South American Gold Corp.
OTC Bulletin Board : SAGD

August 04, 2011 14:26 ET

South American Gold Reports on Santacruz Gold Project

RICHMOND, INDIANA--(Marketwire - Aug. 4, 2011) - South American Gold Corp. (OTCBB:SAGD) is pleased to provide an update on its activities in Colombia, South America in a location referred to as the Santacruz gold project.

We believe that the Narino province of Colombia represents an historic gold mining district that has been underexplored by modern exploration techniques. The Company is currently in the process of evaluating the area for potential acquisitions in addition to field work in the Santacruz Gold project area.

South American Gold has signed a definitive agreement acquiring 25% of the equity of a privately-held company, Kata Enterprises Inc. ("Kata Enterprises"), with an option to increase the Company's ownership interest to 100%. Kata Enterprises through a subsidiary owns an 85% equity interest in Minera Narino S.A.S. ("Minera Narino"), which has a contractual right, subject to the satisfaction of certain conditions, to acquire a mining concession contract covering an area referred to as the Santacruz Gold Project. The mining concession application is in process, and an initial financial and technical package has been provided to INGEOMINAS, the agency to register the concession, for their review and approval. South American Gold is in the process of creating baseline social and environmental studies which will be required for further permitting requirements should a mining concession contract covering the Santacruz Gold Project be granted and assigned to Minera Narino.

Field reconnaissance work, which the Company began earlier this year, has been ongoing to cover the 1,800 + hectare area (approx. 7 square miles). The initial focus is on geologic mapping and confirming historical data from government studies conducted in the 1980s. To date this work has confirmed the location of several former and current artisanal mines and workings within the project boundaries. In addition, the Company has been evaluating and sampling the nearby Las Delicias and El Diamante mines to increase its knowledge of the general area. In particular, the intent is to locate projections of veins from the two producing mines from adjacent properties onto the Santacruz Gold project . In the Cerro Los Churros area of the proposed Santacruz concession area, five old workings were identified Mineralization was identified in the form of quartz veins with associated arsenopyrite and iron oxide, in part derived from alteration of basic rock-forming minerals and oxidation of pyrite in the veins and adjacent rock

An inactive small mine, known as Mina San Antonio, lies within the proposed concession area. Evidence shows the mine was operated as an open-pit facility and that it contained several underground workings. Sampling at the Mina San Antonio has proved inconclusive to date.

Surveying by South American Gold was conducted at the El Chitan area mine within the proposed concession. The Chitan I mine is inactive while the adjacent Chitan 2 mine and the nearby Narvaez area have artisanal mining occurring, with workings all being found along one vein at El Chitan mines and probably a different vein at Narvaez. The veins are located along faults and the adjacent wall rock shows phyllic alteration with a high sericite, pyrite and quartz content, and the accessible veins are narrow under 0.3 m. Preliminary channel sampling was conducted at El Chitan 1 and 2 mines and the Narvaez mine and surface outcrops in accessible areas with (fire) assays performed by SGS Peru. This work was conducted according to quality control procedures supervised by our Vice President of Exploration.

Vn = vein, w= wallrock, Poligonal refers to surface outcrops

Sample No LOCALIZATION SAMPLE TYPE WIDTH (m ) Au Au Ag
Ppb g/t ppm
R00147 Poligonal Guia Narváez 1 Channel (vn ) 0.15 542 -- 1.12
R00148 Poligonal Guia Narváez 1 Channel (w ) 1.10 699 -- 1.96
R00153 Poligonal Guia Narváez 1 Channel (vn ) 0.10 398 -- 0.34
R00166 Poligonal Guia Narváez 2 Channel (vn ) 0.15 2256 -- 0.45
R00167 Poligonal Guia Narváez 2 Channel (vn ) 0.15 >5000 10.42 3.02
R00175 Mina Narváez Channel (vn ) 0.40 488 -- 25.00
R00176 Mina Narváez Channel (vn ) 0.70 122 -- 0.45
R00177 Mina Narváez Stockpile 720 -- 1.67
R00179 Mina Chitan 1 Channel (vn ) 0.25 2159 -- 6.71
R00181 Mina Chitan 2 Channel (vn ) 0.15 383 -- 0.20
R00182 Mina Chitan 2 Channel (vn ) 0.30 >5000 21.85 12.00

Historical information, developed by government agency surveys, has indicated in the district gold mineralization potential from geochemical and geophysical exploration. South American Gold has not independently verified this information to date. The Company's exploration efforts are designed to independently verify and expand this data to guide future exploration of the project.

South American Gold CEO Raymond De Motte stated "We are pleased that our exploration efforts are covering a considerable territory in a relatively short period, and at the El Chitan Mine sampling results are indicating the presence of gold mineralization although much additional sampling will be required to establish potential drill targets and confirm prior agency surveys. We are actively conducting reconnaissance exploration efforts throughout the Narino district."

About South American Gold (OTCBB:SAGD)

The Company's objective is to locate, explore and develop large-scale commercially viable gold deposits primarily in Latin America. The Company focuses principally on geographic areas that are home to established gold deposits, including highly prospective districts with the potential to hold large deposits, and secondly on projects which may generate near to mid-term cash flow to support exploration activities. South American Gold currently is primarily focused on historic gold mining districts of Colombia.

Cautionary Note: The Company currently does not have any interest, directly or indirectly, in the property referenced herein as the Santacruz gold project. The Company's field work in the Santacruz Gold project area is being undertaken in order to gather data for the purpose of placing the Company in a better position to develop and execute a plan for exploration and development of the Santacruz Gold Project, should the Company be successful in acquiring an indirect interest in a mining concession contract underlying the Santacruz gold project. The Company acquired a 25% equity interest in Kata Enterprises, with an option to increase the Company's ownership interest to 100%. Kata Enterprises, through its subsidiary owns an 85% equity interest in Minera Narino, which has a contractual right, subject to the satisfaction of certain conditions, to acquire a mining concession contract covering the Santacruz Gold Project. The Company can provide no assurance that the conditions required for Minera Narino to acquire a mining concession contract covering the Santacruz Gold Project will ever be satisfied. If for any reason a mining concession contract covering the Santacruz Gold Project is not granted and assigned to Minera Narino, the Company will have not acquired any direct or indirect interest in a mining concession contract underlying the Santacruz gold project. If this were to occur, there is a substantial risk that the Company's business would fail.

On behalf of the board,

Raymond De Motte, CEO, South American Gold Corp.

Disclaimer

This release contains forward-looking statements that are based on beliefs of South American Gold Corp. management and reflect South American Gold Corp.'s current expectations as contemplated under section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities and Exchange Act of 1934, as amended. When we use in this release, the words "estimate," "project," "believe," "anticipate," "intend," "expect," "plan," "predict," "may," "should," "will," "can," the negative of these words , or such other variations thereon, or comparable terminology, are all intended to identify forward looking statements. Such statements reflect the current views of South American Gold Corp. with respect to future events based on currently available information and are subject to numerous assumptions, risks and uncertainties, including but not limited to, risks and uncertainties pertaining to development of mining properties, changes in economic conditions and other risks, uncertainties and factors, which may cause the actual results, performance , or achievement expressed or implied by such forward looking statements to differ materially from the forward looking statements. The information contained in this press release is historical in nature, has not been updated, and is current only to the date shown in this press release. This information may no longer be accurate and therefore you should not rely on the information contained in this press release. To the extent permitted by law, South American Gold Corp. and its employees, agents and consultants exclude all liability for any loss or damage arising from the use of, or reliance on, any such information, whether or not caused by any negligent act or omission. Investors are encouraged to review all of the Company's public filings. The Santacruz project area is coved by a mineral concession application made with the relevant Colombian government body for which there is no assurance as to the definitive approval or timing of such approval if received. The Company provides a comprehensive list of risk factors in its SEC filings, which should be reviewed for more complete information, including Part 1 Item 1A Risk Factors of its Annual Report on Form 10-K and Part II, Item 1A Risk Factors of its Quarterly Reports on Form 10-Q.

Contact Information