New appraisal work completed
During autumn 2007 six diamond drilling wells totaling 1,400 m were completed.
Core drilling by an independent local subcontractor continues in 2008 at a
current rate of a few hundred m per month. The analysis of the cores recently
retrieved clearly shows that the mineralized zone of the project continues from
surface down to at least an absolute depth of some 100 m (the depth so far
achieved). The previous work programmes conducted in the Soviet period, and
also from 2000 - 2004, have proven more than 7 tons (240,000 oz) of recoverable
gold reserves in the Russian C1 and C2 categories. These reserves were,
however, only attributed to a depth of some 30 m due to the difficulty at that
time of collecting sufficiently large data samples from depth.
During January - March 2008, 20 bulldozer trenches (exploration lines) totaling
more than 3,800 m were completed. The distance between these new trenches is 80
m. The bulk of the trenches has been positioned to the east of the established
ore body. The currently established strike of the ore body is some 300 m and
the width is 50 m. The new trenches will allow channel sampling to be
performed, whilst simultaneously hammer drilling (large volume cores down to a
depth of some 45 m) will be carried out along the mineralized zone in a grid of
80 m to the east from the boundary of ore reserves over a distance of 1,200 m
and to the west over a distance of 160 m. Hand cleanup and channel sampling of
the trench bottom along the exploration lines #328 and #316 have commenced in
order to define the optimum sample size.
New sample preparation unit
In order to be able to efficiently analyse the huge number of samples, CAG has
constructed its own sample preparation unit in the Bodaibo region. Some 30
analysts will work here in 3 shifts preparing the samples. During the first and
second quarters of 2008, the work will focus on achieving the optimum sample
size. The preparation is performed using crushers and small gravimetric
mini-processors, which process the samples reliably at fast pace. The prepared
samples, with an incoming weight of some 25 - 35 kg and final weight of 300-400
g, are then sent to an external modern laboratory in the Tchita republic in
Eastern Siberia for fire assay analysis. This laboratory is certified according
to Western geologic standards, and will thus enable CAG to classify its gold
reserves according to JORC-standards. The processing of samples has already
begun.
New powerful RC-drilling rig ordered
The ideal sample size will be collected at depth via reversed circulation
drilling (RC). RC-drilling is at present very rare in Russia, and no suitable
RC-drilling contractor was available in the Irkutsk or neighbouring regions.
Central Asia Gold has therefore ordered a new powerful RC-rig from Atlas Copco,
however this will only be delivered to the site in the 4th quarter of this
year. The boom in the global mining sector has negatively impacted delivery
time. The high capacity of the ordered rig will allow Central Asia Gold to
collect large volume samples down to depths of 200 - 300 m.
Existing processing plant can be used for pilot gold production
When the license was purchased an experimental processing plant existed at
site. High voltage electricity has already been connected to the site, and the
plant was used to process the test ore samples in 2000 - 2004. The experimental
plant consists of crushers and mills for gravimetric processing. Central Asia
Gold's technicians have now analyzed the concentration plant. A slight upgrade
is needed to commission the plant. The cost for this is currently judged to be
modest. This plant can thus be used to verify gold grades at the deposit via
large bulk samples. This verification program will, in such a case, also result
in certain quantities of gold that can be sold on the market. This pilot gold
production programme will be reviewed and decided upon in 2009. After carrying
out the test production program, it will be possible to start construction of
an industrial processing plant with a yearly processing capacity of at least 1
million tons per year. Large scale gold production is not expected to be
launched until the end of 2010 at the earliest.
Potential and comparisons
It should be emphasized that the Kopylovskoye project is at the appraisal
stage. Risks are still high but its potential is significant. The data
collected thus far supports the hypothesis that the mineralized zone extends at
depth down to at least 100 m. The strike is also still unlimited. Today's ore
reserves are only located in the top section of the mineralized zone. CAG
therefore strongly believes Kopylovskoye could be a project with at least some
1 million oz of recoverable gold reserves.
For an indication of what this project could be currently worth on a
stand-alone basis, we refer to the Canadian listed gold exploration company
Zolotoresources (www.zolotoresources.com). This company is active in the same
Bodaibo region of Irkutsk. It is currently conducting an appraisal of two gold
projects with characteristics resembling Kopylovskoye's. The existing C2 gold
reserves of Zolotoresources are on par with Kopylovskoye's, and the geology is
very similar.
For more information, please contact:
MD Torbjorn Ranta, tel: +46 (0)8 624 26 80, fax: +46 (0)8 624 37 20, mobile
phone: +46 (0)70 8 85 55 04, e-mail: torbjorn.ranta@centralasiagold.se,
Website: www.centralasiagold.se, Post- and visiting address: Brovägen 9, SE-182
76 Stocksund
Central Asia Gold AB is a Swedish mining company focused on gold production and
exploration in Russia and Mongolia in the central parts of Asia. The gold
production was initiated in late January 2005 and the assets today encompass
some 645,000 troy ounces (1 troy ounce = 31.1 g) of C1/ C2 Russian gold
reserves.
Cautionary Statement: Statements and assumptions made in this report with
respect to Central Asia Gold AB's ("CAG") current plans, estimates, strategies
and beliefs, and other statements that are not historical facts, are
forward-looking statements about the future performance of CAG. Forward-looking
statements include, but are not limited to, those using words such as "may",
"might", "seeks", "expects", "anticipates", "estimates", "believes",
"projects", "plans", strategy", "forecast" and similar expressions. These
statements reflect management's expectations and assumptions in light of
currently available information. They are subject to a number of risks and
uncertainties, including, but not limited to, (i) changes in the economic,
regulatory and political environments in the countries where CAG operates; (ii)
changes relating to the geological information available in respect of the
various projects undertaken; (iii) CAG's continued ability to secure enough
financing to carry on its operations as a going concern; (iv) the success of
its potential joint ventures and alliances, if any; (v) exchange rates,
particularly between the Russian rouble and the U.S. dollar. In the light of
the many risks and uncertainties surrounding any gold production and
exploration company at an early stage of its development, the actual results
could differ materially from those presented and forecast in this report. CAG
assumes no unconditional obligation to immediately update any such statements
and/or forecasts.
