:: Patagonia Gold ::

GEOLOGY

Santa Cruz Province in southern Patagonia, Argentina, comprises an extensive area of relatively flat-lying terrain (Argentina) bounded in the west by the rugged Andean Cordillera (Argentina and Chile).
The Andean Cordillera is composed of strongly folded, faulted and elevated Palaeozoic metamorphic rocks overlain by Jurassic andesite-rhyolite volcanics and Cretaceous sediments. Upper Miocene granite batholiths occur in places (e.g. San Lorenzo, Mount Fitzroy). Extensive areas of Pleistocene glacial sediments occur to the east of the Cordillera and the southern one third of Santa Cruz province is covered by extensive Pleistocene-Holocene fluvial deposits.

In northeast Santa Cruz province the low-lying Deseado massif is composed of Precambrian-lower Palaeozoic metamorphic-intrusive basement overlain by a relatively flat-lying stratigraphic sequence of Permo-Triassic to Jurassic sediments, Jurassic basalt, andesite and rhyolite (ignimbrite) volcanic rocks and Cretaceous-Tertiary sediments and volcanics. Much of the massif is covered by extensive Tertiary-Quaternary sedimentary and volcanic lithologies, including flood basalts.

The ignimbrite plateau of the Deseado massif is 60,000 km2 in area and hosts several mines (e.g. Cerro Vanguardia (end 2004 reserves 0.6 Mt proven, grading 9.99g/t gold, 6.2 Mt ore probable grading 6.87 g/t gold, and measured, indicated and inferred resource 11 Mt grading 8.01 g/t gold), Mina Martha, and several advanced projects (Manantial Espejo, Huevos Verdes, Cerro Negro) as well as numerous smaller prospects and showings. These are low sulphidation epithermal “bonanza” vein style gold-silver deposits, the main target for exploration in this region.

PROPERTY HOLDING

Patagonia Gold holds over 70 properties (expedients) in Santa Cruz, totalling approximately 200,000 hectares. This impressive portfolio of properties is composed of several targets which are currently being drilled. The bulk of the properties were acquired from Barrick on their decision to desist from further exploration in Santa Cruz.

Patagonia Gold has already completed one programme of 38 diamond and 9 RC holes (totalling 7,100 metres), and 750 metres of trenching at the very prospective Lomada de Leiva property in the La Paloma block the successful drill prgramme formed the basis of a NI-43 101 compliant resource. Further work in progress includes a scoping study, metallurgical testing and geophysical targeting, aimed at increasing the resource potential and feasibility status. An infill drill and exploration programme will be undertaken in the second quarter of year 2008.

A drill programme was started at the El Tranquilo Property (Cap Oeste and Breccia Valentina prospects) in 2007, and a second programme has started on the Cap Oeste Project in 2008. Drilling along the mineralized structure has now extended Cap-Oeste over 1,200 metres in length and up to 100 metres in depth. The zone remains open at depth and along strike in both directions.

The La Manchuria Project to the west is currently being drilled in order to advance the project to a NI-43 101 compliant resource.