28 October 2013
Kolar Gold Limited
Jonnagiri Mining Lease Granted
Kolar Gold Limited (AIM: KGLD, referred to as 'KGL', 'Kolar Gold' or the 'Company') is pleased to announce that the Jonnagiri Mining Lease has been granted by the Andhra Pradesh Government to the Company's partner Geomysore Services India Private Limited ("GMSI"). As announced on 19 August 2013, the Company holds a 30% equity interest in GMSI and therefore all its gold projects, including the Jonnagiri Gold Project in India.
GMSI is a leading exploration company in India with a well-established office in Bangalore and a strong gold exploration team of experienced geologists. Over the last 15 years GMSI has secured the project rights and preferential rights under application to 49 gold projects, including Reconnaissance Permits, 32 Prospecting Licences and six Mining Leases covering 11,066km2 across India with 1.36Moz JORC resources defined.
GMSI secured a Reconnaissance Permit in 2008 and since then has undertaken exploration including, geochemical sampling, structural mapping and core drilling, while also conducting public hearings and completing all necessary approval steps to proceed with mine development upon granting of the Mining Lease. GMSI first applied for the Mining Lease in 2006.
The Jonnagiri Greenstone Belt lies in the Eastern Dharwar Craton and the project is located in the Kurnool district of Andhra Pradesh. The region is recognised as being highly prospective with many indications of ancient mining. The Geological Survey of India commenced a detailed investigation between 1991-1994 involving 3,298m of core drilling, which led to the identification of two mineralised blocks. The project also has good access to infrastructure being located close to the Bangalore - Hyderabad national highway.
As part of Kolar Gold's due diligence, the Company engaged Mining Associates in 2012 to produce a competent persons report on the Jonnagiri deposit, the result was a validated 720koz JORC Resource and an exploration target of 2-5Moz. Mining Associates confirmed an open pittable resource at the Dona East block of 190koz @ 2.1g/t and 530koz @ 4.3 g/t in an underground resource at the Dona Temple block which demonstrated wide intersections of 22.7m @ 7.5g/t at a depth of approximately 300m.
The Board believes this is an excellent opportunity for GMSI and KGL and the immediate plan is to mobilise drilling rigs to undertake further exploration drilling to extend and upgrade the JORC Resource. Planning is underway for the development and design of the open pit and the necessary shaft sinking and underground development work. The awarded Jonnagiri Mining Lease is a 30 year licence with an option to extend for a further 20 years. The Company is not obligated to fund the development of the GMSI gold projects but the Board may decide to do so in the future depending on the commercial rationale.
CEO Nick Spencer commented today: "We are delighted that GMSI has received final State Government approval for the Jonnagiri Mining Lease. This is a rare event in a complex and bureaucratic licence regime and therefore a major step forward for the companies. We now look forward to working closely together to develop the project with the intention of building one of India's first private gold mines and realising its significant resource potential for the benefit of all stakeholders, including the local population, GMSI and our shareholders."
Kolar Gold Limited
Nick Spencer / Chris Clowes
+617 3846 0211
N+1 Singer (Nomad and Joint Broker)
James Maxwell / Jenny Wyllie
+44 20 7496 3000
Ocean Equities Limited (Joint Broker)
Guy Wilkes / Will Slack
+44 20 7786 4370
Edward Portman / Nuala Gallagher
+44 20 7920 3150
+44 7768 696 760