Gold Mines of Sardinia Limited

A.C.N. 009 234 851

31 May 2001
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  Announcement Details
 
Company   Gold Mines Of Sardinia Ld
TIDM   GMN
Headline   Drilling Report
Released   17:46 31 May 2001
RNS Number   5225E
 

Full Announcement Text
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RNS Number:5225E
Gold Mines Of Sardinia Ld
31 May 2001



Drilling campaign planned for Monte Ollasteddu gold discovery


Gold Mines of Sardinia is advancing plans for a strategic drilling campaign
over the company's new gold field discovery at Monte Ollasteddu in eastern
Sardinia.  A Research Permit application has been lodged with the Sardinian
Government to enable reserve circulation (RC) and diamond drilling to fully
evaluate the prospect.

Company geologists continue to report high gold values from a wide- ranging
channel sampling program.

"We will begin drilling as soon as we receive the necessary permits, probably
within three months," managing director Mr John Morris said at the company's
annual general meeting in London today.

"The sampling results we are getting are as good as any that experienced
people have seen, and they are especially significant since the deep fissures
in the country enable us to gain critical insights into what lies below the
surface.

"Even without drilling, Monte Ollasteddu is looking very promising as a
potential bulk-mining operation.  There are multiple gold-bearing structures
up to 500 metres long in a 3.5 square kilometre area."

Further information: John Morris, +61 8 9389 7711, gms@gmsltd.com.au

Geologist's report

Gold Mines of Sardinia announced the Monte Ollasteddu discovery in January
this year as a result of extensive exploration of the Eastern Paleozoic region
of the island.  Further encouraging results were reported in April (Figure 1).

The discovery is associated with stockwork quartz veining, pervasive
silicification and arsenopyrite mineralisation.  Selective sampling of
individual quartz-sulphide veins is returning quite high grades, generally in
the 15 to 50 grams per tonne (g/t) gold (Au) range.  These are usually being
taken from veins less than 1 metre wide but they offer the added possibility
of discrete bonanza-style veins within the large bulk tonnage stockwork vein
and disseminated sulphide target.
Samples submitted for 24-hour cyanide leach returned an average 90 per cent
gold recovery.

The discovery area, 3.5km long and 1km wide, is defined by a gold-in-soil
anomaly averaging 10 parts per billion (ppb) Au.  One Zone 2km long and 500
metres wide within the discovery area has returned values of +50ppb.  In the
central part of the area, gold results from the soils of up to 1g/t have been
recovered (Figure 2).

The soil anomaly is still open along strike to the east and west.  It more
than likely continues for a further 4km to the east, under shallow sandstone
cover, to the Baccu Locci group of old workings which return up to 12g/t Au
from quartz veins.

Rock chip channel samples come from outcrops comprising less than 20 per cent
of the area.  The deeply dissected plateau on which the discovery is located
offers good exposures on steep slopes, cliffs and creeks.

The mineralisation appears to be contained in a series of narrow veins in
parallel vertical, east-west trending fault zones that can be mapped up to
500m along the strike.  The widths of the fault zones vary from a few metres
to 75m and the steep topography  demonstrates vertical continuity over 200m. 
The best results are tabulated below (the length of some of the sample
intervals is restricted to the presence of continuous outcrop, Figure 3a and
b).

Channel No.       Interval & Grade (g/t)       Channel No.       Interval &   
                                                                 Grade (g/t)
100                75m @ 0.87                       136         9m @ 5.73
103-104            20m @ 2.63                       137         1m @ 5.71
108                23m @ 3.56                       138        22m @ 3.20
116                27m @ 4.69                       139         1m @ 5.11
122                16m @ 3.09                                   1m @ 4.96
125                 3m @ 2.32                       141          3m @ 6.5
127                 2m @ 4.59                       142        10m @ 3.74
130                 5m @ 2.88                       143          3m @ 2.5
133                7m @ 22.36                       144         9m @ 4.65
134                14m @ 8.16                       145        2m @ 14.41
                     3m @ 2.2                       147         4m @ 4.41
                    1m @ 5.36                       148        10m @ 4.77
135                 4m @ 6.65              


Elsewhere in the Eastern Paleozoic belt, systematic ridge and spur soil
sampling is continuing on wide-spaced lines 1 km apart.  Highly anomalous
results have been received near Escalapano, an area 6km to the west of Monte
Ollasteddu.  Best results from these samples include 639, 602, 556, 97, 93 and
78 ppb Au.

An extensive (9km x 6km) gold-in-stream sediments anomaly surrounds old
workings at Villasalto, 10km south-west of Monte Ollasteddu, and up to 27g/t
Au in rock chips has been returned from the Genna Ureu prospect 20km west of
Monte Ollasteddu.

                            *        *        *

Mr Jeff Rayner, Chief Geologist for Sardinia Gold Mining SpA, has been
responsible for the preparation of the geological sections of this report.  Mr
Rayner is a corporate member of the AusIMM and has more than five years'
experience in the estimation, assessment and evaluation of mineral resources
and ore reserves which is relevant to the style of mineralisation under
consideration.

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Last modified: June 22, 2001