Australasia Gold's Initial Drilling at Wetherstones Field in Otago

The South Australian-based junior explorer Australasia Gold Ltd targeting palaeoplacer gold deposits in Otago, has completed its initial drilling programme in the Wetherstones gold field near Lawrence in Otago.

Australasia Gold, which was listed on the Australian Stock Exchange in January 2006 after raising A$3.1 million in an initial public offer, said in its quarterly report to 31 March, that the eight reverse circulation holes drilled generally confirmed earlier predictions about the geology of the Wetherstones gold deposit.

Gabriel's Gully, just 3km away and Wetherstones were the gold discoveries made in 1861 which triggered the gold rushes to Otago.

The report said that grades intersected around the base of the conglomerate sequence were mostly between 0.1 and 1grams/tonne (g/t) gold, with a peak value of 5.5 g/t.

Australasia Gold said the aim of its Wetherstones project is to test an interpreted buried alluvial channel which has been identified from historic mining records, and shown by sampling of an exploratory adit in the 1930's, to contain high gold grades at its base.

The channel has been tilted by fault activity, and extends from the surface, where it was historically mined, to depths in excess of 100 metres.

The company's maiden exploration programme included the completion of a preliminary programme of eight vertical drill holes in three lines across the interpreted channel, crossing each side of the exploratory adit, for an aggregate 671 m.

There is a 50-100m sequence of conglomerates of which the lower 10 to 30m is unoxidised, with a 4 to 10 m basal horizon relatively rich in pyrite and more indurated than the overlying material.

Elevated grades were encountered at, above and immediately below the basement contact in all holes.

The results are being reviewed by the company and their significance assessed, and the location of a follow up programme of drilling is being considered.

Australasia Gold says in background information on its website, that the Wetherstones alluvial deposit of Blue Spur Conglomerate, which is variably cemented and is gold-enriched, covers approximately 5 sq km, and is the most extensive of several such sedimentary sequences, preserved in the area.

Australasia Gold holds Exploration Permit 40664 over Wetherstones and its down-dip extensions not systematically mined plus the Prospecting Permit 39265 over the surrounding area of approximately 95 sq km.

Australasia Gold said the rush to the Gabriel's Gully and Wetherstones fields yielded 200,000 oz of gold in 1862 alone, and a reported aggregate overall production from Blue Spur sources of significantly more than 500,000 oz.

The company said that the alluvial deposits at Wetherstones were intermittently mined during the 19th and 20th centuries by classical alluvial techniques. Underground mining attempts all ended for various technical reasons, not exhaustion of the gold lode.