Dacian Gold : Strong New Drilling Results at Westralia

Microsoft Word - Westralia_Footwall_RC_Exploration_25072016.docx

25 JULY 2016

STRONG NEW DRILLING RESULTS AT WESTRALIA AWAY FROM EXISTING 1.5MOZ RESOURCE AND AT MORGANS NORTH OPEN PIT New near-surface shoot identified above Morgans Underground; encouraging results from previously untested near-surface Westralia Footwall BIF

• Shallow resource in-fill and extension drilling at the Morgans North open pit, north of Westralia, has returned several excellent results, including:

  • 10m @ 11.6 g/t Au from 5m
  • 1m @ 128 g/t Au from 32m
  • 34m @ 3.7 g/t Au from 139m including 7m @ 11.3 g/t Au from 144m
  • 21m @ 2.6 g/t Au from 20m o 9m @ 4.6 g/t Au from 33m o 5m @ 4.8 g/t Au from 50m
  • 4m @ 2.5 g/t Au from 141m and 7m at 5.4 g/t Au from 164m.
  • 7m @ 2.4 g/t Au from 73m
  • 10m @ 1.4 g/t Au from 8m

• Shallow reconnaissance drilling intersects mineralisation in the poorly tested Footwall BIF unit along the Westralia trend, confirming the existence of mineralisation in areas previously assumed to be unmineralised. Results include:

  • 17m @ 2.2 g/t Au from 63m and 2m @ 4.8g/t Au from 92m
  • 6m @ 8.3 g/t Au from 82m

    The above two intersections appear to define a new, near-surface shallow plunging high grade shoot directly above the Morgans Underground Mineral Resource

• High grade, near-surface quartz vein identified following sampling of the hangingwall basalt stratigraphy above target BIF returned 9.15m @ 6.3 g/t Au 55m below the surface including 1.85m @ 23.6 g/t Au

Dacian Gold Limited ("Dacian Gold" or "the Company") (ASX: DCN) is pleased to advise that exploration RC drilling along the Westralia BIF has intersected highly encouraging mineralisation away from the 1.5 million ounce Westralia Prospect Mineral Resource, within its 100%-owned Mt Morgans Gold Project (MMGP) in WA.

Additionally, and as part of the same drilling program, high grade mineralisation has been intersected from an in-fill and resource-extension drilling associated with the Morgans North open pit, located 900m north of the Westralia open pit.

A total of 67 RC drill holes for 9,700m has established the presence of new, near- surface mineralisation directly above the Morgans Underground and the Westralia Underground Mineral Resources, and in some cases has confirmed the existence of mineralised Westralia Banded Iron Formation (BIF) in areas where 30 years of previous mining and exploration history had not recognised its presence.

Dacian Gold's Executive Chairman, Mr Rohan Williams said the new results were important because they established the presence of mineralisation in the Footwall BIF unit in areas which had not previously been drilled, once again demonstrating the scale and potential of the Westralia gold system."

"It is particularly pleasing that our geological concepts at Westralia are paying dividends with the discovery of new mineralised BIF positions in areas that have never previously been tested."

"The shallow results returned from Morgans North are also significant because they will be included in the Westralia Prospect Mineral Resource upgrade due to be released later this month, which in turn will be incorporated into the MMGP Feasibility Study, due for completion in the December quarter of this year."

BACKGROUND

Dacian Gold recently completed its major, 90,000m resource in-fill and extensional drill program at the Westralia and Jupiter Prospects (see ASX announcements 28 June 2016, 1 June 2016, 21 March 2016 and 11 February 2016 for Westralia; and 16 June

2016, 9 May 2016, 14 March 2016 and 8 February 2016 for Jupiter). This drilling was focused principally on upgrading the Mineral Resource classification of those resources used in the MMGP Scoping Study (see ASX announcement 30 September 2015).

As noted in the MMGP Scoping Study the potential mining of the Morgans Underground Mineral Resource considered an access decline from the base of an expanded Morgans North open pit which had an historic production of 17,000 ounces during the 1990s.

Thirty-eight of the 67 drill holes that are the subject of this announcement were drilled at Morgans North, both within the existing Mineral Resource, and also seeking extensions of the Mineral Resource. All holes drilled at Morgans North will be used to update the existing Morgans North Mineral Resource.

Figure 1 below shows the location of the Morgans North drilling program, the existing Morgans North open pit and the Morgans Underground Mineral Resource.

The majority of the Morgans Underground Mineral Resource, referred to above, lies within a mineralised BIF unit that sits between 50 and 100m into the footwall of the mineralised BIF unit that hosts the majority of the 900,000 ounces of gold mined historically from Westralia.

Prior to Dacian Gold's discovery of the Morgans Underground mineralisation, very little was known about the presence of the mineralised Footwall BIF unit and any associated gold mineralisation. Accordingly, the Footwall BIF unit has seen virtually no exploration despite the +100 year history of mining at Westralia.

Detailed interpretation of the location of the near-surface expression of the Footwall BIF unit was made possible following the completion of Dacian Gold's extensive diamond drilling programs along the 3km length of the Westralia mineralised system.

Dacian Gold has now completed a reconnaissance RC drilling program over several hundreds of metres of possible near-surface Footwall BIF above both the Westralia Underground and the Morgans Underground mineralised positions.

Twenty-nine of the 67 RC drill holes, the subject of this announcement, were drilled to test the near-surface interpreted position of the Footwall BIF. Most of the holes drilled were reconnaissance in nature with only one hole drilled for every 50 to 100m along strike. This drilling is designed to (i) test for the presence of Footwall BIF, and (ii) identify any associated mineralisation. Where significant gold is identified, follow-up drilling will be required.

Figure 1 below shows the location of the near-surface reconnaissance drilling testing for the Footwall BIF above the Westralia and Morgans Underground Mineral Resources.

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Figure 1: Long section of the 3km long, 1.5 million ounce Westralia Prospect Mineral Resource showing the location of the recently completed 71 RC drill holes testing Morgans North resource in-fill and extension program; the Footwall BIF reconnaissance drill testing above the Westralia Underground and Morgans Underground positions.