announcement

ANNOUNCEMENT


Update Charters Towers gold
16 December 2009: Brisbane, Australia Citigold Corporation Limited (Citigold)
(ASX:CTO, NASDAQ Dubai:CTO, FSE:CHP) is pleased provide an update on the
Charters Towers mining operation.

Revised Production Targets Citigold has considered the expected gold production for the
December quarter in relation to the earlier announced target.
Gold production for the current quarter is now expected to be
5,000 ounces. While this is below the earlier target forecast it
would represent nearly a 100% increase from the September
quarter and the largest quarterly gold production since mining
operations began. The 5,000 ounce quarterly production would represent an
annualised rate of 20,000 ounces per annum if the rate is
maintained. This lift in gold production at Charters Towers follows the mine site's management
restructure implemented 2 months ago. With the new growth focused management team in place, the Board met in
Charters Towers recently to get a first hand opinion on what is achievable going
forward. In consultation with both Mr Towsey (COO) and Mr McDonald (GM
Operations), the gold production target for calendar 2010 year has been revised to
50,000 ounces. These more modest targets are based on accumulated experience
and the more detailed understanding of the gold distribution. With the benefit of
hindsight the previous aggressive production build up rate was premature. The
overall long term project target remains unchanged however it will be a more
gradual build up in production. Strength of the Charters Towers gold asset. Although the production expansion has taken longer then anticipated, the capital
and infrastructure works plus mining completed to date have helped strengthen the
value of the asset. Ore Body is as expected The overall mining payability of the reef structure explored as part of the
mining process has proven to be consistent with the 70% discount factor Page 2 Citigold Corporation Limited Level 15, IBM Centre, 348 Edward Street, Brisbane QLD 4000 Australia Tel:+61 (0)7 3834 0000 Fax:+61 (0)7 3834 0011 www.citigold.comalready applied to the overall tonnages used in the Inferred Mineral
Resource published in 2005 and available on the Company web site. Mechanised mining system optimisation continues Citigold has developed a mine planning and development system that is
suitable for a large scale mining operation. While the mechanised system is
taking longer then expected the Company's conservative approach aims to
ensure a low operating cost mining method for long term gold production. Ore Reserve reconciliation - 101.5% recovery Of an initial parcel of 19,307.5 oz outlined within the Probable Ore Reserve
that was mined from the Warrior reef, the refinery paid the Company for
19,210 ounces. At 98% recovery in the Mill, we expected 18,921.35 oz to be
sold, indicating Citigold produced 288 oz more (101.5%) than the Probable
Ore Reserve estimate. This shows that the Company's estimation
methodology including mining factors applied to the resource is sound and
confirms the methods used in the current Inferred Mineral Resource of
23 million tonnes at 14 g/t Au containing 10 million ounces. Power to sites exceeds 10 MW Electric power throughout 2008 was a limiting factor that put Citigold behind
by a year on the planned production growth. With state grid electric power
connected to the overall Charters Towers gold project of 10 megawatts, the
Company is starting to see production growing after the development catch
up made in 2009. Geophysics and diamond drilling Test work to date using down hole induced polarisation (DHIP) has shown
very encouraging results in mapping the sulphide zones associated with the
gold mineralisation around and between drill holes. A number of significant
target areas have been defined after initial calibration of the system on
known mineralised areas. The goal is to use these geophysical imaging
techniques to map the ore body in detail for mine planning to efficiently
locate the development drives to access the stoping panels. The Charters Towers gold field is performing in keeping with our studies and
general expectations. Although growth in gold production is slower than expected,
in 2008 and 2009, we believe that the knowledge gained to date from nearly
3 years of continuous gold production has been very valuable and will better assist
future gold output estimations. Citigold's approach to capital expenditure has been
prudent through gradual expenditure of relatively small capital amounts. Current gold prices coupled with growing gold production are producing good cash
flows. The Reserve and Resource assumptions are being confirmed, the
mechanised mining method is working well, new mine site management has
produced results and with a strong gold price, the Company is looking to a strong
result in 2010.