AUSMEX – WARDELY JAMES CAPEL BREATHING LIFE INTO MT FREDA

“WARDLEY REPORT” SHEDS LIGHT ON BIGGER RESOURCE AND HIGHER GOLD GRADES

Ausmex Mining Group Ltd released an update of their flagship Gold Mine Project Mt Freda and the Golden Mile Gold Projects, near the regional township of Cloncurry NW Queensland in an announcement on 24th June 2020.

It seems that the Company is super serious about bringing Mt Freda into production with the commencement of dewatering of the pit, securing infrastructure for on site operations, commencing a cost study into underground mining, a resource and category upgrade on its resource statement, clearing sites and completing roadworks. Ausmex has over $4m cash and owed $1.5m for the balance of the sale of its Gilded Rose Gold tenements. The rebadging and recent change of directors on the board, sparked a lot of new interest with the new blood and certainly a different approach to “getting things done” from previous management. Mr Day appears to be a person of little talking and plenty of action. The previous Directors have around 66m shares between them, so I would, under the circumstances, be expecting a lot of heavy selling from this department group over the coming months. However having said that there appears to be quite a thirst for the shares in this company now with record volumes getting gobbled up.

Change of Management

Ausmex has just undergone a complete change of management within the Company with 3 directors resigning two weeks ago and Mr Aaron Day a Senior Geologist and resident of Cloncurry with 15 years in the Cloncurry mineral field, holding senior management positions. Also on the Board is Mr Trevor Coombe, a senior and experienced Mining Engineer specializing in underground management, design and engineering. The Company has also stated that it is preparing a Cost Study for the capital required for all underground/surface infrastructure and mining costs associated with a 250m initial vertical shaft and mining on several levels. The study, Mr Day said, is also to compare cost comparisons with contract mining versus employees mining.

Download: Wardley James Capel Resource Statement Report 1989

Measured & Indicated: 600,000 tonnes @ 5.65g/t Au + Inferred: 497,340 tonnes @ 4.96g/t Au.

More interesting and exciting and factual is that, Kitcogold has come into the possession of a report that had been archived and not seen the light of day for some 30 years. It was written in 1989 by then one of Australia’s leading Merchant Banks, (Subsidiary of HSBC) Wardley Australia Limited. Wardley James Capel the corporate finance arm of the Bank was commissioned by Diversified Mineral Resources NL 90% and Central Victorian Gold Mines NL 10% holder of Mt Freda, to find a JV partner or a buyer for the Mt Freda and associated projects.

Kitcogold has verified the authenticity of the Report.

Diversified Mineral Resources NL operated the Mt Freda Gold mine from 1986 to 1989 with a head grade of 4.2g/t, producing high grade Gold bars at over 98% Gold content. The mine was closed in late 1989, due to the global Gold price dipping below the $300 level and the financial crash. The Report was completed just prior to the Mt Freda operations ceasing meaning the resource calculated has not been mined.

Wardley James Capel completed an independent evaluation and resource estimation on the project in 1989, based on the extensive diamond and RC drilling programs carried out at Mt Freda.

The resource statement was included in the document, seeking a JV or outright sale of the Project. The report completed by Wardley in 1989 that reported a Measured and Indicated Mineral Resource of 600,600 tonnes @ 5.65g/t Au and an Inferred Resource of 497,340 tonnes @ 4.96g/t Au. Wardley Report also said that they were waiting on completion two more diamond core hole to increase the category to “reserve category” The abovementioned resources estimate, today, would equate to a 189,038 ounces of Gold, with a current value of $A472,596,000 based on the current gold price.

The market was surprised by the recent resource statement by the Company recently as it did not equate to the Mt Freda mines processing data of Gold recoveries of 4.2g/t Au. Even the waste dumps from historical mining at Mt Freda of +2 and -4 grams per tonne and were recently sold to Round Oak Minerals for $2.5m by Ausmex were higher than the recently reported Mt Freda resource. After the recent resource announcement, 3 directors resigned or were asked to resign and the Company immediately informed the market that an upgrade of the resource estimates was underway using all of the data available including historical drilling which appears to have not been used in the current statement. It seems on the surface that a “hurried resource” was completed by Ausmex to quell the ever growing unrest of shareholders due to the lateness of the report which was supposed to be completed in August 2019. Its no wonder a resource upgrade has commenced with the surfacing of this Wardley Report.

Excerpt from the Wardley James Capel Geological Report. (word for word)

“The ore reserves and were calculated employing the end area sectional method, a cut off of 1g/t Au and a cutting factor of 10g/t (geometric mean + 2 x standard deviations). This was considered appropriate at the time as the RC drilling had not allowed the higher grade material to be geologically differentiated. Recent diamond drilling has however, shown that the higher grade material is commonly fault gouge breccia or medium graded quartz jasper breccia, with sulphides or siliceous ironstone breccia. Lower grade material occurs within the altered country rock and coarse quartz/jasper or quartz carbonate at depth. Consequently it can be seen that two grade distribution populations exist and therefore cutting factors are probably not applicable. This also gives confidence to selective underground mining as it is believed the higher grade fault material can be distinguished from the lower grade mineralized rock. At this stage “reserves” are presented as a geological resources to the categories of measured and indicated and inferred. These have been calculated on the bases of a dry density of 2.7t/m3 and a cut-off 1g/t Au with a polygonal model of long section as presented.

Measured and Indicated Resource: 600,600 tonnes @5.65g/t Au

Inferred Resource: 497,340 tonne @ 4.96 g/t Au

Two Diamond holes are currently being drilled, which will allow these resources to be upgrade to reserves for both the open pit and underground mining with appropriate cut-offs dependent on mining method.”

Wardley Report ends.

Ausmex also announced to shareholders on 24th June 2020, that it has commenced the dewatering of the Mt Freda open cut and pumping the water into 4 evaporation cells.

What about Burra

There has been a fair bit of hype attached to the Ausmex Burra exploration. When asked about where that project was at the moment Mr Day informed us of the following – The area that the company explores (7,000 square Km) has been the subject of major bushfires and now having restrictions on the drilling by the Covid 19 Government restriction. The Company has advised Kitcogold, that Ausmex will commence drilling as soon as the restrictions are lifted and he could not wait to put a deep hole into the anomaly created by the magnetotulluric survey that identified a massive magnetic and conductive anomaly over 14 km wide and 6 km long. Mr Day said that its certainly hot ground given its location in the G2 Corridor where the BHP Olympic Dam mine is located. “We are hopeful “,he said. The indications from the Survey have identified a large magnetic and conductive anomaly, so we know there is something down there, with real size, but we wont know what is giving us the data, until we drill it. Mr Day said the Company had also applied for $300,000 drilling grant offered by the South Australian Government to be spent in the Burra area.

Goldman

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