Very large slice of the pie this property..... looking very...

Very large slice of the pie this property..... looking very good..

SUBJECT: ENVIROGOLD OPTIONS ANOTHER HIGHLY PROSPECTIVE GOLD PROPERTY IN THE AZUAY PROVINCE OF SOUTHERN ECUADOR

EnviroGold Limited (ASX Code ?EVG?) advises that it has entered into an Option Agreement to purchase a 2,200 ha Mining Lease near the village of San Gerardo in Azuay Province, Ecuador which adjoins the Company‟s leases covering the Pinglio and Papercorp mines (refer attached map).
The San Gerardo property can be purchased at EnviroGold‟s option at any time within three years at a cost of US$4,300,000. The vendors, the Cincoca Mining Association, will be paid an option fee of US$300,000 which is deductable from the purchase price.
EnviroGold‟s Executive Chairman, Mr Brian Johnson, said that the signing of the Option Agreement was the culmination of 12 months of negotiations and now provided the Company with a significant exploration target in the heart of a heavily mineralised gold belt, and the possibility of increasing gold production from the 75,000 to 100,000 ounces Au per year planned for the expanded Pinglio and Papercorp mines.
The Company‟s consultants, Buscore Consulting Limited, have advised that the San Gerardo property is expected to add substantially to the 1.2 million to 1.5 million ounce Au mining target previously reported for the adjoining Pinglio and Papercorp leases, and the three concessions could together realistically host aggregated multimillion ounce gold deposits.
Since 2004, Canadian and US companies have reported NI 43-101 compliant resources (Canadian JORC equivalent) of over 15 million ounces of gold from exploration of leases surrounding EnviroGold‟s properties in Azuay Province:
Deposit
Company
Province
Status
Resource Oz AU
Gaby*
International Minerals Corporation
Azuay
Pre Feasibility
6,940,000 M&I
2,850,000 Inf
9,790,000
Quimsacocha
IAM Gold
Azuay
Pre Feasibility
1,682,000 P&P
2,107,000 M&I
61,000 Inf
3,850,000
Rio Blanco
International Minerals Corporation
Azuay
Feasibility
661,000 M&I
354,000 Inf
1,015,000
Tres Chorreras
Atlas Moly
Azuay
Resource
383,000 M&I
515,000 Inf
898,000
TOTAL
15,553,000
* Lease adjoins San Gerardo property
P&P = Proven and Probable
M&I = Measured & Indicated
Inf = Inferred
Registered Office:
Level 2, 12 O?Connell Street
Sydney
New South Wales 2000
Australia
Tel: 61 2 4861 1740
Fax: 61 2 4861 7665
Email: [email protected]
2
Buscore Consulting after a reconnaissance of the San Gerardo property reported that:
?the geology in the area is represented mainly by volcanic rocks (andesite ? andesite tuffs), with extensive mineralisation in two forms:
quartz-pyrite-calcite-chlorite veins with values that ranged from 1.9 g/t Au to 17.6 g/t Au;
hydrothermal breccia with open cut potential.
Five artisanal co-operatives are extracting around 100 tones of ore per month with grades ranging from 5 g/t to 20 g/t gold which is processed offsite (the subleases expire in August 2014).?
If the San Gerardo property realises its development potential it could benefit from a staged expansion of the planned Azuay project process plant and the sharing of infrastructure including tailings dams.
Mr Johnson said that a Scoping Study of the technical and commercial viability of the Azuay project had been completed which indicated a total development cost for the project of US$77.5 million including the cost of exploration, feasibility studies, mine and plant construction, holding costs, and contingencies. Operating costs for a 75,000 ounce Au per year operation are anticipated to be in the order of US$395 per ounce.
The Azuay process plant will require a combination of gravity separation, Albion oxidation, and standard carbon-in-leach circuits to extract around 90% of contained gold.
Details of the results of the Scoping Study including breakdown of capital and operating costs, and potential profitability will be released in approximately two weeks.
Equity funding for the first stage of the Azuay project is expected to be provided primarily from the conversion of 206 million listed share options at 15 cents each on or before 31 December 2011 ($31 million). EnviroGold is earning a 65% interest in the project through the expenditure of US$6.5 million on predevelopment costs. Development is planned for 2012 subject to the results of a drilling program which will commence in January 2011.
Mr Johnson said that construction of EnviroGold‟s first project in the Dominican Republic was well underway with the first gold pour expected within 12 months, and with clear objectives now established for the predevelopment phase of the first stage of the Azuay project, the Company would increase its focus on identified opportunities for the application of the Albion oxidation process in Northern Peru.
Mr Johnson said he expected EnviroGold to be able to progressively grow its gold production over the next three to five years based on opportunities in Latin America, and the current challenge is to build a cohesive and competent management group capable of successfully exploiting these opportunities.
Yours sincerely,
ENVIROGOLD LIMITED