Nagambie Mining Limited - Exploration

The REDCASTLE PROJECT with an area of 33 km² in the northern part of EL 3316 (first granted to Nagambie Mining Ltd on the 29^th December 1992 and is renewed on an annual basis) covers the old Redcastle Goldfield. The Redcastle Goldfield lies in a fault-disrupted anticlinal structure. Oxidation occurs to around 70 metres and the gold mineralisation is hosted by both north-south and east-west fractures. This makes it an attractive area for shallow open pit exploitation.

The historic Redcastle Goldfield was discovered in 1859 and consisted principally of quartz reef mining of up to 117 mines and alluvial workings. Historical production records are incomplete however some mines reportedly produced up to 1088 kg of gold. Operations ceased by 1902 however fossicking was still continuing in creeks in the Redcastle area during the 1930’s. Redcastle has been subject to mineral exploration by various companies since 1985.

There are few reliable production records of the early mining in the Redcastle Goldfield, however very high grades of gold and associated stibnite were recorded from nearly all lines of reefs, which were only worked to an average depth of 55 metres.

The Redcastle Gold Mining Company is reported to have produced some 35,000 oz. from Clarkes Reef with grades of 33g/t of gold.

The company’s main exploration tool to date has been to use costeaning. Some 61 costeans with an average depth of 1.5 metres (width of 1.5 metres) and a maximum length of 110 metres have been completed to date and more are planned in conjunction with an intensive drilling program. This work tested Silurian sediments for disseminated and narrow vein gold mineralisation and, more importantly, enhanced the understanding of geological controls on the gold mineralisation over the entire goldfield. Error! Reference source not found. shows the three structural domains identified through detailed structural analysis of data from the costean and associated surface geological mapping,supported by interpretation of publicly available geophysics imagery.

Figure 1: Structural Interpretation with Principal Mines – Redcastle Goldfield

Each of these domains has its own characteristic controls on gold mineralisation:

Dominated by numerous historic minor workings with scattered deep shafts and stopes, in a setting of tight, small scale folds. Gold mineralisation is within narrow quartz veins as well as disseminated within fine sandstones, and is controlled by oblique (NW striking) reverse faults which have disrupted the anticlinal axes of local folds.

Dominated by numerous localised historic workings, both minor and major. The main feature is a large scale anticline (Redcastle Anticline) which is locally offset by a number of WNW strike slip faults. The Native Gully Prospect is controlled by an east dipping fault disruptinga smaller parasitic anticline to the Redcastle Anticline. Gold has been won from quartz reef structures, but there is evidence of disseminated gold within fine grained sandstones.

Located in the hanging wall to the Moormbool Fault which is the eastern boundary of both the Redcastle North Zone and Redcastle South Zone. Largely within a National Park, the gold mineralisation is confined to narrow quartz stringers in sheared sandstones and siltstones.

The Redcastle tenement (EL 3316) is located in the footwall of the major regional Moormbool Fault, which has a north-easterly inflexion as it trends north. A series of NW trending reverse faults appear to be splays from this zone of inflexion, which may well be the main conduits for gold mineralising fluids. As such, these north-east dipping reverse faults present as drill targets, particularly where they disrupt local anticlinal folds. Secondary fault splays from these structures have also been identified as drill targets.

Assay results from the initial costeaning program, included 6m at 2.1 g/t gold at Mullocky, 10m at 1.6 g/t at Redcastle Anticline and 6m at 1.2 g/t at Pioneer.Significant results from the recent costean program give further support with Pioneer showing 2metres at 2.05 g/t, Welcome 4metres at 1.14 g/t, Mullocky 6metres at 0.86g/t metres at 1.14g/t, Native Gully 6metres at 1.16g/t and a new area Site 2, 10metres at 0.53 g/t gold.

This work is crucial to the design of an initial RC drilling program. Figure 2 shows the five target zones within the North & South Redcastle structural domains that have been selected for RC drilling and in some cases supported by further costean work.

Previous drilling in the Redcastle Goldfield, while showing some interesting gold intersections, failed to delineate mineable blocks. The new structural interpretation predicts the occurrence of gold at fault-anticlinal intersections, and along NE dipping reverse faults in favourable structural settings. The company now plans to undertake an extensive RC drill program to test and refine the structural model – this will be supported by some further costean work where some greater detail is still required before confidence in drill siting can be established.

Table 1 outlines Phase 1 of the proposed RC drilling program of 54 holes for 4,320 metres. This first round of drilling will investigate mineralisation to the water table which is expected to be around 40metres depth - the oxidised zone may extend to 80 metres in depth.

Phase 2 RC drilling will follow up on mineralised intersections encountered in Phase 1, and will include the first round of drilling on the Welcome, Redcastle Anticline and Laura Mine.

Figure shows the structural settings of each of the 6 Prospects (within the 5 Zones) with major reverse faults shown in black and secondary faults, which have mineralisation potential, shown in red. Figures 4, 5 and 6 show a typical mineralisation setting (using the Native Gully Prospect as an example) with the target mineralisation envelope shown in green.

The Company believes that these mineralisation envelopes have the potential to yield significant volumes of between 1 and 2 g/t gold in oxide rock.

The Native Gully Anticline is dislocated by a northerly striking, west dipping fault