Fergusson

At Fergusson Island, Vangold is targeting epithermal gold mineralization in major, metamorphic dome-bounding fault zones, and in quartz vein/stockwork in younger acid volcanics and intrusives. Vangold's two most advanced projects on the Fergusson property are Igwageta and Unagala.

Introduction

The Fergusson property, consisting of Exploration license (EL1324), covers 115 square kilometers and is situated in the D'Entrecasteaux island chain in the Solomon Sea east of the main Island of Papua. The concession contains 6 main prospects with potential for gold deposits, which are located on the southwest and the northeast of Fergusson Island. The geology consists of basement metamorphic rocks forming rising dome complexes intruded by granodiorite and overlain by Late Tertiary acid volcanics.

Historical work on Fergusson

Prior to 1980, exploration on the island was limited to the search for base metals, chromite and magnetite. Esso Minerals commenced gold exploration in the area in 1982 and an extensive geochemical sampling program was conducted across Fergusson island. This work was continued by City Resources Ltd and Ingold Holdings (INCO) between 1982 and 1987. The second period of exploration took place from 1994 to 1997, firstly by Union Mining NL and later by Yamana resources, which targeted epithermal gold mineralization related to major structures and acid volcanic rocks. This work led to the discovery of numerous gold prospects and the definition of significant mineralized intervals in trenches. During this period, Union Mining NL completed trenching, soil sampling and 75 shallow drill holes at the Igwageta prospect, returning near surface drillcore intersections including 11m at 7.47 g/t Au; 3m at 19.94 g/t Au and 11m at 5.44 g/t Au.

In 1997, an airborne geophysical survey was flown over all of Fergusson Island by Kevron Geophysics Pty Ltd by helicopter. The survey was flown at 60m elevation and north-south flight lines with 200m spacing.

Accessibility

Fergusson Island can be accessed by boat from the Milne Bay provincial capital of Alotau. A passenger boat has regular service to carry passengers from Alotau to some of the small villages on Fergusson Island. A barge can be used to transport drill rigs and heavy equipment to the island. The town of Alotau has a population of approximately 25,000 and provides an excellent logistics base to support fieldwork on Fergusson Island. Alotau is serviced by daily jet passenger services from PNG's capital Port Moresby.

Gold Mineralization on Fergusson

Gold mineralization at Fergusson is associated with major metamorphic dome-bounding faults. These zones are highly prospective for epithermal gold. Mineralization styles recognized include: volcanic hosted gold in quartz stockwork zones, gold in volcanic breccia zones, gold associated with active hot springs and gold in altered (listwanite) ultramafic rocks.

There are two known epithermal gold deposits located on the northwest and north coast of Fergusson Island currently being developed by Gold Aura Ltd. from Australia, which have a combined NI43-101 compliant resource of approximately 850,000 ounces of gold.

Igwageta Prospect

Epithermal gold mineralization at Igwageta is controlled by deep-seated detachment faults (DFZ) separating metamorphic basement (gneissic fault-bounded core complexes) and slices of younger ultramafic volcanics and sediments (limestones, sandstone). Gold is localized by the DFZ and is hosted by epithermal quartz-carbonate veins and argillic-silicic altered breccias associated with Pliocene to Recent volcanism. This exploration model has similarities to the 4 million ounce Misima Island gold mine to the southeast of Fergusson Island. The Igwageta prospect was the focus of exploration by Union Mining in the mid nineteen-nineties, who drilled a series of shallow (40m average depth) RC drillholes into the DFZ.


In 2007, Kanon (Vangold) conducted a soil sampling program at Igwageta, which returned some highly anomalous gold-in soil results, including 28.1 g/t Au; 7.42 g/t Au and 9.47 g/t Au in a north-south line over 60m. Trenching in 2008 by Kanon consisted of sampling in 12 trenches at 3m intervals for a total of 821 samples. 139 of these samples assayed greater than 0.5 g/t Au with a high value at 8.83 g/t Au over 3m. Highlights of these results from trench samples are listed in the table below. Typical trench results include 30m at 1.01 g/t Au and 12m at 1.41 g/t Au. Gold in trench results from this program define a zone approximately 700m by 250m, trending northwest.


Encouraging gold assay results returned from Trench 12, located to the south of the known mineralized zone, with trench results of 21m at 2.51 and 57m at 1.23 g/t Au. This zone is also marked by the very strong gold in soil anomaly from Kanon's 2007 program. This same zone was intersected in a 1998 RC drill program by Union Mining and returned 11m at 7.47 g/t Au, including 3m at 20.82 (IRC-07). Field investigation by Vangold's geologist in May 2009 revealed the area is underlain by argillically altered siliceous breccias that contain fine free visible gold. This high grade zone is a hot target for future exploration.

Unagala Prospect

The Unagala prospect is located some 4.5 km north of Igwageta and lies in a major east-west trending structural corridor. Accessed 1.5km from the coast, Unagala is situated in a subdued topography, favourable for exploration work. Gold-bearing low-sulfidation epithermal textured quartz carbonate veins up to 2.5 meters in thickness are hosted by metamorphic basement. An active hotspring is located on the Unagala prospect. Like much of the Island, this prospect has gneissic metamorphic rocks that are unconformably overlain by younger volcanics and volcaniclastics. Detailed exploration to date has included hand and bulldozer trenching, grid soil sampling, detailed geological mapping and ground geophysics. Esso drilled ten diamond and 16 RC holes in 1982 with encouraging results, including 14.45m at 4.18 g/t gold starting at 9.5m depth (UND002). Vangold geologists have compiled the historical data for Unagala and re-interpreted the structural setting of the area.


Based on abundance of As-Sb-Hg and presence of marcasite, the epithermal system may be high level and low temperature. Gold mineralization is primarily controlled by a zone of silica-pyritic breccia.

Iaupolu Prospect

This prospect covers an area of 4 sq km along Iaupolu Creek. The area is underlain by gneiss. A few small zones of argillic alteration have been noted, and these appear to be fault controlled. Crystal vitric tuffs, in faulted contact with the gneiss, have been mapped in the headwaters of Iauplou Creek.

Yaluwana Prospect

The Yaluwana prospect is centered on an active geothermal system. Sulphur depositing fumaroles and boiling water pools occur throughout the main zone of geothermal activity. In the immediate area of the thermal zone, the rocks are intensely altered (argillic and advanced argillic). Visible gold has been panned from the creeks. A soil grid of 234 samples over a 1km by 1km defined a large east-west trending mercury anomaly and coincident arsenic anomalies. A single diamond drill hole was drilled vertically into 202 meters of strongly altered volcanics in the central arsenic anomaly. Although mercury was strongly anomalous, it did not intersect gold values. Hydrothermal breccias were noted in much of the core. Several targets remain untested.

Mebulibuli Prospect

Host to some of the strongest stream sediment gold anomalies on the Island, Mebulibuli is situated on the northeast coast of Fergusson. The area is underlain by serpentinized ultramafics. Gold mineralization is restricted to silicified brecciated ultramafics. This prospect remains relatively underexplored.

Niyaila Prospect

Located approximately 45km southeast from Wapolu gold deposit on the north east coast of Fergusson Island. A ridge of silicified brecciated ultramafics crops out. Similar to Mebulibuli, silica flooding, along with pervasive chalcedonic and opaline silicification and pyrite-arsenopyrite mineralization (locally up to 15% sulfides) has been recognized both at the surface and at depth. Five diamond drillholes tested silicified and brecciated serpentinite but geology intersected was not as anticipated from surface geological mapping. A panned concentrate stream sample of 13.6 g/t Au was collected downstream of Niyaila by City Resources.

Photos
Location Map Fergusson	Visible Gold in argillic altered silicified volcanic breccia outcrop at Fergusson Igwageta prospect

Reports

43-101 Technical Report on Fergusson

News Releases

September 09, 2009

Vangold's Kanon samples 21m at 2.51 g/t Au and 57m at 1.23 g/t Au in Trench at Fergusson Gold Project, PNG