Cargo Gold Project (GCR 100%)

Figure 1. Cargo Project location

Cargo, like Copper Hill, is in the Molong Volcanic Belt and has a similar geological setting. It hosts copper and gold mineralisation and is a core GCR project.

The Cargo goldfield has operated since 1869 and has recorded production of 10,000 ounces of gold. The majority of this production has been sourced from eluvial deposits and the shallow parts of quartz-pyrite lodes. Mining activity continues sporadically on a small scale from two mining leases, the Ironclad and the Goldenclad.

Exploration indicates the near surface potential for gold is greater than for copper, however the project has strong similarities to both Copper Hill and Cadia and GCR believes potential remains for large scale porphyry related copper-gold mineralisation at depth. The Company plans to pursue this opportunity as well as the shallower gold potential.

A near-surface (JORC 2004 compliant) gold resource estimate of 4 million tonnes at 1.19 g/t Au using a 0.8 g/t Au cut-off containing 154,000 ounces of gold was reported by GCR for the Spur Dalcoath area in May 2012.

Gold Exploration

Cargo is 12 km west of the Cadia-Ridgeway gold-copper mining operation (Figure 1), where Newcrest reported head grades of 1.20 g/t Au and 0.36% Cu from Cadia East Underground in March Quarter 2015. It is hosted by prospective rocks of the Molong Volcanic Belt (MVB), a package of Ordovician calc-alkaline island arc-related volcanics and sediments intruded by calc-alkaline and potassic intrusive complexes which are elsewhere related to significant porphyry copper-gold deposits and prospects including Cadia, Northparkes and Copper Hill.

GCR acquired the Cargo project in 1997 and undertook extensive geological studies which indicated the presence of a large, concentrically zoned hydrothermal mineralogical system, which is truncated on the western side by a prominent meridional fault.

The system is characterised by a core zone of intrusive rocks anomalous in copper and molybdenum, and an outer arcuate zone of magnetic and pyritic volcanic rocks containing quartz-sulphide gold-bearing vein systems which are in a radial configuration relative to the intrusives (Figure 2). The vein systems are up to 500m long with elevated gold grades in limited shallow historical mining and drilling.

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Figure 2. Simplified Cargo Geology and Lodes

Exploration by GCR and previous explorers has demonstrated all known lodes contain gold with significant intercepts received from drilling at the prospects drilled to date. While the lode continuity is generally good, the gold grades exhibit a high degree of variability both along strike and down dip, typical of many gold systems. Grades over mineable widths tend to be low to moderate (0.5g/t – 1.2g/t Au) with the average grades of the lodes generally in the 1g/t to 1.5g/t Au range.

The size of the mineralised system provides strong encouragement and the Company believes that further work will identify areas where lode density and gold grades are adequate to support an open pit mining operation. In addition, the potential remains for deeper high grade lodes which can be exploited from underground.

Spur-Dalcoath

Surface mapping and previous exploration indicated the Spur Dalcoath area contained a high concentration of veining and relatively consistent drilling results. Accordingly GCR’s initial gold programs focused in this area.

Pre-GCR drilling had returned best intercepts of 54m @ 1.19 g/t Au, 43m @ 1.22 g/t Au and 59m @ 0.85 g/t. The intercepts from the Spur-Dalcoath lode system are shown in Figure 3.

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Figure 3. Spur-Dalcoath Prospect showing orientations, drill hole locations and intercepts (GCR = SD holes).

In 2012-13, Golden Cross undertook a drilling program of ten PQ/HQ core holes, including three twin holes to verify previous reverse-circulation drilling results. The results confirmed or improved on the previous results, for example, SD005 returned 67m @ 1.15 g/t Au compared with the previous RC result of 59m @ 0.85 g/t Au. Results also provided better detail on the internal high grade vein architecture which was not available from previous 2m RC sampling.

Resource estimate at Spur-Dalcoath:

Potentially economic mineralisation at Spur Dalcoath extends from the surface to a depth of 180m over a 400m strike length in a series of quartz-sulphide veins, and remains open at depth. Based on 121 drill holes totaling 13,865m, H&S Consultants completed a resource estimate in 2012 compliant with JORC 2004 (refer ASX release dated 21 May 2012). An Inferred Resource of 154,000 ounces is contained in 4.0 million tonnes, with an average grade of 1.19 g/t Au at a 0.8g/t Au cut-off (refer Table 1), all within a larger tonnages of lower grade material when lower cutoffs are applied.

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Initial metallurgical testing has yielded recoveries of up to 94% with an average of 82%.

Interpreted extensions both along strike and down dip provide additional exploration potential within 250m of surface within the existing mineralised envelopes adjacent to the Spur-Dalcoath Inferred Resource.

Gum Flat Prospect

Gum Flat eluvial/alluvial deposits were drilled by Shell Metals between 1985 and 1987 using mostly RAB drilling with some RC and limited core drilling. Better results included 18m @ 1.48g/t Au, 13m @ 2.41g/t Au, 13m @ 1.81g/t Au, 17m @ 1.42g/t Au, 9m @ 1.47g/t Au, 12m @ 1.14g/t Au, and 17m @ 1.42g/t Au.  At the northern end of Gum Flat, drilling into the underlying altered andesitic basement rocks intersected 7m @ 1.09g/t Au and 26m @ 1.06g/t Au indicating potential for mineralisation in the deeply weathered rocks east of the Gum Flat Fault.

Large diameter PQ & HQ core drilling by Golden Cross, confirmed the tenor of historical intercepts, but also showed considerable variability in the eluvial material. The underlying bedrock andesite continued to yield elevated gold beneath the shallow historical drilling. The best intercept in this material was in drill hole GF007 which intersected 18m @ 0.53g/t Au from 113m down-hole.

Copper Exploration

Exploration since 1970s targeted the central zone defied by elevated copper and molybdenum surface geochemistry. Drilling by Command Minerals in 1971 returned 100m grading 0.34% Cu with low levels of gold and molybdenum.

The first deep drilling was undertaken by joint venture partners Renison Goldfields in 1998 followed by Newcrest in 1998-99.

Newcrest drilled 5 long holes on 400m spaced sections with a maximum length of 1248m, targeting magnetic features with a best result of 58m @ 0.21% Cu. Further evaluation suggested the Newcrest holes had not adequately tested the central dacite porphyry host, and in 2008 Calibre Mining (Australia) PL drilled an RCP hole that returned 250m @ 0.13%Cu with low Au (0.10 g/t) and Mo (~40ppm); a 235m cored extension returned a further 116m @ 0.14% Cu, indicating no material improvement in grade with depth. Testing of the peripheral breccia zone on the southern flanks of the central porphyry provided more encouragement with 56m @ 0.29% Cu from 428m with a slight increase in Mo to 57 ppm. (Figures 4 & 5). Calibre concluded that this zone showed the best depth potential for copper.

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Figure 4. Detailed Geology (after Calibre 2008)

Figure 5. Section CYC12 & 13 - Calibre 2008

Figure 5. Section CYC12 & 13 – Calibre 2008

Cargo has been used in recent years as a training range for a porpyhry mapping course run by consultancy Corbett, Menzies & Cunliffe (www.cmcgeos.com). Evaluation of some cores has identified mineralogical assemblage similarities with other porphyry deposits, and this line of research is being further evaluated for its potential to provide vectors to deeper targets.

Exploration Potential

Immediate potential for economic mineralisation at Cargo is with the ~15 radial gold lodes which have shallow gold intercepts in limited drilling, and similarities with the Spur-Dalcoath system, the only lode system with a resource estimated in recent years.

A detailed review of the exploration data, including detailed logging to further define the mineralogical assemblages which commonly are associated with porphyry copper deposits is planned in conjunction with Corbett, Menzies & Cunliffe. This is expected to provide vectors for testing the deeper copper potential at Cargo.

June 2015