a year earlier.

For the three months ended June 30, 2007 (the second quarter), operating expenses were $227,864 versus $153,959. The increase is primarily attributable to increases in shareholder relations expenses, consulting fees, travel, rent and stock option compensation expenses.

For the six months ended June 30, 2007, operating expenses were $422,668 versus $327,458 for the same period a year earlier. The increase is primarily attributable to an increase in stock option compensation expenses from $47,670 to $107,796 as well as smaller increases in travel, rent and consulting fees.

Total assets of the Company increased at June 30, 2007 to $6,250,342 from $4,434,998 at December 31, 2006. Greencastle's working capital at June 30, 2007 was $3,419,818 compared with $1,872,251 at December 31, 2006.

In July, Greencastle completed a seventeen hole drill program for a total of 2,702 metres on five separate target areas, at the Jewel Ridge gold property in Nevada.

At the Hamburg area target, three holes tested the extensions of the gold mineralization in sanded dolomite near the Hamburg-Dunderberg contact identified in 2004 in holes HRC-11 and HRC-13. One hole intersected anomalous, but uneconomic gold, values over 22.8 metres. Two holes tested for carbonate replacement-type (Au-Ag-Pb-Zn) mineralization along a NE trending fault just south of the former Croesus mine to the north of the Hamburg area, with negative results. Further to the east at the Lost Jewel prospect, three holes tested for stratigraphically controlled gold mineralization in Goodwin Limestone which is the main host rock for gold mineralization at Barrick's Ruby Hill Archimedes mine some 5 km to the north, but returned no significant values. At the north end of the 3 km long silicified and brecciated Silica Ridge target near Windfall Canyon, where chip samples by earlier explorers returned values up to 4.2 g/t Au, all three holes returned low gold values.

At Magnet Ridge, in the NW corner of the claim block, gold occurs in strongly oxidized zones associated with silver, lead and zinc in pods of carbonate replacement in the Eldorado Limestone. Six holes were drilled with the best values occurring in GR-07-15 which returned 1.22 g/t Au over 6.1 metres at a depth of 32 metres.

In the Republic of Niger, West Africa, Greencastle's Namaga and Koyria concessions, covering 1,148 km2 and 1,045 km2 respectively, are currently under option to Orezone Resources Inc. ("Orezone"). Following significant exploration on Blocks 3 and F on the Namaga concession, Orezone has given Greencastle notice that it will terminate the Namaga option agreement. Orezone continues to conduct exploration programs at the Koyria concession. Greencastle is currently evaluating the results of the Orezone exploration programs at Namaga.

In Wyoming, U.S.A., further data acquisition at Greencastle's Beaver uranium property continued. The Beaver property consists of 170 lode claims in three blocks and is located in the prolific Gas Hills uranium district. Between 1956 and 1992, approximately 100 million pounds U3O8 were produced before mining ceased in the area due to low commodity prices. The uranium deposits in the area are located within alluvial fan facies of the Eocene age, Wind River formation. Greencastle is currently identifying and assembling historic exploration data relevant to the property and vicinity in preparation for a phase one drill program.

To find out more about Greencastle Resources Ltd (TSX VENTURE:VGN), visit our website at

This news release includes certain "forward looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. Without limitation, statements regarding potential mineralization and resources, exploration results, and future plans and objectives of the Company are forward looking statements that involve various degrees of risk. The following are important factors that could cause the Company's actual results to differ materially from those expressed or implied by such forward looking statements: changes in the world wide price of commodities, general market conditions, risks inherent in exploration, risks associated with development, construction and mining operations, the uncertainty of future profitability and the uncertainty of access to additional capital. The Company relies on litigation protection for forward looking statements.

Issued and Outstanding: 41,967,005

No Stock Exchange has reviewed nor accepted responsibility for the adequacy or accuracy of this news release.

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