Regional Setting
The Otago region of New Zealand’s South Island has produced at least 8 million ounces of alluvial gold. The +5 million ounce Macraes gold deposit is thought to typify the primary source of the alluvial mineralisation and is the model for the Company’s primary gold targets.

New Zealand has experienced a dynamic geological history due to its position at the junction of two
oppositely moving crustal plates.

The progressive uplift of gold-bearing schist basement has fed the deposition of auriferous alluvial deposits since the end of the Cretaceous Period, some 65 million years ago. Some of the earliest deposited alluvials have been uplifted, and subsequently eroded and reworked into younger alluvial deposits, while others have been tilted and downfaulted, and thereby protected from subsequent geological dismemberment.

Wetherstones Gold Deposit
The Wetherstones alluvial deposit extends from surface to a depth of more than 100m below ground
surface. Its basal unit, the so-called Blue Spur Conglomerate (“BSC”), is variably cemented and is
gold-enriched compared to the body of overlying alluvial material. Covering approximately 5 sq km,
the Wetherstones conglomerate is the most extensive of several such sedimentary sequences
preserved in the area.

In the adjacent Gabriels Gully, just 3 km north west of Wetherstones, the BSC was the source of the gold of the first major gold discovery made in the Otago alluvial gold province, in 1861.

The subsequent rush to the Gabriels Gully & Wetherstones fields yielded, at its peak, a recorded 200,000 ounces of production in 1862 alone, and a reported aggregate overall production from Blue Spur sources of significantly more than 500,000 ounces of gold.

Exploration Permit EP 40 664 and surrounding Prospecting Permit PP 39 265 cover the area of the old Wetherstones gold mine, and its down-dip extensions, which have not been systematically mined, nor fully explored.

The near-surface alluvial deposits at Wetherstones were intermittently mined during the 19th and 20th centuries by classical alluvial techniques. There are a number of accounts of relatively sortlived attempts to mine the down-dip extensions of the basal BSC by underground methods. These terminated for various technical reasons, and not because of exhaustion of the gold lode. In 1929-30 an inclined tunnel was excavated along the basal contact to a depth below surface of about 100m.

These underground excavations provide invaluable information on the economic potential of the deposit and mining conditions which might be encountered by a modern open cut miner. If the grade and width of mineralisation indicated by sampling results from the incline were to be representative of one kilometre of palaeochannel, that part of the deposit would contain approximately 200,000 tonnes of mineralised conglomerate with approximately 150,000 ounces of contained gold. Potential is inferred for the existence of several kilometres of channel in the subsurface of the Wetherstones basin.

Exploration by Otago Gold Limited
Drilling by Otago Gold totalling 37 holes of average 28m depth helped to define the distribution, grade
of contained gold, and quite variable thickness of BSC around the northern margin of the basin. The drill samples also confirmed the discovery of variably auriferous pyrite in parts of the BSC. Although pyrite comprises only a small percentage component of the rock, pyrite extractions evaluated by Dominion Laboratories in 1931, and by Otago in 1997 yielded up to 30 ounces of gold to the tonne of pyrite). Pyritic gold may significantly increase the total gold recoverable from the Wetherstones deposit, but has not been considered in previous economic assessments of the deposit.

Exploration of Extensions
The Gabriels Gully Prospecting Permit PP 39 265, of approximately 95 sq km surrounds the Wetherstones Exploration permit. It enables the Company to evaluate the potential of a 15 x 5 km belt of country containing extensions of the Wetherstones sedimentary basin, and additional strike extensions of the BSC depositional environment, and concealed basement structures prospective for primary mineralisation.

Additional land access agreements will be required with landholders affected by proposed exploration and any future mining activity, both at Wetherstones and in the Prospecting Permit areas.

Otago Regional Exploration Projects
Australasia Gold holds Prospecting Permits PP 39 264 and PP 39 266 in the St Bathans area (250 sq km) and the Buster-Naseby area (460 sq km) respectively and Exploration Permit PP 40 711 (597ha) Waikerikeri located just northwest of Alexandra. They cover significant past production centres in the northern Otago alluvial gold province. St Bathans in particular is renowned as the source of almost 150,000 ounces of recorded historical gold production, much of it from an alluvial channel of recorded grades up to approximately 30 g/t gold *. According to contemporary reports and more recent drilling, the channel continued to depth beyond the capability of then available mining technology and infrastructure.

At Waikerikeri, very limited drilling by Otago Gold demonstrated that high grades of alluvial gold remain in place, including best intersections of 3m @ 4.8 g/m3 (2 g/t gold*) and 8m @ 0.5 g/m3 (0.2 g/t gold*) within 20m of surface.

As significant former production centres, all these areas retain potential for the discovery of shallow
blind alluvial deposits and primary gold mineralisation.

Program for the Otago Projects
During the first year the Company proposes to commence a staged drilling and geophysical program designed to confirm the Wetherstones geological model and demonstrate the economic potential of the deposit, and ultimately to enable resources to be estimated as a part of feasibility studies. If warranted by results, a feasibility study will be undertaken in the second year.

The program for the three Prospecting Permits and Waikerikeri during the first year will comprise mainly the compilation of existing geological, exploration and mining records, supported by field prospecting. This information will be used to plan a properly targeted program of reconnaissance including drilling commencing in the second year.