Segilola Gold Project - Maiden resource statement

/NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR RELEASE TO US NEWS WIRE SERVICES/

ANNOUNCEMENT TO THE AUSTRALIAN SECURITIES EXCHANGE AND TORONTO STOCK EXCHANGE

PERTH , Western Australia , Dec. 3 /CNW/ - CGA Mining Limited (ASX: CGX, TSX: CGA) ("CGA" or the "Company") through it's wholly owned subsidiary Segilola Gold Limited ("Segilola") is pleased to announce a maiden JORC and NI 43-101 compliant indicated resource of 520,000 ounces of gold contained in 3,658,000 tonnes at a grade of 4.4g/t and an inferred resource of 97,600 ounces of gold contained in 790,200 tonnes at a grade of 3.8 g/t, at the Segilola Project in Nigeria .

This maiden resource has been generated from a first pass drilling campaign of 12,166m in 119 holes ranging in depth from 40m to 220m.

The deposit lends itself to being exploited by open pit mining methods. The metallurgical characteristics of the ore are amenable to fully conventional CIL processing techniques.

The deposit remains open along strike (existing strike length of 1.9km) and at depth. Follow up drilling is currently being planned, and a feasibility study ("FS") is underway in accordance with the Joint Venture Agreement (defined below) requirements.

Figures 1 and 2 (below) summarise the indicated and inferred resource available at various lower cut off grades, of note is that in excess of 500,000 ounces of gold at a grade of 6.77g/t Au is available at a 3.0g/t cut off, of which 426,000 ounces reports to the indicated category at 6.70g/t Au, see Figure 1.

The resources estimate was carried out by Odessa Resources Pty Ltd, an independent geological and resource consultancy based in Western Australia , according to both JORC and NI 43-101 guidelines. The full report titled Resource Estimate for the Segilola Gold Deposit, Osun State, Nigeria for CGA Mining Ltd, dated 15 November 2009 is available on the SEDAR website at www.sedar.com.

The resource is based on core obtained from diamond drilling carried out by an independent Turkish drilling contractor on behalf of Segilola. The indicated mineral resource estimate and the inferred mineral resource estimate (no minimum cut-off grade), is presented in Table 1.

Figure 1: Indicated Ounces Available at Different Lower Cut Off Grades

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Figure 2: Inferred Ounces Available at Different Lower Cut Off Grades

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Location

The Segilola Gold Project is located in Osun State, 120km North East of Lagos (principal port and commercial centre of Nigeria , estimated population - 16 million) and 18km South of Ilesha, the local government centre (population 300,000). Ilesha is on the main road between Lagos and Abuja (State Capital). (Refer to Figure 3)

Figure 3: Project Location Map

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Ownership

The Segilola Gold Project comprises Mining Lease 41 ("ML41") and Exclusive Prospecting License 39 ("EL39"), (refer Figure 4). ML41 covers an area of 46.41 hectares and is wholly contained within EL39 (43.8km(2)).

EL39 was granted to Tropical Mines Ltd as EL13205 for a period of 2 years on 29th September 2005 and has subsequently been renewed twice each for a two year extension.

On the 25 May 2007 Segilola, entered into a Joint Venture Agreement with Tropical Mines Limited ("TML"), to evaluate and develop the Segilola Gold Project.

Under the terms of Joint Venture Agreement ("JV"), SGL are to carry out and sole-fund exploration and the preparation of a FS for the Segilola project, within three years of the JV formation.

Subject to the JV, SGL have the right to earn up to a 51% interest in the project.

On 6 November 2008 Segilola was granted 25% equity in the license holding (option 1).

On 28 August 2009 Segilola notified TML that it had completed sufficient work to earn an additional 13% equity (option 2).

Segilola will acquire the remaining 13% (option 3) on delivery of the FS.

Figure 4: Map of Area Showing Licences

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Geology

The project area is located in the crystalline Basement Complex rocks of Southwestern Nigeria within the Ilesha Schist Belt. Schist belts in Nigeria occur as North-South trending domains of Upper Proterozoic meta-sedimentary, meta-volcanic and intrusive sequences that are oriented parallel to the boundary between the West African Craton and the Pan African province (similar to the Ashanti and Sefwi belts in nearby Ghana )

The mineralized lodes generally comprise highly silicified fine-grained foliated biotite gneiss typically intruded by both discordant and concordant pegmatitic quartz-feldspar veins. Gold commonly occurs as either very fine disseminations or as coarser, often visible, grains in the altered gneissic host rock and in quartz-feldspar veins. Figure 5 illustrates the density of drilling on a single section and the continuity of grade down dip.

Figure 5: Section through the Ore Body at Section 831140N

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The focus on the recent exploration program (2007-2009) has been to test the continuity of the mineralisation on 25m-spaced drill section lines.

A total of 12,166m of diamond drilling was completed in 119 holes ranging in depth from 40m to 220m. All holes were drilled at an inclination of -70 degrees to the horizontal.

All sample preparation and analyses were carried out by SGS Laboratory Services GH Ltd. A total of 6,191 gold fire assays and silver analyses were completed and reported. Inter-laboratory checks were carried out at Genalysis Laboratories Ltd located in Tarkwa, Ghana .

Limited trenching was also completed to identify the surface expression of the mineralised shear zone and to identify any parallel structures (the latter is ongoing).

Metallurgy

Preliminary test work (bottle rolls) carried out by SGS Laboratory Services GH Ltd, Ghana , have indicated that gold recoveries in excess of 90% are achievable.

Future Exploration

The deposit remains open both along strike and at depth and additional drilling campaigns may be undertaken in the future to expand the resource.

Mineral Resource Evaluation

The resource wireframes represent a single 010 degree North Easterly trending mineralised structure that dips at between 80 degrees to 70 degrees towards the West.

An earlier-phase, vertical normal fault, which intersects the lode at a very oblique angle, truncates the Northern section at depth. A continuation of the lode at depth on the Southern down-throw side of the fault is considered likely and is definite target for additional resources that could be explored by underground mining methods.

There is a persistent distribution of high-grade assays throughout the mineralised zone. An overall top-cut of 50 g/t Au was applied to restrict the influence of extreme grade values.

Gemcom software was used to examine the geostatistical characteristics of the individual domains and to carry out an inverse distance squared grade interpolation. An Ordinary Kriged model was generated as a validation check. A 3D block model was then generated within the Gemcom software.

The model is considered to meet the requirements of confident interpretation and of the continuity of mineralisation within the Segilola deposit and as such meets the classification requirements of National Instrument 43-101 for an Indicated Mineral Resource.

The Inferred portion of the resource largely represents the sparsely drilled, down-dip and down-plunge extent of the mineralisation. The geological interpretation of drilling in this area is consistent with the better defined portion of the deposit, and hence the Inferred classification is appropriate.

The summarised Resource Report for all zones combined is given in Table 1.

    
        Table 1: Segilola Gold Project: August 2009 Mineral Resources

    -------------------------------------    --------------------------------
    Lode        Indicated Resources                 Inferred Resources
    -------------------------------------    --------------------------------
            Tonnes     Grade     Ounces        Tonnes     Grade     Ounces
                       (g/t)      (Au)                     g/t       (Au)
    -------------------------------------    --------------------------------
    100    3,107,000    3.9     393,000         471,900     5.1      78,000
    -------------------------------------    --------------------------------
    200      551,000    7.3     129,000          20,400     6.5       4,300
    -------------------------------------    --------------------------------
    300            -      -           -         297,900     1.6      15,300
    -------------------------------------    --------------------------------
    Total  3,658,000    4.4     522,000         790,200     3.8      97,600
    -------------------------------------    --------------------------------
    

ABOUT CGA MINING LIMITED

CGA is listed on the Toronto Stock Exchange and Australian Securities Exchange. The Masbate Gold Project in the Philippines was successfully constructed with first gold poured on 12 May 2009 . The project which is currently ramping up to full production has a total indicated resource base of 4.55M ounces of gold, total inferred resource base of 3.22M ounces of gold and a probable reserve of 3.03M ounces of gold. It is currently forecast to produce over 200,000 ounces per annum at steady state operations.

The 4Mt per annum plant was constructed by Leighton Contractors Asia Limited ("Leighton") without one lost time injury. The mining contract for the project has also been awarded to Leighton, the largest mining contractor in the world. CGA is completing a scoping study for the expansion of the plant throughput at Masbate.

CGA has a disciplined acquisition program focused on acquiring new gold projects with a substantial initial resource with the capacity to grow materially and where the development and operational experience of CGA can be applied to enhance shareholder value.

NATIONAL INSTRUMENT 43-101 AND JORC COMPLIANCE

Mr Geoff.G.Jones, F.Aus.I.M.M.CP Mng, CGA's Consulting Engineer, is acting as the Qualified Person in compliance with NI 43-101 and JORC reporting requirements with respect to this announcement. He has prepared and / or supervised the preparation of the scientific or technical information in this announcement and confirms compliance with NI43-101 and JORC requirements. Further details about the Masbate Gold Project are found in the following technical reports (i) NI43-101 Technical Report, October 2008 , Masbate Gold Project, Masbate Island, Philippines dated 5 December 2008 and (ii) Technical Report on the Mineral Resources of the Masbate Deposit Masbate Province, Republic of the Philippines , For CGA Mining Limited, dated 20 May 2008 .

Mr. Alfred John Gillman of Odessa Resources Pty Ltd, an independent qualified person experienced in the style of mineralisation at Segilola, has completed the resource statement for the Segilola Project as disclosed in this announcement, including verification of the sampling, analytical and test data underlying the estimate. Verification also included a site visit, database validation of historical drill results and a review of sampling and assaying protocols. The qualified person was satisfied with all of the protocols used during the drilling, sampling and in the Segilola resource estimate compilation and computation.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This announcement includes certain "forward-looking statements" within the meaning of Canadian securities legislation. All statements, other than statements of historical fact, included herein including, without limitation, statements regarding follow-up drilling plans at Segilola, the completion of a feasibility study, the Segilola mineral resource estimate, the acquisition of an additional 13% interest on the completion of a feasibility study, expansion of the resource at Segilola, anticipated timing for construction and production, and other milestones related to the Masbate Gold Project and other projects, production estimates and CGA's future operating or financial performance, are forward-looking statements. Forward-looking statements involve various risks and uncertainties and are based on certain factors and assumptions. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from CGA's expectations include uncertainties related to fluctuations in gold and other commodity prices and currency exchange rates; uncertainties relating to interpretation of drill results and the geology, continuity and grade of mineral deposits; uncertainty of estimates of capital and operating costs, recovery rates, production estimates and estimated economic return; the need for cooperation of government agencies in the development of CGA's mineral projects; the need to obtain additional financing to develop CGA's mineral projects.; the possibility of delay in development programs or in construction projects and uncertainty of meeting anticipated program milestones for CGA's mineral projects ; and other risks and uncertainties disclosed under the heading "Risk Factors" in CGA's Annual Information Form for the year ended 30 June 2009 filed with the Canadian securities regulatory authorities on the SEDAR website at www.sedar.com.

For further information: Australian Contact, President & CEO - Michael Carrick, Tel: [phone], Fax: [phone], Email: [email protected]; US Contact, Independent Chairman - Mark Savage, Tel: [phone], Fax: [phone], Email: [email protected]