Castillian Resources Corp.
TSX VENTURE : CT

Castillian Resources Corp.

February 14, 2012 07:00 ET

Hope Brook Confirmed as Major Gold Deposit-First NI 43-101 Mineral Resource of 290,000 Ounces Gold Indicated and 740,000 Ounces Gold Inferred

- Discovery Cost Approximately $10 Per Resource Ounce

- Considerable Potential to Upgrade and Expand Resources and Outline New Zones Along Strike

- Exploration Drilling to Recommence at Hope Brook During the Third Week of February

- Preliminary Economic Assessment (PEA) to Commence in Q2

TORONTO, ONTARIO--(Marketwire - Feb. 14, 2012) - Castillian Resources Corp. ("Castillian" or the "Company") (TSX VENTURE:CT) is pleased to announce its first National Instrument 43-101 ("NI 43-101") compliant mineral resource estimate for its Hope Brook Gold Project in southwestern Newfoundland. The mineral resource estimate presented in Table 1 below is based on 631 diamond drill holes totaling 124,801 metres of historic and recent drilling, including 77 surface diamond drill holes totaling 24,857 metres completed by Castillian in 2010 and 2011. Mineral resources have been estimated within a constraining pit shell at a cutoff grade of 0.50 grams gold per tonne (g Au/t) and below this shell at a cutoff grade of 2.0 g Au/t.

Highlights are as follows:

  • Total indicated mineral resources are estimated at 290,000 ounces of gold and total inferred mineral resources are estimated at 740,000 ounces of gold
  • Within constraining shell at 0.50 g Au/t cutoff grade:
    • Indicated mineral resource of 4.0 million tonnes grading 1.11 g Au/t containing 140,000 ounces of gold
    • Inferred mineral resource of 11.2 million tonnes grading 1.57 g Au/t containing 570,000 ounces of gold
  • Below constraining shell at 2.0 g Au/t cutoff grade:
    • Indicated mineral resource of 1.5 million tonnes grading 3.04 g Au/t containing 150,000 ounces of gold
    • Inferred mineral resource of 2.0 million tonnes grading 2.65 g Au/t containing 170,000 ounces of gold
  • Constraining shell incorporates essentially all of the remaining historic resources in the former Hope Brook mine in addition to new areas of resource defined by Castillian including the Pit Zone, Hanging Wall Zone and Mine Zone Extension

Dr. Bill Pearson, P.Geo., President & CEO of Castillian, stated: "We are delighted with the results of this resource estimate, which establishes Hope Brook as a major gold deposit. This has been achieved by our exploration team in only 16 months of diamond drilling at an overall cost of approximately $10 per resource ounce. The deposit is open along strike in both directions and downdip. There is considerable potential to upgrade and expand these mineral resources within the current model, which extends some 2.7 kilometres along strike. In addition there is excellent potential to outline new zones along the more than eight kilometres of underexplored mineralized structure that has been identified to date.

Dr. Pearson continued: "We will recommence exploration drilling at Hope Brook during the third week of February, initially targeting the potential northeast extension area and the 240 Zone. Geophysical surveys have already been completed to aid in identifying potential drill hole locations. The mineral resource estimate will be used as the basis for a Preliminary Economic Assessment (PEA), which we plan to commence in the second quarter of 2012."

The Company will be holding a conference call on Wednesday February 15, 2012 at 8:30 a.m. EST. To participate on this call, Canadian callers may dial toll-free 1-866-226-1793 and international callers may dial direct +1-416-340-2218. A replay of the call will be available on Castillian's web site.

Table 1. NI 43-101 Mineral Resource Estimate, Hope Brook Gold Project as at February 14, 2012 (see Notes)
Within constraining shell
@ 0.50 g Au/t cutoff
Below constraining shell
@ 2.0 g Au/t cutoff
Total
Category Tonnes
(millions)
Gold
g/t
Gold
(k Oz)
Tonnes
(millions)
Gold
(g/t)
Gold
(k Oz)
Tonnes
(millions)
Gold g/t Gold
(k Oz)
Indicated 4.0 1.11 140 1.5 3.04 150 5.5 1.65 290
Inferred 11.2 1.57 570 2.0 2.65 170 13.2 1.73 740

Notes on Mineral Resource Estimation Methodology:

1. Mineral resources are estimated in conformance with the CIM Mineral Resource definitions referred to in NI 43-101 Standards of Disclosure for Mineral Projects. Pierre Desautels, P.Eng., Principal Resource Geologist, and Jay Melnyk, P.Eng., Principal Mining Engineer, both of AGP Mining Consultants and Qualified Persons under NI 43-101 who are independent of the Company, have prepared and authorized the release of the mineral resource estimates presented herein. The Castillian and historical diamond drill hole databases and geological model developed by Castillian were reviewed and validated by Michael Cullen, P.Geo., of Mercator Geological Services, an Qualified Person as defined under NI 43-101 who is independent of the Company. A NI 43-101 Technical Report on Hope Brook outlining the procedures for estimation of the mineral resource estimates presented herein will be filed on SEDAR within 45 days of the date of this press release.
2. Specific gravities were determined by Castillian for a representative number of rock and mineralization types using industry standard methods. A total of 1,387 determinations exist in the database. The average value for each modeled domain was applied to the block model.
3. Detailed geological logging and sectional interpretations by Castillian led to the development of three-dimensional (3D) domain models based mainly on lithological controls and partially on assay results. The wireframing resulted in a high grade envelope (approximately 2.0 g Au/t cutoff grade) within a lower grade silicic domain (approximately 0.5 g Au/t cutoff grade) that encompasses the bulk of the mineralization. These domains were utilized in the variography studies and in grade interpolation constraints. A footwall pyrite domain and a hanging wall argillite alteration domain were also wireframed to enable interpolation of local areas of mineralization and to provide possible exploration targets. The mineralization is cut by a series of mafic dikes that could not be individually wireframed, therefore a statistically derived dike model was constructed that was calibrated with available surface and historical underground geological information.
4. For the treatment of outliers each statistical domain was evaluated separately for gold and a combination of grade capping and search restrictions imposed on threshold values was used to restrict the influence of outliers. Capping only affected a small number of samples.
5. The composite intervals selected were 2.5 metres. Grade capping was applied prior to compositing.
6. A 3D geological block model was generated using GEMS© software. The block model matrix size is 15 metres x 5 metres x 10 metres. Ordinary kriging was used for all domains with inverse distance and nearest neighbour check models. The interpolation was carried out in multiple passes with increasing search ellipsoid dimensions. Classification for all models was based primarily on the pass number followed by an adjustment to the class model, based on the distance to the closest sample and kriged variance. The area in the model where historical mine workings exist was downgraded to inferred due to uncertainties about the location and extent of these workings. Insufficient assay data for copper was available in historical drill holes to allow for reporting of copper grades from the model and therefore the total contained copper was omitted from this release. However, as the former mine produced a copper concentrate in the last five years of its production history, there is potential for a copper credit, but further drilling is required to confirm the grade and distribution of copper in the mineral resource.
7. The reported mineral resources are considered to have reasonable prospects of economic extraction. A Lerchs Grossman optimized constraining shell was generated to constrain the potential open pit material. This shell was designed using design parameters and costs for comparable deposits, 85% recovery based on historical plant performance and a gold price of US$1,400 per ounce. The constraining shell extends down to the 4,800 metre level, the deepest level developed in the historical mine at approximately 340 metres below surface.
8. The rounding of tonnes as required by NI 43-101 reporting guidelines may result in apparent differences between tonnes, grade and contained ounces.
9. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.
10. The quantity and grade of reported inferred mineral resources in this estimation are uncertain in nature and there has been insufficient exploration to define these inferred mineral resources as indicated or measured mineral resources and it is uncertain if further exploration will result in upgrading them to indicated or measured mineral resources.

The mineral resource estimates are presented in Table 2 below at different cutoff grades to demonstrate the sensitivity of the mineral resources to change in cutoff grade:

Table 2: Mineral Resource Estimates at Different Cut-off Grades, Hope Brook Gold Project
Within constraining shell @ 0.50 g Au/t cut-off
Cut-off
Grade
Tonnes
(millions)
Gold
(g/t)
Gold
(k Oz)
> 1.0 1.8 1.57 90
> 0.7 2.8 1.31 120
Indicated > 0.5 4.0 1.11 140
> 0.4 5.1 0.96 160
> 0.3 7.3 0.77 180
> 1.0 7.0 2.09 470
> 0.7 9.3 1.78 530
Inferred > 0.5 11.2 1.57 570
> 0.4 12.6 1.45 590
> 0.3 14.1 1.33 600
Below Constraining Shell @ 2.0 g Au/t Cut-off
Cut-off
Grade
Tonnes
(millions)
Gold
(g/t)
Gold
(k Oz)
> 4.0 0.3 4.72 40
> 3.0 0.6 4.03 80
Indicated > 2.0 1.5 3.04 150
> 1.5 2.5 2.54 200
> 1.0 4.1 2.03 270
> 4.0 0.2 4.71 20
> 3.0 0.4 3.93 50
Inferred > 2.0 2.0 2.65 170
> 1.5 3.0 2.35 230
> 1.0 4.5 1.97 290

SAMPLING, ASSAYING AND QUALITY CONTROL

All drill core in the Castillian diamond drilling program (NQ (47.6 mm), BQTK (40.6mm) and BQ (36.4mm)) was logged, photographed and then sawn in half with one-half sent to the laboratory for analysis and the other half retained and stored on site. All core samples were prepared and assayed at ALS Chemex, with sample preparation done in Sudbury and analytical work done in Vancouver. All locations of ALS Chemex are ISO 9001:2000 certified. The entire sample received is weighed and crushed to ≥ 70% passing 2mm (10 mesh). A sample split of up to 1000g is then pulverized to ≥ 85% passing 75 microns (200 mesh) to produce a homogenized sample. A 50g aliquot is used for fire assaying with an atomic absorption (AA) finish to determine gold concentration. Copper is initially analyzed using a four acid digestion ICP (inductively coupled plasma-atomic emission spectrometry) method. Any results for copper greater than 10,000 ppm are assayed further by a four acid digestion and "ore grade" ICP method. Internal quality control includes the use of blanks, duplicates and standards in every batch of samples. The Company also conducts internal check assaying using certified external reference standards and blanks. Regular external check assays are performed at a second certified Canadian commercial laboratory. Castillian also inserts external reference standards as well as blank granite drill core in each sample batch as a further external check.

QUALIFIED PERSONS

Mr. Dan Lee, P.Geo., Chief Geologist and Project Manager for Hope Brook, and Dr. Bill Pearson, P.Geo., President and CEO of Castillian, both of whom are qualified persons as defined by NI 43-101, have reviewed and approved the scientific and technical content of this press release. Pierre Desautels, P.Eng., Principal Resource Geologist, and Jay Melnyk, P.Eng., Principal Mining Engineer, both of AGP Mining Consultants and Qualified Persons under NI 43-101 who are independent of the Company, have prepared and authorized the release of the mineral resource estimates presented herein. The Castillian and historical diamond drill hole databases and geological model developed by Castillian were reviewed and validated by Michael Cullen, P.Geo., of Mercator Geological Services, an Qualified Person as defined under NI 43-101 who is independent of the Company.

ABOUT CASTILLIAN

Castillian Resources Corp. is a Canadian mineral exploration company listed on the TSX Venture Exchange under the symbol "CT" which has gold and base metal properties in Canada and South America. Castillian's flag ship property is the Hope Brook Gold Project located in southwestern Newfoundland, which has 290,000 ounces of NI 43-101 compliant indicated mineral resources and 740,000 ounces of inferred mineral resources. Castillian has outlined an extensive new Gold-in-Soil anomaly trend on its Canadian Creek property in the Yukon that is adjacent to Kaminak's Sugar Gold-in-Soil trend.

Cautionary Note Regarding Forward-looking Information

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the anticipated timing of the Company's diamond drill program at its Hope Brook project, anticipating timing with respect to a Preliminary Economic Evaluation with respect to the Hope Brook project, and statements regarding exploration prospects and timing of future exploration. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities; future prices of mineral prices; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and shortages and other risks of the mining industry. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

Information Concerning Estimates of Indicated and Inferred Resources

This news release uses the terms "indicated resources" and "inferred resources". Castillian advises investors that although these terms are recognized and required by Canadian regulations (under NI 43-101), the U.S. Securities and Exchange Commission does not recognize them. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into mineral reserves. In addition, inferred resources have a great amount of uncertainty as to their existence, and economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, or economic studies except for preliminary economic assessments as defined under NI 43-101. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

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