Murchison Project, Western Australia

Murchison is AXG’s most advanced project. AXG has a 49.9% interest in gold deposits of over 500,000 ounces. AXG has the right to increase its interest to 80% in the Western Queen tenements.

The Murchison Project is located approximately 650km north northeast of Perth and about 80km northwest of Mt Magnet in the Murchison Province of Western Australia.

The project is separated into two tenement groups, the Western Queen (including Western Queen South)and Dalgaranga. The two Western Queen and Western Queen South mining leases and the Dalgaranga tenements form the Dalgaranga Gold Mines Joint Venture (DGMJV) between AXG and Equigold. AXG has a 49.9% interest in the DGMJV and Equigold has 50.1% and is the manager. In 2002, the DGMJV was varied so that AXG has the right to earn up to a 70% interest in the two Western Queen and Western Queen South mining leases by spending $1 million (or to 80% by spending another $0.5 million). This right expires on 17 July 2005. AXG has a large holding of 100% owned tenements surrounding the Western Queen and Western Queen South leases which together cover about 70% of the 4km x 40km Warda Warra Greenstone Belt.

Significant gold deposits totalling some 514,000 ounces of gold remain within the Murchison Project tenements after the DGMJV produced 396,900 ounces from the project area from 1996 to 2001.

Western Queen

The gold deposits at Western Queen and Western Queen South now contain over 139,000 ounces in resources and remain open at depth, down plunge and down dip and there is potential to substantially add to this total.   

The Warda Warra Greenstone Belt has been largely unexplored away from the Western Queen and Western Queen South deposits. Up to 50% is under transported cover and much of the belt has strongly leached regolith materials. As a result regional surface geochemistry has been only partly effective.  An extensive study by Geoinformatics Exploration Pty Ltd (Geoinformatics) involving all previous exploration data and interpretation of low level geophysics has led to the outlining of a number of high priority new targets within AXG’s 100 % owned tenements in the Warda Warra Greenstone Belt. AXG has completed focussed exploration on a number of high priority targets in the period to 31 December 2004. It should be noted that the Warda Warra Greenstone Belt is of similar size and geological setting to other greenstone belts which have hosted world class deposits such as Plutonic and Big Bell.  Therefore there is no apparent reason why this greenstone belt cannot also host another world class gold deposit.

Resource Estimate

A new resource estimate of 1,503,000 tonnes @ 2.42 g/t containing 117,080 ounces of gold for Western Queen South at cut-off grade of 1 g/t was completed using the Polygonal Cross sectional Method as detailed below in Table 1. Estimated JORC compliant resources have increased by 9000 ounces to 117,080 ounces of contained gold (from 108,000 ounces) by incorporating RC and diamond drilling results and new specific gravity (SG) test work.

This resource is based on 25 X 20 metres drill spacing with some infill to 25 X 10 meters. The resource was calculated within an area 325 metres long and from 15 metres below surface in the northern part and to a depth of 300 metres in the south.

Table 1: New Western Queen South Resource Estimate

The Western Queen South prospect is located approximately 700m south of the Western Queen open cut pit along the Western Queen Shear within an amphibolite host. The shear zone and the deposit strikes at approximately 028°, with the mineralization plunging to the south at 45°. The mineralized fresh rock can be described as silicified with biotite and sulphide alteration.

Targets 2, 3, 5 and Buried Granite 

RAB and Aircore drilling programs have been completed to test targets 2, 3, 5 and Buried Granite at Western Queen area – Murchison Project as identified by Geoinformatics. A total of 164 RAB holes for 4059 metres and 20 Aircore holes for 739 metres have been drilled.

Target 3  

Drilling over Target 3 focussed on the greenstones adjacent to the western greenstone/granite contact of the Warda Warra Greenstone Belt.  The area is interpreted to be intersected by north-south and northeast-southwest shear zones. Previous drilling has intersected high grade ore–quality intercepts including 1m @ 4.52 g/t and 2m @ 3.40 g/t. 

Two areas of anomalous lag geochemistry peaking at 8500 ppb Au and 7800 ppb Au respectively were also was tested.

Target 2 

Target 2 is a complex zone of serpentinite, demagnetized ultramafics and amphibole-rich ultramafics intersected by north-south and northwest-southeast structures occurring 550 m to the east of the high grade Western Queen pit. Previous WMC Resources Ltd geochemical sampling had returned a value of 510ppb gold (0.51g/t gold).

Target 5 – The Wild Card 

Target 5 - The Wild Card is a structurally complex area comprised of ultramafic, mafic and BIF lithologies, with faults striking NW-SE, N-S, NNE-SSW considered prospective for hosting gold deposits. The area is largely covered by transported material rendering geochemistry ineffective.

Buried Granite Target 

Drilling at this target was aimed at testing for gold mineralisation associated with the magnetic rim and or shear zones around a shallow granite body. Previous drilling this area had returned anomalous gold value of 0.14 g/t in weathered amphibolite.  

Best results of 4m @ 3.45 g/t and 4m @ 1.82 g/t were returned from Target 3. Data review is underway to examine if targets 2, 3, 5 and Buried Granite have any further potential to host gold deposits.

Dalgaranga

AXG holds a 49.9% interest in the Dalgaranga tenements which form part of the DGMJV. Exploration is managed by Equigold whose interest is 50.1%.

Gilbeys contains gold deposits of 381,000 ounces at 1.58g/t within the Dalgaranga tenements.

The resource at Gilbeys occurs within the primary zone with a number of higher grade zones, which could be exploited by underground methods. Further close spaced drilling based on detailed structural studies needs to be undertaken to bring part of the resource to reserve status, however, it is considered unlikely that Equigold will propose a budget for this type of work in the near future.